Stericycle Earnings: Lower Paper Prices a Near-Term Headwind but Turnaround to Accelerate in 2024

Putting aside lower recycled sorted office paper prices and surcharges compared with the year-ago quarter and revenue lost with divestitures, we thought Stericycle reported solid third-quarter results. The company’s competitively advantaged regulated waste and compliance services segment (67% of sales) reported 4% organic revenue growth, primarily driven by pricing actions. And while the secure information destruction services business saw a 12% decline in organic revenue, that decline was almost entirely due to lower paper prices and fuel and environmental surcharges. Nevertheless, Stericycle is better protected from paper price volatility now than in the past due to contract adjustments implemented by the current management team.