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Stericycle Q2 Earnings Surge on Accretive Buys

SRCL CCO HHS

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Leading waste management company Stericycle Inc. (SRCL - Analyst Report) reported strong improvement in both revenues and net income in second quarter 2013, primarily aided by accretive acquisitions. The company reported net income of $78.0 million or 89 cents per share in second quarter 2013 compared with $67.6 million or 78 cents per share in the year-earlier quarter.

Excluding one-time items, adjusted earnings for the reported quarter were 93 cents per share vis-à-vis 81 cents in the year-ago quarter. The adjusted earnings were in line with the Zacks Consensus Estimate.

Quarterly revenues increased 12.3% year over year to $526.5 million, but missed the Zacks Consensus Estimate of $530 million. Domestic revenues increased 9.6% year over year to $370.2 million in the quarter. International revenues increased 19.2% year over year to $156.3 million.

Gross profit for the reported quarter aggregated $237.9 million versus $209.5 million in the year-ago quarter. Gross margin was 45.2% compared with 44.7% in prior-year period.

Financial Position

As of Jun, 30, 2013, cash and cash equivalents totaled $18.0 million compared with $31.3 million as of Dec 31, 2012. Cash from operations for the six months ended June 30, 2012 was $176.5 million versus $188.8 million in the corresponding period in the preceding year. Long-term debt stood at $1.2 billion versus $1.3 billion at year-end 2012. Capital expenditure stood at $37.4 million in the reported quarter.

During the reported quarter, the company repurchased 540,390 shares for $59 million and currently has an authorization to purchase an additional 3.2 million shares.

Acquisitions

In the reported quarter, Strericycle closed 12 acquisitions, which included 8 international and 4 domestic locations. The international acquisitions comprised of one in Japan, three in the U.K., one in Romania, one in Portugal and two in Brazil. The acquisitions contributed $1.6 million in revenues during the quarter.

Moving Forward  
 
Stericycle expects EPS to be in the range of $3.69 to $3.71 for 2013. Revenues for 2013 are expected to be in the range of $2.12 billion to $2.15 billion. Capital expenditure is expected to be in the range of $67 million to $70 million for 2013.

Stericycle is witnessing strong growth across the globe, driven by acquisitions and expansion of its portfolio of service offerings. We remain encouraged by the company’s solid performance in the reported quarter and expect growth momentum in the coming quarters as well.

Stericycle currently has a Zacks Rank #2 (Buy). Other stocks that look promising and are worth considering now in the industry include Harte-Hanks Inc (HHS - Snapshot Report), AirMedia Group Inc and Clear Channel Outdoor Holdings Inc (CCO - Snapshot Report), each carrying a Zacks Rank #2 (Buy).
 

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