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Stericycle (SRCL) Gains 3.2% Despite Missing on Q4 Earnings

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Stericycle, Inc.‘s (SRCL - Free Report) fourth-quarter 2021 earnings and revenues missed the Zacks Consensus Estimate. The stock gained 3.2% since the earnings release on Feb 24 despite disappointing results.

Quarterly EPS of 38 cents missed the Zacks Consensus Estimate by 13.6% and declined 35.6% year over year. The downside was due to higher supply chain, labor and other inflationary costs, as well as higher ongoing IT operating expenditures, and legal and self-insurance claim expenses.

Revenues of $657.3 million also missed the consensus mark by 0.4% but moved up slightly year over year on the back of higher Regulated Waste and Compliance Services revenues. Organic revenues increased 3.5% year over year.

In the past year, shares of Stericycle have lost 13.1% compared with 12.7% decline of the industry it belongs to.

Revenues by Service

Regulated Waste and Compliance Services revenues decreased 2.7% year over year on a reported basis but increased 1.9% on an organic basis to $455.7 million. The segment contributed 69.3% to total revenues.

Secure Information Destruction revenues increased 7.6% year over year on a reported basis and 7.4% organically to $201.6 million. The segment contributed 30.7% to total revenues.

Revenues by Geography

Revenues from North America were $536.3 million, up 1.9% year over year on a reported basis and 4.1% organically. International revenues of $121 million declined 6.7% year over year on a reported basis while organic decline was marginal.

Profitability Performance

Adjusted gross profit in the quarter amounted to $247 million, down 8.3% from the year-ago quarter’s level. Adjusted gross profit margin was 37.6%, down from 41.1% in the prior-year quarter.

Adjusted EBITDA was $92.3 million, down 30.9% from the year-ago quarter’s figure. Adjusted EBITDA margin was 14%, down from 20.4% in the prior-year quarter.

Adjusted operating income was $64.2 million, down 40.9% from the year-ago quarter’s levels. Adjusted operating income margin was 9.8%, down from 16.6% in the prior-year quarter.

Balance Sheet & Cash Flow

Stericycle exited the reported quarter with cash and cash equivalents of $55.6 million compared with $37.5 million at the end of the prior quarter. Long-term debt was $1.6 billion, flat with the prior quarter.

The company generated $100.9 million of net cash from operating activities and capex was $31.1 million in the quarter. Free cash flow came in at $69.8 million in the quarter.

Stericycle, Inc. Price, Consensus and EPS Surprise

Stericycle, Inc. Price, Consensus and EPS Surprise

Stericycle, Inc. price-consensus-eps-surprise-chart | Stericycle, Inc. Quote

2022 Outlook

For 2022, the company anticipates organic revenue growth of 3% to 5%. Adjusted EPS is expected in the range of $2-$2.3, the midpoint ($2.15) of which is lower than the current Zacks Consensus Estimate of $2.29. The company expects capital expenditures in the range of $120-$140 million, and free cash flow to be $125-$155 million.

Currently, Stericycle carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Business Services Companies

Robert Half International (RHI - Free Report) reported impressive third-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate. Quarterly earnings of $1.53 per share beat the consensus mark by 9.3% and soared 100% year over year.  

Revenues of $1.71 billion surpassed the consensus mark by 4% and increased 44% year over year on a reported basis and 43% on an as-adjusted basis. RHI currently sports a Zacks Rank #1.

Automatic Data Processing (ADP - Free Report) recently reported better-than-expected second-quarter fiscal 2022 results. Adjusted earnings per share of $1.65 beat the Zacks Consensus Estimate by 1.2% and rose 9% year over year.

Total revenues of $4.03 billion beat the consensus mark by 1.1% and rose 9% year over year. ADP currently carries a Zacks Rank #2 (Buy).

Rollins (ROL - Free Report) reported mixed fourth-quarter 2021 results, with earnings meeting the Zacks Consensus Estimate and revenues beating the same. Adjusted earnings of 14 cents per share met the Zacks Consensus Estimate and increased 7.7% year over year.

Revenues of $600.3 million beat the consensus mark by 3.3% and rose 11.9% year over year. ROL currently carries a Zacks Rank #2.