Stericycle reported $887.8 million in revenue during the quarter, which came in a bit higher than expected and helped push full-year sales to $3.58 billion, up 0.5% from last year and toward the upper end of its $3.54 billion-$3.6 billion guidance range. Profits, however, missed the mark. Overall, adjusted earnings came in at $1.00 per share, which was flat with 2016 and $0.14 below the consensus estimate. As a result, full-year earnings were just $4.34 per share, which was 4.2% below last year's result and less than the company's guidance for $4.46 to $4.52 per share.
The main issue was a big spike in selling, general, and administrative expenses, which ballooned 23% to $367 million during the quarter. That said, Stericycle did unveil a plan to turn around its sinking profitability, which includes selling non-strategic assets, optimizing its operations, improving efficiency, and leveraging its scale. The company believes this transformation will drive 6% to 10% compound annual growth in adjusted earnings per share through 2022 and 10% to 14% compound annual growth in free cash flow over that time frame.
Stericycle has been stuck in a rut for quite some time due to in part to headwinds in its manufacturing and industrial services business. However, it has a plan to get out of this rough patch by undertaking a comprehensive strategy to reaccelerate growth and profitability. The company fully believes that this plan will begin paying off this year, estimating that it can grow earnings 7% even though it expects revenue to dip.