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Stericycle (SRCL) Q1 Earnings Miss Estimates, Down Y/Y

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Stericycle, Inc. (SRCL - Free Report) reported lower-than-expected first-quarter 2020 results.

Earnings per share of 52 cents missed the Zacks Consensus Estimate by 20% and fell 8.8% year over year, mainly due to lower sorted office paper (SOP) pricing. This was partially offset by margin improvement, lower effective tax rate and related tax expenses, and reduced interest expenses.

Total revenues of $785 million missed the consensus mark by 2.5% and declined 5.4% year over year on a reported basis. The downfall was due to divestitures that hurt revenues by $38.4 million, and SOP pricing and foreign exchange rates that impacted revenues by $16.4 million and $10.2 million, respectively. Revenues were up 0.5% on an organic basis.

Shares of Stericycle have gained 3.3% over the past year, compared with 20.1% decline of the industry it belongs to.

Due to economic uncertainty induced by the COVID-19 pandemic, Stericycle has withdrawn its full year financial guidance.

Revenues by Service

Regulated Waste and Compliance Services (RWCS) revenues declined 0.4% year over year to $467.3 million. The segment contributed 60% to total revenues. Secure Information Destruction (SID) revenues declined 6% year over year to $218.1 million. The segment contributed 28% to total revenues. CRS revenues fell 45.1% year over year to $33.6 million. The segment contributed 4% to total revenues. Manufacturing and Industrial (M&I) revenues of $66 million fell 2.5% year over year. The segment contributed 8% to total revenues. Organic revenue growth for RWCS, SID and Manufacturing and Industrial M&I was 3.3%, 1.4% and 2.2% respectively. CRS organic revenues declined 0.5% year over year.

Revenues by Geography

Revenues from North America were $627.5 million, down 0.6% year over year. The region contributed 80% to total revenues. International revenues of $130.4 million fell 12.2% year over year. The region contributed 17% to total revenues.

Profitability Performance

Adjusted gross profit in the reported quarter amounted to $286.6 million, down 4.7% year over year. Adjusted gross profit margin was 36.5%, up from 36.2% in the prior-year quarter.

Adjusted operating income was $93.8 million, down 10.6% year over year. Adjusted operating income margin was 11.9%, down from 12.6% in the prior-year 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

 

Balance Sheet & Cash Flow

Stericycle exited first-quarter 2020 with cash and cash equivalents of $36 million compared with $34.7 million at the end of Dec 31, 2019. Long-term debt came in at $2.5 billion compared with $2.6 billion at the end of the prior quarter.

The company generated $82.1 million of net cash from operating activities and capex was $39.6 million in the quarter. Free cash flow of $42.5 million was generated in the reported quarter.

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

Sectorial Snapshot

S&P Global Inc. (SPGI - Free Report) reported first-quarter 2020 adjusted earnings per share (EPS) of $2.73, which beat the consensus mark by 15.7% and increased 29.4% year over year on revenue growth, benefits of productivity initiatives and reduced business travel.

IQVIA Holdings Inc. (IQV - Free Report) delivered first-quarter 2020 adjusted EPS of $1.50, which outpaced the consensus mark by 1.4% but dropped 1.9% on a year-over-year basis. The reported figure was within the guidance of $1.46-$1.51.

Insperity, Inc. (NSP - Free Report) came up with first-quarter 2020 adjusted earnings of $1.70 per share, which surpassed the consensus mark by 5.6% but declined 14.1% year over year. The reported figure matched the higher-end of the guidance of $1.61-$1.70.

All the stocks carry a Zacks Rank #3.

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