Yahoo Finance Stericycle Inc (SRCL) Q1 2024 Earnings: Adjusted EPS Outperforms as Revenue Declines
Revenue: Reported at $664.9 million, down 2.8% year-over-year, falling short of estimates of $676.42 million.
Net Income: Increased to $13.1 million from $11.2 million in the previous year, exceeding estimates of $51.03 million.
Earnings Per Share (EPS): Achieved $0.14, slightly above the previous year's $0.12, but below the estimated $0.56.
Adjusted EPS: Improved to $0.57 from $0.49 year-over-year, surpassing the estimated $0.56.
Free Cash Flow: Experienced a significant outflow of $97.6 million compared to an inflow of $13.1 million in the previous year.
Operating Income: Slightly decreased to $38.9 million from $40.0 million in the prior year.
Cost Savings: On track to realize estimated in-year cost savings of $40-$45 million following workforce reductions.
Stericycle Inc (NASDAQ:SRCL), a leading provider of compliance-based solutions, disclosed its financial results for the first quarter ended March 31, 2024, through its 8-K filing on April 25, 2024. The company reported a revenue of $664.9 million, a decrease of 2.8% year-over-year, falling short of the analyst's expectation of $676.42 million. However, adjusted diluted earnings per share (EPS) was $0.57, slightly above the estimate of $0.56.
Stericycle is the largest provider of medical waste disposal and data destruction services in the United States. It operates globally with about 20% of its revenue coming from outside North America, facing stiff competition from entities like Sharps Compliance and Iron Mountain's information destruction segment.
Performance Overview
The decrease in revenue was primarily attributed to divestitures amounting to $17.7 million, partially offset by favorable foreign exchange rates and a minor acquisition. Despite the revenue decline, Stericycle achieved a net income of $13.1 million, or $0.14 per diluted share, up from $11.2 million, or $0.12 per diluted share in the first quarter of 2023. This improvement was largely due to lower interest expenses and effective cost control measures.
Adjusted income from operations rose to $90.5 million from $84.7 million in the previous year, reflecting a disciplined execution across key priorities and a focus on operational efficiencies. These measures are part of Stericycle's ongoing strategic adjustments, which also included a workforce reduction expected to realize $40-$45 million in cost savings within the year.
Challenges and Strategic Measures
The company faced significant challenges, including a $104.0 million decrease in cash from operations, turning into an outflow of $54.5 million. This was mainly due to an increase in accounts receivable and higher annual incentive plan payments. Moreover, free cash flow was negatively impacted, recording an outflow of $97.6 million compared to an inflow in the previous year, exacerbated by increased capital expenditures.
President and CEO Cindy J. Miller commented on the results, stating,
We are pleased with our first quarter results, which reflect improvement in adjusted EBITDA and adjusted EPS, driven by disciplined execution across our key priorities."
She also reaffirmed the company's commitment to achieving its full-year 2024 guidance and long-term outlook.
Financial Health and Future Outlook
Despite the current challenges, Stericycle's strategic initiatives, including the recent workforce reduction and operational optimizations, are expected to bolster its financial stability and enhance shareholder value. The company remains focused on leveraging its core competencies in regulated waste and compliance services to navigate through the volatile market conditions effectively.
As Stericycle continues to implement its strategic plans, investors and stakeholders will be keenly watching the company's ability to turn around its cash flow situation and maintain its trajectory of adjusted EPS growth in the coming quarters.
Explore the complete 8-K earnings release (here) from Stericycle Inc for further details.
This article first appeared on GuruFocus.
