Stericycle, Inc. (SRCL) reported year-over-year improvements in both revenues and net income in fourth quarter 2013, primarily aided by accretive acquisitions. The company reported net income of $78.2 million or 90 cents per share in fourth quarter 2013 compared with $70.1 million or 80 cents per share in the year-earlier quarter.
For full year 2013, the company reported net income of $311.4 million or $3.56 per share compared with $268.0 million or $3.08 per share in 2012.
Excluding one-time non-recurring items, adjusted earnings for the reported quarter were 99 cents per share versus 89 cents in the year-ago quarter. The adjusted earnings beat the Zacks Consensus Estimate of 96 cents.
Adjusted earnings for full year 2013 were $3.75 per share compared to $3.34 in the previous year. Adjusted earnings for 2013 beat the Zacks Consensus Estimate of $3.73.
Revenues & Margins
Revenues for the reported quarter were up 12.8% year over year to $567.9 million, beating the Zacks Consensus Estimate of $566 million. The increase in revenues was primarily attributable to inorganic growth, which contributed approximately $32.4 million of the $64.3 million year-over-year rise.
Revenues for full year 2013 were up 12.0% year over year to $2,142.8 million, but missed the Zacks Consensus Estimate of $2,158 million
Domestic revenues (GAAP) increased 11.0% year over year to $394.6 million in the reported quarter. International revenues (GAAP) were up 17.0% year over year to $173.3 million.
Gross profit for the reported quarter aggregated $253.3 million versus $227.0 million in the year-ago quarter. Gross margin in fourth quarter 2013 was 44.6% compared with 45.1% in the prior-year quarter.
Financial Position
As of Dec, 30, 2013, cash and cash equivalents totaled $62.0 million compared with $31.3 million at year-end 2012. Net cash provided by operating activities, as of Dec 30, 2013 was $403.5 million versus $387.4 million in the year-ago period.
Long-term debt (net of current portion) stood at $1,280.7 million compared with $1,268.3 million in the year-ago period. Debt-to-EBITDA ratio was 2.1x at quarter end. The company had a borrowing capacity of $573 million under its revolving credit facility.
During the reported quarter, the company repurchased 424,729 shares for $49.2 million and currently has an authorization to purchase an additional 2.3 million shares.
Acquisitions
In the reported quarter, Strericycle closed 8 acquisitions, including 7 in international and 1 in domestic location. The international acquisitions included three in the United Kingdom, two in Romania, and one each in Canada and Spain. The acquisitions contributed $0.7 million in revenues during the quarter.
Guidance
For 2014, Stericycle expects earnings per share to be in the range of $4.13 to $4.17 with revenues in the range of $2.33 billion to $2.36 billion. Capital expenditure is expected to be in the range of $70 million to $75 million in 2014.
Stericycle is witnessing strong growth across the globe, driven by acquisitions and expansion of its portfolio of service offerings. We remain encouraged by the company’s solid performance in the reported quarter and expect the growth momentum to continue in the coming quarters as well.
Stericycle currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth considering in the industry include Lamar Advertising Co. (LAMR), Millennial Media Inc (MM) and WPP plc (WPPGY), each carrying a Zacks Rank #2 (Buy).
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