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.
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 >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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.
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 >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on SRCL - FREE
Get the latest research report on RSG - FREE
Get the latest research report on CBZ - FREE
Get the latest research report on WCN - FREE