Stericycle Surpasses Estimates

Zacks

Stericycle Inc. (SRCL), a leading waste management company, reported strong fourth quarter and full year 2012 results with both revenues and net income witnessing healthy year-over-year increase, primarily due to accretive acquisitions. The company reported a net income of $70.1 million or 80 cents per share in fourth quarter 2012 compared to $64.3 million or 74 cents per share in the year-earlier quarter. Excluding the one-time items, adjusted earnings for the reported quarter were 88 cents per share vis-à-vis 76 cents in the year-ago quarter. The adjusted earnings exceeded the Zacks Consensus Estimate by a couple of cents.

For full year 2012, Stericycle recorded a net income of $268.0 million or $3.08 per share compared to $234.8 million or $2.69 per share in the previous year. Excluding one-time items, adjusted earnings for 2012 were $3.30 per share versus $2.86 in the prior year. The adjusted earnings for the year surpassed the Zacks Consensus Estimate by 2 cents.

Total revenue for the reported quarter increased 12.8% year over year to $503.6 million, ahead of the Zacks Consensus Estimate of $491 million. For full year 2012, Stericycle reported revenues of $1.9 billion, up 14.1% from $1.7 billion in the preceding year.

Financial Position

At year-end 2012, cash and cash equivalents of Stericycle totaled $31.3 million compared to $22.5 million in the prior-year period. Cash from operations was $387.4 million in 2012 versus $306.1 million in the prior year comparable period. Long-term debt remained relatively stable at year-end 2012 at $1.3 billion.

Moving Forward

Stericycle is witnessing strong growth worldwide, driven by new account acquisition and expansion of its portfolio of service offerings. We remain encouraged by the solid performance in the company in the reported quarter and expect the growth momentum to continue in the coming quarters as well.

However, stiff competition from other players in the industry such as Republic Services, Inc. (RSG), Waste Management, Inc. (WM) – both carrying a Zacks Rank #2 (Buy), and Clean Harbors, Inc. (CLH) – carrying a Zacks Rank #1 (Strong Buy), could undermine its profitability to some extent. Stericycle currently has a Zacks Rank #3 (Hold).

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