) delivered adjusted earnings per share (EPS) of 84 cents in the
third quarter of fiscal 2012, up 17% from 72 cents in the
prior-year quarter. Adjusted EPS beat the Zacks Consensus
Estimate by a cent.
The quarter noted some special items including acquisition
expenses of 3 cents per share, restructuring costs and plant
closure expenses of 2 cents per share and a loss on sale of
business of 4 cents per share. The prior-year quarter included
acquisition costs of 4 cents per share. Including these items,
EPS amounted to 75 cents in the reported quarter compared with 68
cents in the year-ago quarter.
Total revenue increased 14% year over year to $480 million in
the quarter, ahead of the Zacks Consensus Estimate of $478
million. Acquisitions contributed $31.5 million to revenues while
foreign exchange had a negative impact of $8 million.
Domestic revenues were $348.2 million and international
revenues totaled $132.3 million. Domestic internal growth rate
was up 10%, with small quantity climbing 11% and large quantity
Cost and Margins
Cost of sales increased to $253 million in the quarter from
$220 million in the year-ago quarter. Gross profit increased to
$215.6 million from $190.1 million in the year-earlier quarter.
However, gross margin contracted 30 basis points year over year
Selling, general and administrative expenses increased 13% to
$82.2 million in the quarter from $72.6 million in the year-ago
quarter. Income from operations improved to $125 million from
$111 million in the prior-year quarter. However, operating margin
declined 30 basis points year over year to 26.1%.
As of September 30, 2012, cash and cash equivalents of
Stericycle amounted to $16.2 million compared with $54.2 million
as of June 30, 2012. The debt-to-capitalization ratio improved to
47% as of September 30, 2012 from 50% as of June 30, 2012. Cash
from operations was $277 million in the first nine months of
fiscal 2012 versus $215 million in the comparable period last
Stericycle repurchased over 43,500 shares for $3.9 million in
the quarter under its authorization program. The company has 4.2
million shares remaining under its existing share repurchase
During the quarter, the company completed twelve acquisitions,
out of which three were in domestic locations and the rest
Management provided EPS guidance in the range of $3.27 to
$3.29 for full year 2012 and expects revenues in the range of
$1.87 billion to $1.9 billion for the same period. For 2013, the
company anticipates EPS to be in the range of $3.62 to $3.67, and
revenue in the range of $2.06 billion to $2.09 billion.
Free cash flow is expected to range between $319 million and
$327 million in 2012 and $350 million to $355 million for
The company is witnessing strong growth worldwide, driven by
new account acquisition and expansion of its portfolio of service
offerings. Its acquisition pipeline remains robust with over $100
million in annualized revenues across various geographies and
lines of business.
Stericycle offers multiple service offerings to its customers,
which add to the value of each account. For its small quantity
customers, services include Steri-Safe and clinical compliance
offerings and for large quantity customers - Sharps Management,
pharma waste and Integrated Waste Services.
With currently 80% of the large quantity and 70% of the small
quantity customers using one of Stericycle's current service
offerings, the adoption of its multiple services could more than
double or even triple its revenues. Currently, the shares of
Stericycle retain a Zacks #2 Rank (short-term Buy rating).
Based in Lake Forest, Illinois, Stericycle Inc. is a leading
provider of regulated medical waste management and product recall
and return services in the U.S. It operates a national medical
waste management network that caters to medical schools,
hospitals, and other healthcare providers.
STERICYCLE INC (SRCL): Free Stock Analysis
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