Markets
CLH

Stericycle (SRCL) Beats on Q4 Earnings, Updates 2017 View

Waste management firm Stericycle, Inc.SRCL reported relatively modest fourth-quarter 2016 results with healthy improvement in revenues on a year-over-year basis. Although non-GAAP earnings for the reported quarter decreased 20.6% year over year to $1.00 per share, it comfortably exceeded the Zacks Consensus Estimate by 7 cents.

FindTheCompany | Graphiq

GAAP earnings were $12.3 million or 14 cents per share compared with $70.7 million or 82 cents per share in the year-ago quarter. The sharp decline in earnings, despite top-line growth, was primarily due to higher operating costs and selling, general and administrative expenses.

For full-year 2016, Stericycle recorded GAAP earnings of $177.8 million or $2.08 per share compared with $256.9 million or $2.98 per share in 2015. Non-GAAP earnings for 2016 decreased 4.6% year over year to $4.52 per share.

Revenues & Margins

Fourth-quarter revenues were approximately $906.4 million, up 2% year over year on organic growth, and matched the Zacks Consensus Estimate. For full-year 2016, the company registered revenues of $3,562.3 million compared with $2,985.9 million in 2015.

Domestic revenues in the reported quarter were $686.6 million, of which Regulated Waste and Compliance Services contributed $633.6 million and $53 million was attributable to recalls and returns. International revenues were $219.8 million.

Gross profit (GAAP) in the reported quarter was $373.7 million, down 1.8% year over year. Gross margin was 41.2% down from 42.8% in the prior-year quarter. Non-GAAP gross profit remained almost flat at $380.2 million, while non-GAAP gross margin was 42.0% compared with 42.9% in the prior-year period.

Acquisitions & Divestures

During the reported quarter, Stericycle closed nine tuck-in acquisitions (including five in the domestic market and four in the international market). The deals together contributed about $1.1 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.

The company divested a U.K.-based hazardous waste asset during the quarter that unfavorably impacted revenues by approximately $0.2 million. The company also made significant progress in Shred-it integration and continued implementation of SQ (small quantity) strategic investments.

Stericycle, Inc. Price, Consensus and EPS Surprise

Stericycle, Inc. Price, Consensus and EPS Surprise | Stericycle, Inc. Quote

Financial Position

As of Dec 31, 2016, cash and cash equivalents were $44.2 million, while long-term debt (net of current portion) was $2,878.1 million compared with the respective tallies of $55.6 million and $3,040.4 million in the year-ago period.

Net cash from operating activities for 2016 was $547.4 million compared with $390.3 million in 2015. The debt-to-EBITDA (earnings before interest, tax, depreciation and amortization) ratio was 3.42x at the quarter end. Stericycle had an unused borrowing capacity of $655 million under its revolving credit facility. Capital expenditure for the quarter was $35.2 million. During the quarter, the company repurchased 105,000 mandatory preferred convertible shares for $6.6 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 $4.54-$4.74 per share, compared with $4.57-$4.77 expected earlier. The company expects revenues to be in the range of $3.51-$3.64 billion ($3.54-$3.67 billion 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 #4 (Sell). Some better-ranked stocks in the industry include Clean Harbors, Inc. CLH , Republic Services, Inc. RSG and US Ecology, Inc. ECOL , each carrying Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Clean Harbors has a long-term earnings growth expectation of 8.9% and is currently trading at a forward P/E of 61.9x.

Republic Services has a long-term earnings growth expectation of 9.1% and is currently trading at a forward P/E of 24.8x.

US Ecology has a long-term earnings growth expectation of 10.0% and is currently trading at a forward P/E of 28.4x.

Just Released - Driverless Cars: Your Roadmap to Mega-Profits Today

In this latest Special Report, Zacks' Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making - autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Stericycle, Inc. (SRCL): Free Stock Analysis Report

Republic Services, Inc. (RSG): Free Stock Analysis Report

Clean Harbors, Inc. (CLH): Free Stock Analysis Report

US Ecology, Inc. (ECOL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

CLH RSG ECOL SRCL

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More