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Waste management firm Stericycle, Inc. (SRCL - Free Report) reported relatively healthy first-quarter 2017 results with modest improvement in revenues on a year-over-year basis. GAAP earnings were $53.4 million or 62 cents per share compared with $66.7 million or 78 cents per share in the year-ago quarter. The year-over-year decline in GAAP earnings, despite top-line growth was primarily due to higher operating costs and selling, general and administrative expenses.
Adjusted earnings for the reported quarter were $1.09 per share compared with $1.11 in the year-earlier quarter. Although adjusted earnings decreased year over year, it exceeded the Zacks Consensus Estimate by 5 cents.
Revenues & Margins
First-quarter revenues were $892.4 million, up 2.1% year over year, and exceeded the Zacks Consensus Estimate of $875 million. Organic revenues for the quarter improved 2.1% while acquisitions contributed $10.0 million to incremental revenues and divestures reduced the same by $0.7 million.
Domestic revenues in the reported quarter were $710.8 million, up 24.6% year over year while international revenues decreased 6.4% to $181.6 million. Regulated Waste and Compliance Services revenues improved to $511.2 million from $506.6 million. Secure Information Destruction Services revenues increased $19.4 million to $204.1 million primarily due to higher recycling revenues. Communication and Related Services revenues increased to $93.5 million from $87.9 million as market-leading position and unique capabilities enabled the company to serve new brands across several industries. Manufacturing and Industrial Services revenues declined $11.4 million to $83.6 million.
Gross profit (GAAP) in the reported quarter was $368.7 million, up 0.6% year over year. Gross margin was 41.3% for the quarter, marginally down from 41.9% in the prior-year quarter.
Acquisitions
During the reported quarter, Stericycle closed 13 tuck-in acquisitions (including nine in the domestic market and four in the international market). The deals together contributed about $2 million to corporate revenues in the quarter. The worldwide acquisition pool of the company remains robust with well over $100 million in annualized revenues in multiple geographies across business lines.
Stericycle, Inc. Price, Consensus and EPS Surprise
As of Mar 31, 2017, cash and cash equivalents were $47.0 million while long-term debt (net of current portion) was $2,767.0 million.
Net cash from operating activities for the reported quarter was $175.3 million compared with $156.9 million in the year-ago period. The debt-to-EBITDA (earnings before interest, tax, depreciation and amortization) ratio was 3.38x at the quarter end. Stericycle had an unused borrowing capacity of $715 million under its revolving credit facility. Capital expenditure for the quarter was $33.1 million. During the quarter, the company repurchased 145,700 mandatory preferred convertible shares for $9.6 million.
Updated 2017 Guidance
For 2017, Stericycle updated its guidance in accordance with the current market scenario. Earnings are currently expected in the range of $4.55–$4.75 per share, compared with $4.54–$4.74 expected earlier. The company expects revenues to be in the range of $3.53–$3.66 billion ($3.51–$3.64 billion was projected earlier), and free cash flow in the range of $450–$470 million (unchanged). Capital expenditure is projected to be in the range of $125–$150 million.
Republic Services has a long-term earnings growth expectation of 9.2%. It posted a positive earnings surprise of 3.6% in the trailing four quarters.
Waste Connections has a long-term earnings growth expectation of 15.8%. It posted a positive earnings surprise of 8.2% in the trailing four quarters.
CBIZ topped estimates twice in the trailing four quarters with an average earnings surprise of 18.4%.
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Stericycle (SRCL) Beats Q1 Earnings, Updates 2017 Guidance
Waste management firm Stericycle, Inc. (SRCL - Free Report) reported relatively healthy first-quarter 2017 results with modest improvement in revenues on a year-over-year basis. GAAP earnings were $53.4 million or 62 cents per share compared with $66.7 million or 78 cents per share in the year-ago quarter. The year-over-year decline in GAAP earnings, despite top-line growth was primarily due to higher operating costs and selling, general and administrative expenses.
Adjusted earnings for the reported quarter were $1.09 per share compared with $1.11 in the year-earlier quarter. Although adjusted earnings decreased year over year, it exceeded the Zacks Consensus Estimate by 5 cents.
Revenues & Margins
First-quarter revenues were $892.4 million, up 2.1% year over year, and exceeded the Zacks Consensus Estimate of $875 million. Organic revenues for the quarter improved 2.1% while acquisitions contributed $10.0 million to incremental revenues and divestures reduced the same by $0.7 million.
Domestic revenues in the reported quarter were $710.8 million, up 24.6% year over year while international revenues decreased 6.4% to $181.6 million. Regulated Waste and Compliance Services revenues improved to $511.2 million from $506.6 million. Secure Information Destruction Services revenues increased $19.4 million to $204.1 million primarily due to higher recycling revenues. Communication and Related Services revenues increased to $93.5 million from $87.9 million as market-leading position and unique capabilities enabled the company to serve new brands across several industries. Manufacturing and Industrial Services revenues declined $11.4 million to $83.6 million.
Gross profit (GAAP) in the reported quarter was $368.7 million, up 0.6% year over year. Gross margin was 41.3% for the quarter, marginally down from 41.9% in the prior-year quarter.
Acquisitions
During the reported quarter, Stericycle closed 13 tuck-in acquisitions (including nine in the domestic market and four in the international market). The deals together contributed about $2 million to corporate revenues in the quarter. The worldwide acquisition pool of the company remains robust with well over $100 million in annualized revenues in multiple geographies across business lines.
Stericycle, Inc. Price, Consensus and EPS Surprise
Stericycle, Inc. Price, Consensus and EPS Surprise | Stericycle, Inc. Quote
Financial Position
As of Mar 31, 2017, cash and cash equivalents were $47.0 million while long-term debt (net of current portion) was $2,767.0 million.
Net cash from operating activities for the reported quarter was $175.3 million compared with $156.9 million in the year-ago period. The debt-to-EBITDA (earnings before interest, tax, depreciation and amortization) ratio was 3.38x at the quarter end. Stericycle had an unused borrowing capacity of $715 million under its revolving credit facility. Capital expenditure for the quarter was $33.1 million. During the quarter, the company repurchased 145,700 mandatory preferred convertible shares for $9.6 million.
Updated 2017 Guidance
For 2017, Stericycle updated its guidance in accordance with the current market scenario. Earnings are currently expected in the range of $4.55–$4.75 per share, compared with $4.54–$4.74 expected earlier. The company expects revenues to be in the range of $3.53–$3.66 billion ($3.51–$3.64 billion was projected earlier), and free cash flow in the range of $450–$470 million (unchanged). Capital expenditure is projected to be in the range of $125–$150 million.
Moving Forward
Stericycle currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Republic Services, Inc. (RSG - Free Report) , Waste Connections, Inc. (WCN - Free Report) and CBIZ, Inc. (CBZ - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Republic Services has a long-term earnings growth expectation of 9.2%. It posted a positive earnings surprise of 3.6% in the trailing four quarters.
Waste Connections has a long-term earnings growth expectation of 15.8%. It posted a positive earnings surprise of 8.2% in the trailing four quarters.
CBIZ topped estimates twice in the trailing four quarters with an average earnings surprise of 18.4%.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>