Executive Summary

Q1 results were mixed: Adjusted EPS beat while revenue missed third‑party consensus; management reaffirmed FY24 guidance and highlighted execution-led margin expansion. Adjusted EPS was $0.57 vs third‑party consensus $0.54–$0.56, while revenue was $664.9M vs $676.4M–$678.2M; S&P Global consensus was not retrievable during query, so third‑party sources are referenced. The beat was driven by cost savings and lower interest/taxes, while the revenue miss reflected divestitures and lower SID commodity-indexed revenue .
Management completed workforce reductions and is tracking toward $40–$45M in in‑year cost savings; adjusted EBITDA margin expanded 120 bps YoY to 17.5% on execution and cost actions .
Free cash flow headwind (-$97.6M) was tied to ERP‑related billing/collection delays, annual incentive payments, and higher capex; management indicated collections started to improve in April on the call .
Stock reaction: shares rose ~2% post‑print as investors focused on the EPS beat and reaffirmed guide; FY24 outlook includes 3–5% organic revenue growth, adjusted EPS $2.20–$2.50, FCF $210–$265M, and capex $140–$160M (reaffirmed) .

What Went Well and What Went Wrong

What Went Well
- Execution and cost actions drove upside on profitability: adjusted EPS +$0.08 YoY to $0.57 and adjusted EBITDA +$4.9M YoY to $116.2M; adjusted operating margin +120 bps YoY to 13.6% . Management: “We are pleased with our first quarter results… driven by disciplined execution… We remain on track to achieve our full‑year 2024 guidance” (Cindy J. Miller) .
- RWCS organic growth: RWCS organic revenue +2.1% YoY; North America RWCS +1.9% organic, International RWCS +3.0% organic, reflecting stable pricing and hospital volumes .
- Cost savings on track: workforce actions completed; company targeting $40–$45M in in‑year cost savings; call commentary detailed routing/fleet efficiencies and productivity gains contributing to guidance confidence .
What Went Wrong
- Revenue headwinds persist: total revenue -2.8% YoY on divestitures (-$17.7M) and SID weakness; SID organic revenue -6.3% YoY on lower commodity‑indexed revenue (SOP price declines) .
- Cash flow pressure: CFO from operations -$54.5M and FCF -$97.6M driven by ERP‑related billing/collection delays (A/R impact ~$63M), higher annual incentive payouts, and other working capital .
- Higher bad debt and adjusting items: bad debt expense higher by $3.8M; adjusting items higher by $6.9M; these partially offset cost savings and margin flow‑through .

Financial Results

Quarterly trend (oldest → newest)

Metric	Q3 2023	Q4 2023	Q1 2024
Revenue ($USD Millions)	$653.5	$652.0	$664.9
GAAP Diluted EPS ($)	$0.02	$0.16	$0.14
Adjusted EPS ($)	$0.43	$0.54	$0.57
Income from Operations ($M)	$24.2	$37.1	$38.9
Adjusted EBITDA ($M)	$96.4	$110.3	$116.2
Adjusted EBITDA Margin (%)	14.8%	16.9%	17.5%

Q1 2024 vs third‑party consensus (S&P Global consensus not retrievable; third‑party shown)

Metric	Actual	Third‑Party Consensus	Surprise
Revenue ($USD Millions)	$664.9	$676.42M	Miss by -$11.52M
Adjusted EPS ($)	$0.57	$0.54 (MarketBeat)	Beat by +$0.03

Segment breakdown (Q1 2023 vs Q1 2024)

Segment/Region	Q1 2023 Revenue ($M)	Q1 2024 Revenue ($M)	YoY %	Organic Growth %
RWCS	$451.3	$447.8	-0.8%	+2.1%
SID	$233.0	$217.1	-6.8%	-6.3%
North America Total	$573.4	$569.2	-0.7%	-0.9%
International Total	$110.9	$95.7	-13.7%	-0.2%

Key cash flow and capital metrics (Q1 2024)

KPI	Q1 2023	Q1 2024
Cash from Operations ($M)	$49.5 inflow	-$54.5 outflow
Capital Expenditures ($M)	$36.4	$43.1
Free Cash Flow ($M)	$13.1 inflow	-$97.6 outflow

Drivers and non‑GAAP reconciliation highlights

YoY revenue decline primarily from divestitures (-$17.7M) and lower SID commodity-indexed revenue; partially offset by FX (+$2.8M) and RWCS organic growth .
Adjusted operating margin expanded 120 bps YoY on cost savings and portfolio mix; headwinds included SID commodity revenue and higher bad debt .
Adjustments included ERP/system modernization, intangible amortization, operational/portfolio optimization, and litigation/regulatory items, with adjusted metrics detailed in the reconciliation schedules .

Guidance Changes

Note: Management reaffirmed FY24 guidance on the call and in press commentary; S&P Global estimate feed was unavailable during query. The ranges below reflect third‑party reporting of company guidance; change assessed as “Maintained.”

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Revenue Growth (%)	FY 2024	3–5% (Q4 posture)	3–5%	Maintained
Adjusted EPS ($)	FY 2024	$2.20–$2.50	$2.20–$2.50	Maintained
Free Cash Flow ($M)	FY 2024	$210–$265	$210–$265	Maintained
Capital Expenditures ($M)	FY 2024	$140–$160	$140–$160	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’23)	Previous Mentions (Q4’23)	Current Period (Q1’24)	Trend
ERP/System Modernization	U.S. RWCS ERP successfully deployed; continued cost efficiencies; SOP headwinds discussed	ERP deployment cited as a 2023 milestone; portfolio optimization; workforce actions starting	ERP impacted Q1 cash collections, but improving in April; enabling routing/fleet efficiencies and new product billing (ProtectPLUS)	Improving execution; cash collections normalizing
SID Commodity Exposure (SOP)	Significant YoY headwind to SID; SOP price declines driving lower commodity-indexed revenue	Continued commodity headwinds referenced	SID organic -6.3% on lower commodity-indexed revenue; ~-$80/ton YoY SOP price	Headwind persists H1’24
Cost Savings/Workforce	Cost efficiencies offsetting headwinds	Workforce actions slated to drive >$35M savings in 2024	Workforce actions completed; tracking $40–$45M in‑year savings; routing/fleet productivity to help close gap	Accelerating savings
Capacity/Infrastructure	—	—	McCarran, NV incinerator construction on track to complete Q2 with testing phase to follow	Capacity coming online
RWCS Demand	RWCS organic growth resilient	RWCS organic +3.1% in Q4’23	RWCS organic +2.1% in Q1’24; hospitals strong; some national account footprint reduction	Stable to positive

Management Commentary

“We are pleased with our first quarter results, which reflect improvement in adjusted EBITDA and adjusted EPS, driven by disciplined execution across our key priorities. We remain on track to achieve our full‑year 2024 guidance and long‑term outlook.” — Cindy J. Miller, President & CEO .
On cost savings and operations: Management completed targeted headcount reductions and is focusing on route rebalancing, fleet optimization, and productivity from upgraded facilities to achieve $40–$45M in in‑year savings .
On ERP and new offerings: ERP is enabling operational efficiency and supporting subscription‑based products like ProtectPLUS (advance billing/ACH/CC) to help cash flow .

Q&A Highlights

Cost savings trajectory: Savings include last year’s and this year’s RIFs; additional benefits from routing/fleet/productivity underpin confidence in FY24 EBITDA guidance .
Cash flow cadence: ERP‑related delays concentrated in largest/most complex customers; collections improving in April; FCF expected to improve through the year (seasonally second‑half weighted) .
Pricing/demand: Pricing environment stable; managing adjustments to cover inflation; RWCS growth strongest in hospitals; competitive dynamics manageable vs smaller players .

Estimates Context

S&P Global consensus was unavailable during our query; therefore, we reference third‑party snapshots: Q1 revenue consensus ~$676.4–$678.2M and adjusted EPS ~$0.54–$0.56. Actuals: revenue $664.9M (miss) and adjusted EPS $0.57 (beat). Sources: MarketBeat (EPS $0.54; revenue $676.42M; beat +$0.03; miss -$11.52M), Yahoo/GuruFocus (EPS est. $0.56; revenue $676.42M) . S&P Global consensus data was not retrievable for SRCL at this time.

Key Takeaways for Investors

Profitability over growth near‑term: Despite revenue pressure from divestitures and SID commodities, Stericycle is expanding margins via cost actions; adjusted EBITDA margin up to 17.5% indicates operating leverage returning .
RWCS resilience offsets SID volatility: Hospital strength and pricing underpin RWCS organic growth, while SID remains a headwind until SOP stabilizes; framework implies H2 could improve if commodities stabilize .
Cash flow recovery watch: ERP‑related billing/collection issues weighed on Q1 cash; call commentary indicated April improvements—monitor Q2 working capital and FCF trajectory vs $210–$265M FY24 target .
Execution catalysts: Workforce actions completed, routing/fleet productivity and the McCarran incinerator ramp are tangible drivers for margins/throughput in 2024–2025 .
Guidance reaffirmation de‑risks the year: Maintaining 3–5% organic growth, adj. EPS $2.20–$2.50, and FCF $210–$265M supports estimate stability; upside depends on commodity stabilization and cash flow normalization .
Trading lens: Near‑term, the narrative is “EPS/EBITDA beat despite revenue miss; FCF recovery ahead”—a setup that can support the stock if Q2 shows A/R progress and SID headwinds don’t worsen .

Notes on sources: Primary financials (actuals, segments, reconciliations) from Stericycle’s Q1 2024 8‑K/press release –. Prior quarters from Q3/Q4 2023 8‑Ks – –. Earnings call transcript and Q&A from third‑party hosts due to an internal retrieval error: Insider Monkey/Yahoo Finance, MarketScreener, and GuruFocus . Guidance ranges reaffirmed per Zacks/Nasdaq article .

STERICYCLE INC (SRCL)·Q1 2024 Earnings Summary