Stericycle (SRCL) 3 May 182018 Q1 Earnings call transcript

Company Profile

Participants

Jennifer Koenig	Stericycle, Inc.
Charles A. Alutto	Stericycle, Inc.
Brent Arnold	Stericycle, Inc.
Daniel V. Ginnetti	Stericycle, Inc.
Ryan S. Daniels	William Blair & Co. LLC
David J. Manthey	Robert W. Baird & Co., Inc.
Sean Dodge	Jefferies LLC
Michael E. Hoffman	Stifel, Nicolaus & Co., Inc.
Hamzah Mazari	Macquarie Capital (NYSE:USA), Inc.
Kevin Mark Steinke	Barrington Research Associates, Inc.
Jeffrey Marc Silber	BMO Capital Markets (United States)
Lawrence Keusch	Raymond James & Associates, Inc.
Isaac Ro	Goldman Sachs & Co. LLC
Scott Schneeberger	Oppenheimer & Co., Inc.

Call transcript

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Operator

Good afternoon. My name is Erica and I will be your conference operator today. At this time, I would like to welcome everyone to the Stericycle First Quarter 2018 Conference 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. you. Thank Mr. Jennifer may of begin (XX:XX) Investor Communication Vice you Relations, your Koenig, [Miss] Corporate President and (sic) conference.

Jennifer Koenig

Hello, Stericycle's and first joining quarter XXXX thank earnings call. you for

Dan Charlie Joining Chief Arnold, risks The forward-looking Chief on and today includes Officer. Financial are today that this Executive and call Operating Officer; statements Ginnetti, discussion Brent uncertainties. Chief Officer; Alutto, involve

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

the non-GAAP financial call measures. discuss we On will

and and reconciliation footnotes GAAP please Stericycle's comparable measures, to found release, Relations most can the to on Investor website. information earnings be in refer which our schedules additional press For

today's now presentation, turn for the the call on I'll comments to prepared to quarter will correspond be Alutto. earnings we call, the Finally, Investor Relations first from slides which presentation. the our available also Throughout is call our website. referencing Charlie specific over

Charles A. Alutto

earnings first our XXXX to conference everyone, Welcome, quarter Jennifer. you, call. Thank

are a We in off to start strong XXXX.

the that solid we for first the plan. to Transformation, Related lines set achieved service above delivered objectives our and our top-line performance quarter. of or at All milestones Business we

operating value. is more focused you business manage to As model and effectively enhance the on reconfiguring the transformation our shareholder recall,

which implementation addition summarized system Enterprise quarterly are five of on initiatives, key or ERP, In earnings Planning X presentation. slide the the transformation includes of the Resource to an

organizational restructuring we operational EBITDA the initiatives sourcing quarter, last adjusted the and slide transformation achieved million November, $X optimization on first reflected resulting savings during X, strategic from As approximately projects. in recurring

first the quarter. in investments the million in Our transformation totaled $XX.X

to remain confident in internal We million for expected XXXX. to on deliver our for $XX the track in milestones savings are achieve adjusted our to million EBITDA $XX ability transformation and

our internal continued on through Murley have of team integrator some a and is We've as continue and as selected system, team important new we will the for year-end. operating ERP phase focused project. that in to In ERP two changes our part dedicated which this of is the like our in a model evolution built Additionally, the important our of leadership. finalizing now success announced strategic the appointed blueprint also detailed design Independent target system of executives. board, mention March, also Stericycle Chairman. Robert appointed I'd was The

the promoted recognition our named Ethics as Michael quarter. enhancing turn to been for Chief Officer, and Officer. program. Brent our We Stahl, leadership his organization. impact David the Mike's to now compliance to has of Weisman Vice over Executive I President, will Information to look in President revenue performance review to our Chief strategic in First, Executive the Compliance global call We've also forward Vice results

Brent Arnold

Charlie. Thanks,

When flat. As of Industrial increase reflected million X.X% an from on total first for and were QX in revenues were $XXX quarter XX, Services, slide the revenues XXXX. $XXX.X for million, adjusted Manufacturing

$XXX.X Services, each million; Information Destruction $X.X Manufacturing million; divestitures million. Waste Services, business the revenues and the $XX.X announced million $XX.X and – lines Destruction the Related and previously the to and Secure the reduced Information South by to previous of revenues, transportation last disclosed Regulated the in service and year, as same and Compliance business Services, Secure Industrial $XXX.X services, million. Revenues first Communication for $XX.X of were follows: quarter million; the Africa patient UK compared As quarter contributed acquisitions and

This Waste. annualized Secure Medical with revenues in (sic) Services in expectations. acquisitions Information quarter, tuck-in $X.X and million. and of Regulated contributed Destruction we revenues in nine (X:XX) of Waste one were quarter, in all These projected the Eight Compliant Regulated acquisitions, U.S. revenues approximately [Compliance] the closed exceeded $X.X million

We see Services. Hospital solid continue to our performance across Compliance

our quarter, services the delivered Hazardous kiosks strong of project our Additionally, medication work retail expansion Retail by growth Waste response pharmacies. disposal emergency the in driven and for

Destruction are to continues perform Organic continues to more U.S. recycled to adjusted on epidemic, for services. in customers the lower Secure X.X% As X.X%, opioid medication quarter the turning growth and well. paper. when the pricing revenue Information more Services disposal our was or confront also

performed quarter by Communication driven the highlighted months. and is While by for XXXX, in another delivered communications sales performance activity. in well, teams first and all international will performance with in strong by greater line due UK Services over inside who strong expectations, the team now financial the recall it and U.S. process our automation improvement past XX quarter, X.X% Related our results up the hand Service with the sales I over good part and detail. automotive delivering revenues in over events in team. Dan, exceptional continued revenues Manufacturing quarter Industrial will discuss same to to the were implemented

Daniel V. Ginnetti

as Brent. first Thanks, for follows. results are The the quarter

lower This discussed, first X.X% performance expectations. reflects quarterly were XXXX, million. the up revenue anticipated compared expenses. EBITDA our to was Adjusted $XXX.X quarter Brent revenues than and strong SG&A As exceeding million, $XXX

was Our the and of $X.XX, versus $X.XX. adjusted EPS consensus guidance

in U.S. was unrelated on thank million contributed for outflows $X.XX; the on see investments slide XX, contributed of Business planned the Transformation. credit convertible continued preferred Cash like our lenders tax flows was $X.XX on the non-reoccurring which to repurchase company inclusive timing facilities, the $X.XX. company accelerating tax to items. and $X.XX; contributed us adjusting EBITDA certain the of adjusted mandatory make will to I'd due to their and depreciation, bridge following: amendments support and was In contributed reform business. nonrecurring to income based the EPS you'll announced from $XXX.X strong operations items, Business adjusting GAAP including interest other March, and for difference benefit cash Transformation. continue the to enable our the As of existing $X.XX; our

X.X% under Our adjusted revolver quarter. EBITDA end was debt ratio the $XXX for CapEx covenant shares have of shares. And at at an of preferred additional $XX.X the quarter, million. XXX,XXX the [times] the amended of unused approximately to mandatory X.X million, The In the the $X.X revenues. the quarter, of we convertible purchase was of to million. end X.XX repurchased portion million the we was or authorization

XXXX days. it hand I now DSO to go outlook. Charlie XX Our over to will over was our

Charles A. Alutto

Thanks, Dan.

on in mind guidance updated Please XXXX, forward-looking keep these statements. are is included slide our XX. which for for that Now

Our include known items guidance as and such or is divestitures. does based not acquisitions items on currently future

quarter, be $XXX the of will to million. Industrial in of we current will the $XXX range $XXX lines foreign billion; depending Manufacturing the Related exchange rates. for be $XXX of recall will Services worldwide believe million annual range believe close Compliance will the range Services $X.XXX million billion to $XXX to to in Services million. is: of Waste to million for the in XXXX $XXX of guidance and million our and the revenue will million; revenue $X.XXX be of Communication service to $X.XX revenues; be on range The Regulated Following the Destruction billion $XXX using $XXX range first million Secure range each $X.XX Services be of billion be and in We of will adjusted in in the EBITDA Information

approximately tax of share in $X.XX count preferred SQ XX.X% expect to We We settlement. million, the $XX.X of not million. rate cash using believe XX%. $XXX $X.XX in from range a adjusted the does payment include an a of EPS effective conversion to of and $XXX previously-disclosed the operations will the to will be of This range reflects for million be shares which

flow to to We expect to will million million. $XXX and be CapEx be million, $XXX $XXX $XXX million cash between between free

continue to will as maintain disciplined allocation strategy approach We outlined XX. to our slide capital on a

Our free successful that operational will the are cash levers density well as we delivering acquisitions quarter shareholder Transformation. repurchases, execution expand enhance behind and first our additional flow term, strong expect tuck-in XXXX Business focused Long us, of and on provide our With share strategic as debt approach a allows strong continued value. our plan for our and throughput. to reduction we

success quarter. in We'll long-term of improvement in significant leadership after more your from the We Services benefits the the for questions. answer performance in We operational line Compliance open a and you expected Erica, markets now confident Q&A. Business remain years the for information second providing please forward Our our to and on in with come. growing the for positioning financial Stericycle the are Transformation Stericycle. progress look to

Operator

(XX:XX). [Daniels] question Ryan comes from (sic) And your first Daniel

Ryan S. Daniels

year. you more what the a questions Okay, were and that $X guys. Good the bit there. you months number EBITDA about visibility hitting the on get Maybe color little how $XX see strong million, the what talk just exiting bit to Thanks derived the those from? And million feeling on your more taking four $XX savings. EBITDA savings run want of million you're two, congrats a about feel your to year, in the then rate. savings, Can to achieved start is little for

Charles A. Alutto

Sure.

optimization operational on Those from, we followed the I the QX, the we order call did the obviously, also savings run you $XX savings strategic million and outlined think projects. in had if outlined organizational Business pillars that and on the got and are on this in million of the came where then call. savings they the in stack the in by $X Transformation we the last from November, sourcing the restructuring rate, presentation

$XX for think slated $XX that EBITDA the feel million I we savings we've in confident around to XXXX. million

run-rate, have really on of hitting but that feel got a pretty line-of-sight that remaining We've to number. still I think that. execute about we good confident we

Ryan S. Daniels

would in you capability the you you're segment benefit cetera. pricing update to along pressure quarter regards et change then investments Can great. yet self-service, more the your are some spent marketing, be there's making managers, investments of in those some any And question you how are in a there, seeing talking an more on if any management to time my Okay, account follow-up about that/if you've last and far little outlook? provide from SQ bit

Brent Arnold

Stericycle customers, make offer retention. And which better there our analytics helping ultimately covering number Brent. Charlie accounts in investments managers. second But promoting are part. team overall, of that brand we the account out about in being content more a continue we decisions We've about us initiatives. make with the thought the the putting first offers can progress We we with then leader, Services. It's about our and long-term leverage take marketing to better market and to made the take good data Compliant also, made Ryan. our now leadership drives significant some and more Hey, I'll the of then part

So you start. I tell team's I we being off this ago and level few a to the all good across a started think early, right, anticipate that on But months of would we the it's this just overall, kind quarters.

Charles A. Alutto

And I'll the think the part I Ryan. take second question, of

We haven't came – SQ pricing seen as QX expected. in

out. minus given We through still there, haven't the seen That change plus we've XXX in number any number or XXXX. holds

Ryan S. Daniels

Thanks, queue. Okay. I'll Perfect. back in the hop guys.

Operator

question And your Manthey. next comes David from

David J. Manthey

Hi. picture, today? And And you you secular largest growth I seeing price Good SQ for in FX as is see would look acquisitions, that we you quarter. there and the the this responsible million like you talk the assume then that segment? growth mid- delta digits. If what bigger divestitures was exclude for upper-single flat wondering, almost growth And guys. I'm and Services exactly about Waste when revenues could look look rate forward, concessions, and afternoon, your maybe were Compliant this, do it see historically, Regulated about we're $XX what as or

Daniel V. Ginnetti

primarily LQ/SQ what think historic anymore meaningful look looking we've When is, those I I growth And those statistics were really we see year-over-year consolidation. rates, think looking we're kind U.S. right you're growth of again, rates. Yeah, more at comparison. as shared David, that at and at really now you aren't the just more

in exiting contracts, impacted the rate, the now overall been of business, Patient been and SQ Patient by by so price the also an growth by concessions. to gone certainly kind Transportation, and that's the we've impacted in It's the you've overall normalization. divestitures seen SQ Transportation the So

and the we're think of So in was approximately I those Patient of upper The the SQ of range, of some impacts that in excluding half rate Waste growth within the Transportation. anticipated, we're range X%. Regulated that we the pleased

David J. Manthey

do normalizes what for But of Okay. secular it'll and once everything on overall out grow, segment the basis, a you here? shakes sort think

Charles A. Alutto

X% pricing. for Waste Yeah. X% the was assumptions I our segment growth to at We growth Everything looking X% look growth Business for rate around on total secular the specifically mean, flat longer-term. would out company be Transformation. that growth Regulated we're on compounded SQ Medical I at that total long-term U.S. growth depending mean for laid in – annual to

David J. Manthey

then, question. Okay. Thanks. And second

to were you and and wouldn't you? lower smaller, low-density you M&I at BTI timeline And diverse If less Solutions the divest, XX% markets, that be international to some this the that would the say, to business be for something costs attractive and XX% point? Communication would shorten

Charles A. Alutto

looking across Certainly service part ERP line. is going implementation and to criteria any geographies. the at comment business on directly the of lines given I'm the not

the We you XXXX as international. have around a David, U.S., milestone, XXXX in know,

that. the an that So got we consistent. impact potentially stay think would certainly costs, more businesses could and out will if on but I we on some to have de-risk Certainly, of come implementation it

time. premature to on a that this at it's think I speculate little

Daniel V. Ginnetti

down lines making so allow rationalization. a vision just to the we're design been add agnostic to and blueprint then than the we've the stay that is we're today, would longer-term in early geography path, Transformation high-level work The in, stages our doing that. us to that have really on the portfolio investments the heading Business the service we're detailed in of Dave, focused and the I that

David J. Manthey

Very you. good. Thank

Charles A. Alutto

Thanks, Dave.

Operator

question from your And next comes Dodge. Sean

Sean Dodge

Maybe Thanks. starting Good Yeah. Latin afternoon. America. on an with update

before to now? modify there some those savings for come some the waiting through have to out a had those permits some And or were alluded I think you of to big infrastructure how were of cost business, and your expected you are be? of take guys

Charles A. Alutto

through. haven't They come

some we're from savings LatAm a have as for America. I overall I would pressures we think, savings as us, market. XXXX. a say those With I Transformation was Latin well in couple in your folded some We higher-inflation increases, into pass had things Business opportunity million in dollars think the can Sean, picture pricing to plans of say question there there. permits, respect I unable to along there the the stabilized in around especially

have they year. will realized those yet the We not later but in come

Sean Dodge

good. fund issued out. are courts Okay. have visibility the looks and any for of final Very some like you're being on the items going And approval sorted then Do when better class to to settlement that? it you last the have

Charles A. Alutto

Yeah.

administrative held on hearing respect the not The think yet. of with give court that. a I'll had the to some has latest today final I – actually, approval court the actually update you a resolve issues. remaining

judgment the expect, in shortly will the settlement. judge We a case the final though, issue approving

then So any If it filing XX Once the days payments. and effective will appeals, not has after of starts settlement the become as to no been formally there yet. settlement clock respect approved of appeals. the we'll judgment that, make kind are is issued, the with

after fund filed, come think will could an you if timeline resolved. to July. arise So as early that is appeal through as If the obligation the a settlement appeal until is not the

stand we basically currently, Sean, where that's SQ the So class action. on

Sean Dodge

Thank great. you. Okay,

Charles A. Alutto

Thanks, John.

Operator

question comes Michael And Hoffman. next your from

Michael E. Hoffman

not I'm I housekeeping A understood much. very question. you sure answer. Thank the

you out X%. what take all the... the that your divestments RMW, Is price in the and grew you If

Charles A. Alutto

That Michael. is correct,

Michael E. Hoffman

Okay.

Charles A. Alutto

(XX:XX) Compliance the PTS In Regulated SQ divestiture, the PTS acres Waste line, that's the pricing. and Service the the correct. including to That's and contract (XX:XX),

Michael E. Hoffman

And rate Right. what was then year-over-year? your paper

Charles A. Alutto

actually if looked had If average growth. you But XXX SOP the last why was X%. We XXX impact quarter, a was for we two you the you it this were gave (XX:XX) quarter, to paper, pricing numbers. Brent it X.X% and of (XX:XX). at That's the exclude close

Daniel V. Ginnetti

And same last is quarter that (XX:XX) XXX the year.

Michael E. Hoffman

not budget this is your (XX:XX)? year I am And Right. for XXX correct,

Charles A. Alutto

We've got a range.

both EBITDA the is XXX to EPS. (XX:XX) range and XXX So for

Michael E. Hoffman

we starting better worse average or than Okay. are XQ? And XQ the

Charles A. Alutto

to came that's slightly down this made at last right we've year adjustment everybody, remind and heading just slightly paper, are no slightly prices want were QX. we why point are into We paper we better I but to But better. now better

Michael E. Hoffman

alluded in And Okay. mean you down? to does then the that growth M&I, was the international, domestic the

Charles A. Alutto

No.

slightly I up overall, flat – X.X% domestically think the down growth. to organic but

Michael E. Hoffman

rationalizing reported as I some flat volatility to good. have industrial suffering about – very been this have opposed be so the the any far markets mean, to because then down slightly would you you And of that

So...

Charles A. Alutto

to more project us about the the opposed the transitioning Yeah. to customers It's as larger of more work. to small medium-sized

Michael E. Hoffman

what I've very got. it. Thank Got you much. That's

Charles A. Alutto

you. Thank

Michael E. Hoffman

question. One One last last.

Charles A. Alutto

Sure.

Michael E. Hoffman

you distributed At $X.XX. now end to more the thought back guidance you year? earnings mean, the much beginning your with I of through the are we performance would the year, relative evenly

Daniel V. Ginnetti

say I Yeah. evenly would we are distributed, more Michael.

kind that think this I the quarter, of things saw were the thing in that don't we we certain see happened there that quarter that replicating.

expected in mandatory additional had above preferred convertible. For we what $X.XX example, the we

quarter. We the FX year-end We through overall some some still two from be from offset of of we flow over projects of tax that our would just and would think got and bit retail bit but We we a Our benefit higher in we a of through some that. acquisitions. accelerated. as numbers little that same in we by anticipated saw in that covenants. what but amended the that hazardous We came think are the result we flow think remains does so interest benefit expect a that is saw little accelerated from cleanups, also some QX those the quarters benefit had quarter saw

of flow it's is it's saw through important the on, very but in the Transformation, for that early that I us it's to quarter think change guidance. as early we for the change, benefit So some too Michael, the absorbing will year a really Business lot business

things the to are than and I for the start, loaded. we of with rather more the level that back-end year the would out, have year We pleased think, though, that rest

Charles A. Alutto

a looking $X.XX EPS as from $X.XX and at between Michael. we'd for be think I QX, perspective, And EPS QX

Michael E. Hoffman

you were hoping to going Thanks. was I That's Perfect. us. what give

Charles A. Alutto

Thank it. You got you.

Operator

Capital cost address hoping you afternoon. how around question plan, transformation comment just on. your about think Mazari ERP morale Inc. (USA), the risk over Hamzah I Hamzah And quick we maybe Hey. that at comes Mazari. customization. could company maybe from going event? should Good next that, overruns, - then of Macquarie And on in more XXXX with the specifically was Is that's a any conjunction all with

Charles A. Alutto

Yeah. Thanks, Hamzah.

the risk I first, morale on talk time think me let take then I'll Stericycle. about at

there risks you of I close ERP we're are in keeping alluded excessive the on. it that eye an design. think to customization a two Certainly

plan of mapping taking through it's differentiated are a And unless the we things an that an out blueprint, out-of-box overview we Stericycle. truly like that in approach, an lot of So things area went disposal, the source to quote, to report, and pay, is to to the to order to that cash, to sure account out market got first. collection make of to way perform, hire retired those we

So that when certainly we designing to We and want don't want doing We us system, box those track. help going keep us replicate we few the we're that look worked sure start will at last to what mega the is stay ERP best-in-class, over on on the today. within to approach – stay processes we months to ERP. out make of on an that the

trying I and think senior Business leaderships, the second with the on right? are deriving things resources, Transformation business. going leaders, risk, the obviously, senior our day-to-day We balance got to all that is

off year, folks, of the morale, the of in lot hit also tough folks we're supplementing And this think obviously, by again, lot coming stride is mitigating a We've a Business resources. mitigate Business address new is would risk a really I a a with to getting hired stepped I I good trying and So got then having by dedicated on. to having with team QX. But folks focused have to It teams is and Transformation. of strong the say starting we've outside to things to start experienced up. that to certainly start morale that year. Transformation lot way their a are necessary respect off where we're that we're and think

for think again, helps. think And and experts. in Capital future with good Hamzah company about to Macquarie I right Mazari Transformation. folks resources I our (USA), both the we're good Inc. respect think internal of Business certainly now feeling But I our really really shape first - and outside quarter success are strong the

sort of I Okay. reiterating pricing you're medical guess headwinds. then your waste And

$XXX $X gives then you color then legal business? million still had $XXX suits called that you that You million is of you've around sort that. not around self-inflicted of $XXX comfort number share that any Is the analytics. data behind much can How Is that of conversations, $XXX million out sort re-priced million and And it any data million? of book remaining? you? customer it is points Just

Charles A. Alutto

we've Yeah. I said with that don't making to we're some effect. EBITDA investments confuse original $XXX the million has the want of the that

the So on Right $XX that million that talked in imply to about, million about about track. now roughly confident we That XXXX. would million $XXX and feel $XX number. XXXX million it's we $XX in another original

that's I think expected coming in several way as and it's been for that quarters.

still to number. I is that, EBITDA EBITDA investments feel making have the an to confidence we're alluding you're we think respect So to, or in effect. additional that With

to, marketing holding and account effect. the of cross-selling, revenue increase Some we're changing EBITDA or leads around branding and management those around investments talking about. behavior, which and whether were an was Brent less are back Others a team that obviously, not price

So the has discounting. (USA), Inc. - bit different expected little discounting in that's overall than QX. Hamzah as come Capital the Macquarie through But Mazari a

Okay, great.

all much investment a is in in up Just it I'll QX, how over. CapEx that $XX million and the just is OpEx? or Dan, turn in Is follow for Thanks.

Daniel V. Ginnetti

– in The Capital that Inc. was - rest $XXX,XXX No, (USA), in a Mazari not – Macquarie was it Yeah. maybe Hamzah was virtually CapEx. OpEx. was

Okay, great. Thank you.

Operator

Steinke. And your next comes question Kevin from

Kevin Mark Steinke

spending think Dan, or Afternoon. you lower-than-expected result. SG&A benefited lower SG&A mentioned quarter that I first the spending

So that might is year? we later the in delayed of back that just kind come spending see

Daniel V. Ginnetti

Yeah.

bit less think take quarter higher I around in saw Benefits typically a a can we QX benefits. SG&A – part in a where see expense quarter. own was their can amount. the life to We of little from be

just than to to We don't conservative does that whether that's that this salaries month little revenue sure need in so we percentage. that We move so expected. we're benefit sure as into the being to look through. not wages. in of it know Again, we result that going flow benefit that's bit a the SG&A was little some through through. flow of did saw day make of so we a So making don't or that extra to one prematurely in did QX, less going all see benefit go the was there higher We

think And the start. very monitor closely. Like with so pleased we'll early we're I said, that I

Some that of pulls is see Maybe if benefit that in anticipated. of we this you'd this some forward. QX

we're And so target conservative QX, and on and to hold do appropriate going approach really guidance. it's We a take and the to $X.XX. this thing think our like somewhere between $X.XX

Kevin Mark Steinke

Okay.

you also choice? about mentioned talk You integrator. Can that that what chose just you your led you to SAP

Charles A. Alutto

Yes, a options met there integrator. our feel lot we ultimately us. We they decided for but job confident had a do great of with We decision that the as have senior on we past also Deloitte them. with great will and system go a lot and specifically lot to of made they these of leaders a SAP. in we the Obviously, done their in

through as good them really journey. this feel partner our we about So

Kevin Mark Steinke

you. Thank Okay.

Charles A. Alutto

Kevin. Thanks,

Operator

from Jeff And comes your question Silber. next

Jeffrey Marc Silber

would there. waste Thank side. what's pushback any know perspective so from a color of SQ progress I'm got on terms Wanted the a you increases, in great. of side, be side? on making the talk price much. you in you medical you're lot to just on, I about curious the going terms LQ focus customer Can on on demand, the issues of

Brent Arnold

is Jeff. Brent. that I'll one. Sure, This take

Rx our really growth solution to waste growth year-over-year. continue has good Whether see at nice in additional really We that's services LQ. our

hospitals a compliant DEA substances where come As with solution are far It's pleased to where and to the we well, with we a of we've turnkey CsRx, in to continues growth. incinerators our a secure the help so controlled about, of that's dispose licensed, solutions the goes solutions it kind our continue new one our and space talked grow of so that's of out lot really team hospital way. in

Jeffrey Marc Silber

back-end your a had talked quarter the the in Can it That's and ramp adjusted you of be EBITDA made rest front-end gears then end year. just in year? the few about the quarters? just going the of you the you the in next over towards distributed savings And slide about for presentation Is where quarter Okay. helpful. to is the the loaded, bit, at the investment talk goal evenly the it the up loaded, shifting you

Daniel V. Ginnetti

Well, And evenly math effect of if about full million it's you works in $X a the it, how quarter distributed. $XX gives million. on the think you relatively savings year

partial getting thereafter, year saving. quarter every So you're a only

pretty if had million out how per $X will get target which you from happen, think in million anywhere quarter So $XX is million the the $X range in we three the you ratably that it $XX about savings about million for next to to will of quarters there.

Charles A. Alutto

again, the million tell spend, distributed. million, this the $XXX on probably easily around to then throughout talked And into anything probably read year. had million wouldn't We you, and $XX that $XX.X spent Jeff, number about of spend year, I the would it'd but evenly be

Jeffrey Marc Silber

so Thanks helpful. really much. That's Okay.

Charles A. Alutto

Thanks, Jeff.

Operator

Keusch. next question from your Larry comes And

Lawrence Keusch

guys. afternoon, Good Thanks.

be I what question when anything not are undertaking. is the know I'm you're on that that Charlie, to guess going you're speak I I review you but that curious looking at, is to portfolio guess, one So guys about that intend to there review do? you was specifically going show Or find that out decisions and seeing been what seek announce up? transaction, made, to you would extent the to by a just really then have that to transaction finished would we

Charles A. Alutto

Yeah.

to I the going what point think portfolio at is lot we're the a thinking don't we process to obviously sale got won't preannounce preannounce have it. that and I but and anything, think being I look when prudent think like. when that's is not by And through learned business members the that – make we and think communicate Larry. M&I think at we're more a those announcements we'll go We'll we've may a I who front this going point decision team we run We finalized, I think a obviously, on look I proactive. make divested the we at it, asset. to day-to-day, to

Lawrence Keusch

you've forward Okay. are several the to Perfect. And I the but and of front done since events really in is, of But of that pressure that number. been be in indicated could additional outlined that is real million going that us? job kind really Perhaps could the then mean, risk well fact, SQ proves again, to what obviously, you've of when guess, tracking this some quarters. quarter last price some kind you've pose news there over the great you two one that? $XXX a I them one pressure, of that back in gets more, obvious out there. And that

Charles A. Alutto

through the We That's closely I And that announcement when through see didn't at the on when some an obviously any on at be to if on as December, I material right, Larry, the But the last didn't checks in July. distributed. point. impact not cash is it next right time was go went material are And out watching appeal, point. you're gone early one Yeah. notifications earlier, yet. be as it point. eye an mean, correct. see I that that said there's it Certainly, would think call impact we'll we've of November at We or year. keep we distributed the is – could could It timing that. were Sean's question volume any into the that like finalized We settlement. now

Lawrence Keusch

what $X.XX range sort Okay. range last the the the of end one year, happens lower of end to And on higher to sort takes us just you could range? to the Dan, get the EPS Got the of what guidance you and remind it. of for then the you for in

Charles A. Alutto

Yeah.

that take I'll – one. me Let

some just ability perspective. hit of what from will is EBITDA look project-based to an does years, business the as And that international, and million. I parts project, a around that the million, so six as recall the the with it. we $XXX have at Paper variability And then of M&I range. the uncertainty haven't million basically the end Business can our it at it the we've so a on have at think we're downside, our component upside certainly is million project want consistent $XXX pricing. if that bottom we Obviously, business, so there you business top from touched $XXX end $XX been over of prices, it, to the happens have $XX that to part certainly looking that in of and that can spot low Transformation, to right business a the million on effect. to at lastly, now, of – global our $XXX million range, SQ high. SQ, impact

impact. Although it's not it have a business, big some on impact the could

really So upsides EBITDA. and million to are $XX or the the $X.XX downsides related those

Lawrence Keusch

Great.

guys. Thanks, Okay.

Charles A. Alutto

Certainly.

Operator

And Isaac your next Ro. comes from question

Isaac Ro

guys. afternoon, Good you. Thank

Charles A. Alutto

Hey, Isaac.

Isaac Ro

Hi.

kind prior just following guidance, thought XXXX process on here. the On of up the

printed, below where it the For example, you year. the are tax guys look if calling I you rate was just for guys at

annualize any So rate I that's reasons help $X.XX why if to tax a range. quarter, this at us a tailwind up? – can the chunk you through path the it that, think in midpoint would and Because least like looked of go decent the

Daniel V. Ginnetti

Yeah.

to through. as I your answer it think flow I we And the take but question why tailwind. to wouldn't how want got first calculated, can in through you $X.XX way I was, it I there a fact,

that in I I will rate moved year think $XX million. of come million $XX.X you gave overall million in the think that will I million of before to the for gave, $XX what up I that have think I do rate $XX.X fact from to do the through. some. We flow to would $X.XX anticipate about about bridge to

out a of anticipate covenant that higher to would through, with. but flow also that, offset do amended we a couple went I of so cents – result some interest expense anticipate we the we And as

is that rate really So what's really three driving tax things.

very First, rates. reform feel U.S. that funds. a of to some in federal burden the offset did tax from lower rate, response they some That's may to state slight increases we anticipate typical our to

of legislated seen that. yet, of do also that by is tax-related be small a adjustments. saw favorably although we haven't We Argentina, deferred that that lower component anticipate and impact still were tax certain the then reserve in Belgium. we slightly And impacted We rates last France and

as imply such thereafter. would And million for got so again, in million is $XX forward $XX other in million. That that, early offset the use certainly, that some a that cautious year rate and The interest range probably that. would will to would flow hold to QX close I going but of to items the just through, we $XX.X there's

Isaac Ro

the sounds really ERP you're then And that And Okay, follow-up like any investment guidance, guidance, the doesn't next assume year? the then the a full-year in is impact should number on not correct? the assumptions just current it helpful. we in there rationalization portfolio two, until assuming still from programs, up pick

Daniel V. Ginnetti

No, never to. nor guidance for we and give I acquisitions future something think, portfolio first consideration That's of all, there there is rationalization no any contemplation either. is for

ERP, the performance of you the themes that. million savings so with out majority see, impacted then with adjusting that our Transformation actually savings as early will until getting as the the implement far and the not that that to along the the expenses track associated had system, in as that's most far is items we some of we're we our you savings. And to in Business the $XX $XX transpire And stages be as us where in of very million going closely number. are you see can the As XXXX

Isaac Ro

much, Okay. guys. so Helpful. Thanks

Charles A. Alutto

Isaac. Thanks,

Operator

Michael Hoffman. And your from question comes next

Michael E. Hoffman

Just $X of a quick any XQ, XQ? it incremental The it's in or XQ, XQ, follow-up. interest, was all million in

Daniel V. Ginnetti

we would Through begin interest-rate enhanced QX. were of the QX end quarter. enhanced the in That were an quarter we to have in so be interest an At future. not in will that that the second through at in all and kick QX, X.XX%, will position QX, the

and year. QX and a anticipate additional of in the and any below the that's through we slight slightly were QX do But it. remainder we why QX did So interest, uptick have not we and

of built year think the increase that rate as throughout the some throughout I is contemplated have well. course increases thing year that and so factors in, the will that of in the LIBOR other the we into interest

Michael E. Hoffman

I'm puts There's for understood And in remainder helped year and clear takes, the lower just so the another the $X.XX I tax XQ. rate. of $X.XX of because the

and offsetting with about it So from that's interest expense. you're $X.XX $X.XX,

Daniel V. Ginnetti

No.

that to you favorability We forward. take that for bit little anticipate anticipate make about be it page, going do interest. on about Michael, of that everybody's is savings, that to our foreign course holding hold it about on just we're would exchange sure so going With and the $X.XX generate $X.XX the and guidance, offset year. favorability. a essence this by guidance me making and just of though, materializes slower, the sure taking same tight the combined we're Let throughout tight tax would acquisitions We that the through $X.XX of in of

Michael E. Hoffman

Okay.

of you're ahead based all So and how equal, things commentary that being the quarter? did in slightly you the first midpoint on

Daniel V. Ginnetti

us of couple is in say, would kind a $X.XX you of $X.XX I above also came we element. the timing all out more pennies, that a just guidance rest from QX. to some netted performance EBITDA would it think The $X.XX I was put if Yes. that factoring the there down.

Michael E. Hoffman

it. Got

Okay. All right. Thanks.

Charles A. Alutto

Mike. Thanks,

Operator

Schneeberger. And your Scott from question next comes

Scott Schneeberger

Thanks. guys. Good afternoon,

Charles A. Alutto

Hey, Scott.

Scott Schneeberger

Services, by Hey, little progressing by us give get on occurring a deeper can Thanks. geography, perhaps? on could you a that's Communication we just what's – layer when in business, address you just just inflection think maybe and that how bit some the maybe

Charles A. Alutto

Yeah.

business in we in that and is I and think Europe. a mean, majority of there. XX%-plus when do the States U.S.-based. little Services, was But Canada geography majority, I faded a It standpoint, some of we is think about operations business your a Related the Communication which that is But question. from have and United

QX had mean this maybe business. expected. good a row. in is seven six specifically If came what's it, trend, recall about a We've project but quarters I is that business, – really now, driving we're as strong you're talking we in about driven – obviously really obviously Recall feel

see to uptick automotive continue an in recalls. We

talked comments. about one event. it it's related to opening not I his just Brent And in think

we're confidence think gaining the our trust OEMs, of expanding capability. I and there and we're

automotive off offer both our strong And very we and our there. technology, the with think done into I so team the unique job two a a good coming really service sector, But voice around come to has to obviously, slightly really our being down even fact being quarters the strong than flat. related years. off the that's two higher business and some contemplates strong guidance more that years, has we're X%

Scott Schneeberger

Appreciate All here. Thanks. the right. connection And weak that. apologies for

Just so you acquisitions seem quarter, two one active there. pronged. kind the The in of follow-up, nine, another

just could to alternatives, is the divestitures? trying I'm what's gauge If about you with there. active follow how share urgency of some allocation. then Thanks. that strategic occurring to sense And detail a resource up you the and regard of to at perhaps looking are

Charles A. Alutto

Sure.

think They acquisition U.S. an We had were space Regulated in we I the nine eight said Waste. from you Medical an Information it, entirely Secure active in one and standpoint, acquisitions, in Destruction had quarter. the

them make acquisitions, on meaning systems ERP, the sure tuck-in can strategic focus as to existing doing to don't to we also, systems. look we that We want not Transformation on continue through on Business And we're any going acquisitions. difficulty any We where and when add at deals ERP. want going to we put add we're we we're in

Transformation rationalization. it's of as a focus Business Transformation, around far on on pillars so Business As in portfolio there's portfolio activity rationalization, one the Transformation, Business urgency and including

As on to we laid evaluating make and financial that of the businesses criteria lines and we're February. I business geographies continuing out call progress on we're that sticking to said in earlier, think we all and the

Scott Schneeberger

very Got it. Thanks much.

Charles A. Alutto

Scott. Thanks,

Operator

time. this no questions there at And further are

Charles A. Alutto

Erica. Thanks,

today, a of Take we'll everybody Jack has XXXX. and out and service today's a its experience family, re-election care. a the one closing guidance, Board far. everyone, has of at the is Schuler. behalf of counsel, of to Directors Stericycle's your He Before member you, many support. I'd you've visionary Jack. Jack Have for call. trusted stages and years Well, positive evening. thank and Jack, road And like to had impact our to sincerely your us great on is on see the of been founders evolution growth company. advisor not miss take all a Thanks, since of through been joining on for truly we Stericycle I'd Jack and on like the and standing thank moment upcoming And company soon. appreciate we'll entire you of Meeting. for Shareholders' thus Annual a to the the recognize

Operator

Thank you. today's conference And concludes this call.

You may disconnect. now

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