S&P upgrades Stericycle

Standard & Poor's upgraded Stericycle Inc. including raising its senior secured bank debt to BB+ with a recovery rating of 3 from BB and senior subordinated notes to BB- from B+. The outlook is stable.

S&P said the upgrade reflects Stericycle's improved financial performance, continued debt reduction and increased cash flow generation.

Despite the economic downturn, Stericycle has consistently grown its revenues and improved its operating efficiency and profitability over the last couple of years, S&P noted. Industrywide cost reduction pressures have increased the amount of outsourcing by hospitals; acquisitions; and market penetration of Stericycle's new programs and services, most notably, its Steri-Safe OSHA Compliance Program for small customers. Additionally, broader regulatory awareness and compliance issues in the medical waste industry have aided in market acceptance, as potential customers require more comprehensive services.

S&P said Stericycle's competitive strengths and good efficiencies enable it to achieve impressive operating profit margins above 30%. Increasing cash flow generation allowed the company to reduce debt by about $60 million in both 2002 and 2003, S&P said.

Credit ratios have steadily improved along with the operational performance. Total adjusted debt to EBITDA and EBITDA interest coverage were 1.2x and 8.8x, respectively, as of Dec. 31, 2003, S&P added.

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