Stericycle (SRCL) 9 Nov 172017 Q3 Earnings call transcript

Company Profile

Participants

Jennifer Koenig	Vice President, Corporate Communications and Investor Relations
Charlie Alutto	Chief Executive Officer
Dan Ginnetti	Chief Financial Officer
Brent Arnold	Chief Operating Officer
Ryan Daniels	William Blair
Sean Dodge	Jefferies
Scott Schneeberger	Oppenheimer
Michael Hoffman	Stifel
Gary Bisbee	RBC
Hamzah Mazari	Macquarie Capital
Kevin Steinke	Barrington Research
Barbara Noverini	Morningstar
Henry Chen	BMO Capital Markets
Isaac Ro	Goldman Sachs

Call transcript

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Operator

Good afternoon. My name is Sarah and I will be your conference operator today. At this time, I would like to welcome everyone to the Stericycle’s Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. now introduce would for your I Ms. today, Instructions] like to to host [Operator President Communications of Vice Koenig, Jennifer Corporate and Relations. Investor Ms. line the is Koenig, yours.

Jennifer Koenig

call involve risks afternoon for uncertainties. today’s Thank thank and includes today. Stericycle’s call that Good during The statements you. forward-looking discussion and joining you

detail to U.S. Securities statements. differ future be in not of and results actual and We any greater are Exchange the and performance forward-looking anticipate should the revisions Harbor commitment statements should forward-looking or results discussed earnings with Commission. significantly could press future statements. considered cause in not described Past in from no in Stericycle’s use Our investors to that those actual disclose make indicator a our trends trends. historical release reliable differ such could to performance filings Factors in results to Safe subsequent

the On footnote non-GAAP measures. reconciliations information measures. and can the Please most we comparable to which for release, additional be refer on press GAAP discuss call to today, the earnings www.stericycle.com at found schedules financial and will our

be Charlie will Chief will Charlie Operating turn I Chief over Dan Ginnetti, Executive call Chief Brent Financial Officer. today’s Joining now call the Arnold, Alutto. Officer; Officer; to and Alutto,

Charlie Alutto

strong for Thanks, waste Secure have Information In waste and hazardous joining Jennifer Destruction, retail you performance. and the thank everyone all services hospital-regulated today. us quarter, our and healthcare

our transformation organization. Since in business results, that a Also comprehensive inception, in across across in Florida were we manufacturing the resulting we the management healthcare resource communication performance. the anticipated, are Gulf processes Latin long-term several consistent has financial to quarter, and our operational many related I Prior the Puerto introduce quantity undertaking our XXX by Rico. hurricanes and small expectations. industrial different performed impacted to America Our through pressures acquisitions and would like quarterly redundancies our to and improve initiative lower Coast, company grown of and came detailed we services and review business cost experienced systems, than the in with

been substantial Although Stericycle’s will see we traditionally and impact to Stericycle our has The a improve company, transformation all geographies. of service operations. lean lines opportunities

the improvement is procurement anticipate restructuring years contributions improve take and to to the or X the enterprise the business business and of positive of planning and of planning, operations, initiatives. the X initiative financial of includes into platform including key the we processes route an systems, The early company’s logistics, resource select reduction business multiple complete, business and to to our consolidation spend to consolidated long-term expected of transformation of operational starting The Stericycle. through performance the organization, While the organization will improved This across the following ERP technology implementation processes. transformation XXXX.

the review will February. a of turn in detailed call We during earnings provide and the cost initiatives, I now over to the expected call QX Dan. savings more our will

Dan Ginnetti

revenues. exiting revenue, were were were divestitures and exchange when of exchange, foreign when decrease Net was million income was revenues. or the adjusted industrial Acquisitions and $XX.X Adjusted results for tax and $XXX services. of SG&A, million. X.X%. million. and was income million, $XXX.X from $XX.X the $XXX.X divestitures as-reported Organic and reduced when as-reported XX.X% in QX of revenue, industrial X.X%. amortization, $XXX.X Canada quarter increased The XX.X% quarter Net the and of $X.X by was for million. operations revenues as manufacturing million the million X.X% Organic industrial and Thanks, attributable and of for of and to services. of manufacturing in XX.X% revenue profit revenues adjusted or $XXX.X when $XXX.X XX.X%. Adjusted revenues foreign Charlie. of Global EBITDA acquisitions X.X%. revenues. divestitures revenue rate or decreased adjusted was adjustments. impact and on was Stericycle revenue million by follows. the revenue adversely or $XXX.X of The interest Domestic manufacturing an a adversely million. services, other by certain foreign exchange, for for revenues contracts XX.X% transportation expense million impacted excluding an acquisitions, acquisitions XXXX. Organic impacted Organic are Organic contributed Gross versus from The decreased adjusted third adjusted for patient international $X.X the million impact was tax quarter acquisition-related expenses was $X.XX rate in $X.XX or basis

end our balance was At portion of debt $XXX revenues. million. In we CapEx cash EBITDA million other approximately unused cash quarter, from the was for we and XXX,XXX the items, sheet, or repurchased of was mandatory revolver million. million. $X.X the reimbursement quarter, of quarter. at $XXX.X Now, the for operations end The of preferred as from was have adjusted Year-to-date When $XX.X million million. to of purchase shares operations X.XX X.X% to ratio the shares. convertible reported $XXX covenant, the authorization for the recall X.X was adjusted Year-to-date

Our DSO XX days. was

and Finally, would credit facility to loans. term that is in extending the the its highlight existing I process company and renewing like of senior

provide it is markets from and and turn banking capitalizing appreciate continued the economic now when our I details conditions. over complete. support on to Brent. current debt are will the We further will partners favorable We financing

Brent Arnold

Thanks, Dan.

of projected U.S. closed we contributed the in annualized million. This acquisitions, of million and in revenues internationally. tuck-in including X revenues quarter approximately $X.X acquisitions These X $X.X X quarter, the with

and acquisition business. million revenues annualized well worldwide geographies in $XXX lines pool multiple in of Our over robust with remains

Latin and the call, Secure and and hazardous expectations. services, hospital-regulated strong with services our Information Destruction quantity pressures in and waste pricing hurricanes. line and performance As the expected. in pressures our in healthcare waste as cost mentioned our in services communication the weakness in Charlie Starting adversely were several had industrial retail quarter. came waste in healthcare all Results America quarter quantity earlier and healthcare manufacturing the small with Small global performed market, by related impacted the regulated in

by delivered for strong another sales Sharps substance quarter and driven pharmaceutical waste team sales new Management, controlled hospital Our disposal. solution our of

Our Secure its service delivering growth organic the revenue X.X% continued quarter. Information momentum, in Destruction

accounts, recognized accounts X team their leaders in national signed all new industries. Our

integration of Shred-it and on Our follow-on remains tuck-in acquisition track.

locations. Our to our performance recent operations. return of the several impacted hurricanes Rico negatively by and Southeast the shutdown to Hurricane Puerto we and weeks was still Coast closed normal our for the Maria in temporarily quarter are regions. and our storms Gulf operations working many These in facilities customers’ in

and weakness in unexpected the resulting across from our market manufacturing delays industrial portfolio of project We also and saw a decrease work. in revenues global

In Latin closing, disasters. American addition, thank were completed would In are in the into our be related that anticipated cost of all to savings team extending to efforts who natural like now we members supported to recovery initiatives QX the XXXX.

preparing to in Our and fellow turn to to remarkable Charlie. who job and our the team by Stericycle the And donated tirelessly service a will hurricanes. we protecting and would impacted time, works thank did to like reroute now team their over support I members money customers. guest it family members everyone sites finally, our or

Charlie Alutto

have we will announced improve upcoming our we when This to the with fundamentals The remain and Thanks, announce XXXX industry I provide visibility change quarter that practices, guidance year financial initial our of Brent. fourth results. peers will like we our our our year policy. revised best to would guidance. to financial prior full Consistent guidance markets issuing strong.

We to that maintain business future. into are we the will confident continue our and grow

anticipate that XXXX, not we are for with detailed line in be our XXXX guidance results. giving we expected Although will results XXXX our

the for other are not adjusted expenses guidance in does integration items. of forward-looking and current that mind remainder and our include keep please our and for Now divestitures, XXXX, acquisitions, statements guidance acquisition-related future these

XXXX using be guidance service range in billion of billion rates. from acquisitions waste believe XXXX $XXX This transport For of count industrial $XXX range revenue We will to the billion, Communication CapEx annual be in divestitures. current $XXX $XXX exchange for be of $XXX $XXX the million. million. range $X.XX approximately of $XXX $X.XX is in the million of in the regulated impact million range XXXX, the a range cash and for EPS in worldwide to be is: services Secure adjusted divested will million $XXX be We $XXX of million of compliance will between range depending we services to the the includes business. Manufacturing will using million $X.XX Information current in The will includes foreign exchange rates, range $X.X on XXXX $X.XX anticipated flow the in and believe be $X.XX the billion Destruction of and will services believe which patient each revenues. million. in and million foreign related to services to our lines The of the recall to be revenues will to million. $XX be share to $XXX free million. of impact to

We the XXXX at today. your to Thank tax below slightly or year rate time full expect be adjusted you for XX.X%.

can line? questions. limit who that couple now Q&A answer now you you the We will have Please of mind in follow Sarah, open your Stericycle. keep We we analysts that questions. many a yourself ask to

Operator

with you. [Operator from Thank question Your William first Blair. Ryan Daniels Instructions] comes

Ryan Daniels

regarding look know maybe but that’s you cost investor SG&A Thanks lot can know timing guess the taking curious what specifically and from and about minds reserve could conversation February, of business how the want and like a you for for that transformation till I something a that’s then the you think And I the over you been specific for there ERP, on time potential initiative? of about the the a to talk savings it I lot while. specifically come question. initiative topic if

Charlie Alutto

take that. Yes, let Ryan, me

first validation a software talk actually you this on through while ERP platform. have and included a tier identified the for second a selection we we think that went decision, and competitive cost, can opinion I but we the going through been decision on top ERP process. then about We

are for the in We integrator. now RFP system the process

and with we So, the when terms said anticipated call. go what until about integrator Again, savings pleased currently will will are and detail on February the system from but cost, about into cost an of the cost that’s believe we going as the I yet. I on transformation, think be savings not through RFP think we will the we are talk finalized, cost business

associated best are adjusted cost investments we about numbers such an transparency out practices think is consistent transformation, the the that to including to management I think the implementation, for you accountable February. and ERP item. going in as This business with and to capture give shareholders team provide when we these handling hold our However, with

Ryan Daniels

rate tax give can the the helpful. EPS us? us there guidance, with I current and then this prior helpful are is revenue, just an that’s the parts quarter Dan, Okay, with always for you FX, between And the with know moving just bridge some bridge

Dan Ginnetti

And you I asking Ryan, specifically QX guidance results? are revised the looking Yes. just think for are you about the specifically

Ryan Daniels

The revised guidance.

Dan Ginnetti

Okay.

Ryan Daniels

want am Or to I you offer others would both it, as sure both, take I well. will if

Dan Ginnetti

Sure.

Let have because that you quarter, me bridge the easier that. be if take through will It probably obviously to through I the first current take the QX. you will impact in

think came from in at Street convertible. to guidance was when repo the primarily the of and by the about $X.XX quarter. offset $X.XX So, and or short QX that of about headwind the consensus $X.XX. the $X.XX. due in $X.XX $X.XX higher EPS preferred our fell in America favorability of was had some EPS We to you than The operations street volume, hurricanes about QX, mandatory by expectations $X.XX lower at Latin more M&I was tax costs adjusted multiple

$X.XX So, into QX if rate. go so end the high and take on the miss, gets about the current on end, the forward, the $X.XX that EBITDA forward you quarter. low going think you hit that to about factored you gets was that When

got rest the the we forward The repo add these that impacts of into we will of We are to $X.XX QX. repo, can that carry that QX. in

weakness $X.XX For market, continuation M&I on the the low about and see the high the end. the we of end and in on $X.XX

end taking well that’s compliance and into change headwind the tightened so and gave Coast really for We the high about that that impacts end. revenue potentially the $X.XX going the we saw really Gulf top you no the bridge another the that as hurricane, the to end anticipate in down, the be bottom our off If regulated Puerto you region Rico revenue, services on QX. waste both as $X.XX Charlie on in saw

EMEA the in discussed Our pressures international those business America as in with impacts high revenue cost Latin some to as low $X.XX about be on $X.XX well end, the we end. on

is a so and our about end bonus for doing change the no to the paper in result interest this, anywhere the the what come of is as seen, improved have so of of have on couple $X.XX, and $X.XX that finally, the down trimming prices we come as of lower And you As benefit from offset top top. direction are our end experiencing as we paper some result pennies simply the going, are $X.XX and have range $X.XX To a as rationalizing the we a off due costs that of to have program in favorability change rates. favorability to we account guidance. $X.XX well will bottom then

are ultimate the is on a top for and $X.XX change on of about you is the the what bottom So, seeing $X.XX. midpoint $X.XX end

Ryan Daniels

color. back the Okay, I great. will for you the in queue. hop Thank all

Dan Ginnetti

the you $X.XX. into go of And just to $X.XX would the add expect to to you in as range so that, QX,

Operator

with Your Jefferies. next from Dodge Sean question comes

Sean Dodge

Thanks. do you literally did in going the Yes, may getting to good that outlook without be seeing for ‘XX the become you in mean maybe initial you the expect similar to in results that that to you to growth ‘XX carry on range or mean far you Charlie, XXXX expect produced you similar back ‘XX there, number afternoon. that expect to the ‘XX comments just ‘XX? you are to into lead you trends too be your ‘XX

Charlie Alutto

Yes.

I think best on with about faced a if estimate SQ that’s you we XXXX. that for are $XX hasn’t probably headwind million think our

‘XX. it. has are am the with that more SQ So, it that year lumpiness be and ‘XX some What don’t the over headwind on some saying major well, million and million to I we guidance projects from a have M&I an about to it facing be we I will C&RS remains if about remains up Again, that about you flat am I pricing some million X.X an think project that versus known to face $XXX we in that as EPS $XX business, talking which EPS next perspective. going obviously make flat $XXX about obviously for think there headwind this business, are will have was period. of changes, but

Sean Dodge

I sort to bridge for hurricanes then you sure had the quarter, impact would imagine, Okay, going of the affected but also as well. thanks. some And I back the waste, alone it on the Dan, outsource am of impact it could med M&I

and So, just back from could? EPS the hurricanes maybe if you both revenue

BrentArnold

to ahead Sean, conservative this very take and we a go hurricane Hey, Brent. a the and $X.XX one. is quarter, that impact. about In I’ll had the impact with that’s regard

storms, of those are As preparing with you –we’re cost basis. can actually more to with stocks, went out were it’s members that went to we the daily normal where the for to that things different that revenue get. a more and time are to us things what’s understand are like the closed the and districts team do storms. that or normal are easier Those for spent what’s help associated The members team we there things straightforward unable difficult those revenue facilities facilities lot the on important to that quantify, certain are to

our So members Southern Texas Northern personally. of Harvey, were was by for team the or during went fact that Texas all instance Hurricane impacted team driven that really our most many to

people bring to needed we in. So

difficult. moving So quantify, parts to of impossible there’s but lot just not a

we as into mention and conservative we think that an when that quarter, be feel QX. the number in $X.XX heard bridge, again feel I also in another you would we also Dan's will just So go penny that’s do impact do a we

to reroute very typical – our stores of as flooding or were and areas. the to to that well quantify that amount, aren’t. as make routes very also one different stocks that to that get route would and able in experiencing dollar changing difficult we those did And to routes be stores as capture it both to thing challenges and makes think open I are capture is having it around are difficult that that routing the hard that of the

Sean Dodge

Very helpful. Understood. you. Thank

BrentArnold

Sean. Thanks,

Operator

from Your next Oppenheimer. question Scott comes with Schneeberger

Scott Schneeberger

for Could I projects Good am cost then but have the Thanks. some follow-up a elaborate could going outside transportation? moment. it dynamic just patient America? and like let on will It pushed, you M&I country pressures, Thanks. Latin on the you on I elaborate sounds a take on evening. each just to also

Charlie Alutto

let I Yes, because is on will Brent jump the in M&I, a the number, global Scott, number. M&I

also going a issues and to Latin plans, So, are transfer The delayed disposable plan seeing were to sector, they in require got America Brazil U.S., would we in the them M&I Latin but that anticipated. close that stations we due in to operations were just We primarily longer are QX. from issues. weakness related cost and in to though taking related are just several Those saving convert our are plans America. the than to but permit modifications not

have Of also didn’t course, restructuring because the permits. delay fruition, related to conversions savings obtaining these planned that in of the come

initiative into savings initiatives ERP and We transformation, our and it the the some will this well take into push like also other business those all has move implementation and XXXX above plan. beyond just will which initiatives

M&I On bit talk little let Brent I of kind the M&I, reductions. about will the volume a

BrentArnold

Hey, Scott, Brent.

I what a don’t talk M&I mind, sure globally people’s it’s will just I am lot also on if minds. You know you of just about

have It Also competitive expectation the lot closed and was fact, As matter on talked is the the our impact were on our by destructions U.S. driven down. and again really factors outside effects so lower there. volume fact by many industrial of form the for lower of side a project in a Charlie as we and to Houston mentioned we global TSD project participate. number earlier will days, And in also volume below this east that, but came markets significant where that almost was just it in a facilities of XX weakness driven were closed, so start a hit a about many you business on hurricane, market. especially levels our and work we’ve is overall

in So, we market. the continue pressures to different face

some are the the expectations. that of those So, in key for below drivers account coming M&I

just would a our solutions remiss our back business step a of I opportunity think to if didn’t that though business. and is overall environmental M&I I component I be take reiterate

has the piece variability revenue us M&I break visibility M&I and with our So, while that business transparency – retail in waste, to one we of to that our it’s infrastructure that really give larger of helps or growth really of high a much actually and what that growing M&I business part single-digits. out the associated enable is the which is

waste is has Our in this low-teens. hospital growing which

Some our infrastructure. us, take-back is rely opioid of big on also for waste pharmaceutical our of another program, programs some of which initiative some growth that or

our I external expectations, So, just success mind is and M&I but disappointed it’s key are important are for strategies we to component in the enables some of there think are while a growth to that, our below of in infrastructure that lot keep that overall that Stericycle. good reasons really

Scott Schneeberger

guidance think and planned? of or we I rehash got that could Okay, just patient the at on are the saw I with that of transportation divestiture on quarter, out that in give us anything two it follow-up is impact you if following for one just uncommon just on as certainly rehash I thanks year. a least kind But more and for one I could but one, you it’s done this understand the in

BrentArnold

that remember, second ‘XX, in was variants to remember $XX that but call it, year, There in second impact expected. was obviously contracts. were talked still about some from comparison of a not came so this million nothing annualized business had $XX an exited that is assets had are in next certain million million couple we divested of $XX divested, up there, last million of we it as million one managing we standpoint half we two also $XX that half that And and sold. was of the year, components as first half if the new you a that No, to $XX Scott,

PTS, had important, when So, at it you negative business about question, announced look as of I certain it. the ordinary in services, M&I exclude quarter came growth it’s or international organic we transport the expected far think the That but and last fluctuations growth X.X%, it obviously X.X%. in of actually transport our the of really your exits patient in was in as no, had call. probably came a as you some patient as out number, the there divestiture But an anything on the contracts for if and

Scott Schneeberger

Got Thanks, it. guys. Alright.

BrentArnold

Thanks.

Operator

comes with question Stifel. Michael Hoffman next from Your

Michael Hoffman

and Hi, thanks, Charlie team.

million been talked think this due? on road them, many on So, the of ERP. that with to about where sort change in been occasions, there have you on way I have is you some $XXX you Is have of any about

Charlie Alutto

Obviously, question, biggest want implementation. going answer know company best get the is are in we piece process piece RFP don’t puzzle, the there the as because I to in want through you system to and this we Michael, the that cost the had experience integrator of that

a comment beyond only to is above of to So, is want we this about get improvements, that that as transformation initiative not restructurings ERP. I business a process, the thing say will projects would part broader on and that. other going happen, talked I be The

this myself giving I on ahead at So, of to point. again, a number want get so

Michael Hoffman

Okay.

are going that working using you, take are XX% up finally contributing we are there? not of time, ERP you businesses so negative for go business divest if in of to but So, transformation, the things going on big your to the money that zero through are and are to

Charlie Alutto

Absolutely, Michael.

good I point. think very you made a

overall to is a really We we as and the or the lot that, are all the implemented want going focusing this a common are country years and a business businesses make a of implementation into to full at to before we the between strategy design fit the multiyear functions through that’s’ that go ERP which backlog years certainly a ERP be Stericycle. sure long-term to blueprinting to implementation, first of X and just on process going X really X is is

are at and of of continue So, look services be the that that go through that. of absolutely Absolutely, business. that in we to need we line before ERP it make at will the portfolio we countries that in do looking or to decisions in service implementing those to we is part expense

Michael Hoffman

do that? about And learn when we

Charlie Alutto

XXXX, obviously, as a but to Well, don’t in as because I and think little our we going soon and premature core and decisions assets were Obviously, start are at anything certainly as of we businesses. businesses the be share that we we classify some are make for sale, implementing XXXX we now, to to shareholders. going we our held first look around that with we if our would we that would disclose are

Michael Hoffman

Okay.

If domestic that away underlying and business, what international growth the was? organic you you happened could compression pulled share growth the the RMW the in growth price

Charlie Alutto

Yes, two Good let Michael. take question. segments, me you through

regulated remember Brent in anticipated. criticized grew and question what reiterates the contract if actually and the had talked pricing little said you a by X.X% if that really growth QX Obviously, me that. earlier issue, we at about of through which that, exclude bit, said organic which was on flat really into a you SQ revenue that before, down pricing see came or But revenues I into so waste we and to you negative the take the year, you going that and the going Let compliance falls be category table have on and a this look either SQ a patient data, X.X%, strong we you growth. segment transport we as

is contributed take-backs certainly growing that the retail has the of contributed wasted opioid a number control to that? that’s growing in substances that that hazardous high What what to some So low-teens in growth. Healthcare single-digit. in contributed to waste growth that at has

because you take patient underlying X.X%, the you exiting and of show again answered let transportation that actually was had X.X% that that number, earlier, around I me quarter. reiterate organic a the about the and our by organic M&I, other of at know I fluctuates rate again, SQ it’s negative for unfortunately growth quarter. I’ll of but or we on the growth The international a issue. Also doesn’t it’s because part that. X.X%. had growth So contract international, it the business quarter total the thing but which grown a for around disappointing up X.X% Again, the think exclude of an through We on

Michael Hoffman

On that Okay. one…

Charlie Alutto

Is that helpful?

Michael Hoffman

very remainder something… so have the a of got of Yes, international, helpful. mixture paper and you And that medical and did

Charlie Alutto

paper would at fall Destruction the actually into Secure the end Information service the that. of No, Michael

Michael Hoffman

I Information meaning – of sorry, that document, destruction Secure document that there your part No. the mean, is that so international – paper XX? is document number,

Charlie Alutto

you the you that gets – are looked worldwide when in would the you overall that number, but there. international in observed at, number the It’s international, in would in that does be looking the Secure Destruction waste specifically if the it at Information at number, then paper look regulated the be and that include that

Michael Hoffman

me RMW that International? gave question or X.X% apologize, data just is all the just international the I the growth, you asked clumsily have I and Alright. international

Charlie Alutto

then service off, includes to different Michael. All lines cut international. the for service all the you lines, I’m those And sorry revenues global

Michael Hoffman

that’s alright. Yes,

X% still in number I of at business or the So think of the X% basis, a had where currency I part of your that? was going is are you kind looking constant – year the been middle trending to in RMW your RMW that International

Charlie Alutto

Yes, don’t on of I to you call want breakout the back the end to lot get look try that. to up by a to at

Michael Hoffman

big a headwind something everybody attention is XQ, remember to? there should right, recalls, the we that, in When that’s to Okay. be paying got

Charlie Alutto

recall record Absolutely. that large C&RS very driven in year QX. a was Last by one year

in without this correct. but that ‘XX big track on no match XXXX, carryover that a to have that’s of had versus QX and event to QX you are big one of We we year comparison are ‘XX right

Michael Hoffman

sales dollar of what the were then And Okay. in paper XQ?

Charlie Alutto

at paper, If gross mean the what you you the revenue from look paper? dollar sales, are

Michael Hoffman

it’s total am be? understand in number, I what sequential trying to document decline destruction is to going Yes, the

Dan Ginnetti

– Information that the it Destruction, Secure rate about think X.X% was organic I our X% of in of Michael, Yes, growth growth.

Michael Hoffman

cash question flow misses of Last on you over given you number. impresses have put numbers, alright. run Okay, for me, things but know the free is anything those I all the the if I

you So, going on $XX to do cash the million to quarter? $XX you in flow free are fourth telling are million

Charlie Alutto

cash pleased of Yes, importantly the Michael, our on we continued very flow-through with are more it. focus flow and

look If I know flow-through. a and that see cash obviously found much it what you and even being from flow tax year-over-year have less you so cash think really it is that income at it, is improved you that to than year-over-year but the being able pay to better as convert, when you of result about down, operations the

based pleased on with generation our we’re flow our So cash results.

Michael Hoffman

Thanks Okay. very much.

Charlie Alutto

Thanks, Michael.

Operator

with Your RBC. Gary next question from Bisbee comes

Gary Bisbee

afternoon. guys. Hi, Good

Charlie Alutto

Gary. Hi,

Gary Bisbee

you project question, Charlie, guess I with there that ago, And the business the just to what to are been Did getting about ready a this consultant it cited trying are The on this. ask this just I lot as out talking more to be you this that a more this just reaction point for and you genesis the that you long you I to talking start about this? needs of am or working point about time is understand getting to wanted have the you start of got to to where in of done. hired of come or year discussed addition ERP. things first transformation

Charlie Alutto

in brought we was genesis the some think talent. I Yes,

but job integrating many year out around not systems. with have too line, I the think we we And a Gary, internally into we are that Stericycle. a good look our at a about knew talked into far necessarily struggled broader of acquisitions done and over we ago operating that service the fact that to systems we

start through as we fully So, integrating of as size the and we best processes, at looking class, we at have is business company transform we a into our went not we a this organizational leverage have at system from a don’t decision looked had challenges and is for year. lightly, the looking known how has in what you through structure, something been can start you you went only obviously we journey scale. initiative. And have so it take standpoint, it last this big is Obviously,

make the on restructuring a of overall but related the system we obviously genesis the second think at Stericycle a can profitability. can we at how that think we we came looked procurement operation are both drive opinion, improve that’s ERP and to as we of better the I for our got activities on the up do we and an challenge, we that process improvements we can the at think and think decision time this some really it,

Dan Ginnetti

the add create implementation not Just to does so take time really only ERP led prior to opportunity broader and and the the to this organizational ERP our things it that, context of processes of including to efficiencies not organization some likelihood create to preparing having very really successful that, in in advance of transformation implementation is increases our to leading to structure of to one business implementation. up only important that’s an it of a by work a then but highly the advance aligns the

Gary Bisbee

effort have at Okay. feel Do guys we makes more you here? like deliver to sounds a are the of talent of That a significant you on or the to amount sense. need right lot areas team there are company like going what

Charlie Alutto

both. of combination Yes, it’s I a think

an IP year, we think our of the with last of certainly proven implementation. record I we the have a course ERP that group professionals over a have supplemented track team of

gone outside. have We

are we there or at realized organization good process some a have that looking things we improvements. as out broad as We were may are

we are rubber top on to tier better think right. again this we with then have put agreement, all we have There one are to to future integrator. your is make the from aligned lot on organization, an down going company middle of executive technologies sure but that us the successful. good. going hits with you the on are We ourselves integration expense top have RFP been feel is system bigger tier negotiated we can an as want that we fit are going education that the cost about be yet, through some to are that of That’s but a to out item. a there. There is comes different very of wait road haven’t help align And This to consulting They it integrator, you system the Stericycle. it whereas team, really the the is we journey. got the the I We why are talking all after and to

be shape years good going are to to from X X we think in more. really much now, I

be going more to We have we are operationally been now. lean, always but efficient

combination it’s outside well. getting of So, from the a inside help talent as and

Gary Bisbee

from on would really have with come strikes me, something that your in Thank last way one as it markets? to the me but from industrial just or the that. the we industrial on there then there back M&I all activity And is do great. I business but should just global comments U.S. as end that that improves you know specific activity I hear business, some something Okay, Is the to make not strongly. it your the down, seen pickup a you. pretty you was lift anything seeing be lag

Charlie Alutto

a it’s think I both. of combination Yes,

you companies when them, might we you bit but year-to-date. a look think a doing waste. hazardous business with out overall at think not I waste, M&I, certainly there well, focused our business the little right, And that compare to of we has like be think customers, total are we other grew overall X.X% obviously if to below I we has healthcare value it’s not waste bring lot retail is where us

XXX on hazardous other and saw, whole lot improvement had The waste remember obviously for across about business points different saw share were this talk profitability lines all about last actually we We in we that a potentially improvement is we profitability year we resources there actually of that an this that the opportunities in thinking you is as about we a basis gets because those run, business. divesting, service year-over-year. have lost improved thing but

little it yes, trailing very marketplace. think miss, market I are the a is competitive we Now, bit, the M&I a

you compare in when We M&I are us niche to player others. a in

on we trying the be are We after. to disciplined go work

and think was business Our Brent does now, call focus and business. the into made to because I out it acquisitions it we we has reason not healthcare it on M&I the this and again And operational build after waste. these is We retail structure talked go really the about got fluctuate.

Our we have revenues PTS RW, why setting by X.X% the compliance focus we were well is on at those excluding SQ regulated proven when of retail and healthcare growing has the aside really that. that it, have on and because and waste and our think you and done that’s markets look I

answered for answer you. So to a way long question, your hopefully but I

Dan Ginnetti

and you market highlighting M&I kind think of in just as a to couple that when of Stericycle a quarters. job great add the Yes, that that began to differences Charlie lagged for I recall that, did is back the retraction that

of orientation that is there rebound, a it’s niche that us surprise so we lag not on because significant if And back may complete our way to the up.

Gary Bisbee

appreciate I Thank the you. commentary. all

Charlie Alutto

Thanks, Gary. Sarah, anymore questions? Sarah?

Operator

I am sorry.

question comes from Hamzah next Macquarie with Capital. Your Mazari

Hamzah Mazari

Good afternoon.

or call The XXXX but guidance first you maybe said question you on something may flagged, XXXX you are guidance, recall giving I did is you guys as then just a XXXX? you have referenced not are being giving clarification,

Dan Ginnetti

Yes, let me take that, Hamzah.

know, obviously best giving First have industry of all, with starts as be and peers but we the call, that practice guidance on you wanted standards. to this consistent

January we will have we give until QX and the not have visibility to will into improved because get Obviously, are guidance we results. our So, will coming guidance results. initial QX we year

transformation pricing We will the at costs. savings have our and greater that to business and SQ visibility time

will those an have XXXX. impact So, on

be level are the detailed anticipate guidance. long-term we and ‘XX perspective directionally get on versus the that are earnings official not more the that you and we call February. jumped we is to What and our strong, call feel guidance are a flat giving lot business our maybe to on grow earnings point a in heard we maintain markets at the So, we QX think in just an from at this very, ‘XX. end are going will Again, very high going

Hamzah Mazari

the discounts. – there? just business, seeing had pricing just you but and in activity Okay. pressure I with M&I know curious chemical customers any of you because the your industrial bigger one U.S. industrial color then any question global Are M&I so about about business, And asked disconnect competitors talked the flagged earlier asking for

Dan Ginnetti

if Yes, want in competitive is is it’s about a and a characterize to a market market competitive very X not pricing projects. got think I don’t think so, know I the you’re really, these competitive marketplace. any to think months any worse it I X time last talking certainly when like over you remains but I it it’s play, is, don’t have, comes we

Hamzah Mazari

be last turn is don’t how should Do is, about just getting distribution, any impact Thanks. question, neutral that big your ignoring but positive, a just on should to as meaningful pharmacy I over. And – from Stericycle? I’ll Okay. that impact drug it be into investors negative that know Amazon it business or relates thinking we

Charlie Alutto

a really impact or material any potential customer, I have impact come our but I no the on material have into who the service. want it they now drug if to comment place, pharmaceuticals, not, lost think it whether would Thank business I think would I don’t takes space I you. distributes where I right think material to Hamzah. that damaged don’t on location matter Yes, the don’t or waste has returned they was distribution or particular eventually, we a think pharma

Operator

next Steinke question Research. Kevin with from Your Barrington comes

Kevin Steinke

of of top the then that million came bottom of end the I up up XX end and service bottom like the two you guidance favorably did XX so terms revise and million the end Hi, came in related by communication million by outlook. lines looks Destruction, X the Secure Information it revenue by believe services

So driving both about those you just of the what’s changes outlooks? talk could in two

Charlie Alutto

When C&RS Sure. when really strong I as us, $XX comfortable. reflection year-to-date a to was and think we do about recalled number. the we our really business, of well million done feel talked you continues at automotive well, We’ve for look a so

obviously more you go time, you returns, know have you and called to followed out, recall for visibility. a have we as long you when QX, As Kevin, us just

quarters three done already. have You

on comfortable narrow feel three and line, good the again certainly unpredictable it. into can the And about about So, on Shred-it, you revenue the business, It’s but it solid feel Destruction row. quarter. in more last an quarters we still Information range the Secure a going

we one range. top the again, we end about and service that tuning So, the bottom newer guidance up us, for fine good so three business end and going before that to feel get with strong business are line trying comfortable of quarters certainly bring up, more but and we that

Dan Ginnetti

four changes to due overall exchange our in about is those of million we and the in acquisitions. just impact to the those set of that to foreign foreign add numbers range it’s across favorability remember built $X some to $X into in is streams, just revenue million exchange about all And

Kevin Steinke

Okay. Did quarter those what deals the composition was you acquisitions you in make any Secure or tuck-in of Information Destruction the did?

Charlie Alutto

tuck-in classify the in would the U.S. in I X as Yes. did We Information Secure were the all Destruction small international and in quarter the they X deals all tuck-in and deals. space.

Kevin Steinke

perfect. Okay,

one one for last Just me. here

had plaintiffs announcing step of X-K this and class looks preliminary So, the and you the is had action the ‘XX court their it approval settlement. counsel next you the entered the October like with settlement for

know the of or So, I into if anymore court you if in timing of gotten up that’s the schedule air? insight have the don’t kind still

Charlie Alutto

an out Members at the approval opportunity caution case you that Yes. the factor opt fairness November It end notification an date. is for know XX class for the that Actually, final the approval the a through or December appeal a February that, best several court will struck. doesn’t certainly the class was Kevin, have right as it of settlement scenario. a granted time the scheduled hearing the of agreement that a October, there hearing settlement. would from little to an late final that if in can or so object on year settlement even receive out after probably of fairness time And has preliminary months for time and push appeal to and members sometime, and be just been XXrd February the final

Kevin Steinke

taking Okay, that’s questions. Thanks helpful. very the for

Charlie Alutto

Have Kevin. a Thanks, day. great

Operator

Morningstar. Your our from next Noverini with question Barbara comes

Barbara Noverini

guys. Hi, Good afternoon.

Charlie Alutto

Barbara. Hello

Barbara Noverini

me well quarter. the that revenue sequentially struck and quarter gross So margins held given another was challenges that in thing actually the pretty kind the up EBITDA about of

low M&I you the than quarter? there were really margin so little some because business bit a other that or better performed expected you primarily in that’s and was this is lines business for So, weak a

Dan Ginnetti

had Barbara some EBITDA we you the the you I the included and favorability we did they of kind basis improvement C&RS million at though have through certainly saw is big a that and then XX some the better then to you of benefit partly through. looking when benefits, margins that about some shortfall indicated the at offset that did of of it current some we also or impact described from our those flows better that in rationalize bonus in the approvals at performance company. and business. points what impact based off but states results, the think to Hurricane flow get $XX as remember as the had and less and profitability of are that the we They of the flow-through of revenue margins, have shortfalls, And the range of

Barbara Noverini

it. Got

Okay, services steady and thanks. And category then seems cross-selling has just quickly that been you to customers this hospital be mentioned a Historically, your pretty to success you margin ongoing. at for gross wise.

customers, services into these business? that in I actually just is if some multiple LQ success curious from margin on to customers So, these your expansion translating hospital layering am

Brent Arnold

that margin, rollout to tend I based It I we take the both at break to already able to I that Brent. say out our is resources is and our overall just each our of regard we times case. expanding services have new would it definitely this operations we Barbara, you LQ place. with be the seeing off in is we our improve services, what support right, because the one. to because are some of that business, difficult but that’s Yes, tell will Yes, SQ would

That leveraged a waste. to substance if you the be be also now So, to change to that Sharps controlled the the technician can CSRX RX technician same out can container. of used have collect you account,

just that bring we off to the are to enables places So, better is services going those margin. on us at fact and of that based lot already a additional

Barbara Noverini

Thanks that’s great. so Okay, much.

Operator

line Markets. comes next from Your with question Silber BMO Jeff the of Capital

HenryChen

afternoon guys. guys. Chen for Jeff. calling Henry Hey, good Hi It’s

more on business, core and seeing the services medical called SQ impact there are improvement headwind some compliance the improved just on excluding could that and question business you organic you Thanks. you retail the of if coming mentioned growth what’s an or and color you the that? a Just and provide that regulated the side, and pricing waste out growth regulated I know from if transport from the driving curious where that’s

Charlie Alutto

Yes.

that’s $XX to in been management think we controlled but we we is a that X.X%, good of headwind core on got as the a the of business, side you report Brent our the to, hospital referring think marketplace. is received Barb Sharps I the waste at obviously have right and and on question negative SQ, I is to regulated of what business we think alluded really X%, for was has about which continue number well is that by the successful the was million That Obviously, great X% sell the impacting business on and I Henry. are on side on SQ certainly med number challenges being substances business Stericycle call, sort certainly LQ really that the to and is LQ, growing waste, a highlighted pharmaceutical historically on us. we have of

the that market. I regulated So, XX% U.S. is am our of on giving a that waste, you number obviously so

the hospital well So, Obviously, SQ big we quarter. expected continue surprise impacts came as the on side. to do there. pricing for There the no was really in

or an seen in We calls increase discounts. haven’t

that we well. So, with pleased as result are

HenryChen

have businesses Yes, Got been in routes you okay. of – consolidating your any business, you any is are divesting it, there? And that the or that helpful. of

Charlie Alutto

business. the of side waste medical the In

HenryChen

waste okay. Medical yes, side,

Charlie Alutto

No, absolutely not.

HenryChen

Got it.

much. so Thanks great. Okay,

Operator

next question with Ro Goldman Isaac from comes And Sachs. your

Isaac Ro

various down, guidance why could your point? talk for but logic if There just clear, lot about Thanks. afternoon, simplify a assumptions, the guys. that Good year wasn’t guidance regulated specific of comes you did has maybe for waste I been

Dan Ginnetti

Yes, absolutely.

quarter the we low So, we quarter the trending mid if we in have the to to as for opportunity been and the fourth end are ranges, to took really range. where at look you the the our narrow of operating

or So, did end top the result are only just of bottom XX tightening bringing you no when change bringing the up adjustment a the adjustments that end is seeing range, by which the your we top-down the to range. of an really but you of the see bottom of just ranges. It’s to

Isaac Ro

are there fundamentals that’s another am new in the wondering, is that. midpoint But understand lower changing the pricing the here business? and or I of is dynamic your assumption something I so

Charlie Alutto

the And in bridge gave American think respect I is the kind Europe. in think be to QX growth that would some and Latin I America. Latin Yes, Charlie, you is in softness I specifically when international, think this it with spoke there of Dan about

certainly So, and an waste well. because as that falls compliance RWCS that it, regulated into table has on revenue impact

Isaac Ro

Okay, that’s helpful.

say was So, better, have heard America tracking if would unchanged have guidance your Latin us been you otherwise?

Charlie Alutto

mitigated emerging EMEA, our think by in was portion a would is I it was have, that, I there European and of have know all on markets would been good which market, though weakness if but think Latin slight yes. Asian it primarily it America. I don’t

Isaac Ro

Okay, enough. you. fair Thank

Operator

And Do have remarks? any no there are you questions. closing further

Charlie Alutto

next cities education do, a over the In memorial Stericycle against that much. public I partnered select the The will of victims I which opens has a Thank Council you in a the visit The Safety months. Sarah. like tomorrow opioid on would drug closing, so Chicago. with to campaign to campaign abuse. National will crisis share traveling X campaign prescription memorial feature

to important and We are feature bag this campaign. mail the Stericycle’s educational of The will send medication campaign envelopes. be memorial and please seal part

Thanks a the to commitment Our for this support disposal safe your pharmaceuticals. night. reinforces and campaign unused time solutions provide of of our have for everybody great

Operator

today’s concludes This conference call.

now may disconnect. You

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