Stericycle's (NASDAQ:SRCL) $2.3 billion acquisition of Shred-it started to pay dividends during the fourth quarter. The company saw a significant bump in revenue and profitability, though on a per-share basis, profitability was a bit flat. That said, the company sees its per-share profits increasing by double-digits in 2016 as it starts to capture the full benefits of the transaction.

Stericycle results: The raw numbers

 Metric

Q4 2015 Actuals

Q4 2014 Actuals

Growth (YOY)

Revenue

$888.3 million

$676.9 million

31.2%

Non-GAAP Gross Profit

$380.9 million

$285.4 million

33.5%

Non-GAAP EPS

$1.11

$1.12

-0.9%

Data source: Stericycle.  

What happened with Stericycle?
Acquisitions were the story this quarter at Stericycle.

  • Revenue increased by $211.4 million, due primarily to the contributions of acquisitions -- with 10 closing during the quarter, including Shred-it -- which combined to add $200 million to the company's top line. Revenue growth would have been even stronger if it wasn't for foreign currency fluctuations, which dampened revenue by $26.9 million.
  • On an absolute basis, earnings followed revenue higher, with non-GAAP gross profit rising pretty much in lock-step with revenue. However, on a per-share basis, earnings were roughly flat because the company's share count is higher due in part to the equity the company issued to complete its acquisition of Shred-it.
  • Margins were a bit better this quarter, with non-GAAP gross profit as a percent of revenue increasing to 42.9%, up from 42.2% during Q4 2014.

What management had to say
CEO Charlie Alutto led off the company's conference call by saying:

We are pleased to report our fourth quarter results. Overall, our business performed very well in the quarter and remains on track despite foreign exchange headwinds and lower hazardous waste volume from our industrial customers. In the quarter, we've made good progress on the Shred-it integration and our team members are working together to help realize the many synergies from this acquisition. 

Stericycle continues to be affected by lower hazardous-waste volumes, which was a big problem for the company last quarter. However, it was able to overcome that weakness, as well as problems with foreign exchange rates and lower fuel surcharges, to turn in a pretty decent quarter. A big driver of that was its strong early progress on integrating Shred-it, which remains the company's top priority going forward. The company sees very strong cross-selling opportunities, because less then 20% of its existing customers use Shred-it for secure information destruction. This represents a tremendous growth opportunity for the company. 

Looking forward
Speaking of growth, Stericycle expects earnings to grow strongly in 2016, with guidance for non-GAAP earnings per share to be in the range of $5.26 to $5.33. At the midpoint, that represents 20.3% earnings growth from last year. That said, this round's guidance is a bit lower than the $5.28 to $5.35 range it initially offered last quarter.

Revenue, meanwhile, is also expected to grow sharply, with the company forecasting it to land in the range of $3.6 billion to $3.67 billion, which at the midpoint would be 21.6% higher year-over-year. Though, again, its new guidance is slightly below than the range of $3.65 billion to $3.72 billion it offered on last quarter's conference call. Still, it represents an outlook for strong growth that could be even stronger if the company can cross-sell more of its existing customers on doing business with Shred-it. 

Matt DiLallo owns shares of Stericycle. The Motley Fool recommends Stericycle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.