Stericycle, Inc. – Q2 2013 NASDAQ: SRCL
Forward - Looking Statements This presentation may contain forward-looking statements that involve a number of risks and uncertainties and our actual results could differ significantly from expected results. Potential risks and uncertainties include difficulties in completing the integration of acquired businesses, changes in governmental regulation of medical waste collection and treatment, and increases in transportation and other operating costs, as well as various other factors described in our public filings with the U.S. Securities and Exchange Commission. Accordingly, past financial performance should not be considered a reliable indicator of future performance, and historical trends should not be used to anticipate future trends or results. For a definition of terms used throughout this presentation please see the last page on our website presentation. 2
Competitive Strengths Broad range of high quality services � Regulated Waste Services SM Safety & Compliance Program � Steri-Safe � Sharps Management Service � Pharmaceutical Waste Disposal � Patient Communication Services � Recall and Returns Management Services 3
Market Leadership Total Estimated Global Market Size: $15 billion* Stericycle 14% Onsite Management and Other Competitors 86% Note: * Frost & Sullivan Industry Study and Management Estimates (including ancillary services & products) 4
Regulated Waste Services � Necessary Regulated Service Compliant management of � Large Diverse Customer Base regulated waste to reduce cross � Worldwide Market Opportunity contamination risk and spread of � Growing portfolio of services infection � Low Cost Operator � Attractive Margins 5
Loyal Customer Base � Highly regulated industry (e.g. U.S. Market: EPA, DEA, FDA, OSHA, DOT, State/Local. Intl: similar agencies) � Insulated from economic cycles � 550,000 accounts (granularity). Revenue retention exceeds 95% Hospitals, Blood banks, Pharmaceutical manufacturers, Medical and Dental offices, Offsite and alternate care providers, Biomedical/Biotech companies, Laboratories/Pharmacies, Corporate America, Retail Locations, Veterinary offices � Largest customer less than 2% of revenues � Predictable revenues: over 95% of revenues are under long term contracts with automatic renewal � Contracts generally include pass through price increase provisions 6
Network of Premier Assets International Presence Integrated Network Collection/Transfer Processing Facilities 7
Growth Strategy � Focus on small regulated waste customers SM OSHA Safety & Compliance Program � Leverage Steri-Safe � Expand Sharps Management Service Program � Expand Pharmaceutical Waste Disposal Program � Grow Patient Communication Services � Grow Regulated Recall and Returns Management Services � Target “tuck-in” strategic acquisitions � International growth and geographic expansion 8
Focus on Small Customers � Small account customers generate gross margins higher than large account customers � Small account customers are more likely to outsource and are easier to up-sell Q4 1996 % Revenue Mix* Q2 2013 Small Small Account Large Large Account Customers Account Customers, Account Customers, 33% 63% Customers 37% 67% 21.0% Gross Margin 45.2% Gross Margin * Note: Domestic SQ and LQ Revenue Mix 9
SM OSHA Safety & Steri-Safe Compliance Program � Subscription Safety Tools Promotes a safe and compliant � Attractive Margins workplace for healthcare � Significant Penetration and employees Up-sell Opportunities � International Expansion Compliance Manual MyStericycle.com Consulting Services Medical Waste Disposal 10
Sharps Management Service � Turnkey Integrated Sharps Promotes a safer workplace by Safety Solution reducing the infection risk from � Synergy with Existing inadvertent needle sticks and supports sustainability efforts Transportation & Plant Infrastructure Use of Product in Hospital Manage & Collect Reusable Sharps Containers 11
Pharmaceutical Waste Disposal � Turnkey Integrated Promotes a compliant workplace by proper handling, segregation, Pharmaceutical Waste transportation and disposal of Management System pharmaceutical waste to keep � Synergy with Existing drugs out of the water supply Infrastructure Training Use of Product in Hospital Protects the Environment 12
Patient Communication Services � Essential service for Live voice telephone current customer base answering service, automated appointment reminders, � Serving medical offices, appointment scheduling, clinics, community care physician referrals, post centers and hospitals discharge and wellness calls � Recurring revenue model � Leverages Recall call center expertise 13
LQ/SQ Opportunity LQ – Hospital Example SQ – Doctor Practice Example Revenue Range Revenue Range Hazardous $15k - $20k Waste Patient Communication • Secure Messaging $35k - $40k $6.3k - $8.8k Rx Waste • Automated Reminder • After Hours $35k - $40k Sharps Management $1.2k - $1.5k SM Steri • Safe $30k - $35k Med Waste Med Waste $1.0k - $1.2k Total Revenue 4x Current Total Revenue 9x Current Opportunity Med Waste Opportunity Med Waste $115k - $135k Revenue $8k - $11k Revenue 14
Recall and Returns Management Services � Remove expired or unsafe � Notification, returns and recall products from supply chain solutions for pharmaceuticals, to reduce risk and protect medical devices, consumer the brand products and food industry � Serving manufacturers, hospitals, distributors, retail pharmacies 15
Acquisitions � Proven integrator having successfully completed 323 acquisitions since 1993 � Current Worldwide acquisition pool represents more than $100 million in revenues � Purchase price is based on IRR/multiples of EBITDA and depends on the risk and quality of the assets purchased 16
Strong Financial Performance Revenues Fiscal Year Ended December 31 $1,913 ($ in millions) $1,676 $1,439 $1,178 $1,084 $1,040 $933 $929 $790 $610 $516 $453 $402 $359 $324 $133 $67 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD YTD Q2 12 Q2 13 Stericycle continues to exhibit steady top-line revenue growth 17
Strong Financial Performance Income from Operations (EBIT)* Fiscal Year Ended December 31 $499 ($ in millions) $444 $391 $325 $280 $272 $242 $240 $202 $167 $147 $126 $104 $88 $75 $12 $6 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD YTD $6 $12 $63 $73 $101 $126 $146 $167 $202 $225 $274 $315 $371 $424 $469 Q2-12 Q2-13 9.6% 9.3% 23.2% 23.6% 25.1% 27.9% 28.2% 27.3% 25.6% 24.1% 25.3% 26.8% 25.8% 25.3% 24.5% $234 $265 25.2% 25.5% GAAP EBIT $ and EBIT to REVENUE % � 2000-2001: Adjusted for pro-forma adoption of new accounting standards to cease amortization of goodwill. � 2006-2013: Includes expensing of stock compensation. � 2000-2013: Excludes integration related costs, write-off of fixed assets and other non-operational items. � 2009-2013: Excludes expenses associated with acquisitions/business combinations. 18
Strong Financial Performance EPS** Fiscal Year Ended December 31 $3.34 ($ in millions) $2.88 $2.55 $2.10 $1.81 $1.74 $1.60 $1.43 $1.18 $1.05 $0.89 $0.73 $0.54 $0.37 $0.30 $0.15 $0.09 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD YTD $0.13 $0.23 $0.18 $0.17 $0.51 $0.71 $0.85 $0.74 $1.16 $1.32 $1.68 $2.03 $2.39 $2.69 $3.08 Q2-12 Q2-13 $1.53 $1.74 GAAP EPS Stericycle has met or exceeded EPS estimates since 1996 IPO **Note: Adjusted for 2-for-1 stock split in May 2002 and in May 2007. *Note: Non-GAAP EPS is adjusted for: Acquisition and integration related costs, bond buyback premium & bank loan financing fees, tax adjustment to fully taxed, non-cash fixed assets write-offs, legal settlements, non-cash write-down of investments, goodwill amortization pre-2002, insurance proceeds, note receivable write-down, gain on divestiture of assets, impairment of intangible assets, restructuring costs. Expensing of stock compensation is NOT part of the adjustments . 19
Capitalization ($ in millions) Dec. 31, 2000 Dec. 31, 2012 Jun. 30, 2013 Current Portion of Long Term Debt $5.1 $87.8 $72.4 Revolver $5.0 $225.9 $206.1 Term Loan $208.0 $0.0 $0.0 Private Placement $0.0 $750.0 $750.0 Other Debt $7.1 $292.4 $290.1 Senior Subordinated Notes $125.0 $0.0 $0.0 Total Long Term Debt, Less Current Portion $345.1 $1,268.3 $1,246.2 Convertible PIK Preferred Stock $71.4 $0.0 $0.0 Common Equity* $134.7 $1,541.8 $1,632.0 Total Capitalization $556.3 $2,897.9 $2,950.6 Debt to EBITDA 3.86X 2.24X 2.09X *Common Equity is defined as Total Shareholders’ Equity less noncontrolling interests. 20
Investment Highlights � Attractive broad range of niche services � Emerging global market � Low cost provider � Diverse customer base � Strong financial performance and strong free cash flow � Demonstrated growth strategy � Successful in integrating acquisitions and improve margins � Proven, experienced management team 21
Stericycle, Inc. NASDAQ: SRCL
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