Waste management service provider Stericycle, Inc. (SRCL) Tuesday reported an increase in third quarter earnings, which topped analysts' estimates, on higher gross margins. The results also reflect a 7.5% growth in revenues helped by contribution from acquisitions less than a year old. However, revenue growth was slightly less than what analysts had predicted.
For the third quarter, the Lake Forest, Illinois-based company's net income rose to $46.5 million or $0.54 per share from $39.2 million or $0.45 per share in the corresponding period last year.
Results for the most recent quarter included the effect of $3.3 million transactional expenses related to acquisitions, offset by $1.8 million net release of prior years' tax reserves. Net income for the prior year quarter included the effect of $0.1 million of charges related to an arbitration settlement.
Adjusted for these charges, earnings rose 23.6% to $0.55 per share from $0.45 per share in the same period last year and came in above the $0.53 per share consensus estimate of seven analysts polled by Thomson Reuters. Analysts' estimates typically exclude special items.
Revenues for the quarter increased 7.5% to $297.8 million, from $277.1 million in the same quarter last year. Six analysts polled by Thomson Retuers expected the company to report revenues of $300.05 million for the quarter.
Revenues were helped by a contribution of $19.3 million from acquisitions less than 12 months old. Adjusted for an unfavorable foreign exchange impacts of $10.1 million, revenues would have grown 11.1% from the third quarter of 2008. Regulated returns management services revenues were almost flat at $16.0 million compared with $16.1 million a year earlier.
In the immediately preceding second quarter, Stericycle reported a profit of $43.90 million or $0.51 per share, helped largely by higher margins. Revenues for the quarter increased 4.1% to $289.27 million.
Amongst others in the industry, hazardous and industrial waste management services provider, American Econlogy Corp. (ECOL) reported a decline in third quarter earnings to $4.2 million from $4.3 million in the year-ago period. Earnings per share for the quarter was $0.23, flat with last year. Revenue for the third quarter of 2009 was $37.5 million, down from $41.1 million in the same quarter last year reflecting both lower transportation related and lower treatment and disposal revenue.
Another major player, Waste Management, Inc. (WMI), for its second quarter, reported a a 22.3% year-over-year decline in profit to $247 million or $0.50 per share, due to lower volumes and the deterioration of the recycling commodities markets. Operating revenues declined to $2.95 billion.
For the quarter under review, gross profit of Stericycle grew by 14.5% to $140.9 million, from $123.0 million in the year-ago quarter. Gross profit as a percent of revenue was 47.3% compared with 44.4% in the corresponding period last year. Income from operations advanced 25.8% to $79.5 million from $71.5 million in the same period last year.
Selling, general and administrative expenses increased to $56.19 million from $50.12 million in the year-earlier quarter. Income tax expense for the quarter was $23.1 million, compared with $23.23 million in the prior-year quarter.
Year-to-date, net income declined to $131.08 million or $1.51 per share from $109.6 million or $1.24 per share in the year-ago period. Net income for the nine month period included the effect of $4.8 million of transactional expenses related to acquisitions offset by $1.8 million net release of prior years' tax reserves.
Results for the nine months of 2008 included the effect of $3.5 million of charges related to an arbitration settlement. Adjusted for these charges, the earnings per share increased 21% to $1.54 from $1.28 in the year-ago period.
Year-to-date, revenues grew 6.7% to $864.2 million from $809.7 million in the same period last year. Revenues increased 11.7% when adjusted for unfavorable foreign exchange impacts of $40.6 million. Regulated returns management services revenues declined to $54.0 million from $58.6 million in the same period last year.
SRCL dropped $1.35 or 2.53% in extended trading after finishing the regular session at $53.35, up $1.08 or 2.07% on volume of about 1.4 million. The stock has traded between $44.36 and $61.87 during the past year, with a three-month average volume of about 0.75 million.
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