Stericycle reports Q1 earnings

Stericycle Inc., Bannockburn, Illinois, reported results for the first quarter on May 7.

Revenues for the quarter were $785 million, a decrease of 5.4 percent from $830.1 million in the first quarter of last year. Revenues increased 2.4 percent excluding divestitures, foreign exchange and changes in sorted office paper (SOP) pricing. Loss from operations in the quarter was $30.4 million, compared to loss from operations of $4.2 million in the first quarter of last year. Excluding the impact of divestitures and goodwill impairment, income from operations was $27.9 million, an increase of $16.6 million from the first quarter of last year. Net loss was $20.1 million, or 22 cents diluted loss per share, compared with net loss of $37.8 million, or 42 cents diluted loss per share, in the first quarter of last year. Adjusted income from operations was $93.8 million, or 11.9 percent of revenues, compared with $105 million, or 12.6 percent of revenues in the first quarter of last year. Adjusted diluted earnings per share was 52 cents compared to 57 cents in the 2019 comparable period.

Earnings report highlights include:

• The company announced it delivered organic growth in the quarter, the first time since 2017, as it continues to drive results from its quality of revenue initiatives. Growth in its regulated waste and compliance services (RWCS) and secure information destruction (SID) areas of business, excluding the impact of SOP pricing, was 3.3 percent and 1.4 percent, respectively.
• Cash flow from operations for the first quarter was $82.1 million, compared to $36.2 million for the first quarter of 2019. Free cash flow for the quarter was $42.5 million, compared to an outflow of $29.9 million in the first quarter of last year, an increase of $72.4 million.
• Stericycle completed the divestiture of its domestic environmental solutions business on April 6 for approximately $462.5 million in cash. According to the company, this marked a significant milestone in its portfolio rationalization and debt reduction efforts.
• Stericycle’s regulated medical waste transportation and treatment facilities are federally designated as essential facilities and remain open to provide safe, compliant disposal of medical waste to healthcare customers.

“In the face of these unprecedented times, we are proud of our team members who stand among the essential service providers to support the fight against COVID-19. Across the country and around the globe, our regulated medical waste operations continue to support the critical needs of the healthcare industry,” Stericycle CEO Cindy Miller says. “As a partner to the healthcare industry, we will continue to provide leadership with specialized services for emerging healthcare demands, educational resources from our Coronavirus Knowledge Center, and safe, compliant medical waste treatment. Now more than ever, we are demonstrating the value of our brand and our commitment to protect what matters.”

“Specific to the quarter, we were ahead of our internal financial plans through January and February, which enabled us to deliver another consecutive quarter of organic revenue growth in our core regulated medical waste and secure information destruction services. Additionally, we delivered free cash flow for the quarter that exceeded our expectations,” Miller says. “We started to see the business impact of the economic shutdown due to COVID-19 during March, primarily in our secure information destruction services. To manage costs in alignment with revenues, we have leveraged a centralized, disciplined and operationally focused approach to reduce or defer operating and capital expenditures.”

A note on the company’s divesture of its domestic environmental solutions business

On April 6, Stericycle completed the divestiture of its domestic environmental solutions business to Harsco Corp., Camp Hill, Pennsylvania, for approximately $462.5 million in cash. Stericycle will continue to offer unused consumer pharmaceutical takeback services and provide hazardous waste services to healthcare customers. Harsco will provide transportation and disposal services to Stericycle under a long-term service agreement. Stericycle applied net proceeds from the divestiture to pay down outstanding debt.

The company announced it is appreciative of government efforts to stimulate the economy and expects positive impacts to cash flow from operations as a result of the U.S. CARES Act. The company anticipates cash refunds under certain provisions of the U.S. CARES Act to be approximately $100 million in 2020. Additionally, the company anticipates deferring payments associated with employer-related payroll taxes of approximately $20 million and is pursuing credits in 2020 under the U.S. CARES Act. Internationally, the company is actively pursuing payment deferrals or credits under the various programs for indirect tax and social matters.