Stericycle, Inc. Q4 2008 Earnings Call Transcript

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2009-02-05 16:40:38.0

Tags: Call Transcript, William Blair Co., Earnings, Stericycle Inc., Richard Kogler Total Steri-Safe, Operational Accounting, Finance, Seeking Alpha

Question-and-Answer Session

Operator

(Operator instructions) Our first question comes from the line of Ryan Daniels. You line is open sir.

Ryan Daniels – William Blair

Hi, good evening guys. If I could just ask a couple of quick housekeeping upfront, could you give us the total Steri-Safe accounts and then percent on premium, and then the additions for Bio and LQG during the quarter?

Richard Kogler

Total Steri-Safe is a little bit more than 132,000 and percent on select and premium is just a little bit over 29%. And then LQG adds were 56 and Bio Systems were 71 new accounts.

Ryan Daniels – William Blair

Okay, great. And then Frank, I think you mentioned upfront that if we adjust for FX the organic revenue growth was fairly close to 9%, I assume there is a little bit of headwind in there for fuel too given the drop in energy prices we have seen. Have you guys tried to determine what organic growth would look like if we kind of out that impact on a year-over-year basis?

Frank ten Brink

Year-over-year it is fairly about a couple of percentage points.

Ryan Daniels – William Blair

It will be a little bit over 10%?

Frank ten Brink

Yes.

Ryan Daniels – William Blair

Okay great. And can you discuss – do you have any hedging programs in place, I know most of your costs obviously are incurred over in the foreign operations, but did you hedge your FX at all, is that pressuring the bottom line given the precipitous drop we have seen particularly in the pound over the last few months.

Richard Kogler

No, we're kind of naturally hedged as a service business since all our cost in country is also generated. It is mostly payroll. We don't make anything in one country and ship it to another. So the intercompanies and the like. We have intercompany loans. Those are not hedged either, though there would maybe some exposure. We had some in the fourth quarter, which is why we had higher other income and expense and that was probably about $850,000, which was an intercompany predominantly between the UK and Ireland. But that was more intercompany borrowings from each other.

Ryan Daniels – William Blair

Okay that is very helpful, and then two more broad ones and then I will hop back off into the queue. Did you guys have any success during the period in trying to hold some of the energy surcharges or maybe lagging those a little bit? In turn, did that drive any of the pretty substantial operating profit improvement we saw year-over-year during the quarter?

 

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