Stericycle, Inc. SRCL reported second-quarter 2016 adjusted earnings of $1.18 per share compared with $1.20 per share in the year-ago quarter. The year-over-year decline in adjusted earnings was largely due to higher integration and amortization expenses. Adjusted earnings were in line with the Zacks Consensus Estimate.
GAAP earnings per share were 43 cents in the reported quarter versus $1.02 in the year-ago quarter. The decline in earnings, despite top-line growth, was primarily due to higher operating costs and selling, general and administrative expenses.
Revenues & Margins
Revenues in the reported quarter were approximately $891.6 million, up 24.6% from $715.7 million in the prior-year quarter. The upside was primarily attributable to accretive acquisitions, which contributed approximately $185.9 million. Despite the year-over-year increase, revenues missed the Zacks Consensus Estimate of $914 million.
Domestic revenues in the reported quarter were $657.1 million (up 26.8% year over year), of which domestic regulated waste and compliance services contributed $486.1 million (up 1%) and $20.9 million was attributable to recalls and returns. International revenues were $234.5 million in the reported quarter, up 18.7% year over year.
Gross profit (GAAP) in the reported quarter was $381.1 million, up 25% year over year. Gross margin was 42.7% versus 42.6% in the prior-year quarter. Non-GAAP gross profit was $381.6 million in the reported quarter versus $305.3 million in the year-ago quarter. Non-GAAP gross profit margin was 42.8% versus 42.7% in the year-ago quarter.
Financial Position
As of Jun 30, 2016, cash and cash equivalents were $44.3 million. Net cash from operating activities for the first half of 2016 was $245.4 million compared to $178.7 million in the year-ago quarter.
For the quarter, long-term debt (net of current portion) was $3,008.6 million. The debt-to-EBITDA ratio was 3.45x at quarter end. Stericycle had an unused borrowing capacity of $506 million under its revolving credit facility.
Stericycle reported capital expenditure of $32.9 million. During the quarter, the company repurchased 32,962 shares.
STERICYCLE INC Price, Consensus and EPS Surprise
STERICYCLE INC Price, Consensus and EPS Surprise | STERICYCLE INC Quote
Updated Guidance
For 2016, Stericycle lowered the guidance provided during the first-quarter 2016 earnings call. Per its latest outlook, earnings per share are expected in the range of $4.68 to $4.75, down from $4.90 to $5.05 per share expected earlier. The company expects revenues to be in the range of $3.56 billion to $3.6 billion (down from $3.6 billion to $3.66 billion projected earlier), and free cash flow in the range of $435 million to $450 million (down from $435 million and $455 million earlier). Capital expenditure is projected to be in the range of $125 million to $135 million. Reduction in 2016 financial expectations was an impact of slower growth due to macroeconomic factors and unfavorable foreign exchange rates.