S&P lowers Stericycle view to negative

S&P said it revised the outlook on Stericycle Inc. to negative from stable and affirmed all of the company’s ratings, including its A corporate credit rating.

The negative outlook reflects the one-in-three chance of a downgrade in the next 12 months if the company’s adjusted debt-to-EBITDA metric does not improve to the 2x to 3x range, S&P explained.

Since the close of the company's acquisition of Shred-It in late 2015, Stericycle has been challenged primarily by a delay in the realization of the expected synergies from that acquisition, the agency said.

In addition, the company also faced increased pricing pressures in its small quantity business and weakening hazardous waste sales, S&P added.

This caused the company’s leverage to remain at higher than 3x, the agency said.

But the company said it still expects to realize the benefits of the acquisition, just at a slower pace in 2017, S&P said.

The agency also noted, however, the increased pricing pressure faced by the company in its SQ waste business due to rising local- and regional-competition and weakening hazardous waste sales.

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