Stericycle (NASDAQ: SRCL) reported Q1 EPS of $0.57, $0.30 worse than the analyst estimate of $0.87. Revenue for the quarter came in at $830.1 million versus the consensus estimate of $865.23 million.

“Revenues for the first quarter of 2019 reflect year-over-year foreign exchange impact and expected softness in recall activity. Our operational and financial performance remains steady when considering significant weather impacts. Given our performance, we remain confident in our guidance for 2019,” said Cindy Miller, Chief Executive Officer.

“We will complete the build phase of our ERP this month and have moved into the test and train phases, positioning us well for our 2020 implementation,” said Miller. “Additionally, following today’s announcement regarding the appointment of a new CFO and two key executives, Stericycle’s new leadership team is complete, and we are focused on driving long-term shareholder value.”

FIRST QUARTER FINANCIAL RESULTS

• Revenues for the quarter ended March 31, 2019 were $830.1 million compared to $895.0 million in the first quarter of last year. The effect of foreign exchange rates reduced revenues by $24.9 million and the expected declines within Communication and Related Services (“CRS”), primarily due to declines in recall activity, reduced organic revenues by $28.0 million. Divestitures net of acquisitions reduced revenues by $5.1 million. Revenues were also impacted by extreme weather conditions and one less operating day compared to the same quarter last year. Organic revenues decreased 3.9%, reflecting 4.3% growth in Secure Information Destruction offset by CRS and the Regulated Waste and Compliance Services (“RWCS”) business including non-recurring project-related revenue in Q1 2018. See Tables 1-A and 1-B.
• Loss from operations in the quarter was $4.2 million, compared to income from operations of $54.1 million in the first quarter of last year, due to a non-cash goodwill impairment charge related to Latin America, expected lower revenue, the impact of weather conditions and one less operating day, and higher operating costs that are not expected to continue in future periods.
• Adjusted EBITDA was $136.8 million, compared to $189.3 million in the first quarter of last year. Adjusted EBITDA as a percentage of revenues decreased to 16.5%, compared to 21.2% in the first quarter of last year, due to expected lower revenue, the impact of weather conditions and one less operating day, and higher operating costs that are not expected to continue in future periods. See Unaudited Condensed Consolidated Statements of (Loss) Income and Table 2.
• Diluted loss per share was $0.42, compared to diluted earnings per share of $0.25 in the first quarter of last year. Adjusted diluted earnings per share was $0.57, compared to $1.21 in the first quarter of last year, due to the matters impacting revenues and loss from operations discussed above, higher interest expense and effective tax rate, and the absence of gains on share repurchases this quarter as compared to first quarter 2018. See Unaudited Condensed Consolidated Statements of (Loss) Income and Table 2.
• Cash flow from operations in the quarter was $36.2 million compared to $110.4 million last year. The decrease was primarily a result of the loss from operations and the timing of net working capital movements. Free cash flow was further impacted by the expected timing of capital expenditures, which were $66.1 million, an increase of $37.6 million compared to the first quarter of last year.

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