On Thursday after market close, Stericycle Inc. (NASDAQ: SRCL) reported the first quarter financial result. Shares of the company tumbled 21.37% to $95.72 during Friday midday. Stericycle, Inc. is engaged in the business of providing regulated and compliance solutions to healthcare and commercial businesses. The company reported a significant earnings miss for the third time in the past five quarters, while meaningfully reducing its guidance.
According to the earnings announcement, revenues for the quarter ended March 31, 2016 were $874.2 million, up 31.8% from $663.3 million in the first quarter of last year. Acquisitions contributed approximately $194.5 million to the current period’s growth in revenues. Net income increased almost 2.4% to $77.6 million compared with $75.81 million last year. Diluted earnings per share decreased approximately 10.34% to $0.78 from $0.87 last year.
CEO Charlie Alutto said, “In the first quarter, we experienced strong revenue growth, strong cash flow and solid sequential growth for the Shred-It acquisition. Results in the quarter were unfavorably affected by the timing of the Shred-It synergies and lower industrial hazardous waste revenues. Despite the challenges in the quarter, we remain confident about our business.”
Stericycle's top line continued to benefit from its recent acquisition of Shred-it. However, the same can't be said for its bottom line, which was lower year over year because of weaker margins. That's partially because the company isn't integrating Shred-it quite as fast as expected, which is leading it to lower full-year guidance just a bit.
Since the slower-than-expected synergy capture, Charlie Alluto updated the company's guidance weaker than before, “For 2016, we believe analysts' EPS estimates will be in the range of $4.90 to $5.05, reflecting the unfavorable impact of the timing of the Shred-It synergies, softer industrial hazardous waste volume, and higher costs associated with our international operations. We believe analysts' revenue estimates for 2016 will be in the range of $3.6 billion to $3.66 billion.”