Stericycle's (SRCL) Stock Gains 6% Post Q4 Earnings Beat

Stericycle, Inc.’s SRCL reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

The stock jumped 6.2% since the release of results on Feb 28 in response to the better-than-expected earnings and impressive guidance.

For 2024, Stericycle expects adjusted earnings per share (EPS) to be between $2.2 and $2.5, the midpoint ($2.35) of which is above the Zacks Consensus Estimate of $2.26.

SRCL’s quarterly EPS (excluding 38 cents from non-recurring items) came in at 54 cents, which surpassed the consensus estimate by 14.9% but declined 10% on a year-over-year basis. Revenues of $652 million missed the consensus mark marginally and declined 2.7% year over year.

The company’s shares have soared 21.4% in the past six months, underperforming the 21.9% rally of the industry it belongs to.

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

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

Segmental Revenues

Regulated Waste and Compliance Services revenues declined 2.1% from fourth-quarter 2022 but increased 3.1% on an organic basis to $439.9 million, topping our estimated $438.9 million.

Secure Information Destruction revenues decreased 4.1% from the year-ago quarter and 3.6% on an organic basis to $212.1 million, missing our estimate of $218.3 million. This segment's revenues were hurt by declining recycling revenues and lower fuel and environmental fees.

Revenues by Geography

Revenues from North America were $560.1 million, missing our estimate of $560.4 million and down marginally on a year-over-year basis. However, it increased less than 1% organically. International revenues of $91.9 million declined 12.1% from the year-ago quarter but were up 1.3% organically and missed our expectation of $96.9 million.

Profitability Performance

Adjusted EBITDA was $110.3 million, down 6.2% from the year-ago quarter’s figure. Adjusted EBITDA margin was 16.9%, down 60 basis points.

Balance Sheet & Cash Flow

Stericycle exited the quarter with cash and cash equivalents of $35.3 million compared with $29.7 million at the end of the third-quarter of 2023. Long-term debt was $1.3 billion, flat with the preceding quarter. SRCL generated $50 million of net cash from operating activities, while capex was $29.1 million.

2024 Guidance

The company expects 3-5% revenue growth organically. Stericycle expects free cash flow to be between $210 million and $265 million. It anticipates capital expenditures between $140 million and $160 million.

Currently, Stericycle carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot of Peers

Republic Services, Inc. RSG reported an impressive fourth-quarter 2023 results.

RSG’s EPS, excluding 2 cents from non-recurring items, of $1.41 beat the Zacks Consensus Estimate by 10.2% and increased 24.8% year over year. Revenues of $3.8 billion surpassed the consensus mark by 2.9% and increased 8.6% year over year.

Envestnet, Inc. ENV reported impressive fourth-quarter 2023.

ENV’s EPS, excluding $4 from non-recurring items, were 65 cents, surpassing the consensus estimate by 22.6%. The bottom line increased 44.4% from the year-ago quarter. Total revenues of $317.6 million beat the consensus estimate by 1.7%. The top line improved 8.5% on a year-over-year basis.

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

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