Stericycle (SRCL) 2 Aug 182018 Q2 Earnings call transcript

Company Profile

Participants

Jennifer Koenig	Stericycle, Inc.
Charles A. Alutto	Stericycle, Inc.
Brent Arnold	Stericycle, Inc.
Daniel V. Ginnetti	Stericycle, Inc.
Sean Dodge	Jefferies LLC
Michael E. Hoffman	Stifel, Nicolaus & Co., Inc.
Scott Schneeberger	Oppenheimer & Co., Inc.
Hamzah Mazari	Macquarie Capital (NYSE:USA), Inc.
Kevin Mark Steinke	Barrington Research Associates, Inc.
Isaac Ro	Goldman Sachs & Co. LLC

Call transcript

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Operator

Good day. My name is Brandon, and I will be your conference operator today. At this time, I would like to welcome everyone to Stericycle's Second Quarter 2018 Earnings Conference Call.

Now, at this time, I would like to turn the conference over to Ms. Jennifer Koenig, Vice President of Corporate Communications and Investor Relations. your begin may you conference. Ma'am,

Jennifer Koenig

you Hello, XXXX Stericycle's Quarter joining Call. and thank Earnings Second for

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

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

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

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

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 second from slides which presentation. the our available also Throughout is call our website. referencing Charlie specific over

Charles A. Alutto

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

company. our benefits businesses our its of overall to second and demonstrate Our strength reflect and business quarter results early the underlying the core the transformation of value

our within adjusted ranges with and Information weaker-than-anticipated Related impact Destruction due EPS expectations. to foreign softness for Services adjusted Services. core Our We performed businesses and in and and Compliance in exchange and despite of the Communication revenue EBITDA Regulated line expected delivered Waste

the quarter. completed that initiatives achieved and part for also and we our the objectives milestones operational sourcing improvements strategic as number and business set a of We of transformation

and to starting Brent detail, accomplishments Dan I'd like second Before in business quarter results with few more a the highlight transformation. review the from

delivered in source-to-pay $X.X operational delivered half from million As on EBITDA In sourcing EBITDA year, improved benefits of and the the adjusted slide during X, we the second reflected first $XX.X million benefits an quarter initiatives implementation processes. of improvements, the additional Transformation strategic adjusted from in initiatives. we

progress $XX million our goal Our a $XX of $XX for to of million expected year-to-date is XXXX. benefit yield million to toward

a the processes. our in transformation the work in detailed We including $X.X year. $XX.X for on business the for for the mapping the quarter were $X.X for future-state design ERP and year. also were Operational end-to-end expenses $XX.X transformation made million million mega totaled business and quarter Capital our expenditures within significant system, second million progress of million flows the

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

the business Portfolio key of Rationalization. is our of One transformation elements

greater focus slide to follow predictable engage shareholders businesses value for our growth. the we on on through on to see our can portfolio long-term commitment you As profitable core simplify provide X, that to and continue through

hazardous During Kingdom. line we United service the the the waste divested in quarter, remaining

and that also clean-room agreement a an U.S.-based August We divest signed non-core X. to service, closed transaction

of a rationalize this conducting a alternatives we are are to Related for the announced We're portfolio. and considering financial the business. process for Communication of strategic pursuing alternatives and including that range commitment divestiture demonstrating legal we advisors the assistance with our potential addition, In and today Services

Stericycle the Our will a no or There consummated. timing shareholders. most assurances be if will focus be transaction the will to be that as transaction of pursuing on drive the or for form outcome any can value

points. Brent, to over Before it I turn two like more I'd highlight to

into went a the settlement action result, on we X. class effect, SQ settlement the funded and July as First,

evolution, Ronee management to both in Finally, Hagen forward the of to appointed new board Stericycle. over review their continued public companies. and members, I Kay quarter. and contributions our now performance strong of two Kay multi-national to look Ronee leadership board bring turn and the we to business We as our Brent the Priestly. part transformation experience for will call

Brent Arnold

Thanks, Charlie.

Manufacturing quantity reflected divestitures, As QX due were medical a on were softness Secure X.X%. Destruction revenues the was second and partially the X.X% in the core total down expected growth was When million, by of and CRS from revenues decline Information slide to This XX, and quarter for offset with combined $XXX.X in Services, million, for XXXX. $XXX.X business in Industrial offerings. decrease small waste adjusted other service

$X.X the million; and Communication to Waste and $XX.X Compliance Related Services, million contributed revenues and the Services, Manufacturing were million; each revenues Services, last to of by million. quarter service quarter lines Regulated compared reduced as divestitures same $XXX.X Revenues in $XX.X acquisitions Destruction million. the $XX.X year, Secure and follows. second Information $XXX for Industrial million; and As Services,

acquisitions. with This approximately revenues quarter, contributed Destruction tuck-in $X.X million. of $X.X projected These of six we annualized closed acquisitions in businesses. six million Information Secure were U.S. revenues All the quarter

quarter business sharps saw Compliance completed also were We and in a expected. projected small our of in divestiture pharmaceutical in by impact $XX perform performance and and management $X.X services. revenues quantity solid to This divestiture waste compliance a reduced as We our United in revenues Service the continued Regulated line Waste hospital business of XXXX million the hazardous Kingdom. million. the with

were quarter driven demand down revenues and Secure came Services in growth Related lower prices Our the year. SOP expected recycled Communication paper hospitals due confront the opioid locations than in Manufacturing retail as and call recall as over by or smaller new Services X.X% when high-quality to same X.X% Services in events remain for the XX-year adjusted revenue average, growth paper. medication above recycled show Communication epidemic. work to revenues U.S. also to and for expected. both for worldwide customers Destruction strong Solutions. volumes X.X% Industrial declined quarter was Organic pricing. disposal continue Information increased and last services the our

to I now second our hand detail. revenues in will it Excluding for divestitures will quarter greater the up performance exchange, were and over Dan financial foreign M&I who X.X%. discuss organic

Daniel V. Ginnetti

Brent. you, Thank

XX, to Looking X.X% results at $XXX.X million, second for down quarter XXXX. were the compared were follows. second EBITDA the $XXX.X revenues as quarter the Quarterly slide million. Adjusted was

unfavorable core anticipated higher versus lower Adjusted of EPS was to due to in of prices EBITDA due paper EPS C&RS the our expectations performance and revenue Our of exchange. guidance business and adjusted on was $X.XX. GAAP enabled deliver line adjusting EPS midpoint to us foreign items. than $X.XX with impact $X.XX non-reoccurring certain in prior

on offset depreciation As business the of other prices was exchange from XX, of convertible reflects in exceeded combined quarter difference lower interest on These based strong working of initiative. were and strategy following. the C&RS. $X.XX; lower partially The will business slide $X.XX; see the $X.XX capital only performance by contributed mandatory in foreign $X.XX; operations contributed $X.XX $X.XX. contributed the the with expense, paper Cash million you by in flow from and and repurchase SOP transformation the our benefit core preferred the was $XXX.X accelerating

the $XXX.X made SQ at million quarter, quarter. agreement The of million. quarter. adjusted shares million payment end to at convertible end Our preferred reflect settlement $XXX This XXX,XXX the the we debt not in X.XX revolver the the amended of portion QX. In unused was repurchased EBITDA of debt under the the was the for $X.X of ratio mandatory does the

shares. of as call days. adjusted will convertible reminder, back to purchase impact additional our EPS provide quarter, a to the million stock September to turn As the was guidance. on method. mandatory reported authorization an of end CapEx no And or preferred Charlie update will an be X.X Stericycle's Upon who have the using convert if-converted been XX. $XX.X revenues. was now DSO we the will full million the year conversion, on XXXX the we there At XX have I will X%

Charles A. Alutto

Thanks, Dan.

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

on guidance divestitures, items currently litigation based known items non-reoccurring acquisitions, not future matters. and Our does or such as is include

annual CRS, worldwide is million. and revenue The is expected as million million from Destruction exchange range end of and Information $XXX $XX Industrial Services Related $X.XXX for and range revenue foreign Manufacturing the to range from in billion range The in we each the revenues. rates, recall majority expected expected softness today. quarter, from range to in We the on XXXX are EBITDA to be million depending to of be be guidance to billion be adjustments the in $XXX be of $XXX is for foreign Communication billion. million of second $X.XX Compliance million Services rates $XX to billion of the announced will our to $XXX will of of $XXX follows. Following the and using the is be unfavorable Regulated range Secure believe $XX the to quarter. $X.XX guidance to million. of $X.XX the in $XXX service the million the to million in million. adjusted believe $XXX $XXX close Services expected Waste were million that is exchange of at of divestitures revenue two lines Services to in

be rate shares. to share a will of in of of reflects tax count XX.X% EPS adjusted expect an approximately range million We using adjusted to the $X.XX XX.X This XX%. $X.XX

plus of the newly adjusted the from and businesses, XX, our payment be can includes SQ completed million EPS in strength softness from from paper believe range EPS including headwinds the expense $X.XX $XXX the favorability SQ of $X.XX operations non-core driving for foreign $X.XX the by of of see from increase businesses, from from the tuck-in offset acquisitions related which slide This is is interest CRS. million, you $X.XX. in the As on adjusted to an settlement, $XXX bridge divestitures settlement. in increase to exchange We $X.XX will pricing cash core the

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

a of approach recent This the SQ maintain class We to will continue reflects to settlement. as funding allocation guidance outlined our strategy slide the XX. disciplined updated action on capital

XXXX, successful execution transformation. our on of Our business the commitments team remains for focused the including

our success Services the for Brandon, expected on the performance. our member our We growing significant that the divestitures provide to questions. our worldwide year-to-date, customers, for can We our potential their of business the leadership believe Compliance now business execution transformation financial and any each and please plan. open in answer business improvements long-term Q&A? for I you from commitment both and team the operational We'll thank several made in completion want the will confident benefits to line values every significant Stericycle of for our remain transformation. and the core of including and and transformation have markets progress in of savings

Operator

is And question from your first from Jefferies. Dodge Sean

Sean Dodge

the there wastes, us into was fairly medical Good client sizable group a there. that's headwind some a regulated little more struggling a geography in Maybe pricing little up results a easier afternoon. a because bit Thanks. surprised within Can expect lap particular there. growth little there you beginning ticked bit? Is would give deterioration or better to Just guys has you starting with organic We were a comps. or SQ insight that?

Charles A. Alutto

I think you're the referring and revenues, Regulated is Actually, Compliance to Waste what Sean.

remember actually guidance, perspective, we you to a came X.X%. in have some guiding. year-to-date number. It contract in I Avis. it's From if were think, from compared line that to divestitures what PTS we about We our had did down correctly,

foreign billion If billion exchange the to most $X.XXX it's $X.XXX it our at look recent for impact. before guidance, we revised you

expected as So the it in came quarter. actually for

Sean Dodge

Okay. And sales sales quarters Brent, force, guess, made transitions the a you're that you've force. then, within the SQ of into couple I for

you've Now, ramped spending. your up ad

promoting strongly the Stericycle more You're brand.

investments all guess? in we going kind – or talked some, made at still point there you've to we about together to to know, the now to jell that really return Are data and make course, difference, analytics. earn those investments Of a need a I don't where kind to pricing get you're fine-tuning a on of starting that happen be of that and to start is some I all of

Brent Arnold

remind Hey, best we've just made. Probably the to investments Sean. everybody

marketing. I and these year, on analytics retention main our churn mentioned you number with a cases, data thing learning strong investment or first then would approach the numbers. we the our say, third initiatives – managers. of off, to a we, you track discounts. out pricing we're expand our fact really accounts also that have would was the some rolled at customer was taking comments recall, are between that we the the As in in correlation year-to-date on, limit with approach, beginning and year-to-date, your our by pricing annual We really And focused in in in things incremental strategic I account reduce reduce three believe our the we of progress price increases, of that the we're covered of these where pleased would to strategic initiatives. discounting future

And view some stay So it relationships. coming provide those and really takes while our build build with all working to and stay that have that compliance retention. a we market, become really compliant Stericycle's they curve. put And as sure we there communications Obviously, changes the do customers the are managers thought they benefit more that a the regards insight the the leader those leadership final in relationships to in there for our is and positive. the of But can account out thing our to and business their is their will the ahead protects customers, of really to and benefit also businesses make Obviously, with good customers. our we if to e-Manifest think goal trying that. recognize a being affecting around with lot different with or sure out in media leadership, we're doing how and make things market relationships

call really It's I we're we're long strategy. play, start. a to with would We investments. long-term It's off overall, you think good pleased long-term the I but the tell SQ term. really a a So it

Sean Dodge

good That's Thank Okay. hear. you. to

Charles A. Alutto

Thanks, Sean.

Operator

next William Daniels comes question Blair. And Ryan your from from

Unknown Speaker

Nick Ryan for This is Speakout Hi. in Daniels. (XX:XX)

QX? the walk is guidance The if could on I'm bridge first going a for one EPS to ask you through

Daniel V. Ginnetti

do I to Nick. will that. certainly. try Thanks, Yeah,

In addition for core there, there's outlook what $X.XX businesses. graph I we the to shared keep mind, think is from the that favorability about you that on results saw in and the that the of comes solid

from still from $X.XX of for then related half we really really we number, the events million settlement. increase had as a any then back number $X.XX help $X.XX where again doing recall end the SQ of saw foreign year. just the C&RS large don't sight $XX events. we blockbuster to line interest. increase to have don't from the lastly $X.XX exchange, You There's we that We're line And the in those foreign events. range. to But you to top sight a have exchange of of have about interest And same in fact, year-over-year increased of expense recall the of in get

example that to about there the the to of you to preferred range that, $X.XX that gave $X.XX a the $X.XX then down of an mandatory should spot you've And range. go you that. at midpoints you when from got think And (XX:XX) QX, that I we then into QX acceleration. for there. So in saw best $X.XX. for put Bradley is benefits on is you a going QX, We in are certain be

Unknown Speaker

then Great. flow And the for cash Thanks. how free about guidance change?

Daniel V. Ginnetti

million. settlement interest to made free contemplate we is from of X the to going to we the have change July now $XXX a for $X million going that's guidance payment. flow $X come the increase on also make There's additional million that actually that did that Well, cash payment about

you would than need With we less the there'll we $XX That's reduced the depending lastly, about adjustment you amount anywhere $XX so that million then up, you million saw items, $XX the We year. million add cash that we planned. we think that's our would flow, a on flow report to of fees get $X did And adjusting free C&RS, there. that $XX million. free and into cash $XX be that the we a to low for and originally range to for high CapEx in million the range primarily as-reported the favorable of that legal spend, but to in increased know, from EBITDA some million, on as when

Unknown Speaker

for Thanks. taking I'll back questions. hop Great. in Thanks queue. the my

Daniel V. Ginnetti

Thanks, Nick.

Charles A. Alutto

Thanks, Nick.

Operator

next your comes Stifel question Baltimore. from from Hoffman And Michael

Charles A. Alutto

Michael. Hey,

Michael E. Hoffman

is It's you're and we're midpoint for at I've math What million, and to $XX.X if most Hi, the taking $XX.X got, that the reconcile $XX midpoint of like EBITDA, guys. of down Thanks trying million questions. revenues, you've CRS. million, of the done $XX this is I'm offset few right, my waste favorable, million, between documentation to million, that something's EBITDA by the split the and million right anybody a that fretting who's medical hit almost at that leaves from gosh, Is way to unwinding it, think $X wrong? And destruction. M&I. about a down medical, you're oh,

Charles A. Alutto

no. Yeah,

slide I C&RS. well got better. it an of line in the slightly the exchange by certainly but helped. CRS. show midpoint is had Paper or You And the performed business Michael. did is that the think the as right, guidance. on take-down I mean, The of impact majority mean, I driven from mostly midpoint about the bridging $X.XX, we actually rest foreign

Daniel V. Ginnetti

I you that's Michael, – great if think you put. that a point

dollar things there the looked was did nature. pricing, or If our is the a raising we and to graph at really you looked that a episodic that's change. in weakening, the interest core or foreign very and settlement year. would that at Unfortunately, back, SOP then guidance. We within exchange, is had brief the issue on operations, you midpoint on of been and And now the the which We pretty have C&RS are that the core and where we the in period the it's anticipate significant within acquisitions, the guide the real settlement. do didn't the interest turned businesses,

So core an would think all-in-all, business the shown have I increase.

Michael E. Hoffman

to, for mean, whatever adjust going million $XX million. $XX $XX I'm So million the it million, $XXX the to wondering, is, I I $XX to was million

I'm number line been able as you is, $XXX we're I is to surprised was million the minimize thought really have proportional there. $XXX would at million, a now That's million $XXX would to the that much. million. have $XXX So to original down

Charles A. Alutto

talking flow cash you number? about free the Are

Michael E. Hoffman

I the million, you're – mean, mean, I not one-time $XXX yeah, Cash, event.

running which $XXX company midpoint $XXX really you're million $XXX million was million. operations, the So million $XXX.X the versus guidance at on the is the old to at is midpoint new

So that's up for sales.

Charles A. Alutto

Actually, I think it's million. $XXX

$XXX would be saying million million, it million. minus You're $XXX $XXX

Michael E. Hoffman

Yeah, just million, understand trying million, $XXX pressure. I'm $XXX yeah. sorry, to $XXX much how million,

Daniel V. Ginnetti

will picking result you're that now up in result will not back the some the a tax the cash thing as we in as one The benefit have the is there a of we that also funding settlement see of year. cash benefit tax that of half now

Michael E. Hoffman

midpoint. swing to in an really a million healthy $XX it's Yeah, midpoint – the it's

were You going cash the seems the $XXX really million-something. like in $XXX big free a and at That million swing now you're flow to midpoint.

Daniel V. Ginnetti

think that the I the there been go Again, down, have that. there. settlement change And the Legal million business things along about EBITDA Right. everything expenses if and that $XX we on the we is no then that. change Michael, shared we've associated on plans. seen there's are are higher, with for interest in transformation adjustment a There's with

DSO terms think that We So have today. with is there's the vendors could to as or million right DSO. from to payment we take I would benefit do $XX ability to our the if initiative there to things which we think are million. to working And do improving at out more $XX aligning million, that outside to coincide to you aligning our work as bridge our we're million capital XX and reaching from where you our on continuing contemplated that, again, there, $XXX down $XXX far that the in

there, make would that. there's what opportunity continued And to then, have just on within we you I acquisitions. other investments think from do So contemplate

Michael E. Hoffman

is repeating the midpoint than $XXX $XX know the And $XXX I adjust $XXX EBITDA. adjust million. but to myself, to for to It million of for million relative midpoint and million – seems hit there million $XXX up. million, is the million. big add bigger $XXX the you $XX $XX just I That's if That was to part both the I'll old million, The too million just guess, a million, okay. to you a I'm why have the seems I – I'm too the EBITDA. if is – free to the struggling cash follow $XX big that's $XXX of with there

Daniel V. Ginnetti

as-reported, think expenses some is, our EBITDA increased I the would the adjusting remember, reason the an as adjustment, get and items EBITDA for giving seeing so that in up that legal adjustment you. are we're picked that we adjusted we're Michael, such doing on not

Michael E. Hoffman

Okay.

helping I bridge be value then to think in there'd that because... some

Daniel V. Ginnetti

Okay. Certainly.

Michael E. Hoffman

story weakened and of your despite of all The this your the more how cash like Yeah. – guidance. other been revised power it rest was of cash this issues looks good the now than the has

Charles A. Alutto

Yeah.

a from to it I cash operations, million was think let's just take million. from $XXX $XXX it flow

You have the in settlement. $XXX million

on have the high interest. on million low You and the million $X $X to the

And $XX to to million gets million. thing million for an one we settlement like got you $XXX have that's it's $XX think $XX outside more plus saying $XXX I million you to EBITDA, the Because million legal. adjustment $XXX which million, that's You the $XX then of the million. the you million to keep make, of $XXX the which

Michael E. Hoffman

is It's $XXX $XX – $XXX And operating mean, is million. million being million that issue. million right? plus $XXX million, $XX million $XX should else doing million is operation million $X an plus all million. The $XXX $XXX to be million equal, not $XXX I

Daniel V. Ginnetti

the we'll them down, Yeah, up for adjustments goes you, – with one it bridge but the then take adjustment and have been add one to you it Michael, again CapEx. slightly by and just that

Michael E. Hoffman

the look Thanks. to follow-up. forward Okay. I'll

Charles A. Alutto

Yes. Thanks, Michael.

Operator

And from Oppenheimer. your next Scott question Schneeberger comes from

Charles A. Alutto

Scott. Hey,

Scott Schneeberger

on multiple Can that of that quarters we forward like following And to a if there? it, touch On look conversation? that can is sounds because that if How up What's there? that guys. could. with? change follow-up, I moment going associated just line legal, what then going in address you Hey, a a was is

Charles A. Alutto

absolutely. Yeah,

those don't with We QX, investigations we're these they expenses of as fully multiple with And the we've collection multiple previously significant the year legal along, as all expenses are interviews nature half take as me in high the second the cooperating of the FCPA a be did to QX languages. investigation. as they were the expenses. in let predominantly The we legal going require a said have with employees large fees think legal very the to and investigation. expensive authorities related a volume half are by announced are Obviously, of but So and of first year. in in conducting legal thorough in data

Scott Schneeberger

Thanks. right. be but part, ends something provide know to that for And or, is XXXX? XXXX trickle in don't want All there beyond? a that Might most I guidance, ends you the

Charles A. Alutto

I think that to to do tell. These would early it's but by obviously it's we're tell anticipate hard to completed will I to time, take investigations so and not not going be this I XXXX think too today. XXXX, guidance give any

Scott Schneeberger

All well. sounds That strategic in in more be right. forward in you or stickler the for Thanks. the alternatives, whole Thanks bit difficulties a talk are quarter CRS package a line And of lot, the some would alone, segment, what as just great there's about Charlie. as for a you there? And it sight guessing that Could recall But is TBD? a a I'm no like little said then it of was the guidance. recalls. the and

Charles A. Alutto

thanks. Yeah,

think two I had questions So you there.

of them. Let both me I – will take

on you're I right First the had to earlier. think spoken actually – of on it all, recall, Dan that. We

everybody. our more QX another the don't trending we larger of to to in remind large And the for sudden, quarters of It way, want QX remainder If business, where with recalls all we retention any been or but XX% if know the significantly if Meaning didn't we recall. another really we now, will we see everybody, in certain business. does don't visibility then, Right the blockbuster us. get quarter. XXXX, does when how slow visibility, where big looking to recall, really less actually lower anymore us rate XXXX on look business. latest at come and a did you events we predict I in – very it's back they – the these have you change. recall we're that an revenue compared year, we recurring, and in large with we We've XXXX, a XXXX, the were but they sat can't saying a to us. have recalls versus be The somebody have now business it's that of recall. recall, have back get unpredictable is they though, come visibility that towards a Again, I'll caution in we right that events

that. we So the in blue we really relationships it's unpredictable, chip have around certainly great know business a but and it's companies great with globe

though. right, our in Communications side the There SMB is live we especially really business. with volumes, see Communications we And another voice decrease. the what factor in to respect is call You're did business saw our

in it So resulted has and reduced recalls revenues. fewer

growth our only have made up in our it difference. partially automated We solutions but and enterprise that

going that's on CRS business. So really what's in the

You had without a on. we question about what comps sell, recall

So, looking alternatives. several strategic at I mean, we're

shareholder focus we any strategic will main alternative our make. Our be on transaction maximizing in value

Scott Schneeberger

Appreciate Thanks. right. All it.

Charles A. Alutto

Scott. Thanks,

Operator

your And question comes from Mazari next from Hamzah Macquarie Capital.

Charles A. Alutto

Hey. Hi. Mazari Hey, Hamzah. you? Yeah. you. How are Hamzah - Macquarie Capital Thank (USA), Inc.

Charles A. Alutto

Mazari Hamzah Capital Macquarie (USA), - Inc. Good.

Was well. on that recalls then $X.XX annual guide then there's because distraction alternatives? you that business of the forecast distraction recalls. I or so as business curious in do curious in terms How on Just the is just there the CRS did – or EPS. headwind policy changed over had thought years that much of thought seeking on bridge question that that I'm I a within and just know segment? do you you're not had any that you And guide of strategic And Just I selling recalls? you that. not

Charles A. Alutto

Yeah.

guidance. don't It's one ago. ever because our blockbuster been over So first let take we've always that in since We me years forecasted forecast recalls. acquired we business XX that recalls

forecast quarter. think we'll the on to end respect guidance slower. are we when middle also think We going things up our and with be We figure don't to right out down we try be to an where average

So always Hamzah. been guidance, it's in our

there quarter, we quarters exceed in long large had �� company been guidance have of for that an for And where, followed period the us this of have seen any those time, quarters. like that absence many you You've a recall.

been So impact had on always an it's in the results. and guidance usually it's

Obviously, As lines distraction, talking I around strategic so in we're it really a I That as talked team on process, the good our obviously internally advisors well. is and question. legal we've question the and think that's advisors. alternatives started. front to looking had process leadership far about at the means as that financial ongoing mean, here an your in our

I – to in results implication of an there So foolish wasn't business. be that the the say think we'd distraction a weren't

it's we really or I the would be what leadership make we the that but there I a lot think Macquarie run Capital for what last it solid and business fair team was Mazari quarter. in on focus the there. have going to Hamzah it's seek that hard sure to to We'll say us continue to quantify business (USA), Inc. on great while that business certainly - really was, we do think alternatives. strategic a that But in

just question. Okay and follow-up a

in execution there Maybe talk how your this looking any the so board is is the about the evolution. could impacting appreciate. business color board of sense and we'd deck Just there, differently? how at more to mentioned Is if And you You your board evolution pressure execute? any business?

Charles A. Alutto

with think as I mean, I'll Charlie. It's helpful. I is perspectives I take think one always good. Getting Hamzah. new I fresh evolution members well. Sure, that guess board is

to I execute there. has always think pressure the been

execution weren't us for accurate. the board that or say as former so members wouldn't us And didn't be to to want execute on

business think a I especially members bring in new vast experience, the certainly transformation.

we in Ronee public have So that and thing I we looking that that transformations. certainly, gone Kay, were through both us. for, certainly one that will when companies help that been have was think adding And folks at looked

in with got some good Murley members board mix now of longer-tenured new a who's members, we've think fantastic. leadership been new Bob I So

if fresh with pressure's certainly, business question, looking the members newer joined it pressure's go just new. last I original with the the the and always you or there. To think back been in the but set have new perspectives to at year, XX% about I But the So not last four three that the a or there. of over your is about board eyes think years, XX% we're think of

progress Capital really we've Great. good So made Inc. I Macquarie Hamzah there. you. think (USA), some Thank - Mazari

Operator

your Research. next Barrington from Kevin from comes Steinke question And

Kevin Mark Steinke

few through go to wanted of of here. just other the Hi, pieces a guidance the

by end paper million. that $XX up Information came Secure from on of In that pricing? Is terms low the Destruction,

Charles A. Alutto

you Dan, Yeah, to want take it?

Daniel V. Ginnetti

is is. core seeing of that's it think the took the We're prices. of business exactly the fundamentals or benefit we of We expect. I Yeah, The what paper as the operating business to and it's We above range index up kind we've to opportunity certainly the for at going year. this of the historical believe the stay guidance seen go our and down. look trends,

We expecting cautious about at are that also today. to it's it the at level stay

revised we're the $XXX be in operating would now of that prices $XXX. paper range the range is making under right to So

of range so well. And did that, come the up with bottom end the as

Charles A. Alutto

think two Yeah, points I there. other

note that acquisitions. impact. going bring to is did at time, Kevin, I think we same why negative foreign for up you That's the a guidance. come so end top have to this the obviously important international exchange But much. That's probably did see up as the us, it's business didn't an

Daniel V. Ginnetti

Yeah, of there was about a Destruction. Information the FX million $XX Secure is million $X impact in

Kevin Mark Steinke

Regulated and change on Services, there, in Compliance then the And currency the plus Okay. Waste divestitures? guidance that's

Daniel V. Ginnetti

will today exchange that the Compliance took things million. impact. announced about million in $XX end number. Waste impact Regulated just opportunity And divestitures we about million the will trim about did $XX Services really in the guidance of to there's of foreign million a that the top $X the We half bottom, $X million The on top. then by we that $X Yeah, and number on that bottom of and

FX change divestitures. of then So and most is the

Kevin Mark Steinke

I the factors Okay. that? Manufacturing And lastly, and what driving are I Industrial then came again. the down guess, guess,

Daniel V. Ginnetti

the is, America. of million that has that $X the company. portion fact, guidance the revising in waste divestiture impact numbers. Latin our do the in both we opportunity with the that Well, fact, because and, about we was on in did continuing UK then is came up adjustment largely to in we took bottom we those M&I the And the are million hit majority and in in top $XX have we hazardous was of to that the that divestitures, There and end

Charles A. Alutto

for I most actually the for M&I it's so And Yeah. a X%, recent M&I, think is organic top the from range growth the just point year-to-date of the guidance. everybody's end trending towards another on reference,

growth you Dan out you about we out if have divestiture, just if exchange the foreign strip on impact, in So talked M&I. strip what

Kevin Mark Steinke

thanks the for taking Great Okay. questions.

Charles A. Alutto

Kevin. Thanks,

Daniel V. Ginnetti

Kevin. Thanks,

Operator

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

Charles A. Alutto

Isaac. Hi,

Isaac Ro

Thank Good you. morning, guys. Hi.

the through terms I process on the it of was case. SQ was that just the settle pricing a me in But guys in just movement working didn't the from question in couple there sound here, here pricing. quarters I are you last know First was that conversation. think I like check to much to and see of wanted if still to

Charles A. Alutto

million we're at talked XXXX. that came half of on to million in for pricing $XXX SQ expected, track Yeah, as about we the $XXX so the in, second QX

Isaac Ro

update prepare with live, between ERP then and Rationalization things Got on and kind would track talking guys to of here putting could for the on all just some it understand as – go just that end you of to how if know steps And about of but you it's the Thank on the the and put it. in now your you're maybe you. be the Okay. year helpful you're next context you plan, start budget, to said and of process Portfolio general within on I that kind key – together. that us that

Daniel V. Ginnetti

Sure.

touch want about on deliverable let I in and that that early the think very $XX $XX great $XX you are feel and benefit year what work XXXX, as talk that is the to the focused confident have. really work can teams that's ERP. the now Rationalization. being our, are I'll the But $XX see, they're very to ultimately the to of the streams million yield the going on million. million call, we will Portfolio first doing what progress And to really we work pay-to-weigh, we that's done I in half the Charlie million around on hit

them. now. about model are our team able how operating engaged They're for blueprint to work seeing technology Our They've getting of going members incredibly now that that's what help mega you and to pay. end-to-end call services. shared processes processes, That's drive really purchase account report; those into those we things and are excited to right it's down design and completed to are the target and

initiatives working collaboratively, of comes a as touch working and Stericycle system around enthusiasm I'm seven Charlie, we with under they're that see of sprint and cross-functional capabilities. through on All this? go or blueprinting. seeing There's team you single to really on and call group. operating They're they really are together world-class eight and them about those of build future the want controls it do them

Charles A. Alutto

remind Dan I year XXXX go to to where in think certainly, is we obviously, our in milestone live talked about I'd then will so – work portfolio And what rationalization. to our for and thing The we of that said we us have in live system. the start XXXX the the is design through the internationally year, everybody, the live build is, all the to and end U.S. of go take go to in add only XXXX. the businesses

Isaac Ro

Thanks guys. so much,

Charles A. Alutto

Thanks, Isaac.

Operator

next Michael from your from comes question Hoffman Baltimore. And Stifel

Michael E. Hoffman

Thanks for taking the follow-up.

Charles A. Alutto

No problem.

Michael E. Hoffman

X.X% trend little the net it. destruction, of bought seems since your a document paper what bit lower In has been than you

been You've a enjoying X%. of X% actually more to

if the X.X% there? think going of customer, on was what and I the of So mix price in purge, new

Brent Arnold

is news the you. Hey, good Michael. middle our It's Brent. range year-to-date. The in right one is, we're for cover that I'll of

X%. of range at net is X%. X% our targets organic right We're So, in paper, the middle to of growth

sales we're that's track, we quarter purge sales and did year-to-date, is that into reoccurring our have good doing ramping was you revenue. purge. an the the head so that saw focused the probably The The up regional Auto the well well. is inside one offices on we timeline. count regard quarter to on the situation. that gap, the and that by with teams in was we bridging on did center on that jumped numbers. doing quarter, have to news. impact necessary a but the was the And our impact In challenge We're moved and area impact one centralized in So of

Michael E. Hoffman

change at I of the When waste. $XX.X there's, back to midpoint think Okay. from $XX the million. of again, million is If midpoint you circle the about revenue, could medical mix,

on? million of something How versus it $X What's the Xx much million? said You $XX of of that going how divestitures. much is is that's

Daniel V. Ginnetti

You're revenue talking about in talking you its are one entirety, streams? Michael, of or the

Michael E. Hoffman

to trying of sources the what I'm reconcile revs down. why were the But coming

million you're down in midpoint, million, divesting So, businesses, the at is waste, $XX right? $XX.X medical for but

Daniel V. Ginnetti

were revenue the came ones the point you every foreign We dollar virtually $XX high Yeah, we divestitures the change. under. The give already divestitures. let announced, and in. almost total. due operate million We down that strengthened $XX came new built to me due old end that we million just down against the currency to The

that, in recall to on and automation, million. we see as Acquisitions catch to has the sight voice $X of we million the of to Charlie then, live as million them from and tighten and paper, contributed revenue in a to in that. don't well due as some larger trimming you talked $XX positive Another with, events, to C&RS mentioned up. other $XX that part, to in as line And have of And do the to due about up top transition M&I ranges we'll midpoint. part to

Michael E. Hoffman

Okay.

XXXX. So

Thanks. right. All Okay.

Charles A. Alutto

Michael. Thanks,

Operator

no questions And we queue. more in have

Charles A. Alutto

Thanks, Brandon.

John to served important played to many call, Throughout, today's as His closing growth former entire like of Board the joining behalf of everybody, business an for recognize the I'd call, for strategic care. Directors on impact. moment make had in sincerely and significant to years. service Before years John contributions for many like company. and John great a Take evolution driving thinking On his Thanks, role Stericycle John influential on to Patience. of a Member, and of Board valuable family, expertise today's the the and our us the have evening. a I'd strong voice and thank the company.

Operator

today's And does call. conference this conclude

You may now disconnect.

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