Stericycle (SRCL) 1 Nov 182018 Q3 Earnings call transcript

Company Profile

Participants

Jennifer Koenig	Stericycle, Inc.
Charles A. Alutto	Stericycle, Inc.
Cindy J. Miller	Stericycle, Inc.
Daniel V. Ginnetti	Stericycle, Inc.
Sean Dodge	Jefferies LLC
Nicholas Mark Hiller	William Blair & Co. LLC
Gary Bisbee	Bank of America Merrill Lynch
David J. Manthey	Robert W. Baird & Co., Inc. (Broker)
Michael E. Hoffman	Stifel, Nicolaus & Co., Inc.
Hamzah Mazari	Macquarie Capital (NYSE:USA), Inc.
Scott Schneeberger	Oppenheimer & Co., Inc.
Isaac Ro	Goldman Sachs & Co. LLC

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. My name is Deirdre, and I will be your conference operator today. At this time, I would like to welcome everyone to the Stericycle third quarter 2018 earnings 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 turn to now host, call the will our over Ms. I Communications Vice Relations. President Koenig, and of Jennifer Corporate Investor Ma'am, you may begin your conference.

Jennifer Koenig

Good afternoon's Charlie for earnings Dan involve discussion afternoon joining Stericycle's Officer. Chief Officer, statements that this Financial third you uncertainties. and and The quarter Ginnetti, Cindy risks Chief call. discussion Chief Alutto, This feature will Executive Officer, afternoon Operating forward-looking thank Miller, XXXX and includes

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

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

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

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

Charles A. Alutto

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

by Destruction quarter. exceeded Services which both or experienced challenges. our that businesses Once our expectations. have was and our further expectations to Secure pleased and are offset the performance We Compliance This Regulated exceeded core C&RS, met again, in report businesses Information Waste

and the EPS on a continued implementation we our transformation line ERP new progress our to In executing make and the adjusted EBITDA with in system. As the business result, were adjusted expectations. quarter, of

few review quarterly detail, more a recent developments. results to highlight we Before our in I'd like

joined October our X. Cindy global President well at career Miller Waste Chief transformation. transportation, as impressive Medical Cindy company Waste Operating leading XX-year of Stericycle Global and execution business of She'll the First, UPS. and as operations Information and be comes logistics, our an following leadership Destruction and as to Officer Secure Hazardous the in on businesses

to transformational important joining with strong innovation this excited are track of during our have We record time. an and executive driving growth team Cindy's and

has $XX million year-to-date quarter full goal in for quarter the the deliver million were year. and to Focusing transformation completed payments track in from million transformation, $XX XXXX. initiatives $X.X business quarter of benefits realized on year. were the business Capital on for to for projected business transformation million year benefits $XX.X combined of for third the million our expenditure place and XXXX. fourth The rate million. run $XX.X for adjusted for in business initiatives transformation on EBITDA as us initiatives initiatives these Expenses $XX.X to million X, Stericycle of $X.X $XX our deliver the million impact slide reflected totaled is with year-to-date These recurring

our and within milestones. achieve remain budget track business to transformation we Importantly, on

This the included to end-to-end of We processes. also ERP the detailed completed our future system. design stay map hosting workshops

our financial our in to operating reduce and of system. to approximately technology XXX-plus phase one build the begun systems now our systems ability from information We the to have and reduce global ERP. XX We remain financial confident down XX

and of system to initiatives initiatives XXXX. in out then materialize the business The that long-term tailwind to internationally deploy achieve rates the expect expected we The from we the business in of XXXX, following the focusing majority in benefits roll on our EBITDA we U.S. implemented deployment reminder, XXXX growth drive Canada benefits for ERP transformation training and XXXX. from building, in the a will system. will In XXXX, in in will transformation come our will be beginning testing, the continue ERP XXXX. ERP and As new to expect

aspect of In U.S. divestiture transformation we Another rationalization. Room non-core business the is Clean quarter, the of portfolio the completed service.

the to welcome for for to explore And the We turn first continue to Stericycle to Cindy call non-core performance team. C&RS strategic for and I'd a and other of evaluate our lines like the the now over geographies. quarter. alternatives in Cindy, service review time,

Cindy J. Miller

Thanks, very and evolutionary warm Charlie. to important during I an and welcome, I'm the such appreciate time. excited join Stericycle

resulting in Waste SQ foreign revenue adjusted revenues and recall declines smaller as the events, revenues total of slide C&RS $XXX.X by a Information Industrial were offset XX, expected in business, core was Destruction well a million, services further down Secure in from million, divestitures. as quarter QX As X.X%. other XXXX. reflected for Strength the decrease reduction $XXX.X third Manufacturing Services, on and for exchange, from X.X% Medical and were When

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

Medical of of Secure four Information Three annualized were closed revenues $X.X one businesses all million acquisitions and acquisitions, projected These $X.X tuck-in quarter approximately the quarter was the in and contributed This U.S. million. Waste. we Destruction in revenues

impact projected divestiture Regulated million. with our Clean unused quarter, business. of expectations, see continued In annualized also $X.X Compliance we healthcare completed our growth. the This encouraged and Service hazardous have revenue previously-announced the are divestiture programs Room and Services the $X the trends across revenues above in business. we to Waste the reduced approximately revenues and million, We the by pharmaceuticals of in substances U.S. by a controlled came waste and and strong quarter for

our Services our Information Organic expectation. driven due continued above came in Waste growth was by X.X% when In revenue to or recycled in paper X.X%, expansion in UK was We the Related newly pricing. slightly the for the the Secure in Overachievement business year. discounting expectation prior of addition, exceeded to our U.S. Destruction quarter recall & implemented adjusted less SQ quarter. events more revenues the Communication compared events. of services by GDPR smaller growth the declined and QX continuation in in the Services to due privacy response regulations. managed recurring to in XXXX Medical

event. smaller of a and involved events number the significantly revenue lower However, per units

brands overall occur. market are and we the recall future remains in very well global business While is results, position the support disappointed positioned as events to strong, our

divestitures revenues X.X%. Dan detail. up for and now exchange for quarter when Services were greater in Manufacturing discuss Industrial and Although foreign down, revenues were financial will performance our organic third adjusted the

Daniel V. Ginnetti

Thanks, Cindy.

Quarterly Latin as other were EBITDA versus and Looking at the results slide and adjusted the in EPS Secure C&RS, of and revenues driven third EPS Information million $XXX.X $XXX.X $X.XX were Destruction services midpoint our decline in $X.XX. for XX, offset growth million. GAAP Both was by and quarter follows. adjusting core was items. by business was and to Adjusted America, due divestitures. guidance $X.XX charges other transformation were

paper from results $X.XX purchase between by slide of XX, of will were offset including and includes expense; the favorability; the mandatory see SOP $X.XX performance following: and actual convertible $X.XX guidance the in lower bridge from shares. on from C&RS. you preferred the $X.XX operations, depreciation the These As

$XXX SQ $XXX.X in payment. from million operations quarter, million the includes was flow which negative settlement cash As-reported the

settlement Excluding the again cash or cash was $XXX.X X.X% quarter, flow the million payment, was $XX.X of payment. settlement includes Free CapEx negative was from which million. $XXX operations SQ revenues. million, the flow in

settlement, the cash free Excluding $XXX flow million. was

And end Our end the debt quarter, we of the shares At debt-to-adjusted authorization X.X under repurchased common convertible the of unused settlement the end for quarter, purchase of was mandatory portion agreement million. the the at million amended the at XX,XXX preferred quarter, of $XXX.X of inclusive EBITDA million third ratio to X.XX shares. we times $X.X the payment. quarter. the of have The in revolver the was

the a have is As convertible using impact reminder, converted reported on adjusted on no method. the stock as preferred if-converted EPS, XX. September the we been mandatory There

it Charlie, back will to Our DSO days. XXXX provide who will an now full-year I on update was XX Stericycle's guidance. turn

Charles A. Alutto

Thanks, Dan.

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

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

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

will of and the repurchases pricing, EPS cash XX.X% and end. adjusted We the the we Lower operations, QX contributed slide a an $X.XX million and These Brazil, paper expense guidance which from million range $X.XX XX.X closure depreciation adjusted share in to for to an will which flow offset revised XXXX be from continue America QX of results cost using the be payment rate through On We recall of to lower of $X.XX temporary from $XXX in revenue a from in contributed in million, This $X.XX revenues exchange, expect present lower from XX%. by range share we will from shares. foreign Strength includes actual $X.XX. pressures expect operations approximately additional Latin bridge. plant were $X.XX $XXX count C&RS, and of SQ EPS year tax $X.XX, reflects from $X.XX. the settlement. adjusted including XX, a believe includes

million million. our information large fundamentals be CapEx on and closing, focus trends, population In We flow and we aging to security, to expect including to our a cash will in million, continue zero between of in drive $XX Key the between remain heightened be growth to $XXX $XXX markets. confident free business.

transformation, business new the our leadership and our system with a of the our platform. Additionally, position, from Stericycle long-term growth ERP strong efficiencies will robust expected provide benefits

is core questions. transformation. future and the values, business line to Q&A. can our committed and our for open excited our your Our customers, the now We'll answer you now team about Deirdre,

Operator

question Jefferies. And first comes from Dodge our Sean with

Sean Dodge

can last provide can you tough ability and at about on Maybe you you Any thanks know that lumpy. questions. potentially to has the with quarter for any everyone afternoon, sell impact, update that And that's talk quarter, to the up on having told us if get should hope business Charlie, starting you'd your Maybe recall process? for another the Good CRS, for sale. is inherently then all, it. business what taking

Charles A. Alutto

Sure, last Sean. during And that business seeking business. a time has strategic our the for Yes, been followed time. a We and down not for call that great C&RS that stock know that unpredictable you've long it's we us. we're touched the we're and on alternatives for an

I event, continue customers, couple think XX% and our us. to by look recall things event, of they and our you we of to recall encouraged a customer year, recall rate events, The a is there. might even over be a when actually year another platform, recall from by back come number reoccurring it up has if get we're smaller uses meaning XX%, that

was by Cindy that. like average is this XX% over something I that an it when down discussed look it The business. recall, encouraged think know we're at in We revenue per comments, her all year year. So we unpredictable

is a this the matter The are deals It's is of fundamentals not process market with this portfolio We're Yes, just lower. as there. it's not we there. is still more any business. the ongoing to this of timing go event we're at the losing significantly So and still of out size through it competitive the for looking business respect that a an leader. perfect alternatives rationalization but results, recall

Sean Dodge

August, then less is you. Can slightly us late that in late Thank the give is any impact talk now? the mentioned And having you're run you're this on I've quarter. incrementally without about you more is at then so put And people you sense or to gives can you anything Cindy discounting that seeing obvious helpful. in there behind that us rate the running XXXX? there getting of maybe heard checks, encouraging. that a sometime you confidence mid behind that's some Okay, less checks something

Charles A. Alutto

had We're feel the magnitude, quarter. we'd you We're want encouraged. our in quarter, that mailed Cindy we SQ confident. one so really of about discounting your that million think slightly the think a expected. checks going we it quarter. We anticipated in it's discounting I touch slightly have for rest better estimate know that in a this gave that for actually even to we through had think discounting. to on couple we I to fact million discounting of on $XXX Sean, which only year was had than let say last were the questions $X million I out, of the though Certainly, XXXX. about with In I'm of $XXX quarter. sticking don't there. touch than better I'll question, was less order we came

to that we it over in talk came from them about the for to the that to anything for continue year. Cindy think checks about I initiatives mailed. We'll some put I encouraged SQ. will strategic those we turn that evaluate of out we're

Cindy J. Miller

to focused just were they had of Sean, had. And any The smaller Thank were anticipated questions making that. they concerned went They about had were valid, needed they in be things. questions calls. than Charlie. did the majority on sure get, them the in and we've were calls We some we number prepared. and normal check have nature actual order of surrounding that prepared the handle anticipated. to seen that you, customers' for were is the and what may We we that we obviously out, checks of

So I in responses feel we've did and very think comfortable handling concerns, we with point in to up that a the job great their the group given this time.

Sean Dodge

Okay, that's you. great color, thank

Charles A. Alutto

Sean. Thanks,

Operator

question Hiller] Nick [Nick comes next Blair. from (sic) William our with Speakout And

Nicholas Mark Hiller

$X.XX Hey, volatile, back coming in color basically bridge, there the so guys. Ryan. is Is EPS Nick of rest year, going we you be to it's for to can is else provide the that there anything the here for C&RS volume just go from can because guidance decreased? think that you on? If

Daniel V. Ginnetti

Nick. about we off strong saw When was sizes there, the really from more saw quarter. through and and normal – take we That saw that, volume really lower saw is a quarter, calls we XX% me Obviously, ago. in came a looked you we in down QX one is but Let we the QX. volume at we it was a disruption year

the that the thought of in really It's QX prudent without not Plus, bleed recall would volume large for any that the QX. It's event recall sight. having on happening. bit And large sight so we it having more. it adjust quarter We a saw now. any QX, tails the was at a that we not little to in it only into In the adjusted of added for results really bit things. of we've recall QX, being a – plus size. little two events, that's line more month And lower of the events smaller the we're and line have

but as through responsible of we run the for not it very result balance volume of QX the just of rate going the thought that, year. the So a

Nicholas Mark Hiller

if that, there more Got some announcement that's might the sale the you. and whether And of disruption a on going there's little sale. you can, color if on bit then losing after with how or provide or focus not be the you process,

Charles A. Alutto

is ongoing an it before, As mentioned I process, Nick.

disruption again, the I this would had. focused there's the is on last any distraction day you look the had question. running we've be alternatives. say they good are also is no quarter events day, strategic a we fair. To at don't if at quarter Obviously, quarters, think eight business I but think the than more looking there But to team that

team winning winning they're from year year. are year events. they and we're size a up they Events event So on that lot are just focused The XX%, events. is XX% year. events, revenue were per a over It's than over less smaller

be I by of of trying job to distracted it's bit think a quarter, won on nature number doing is maintaining their the team it. human think we market. little the the in events and But that focus So good I distraction, increasing I to based think a on the

Nicholas Mark Hiller

here. Got in. I'm thanks. jump good I'll back you,

Charles A. Alutto

Thanks.

Nicholas Mark Hiller

Thanks, guys.

Operator

Bank Lynch. question Merrill And from comes America of next of our Gary Bisbee

Charles A. Alutto

Hey, welcome Gary, back.

Gary Bisbee

it's just recall. time business, in to quick that. follow-up, on CR&S to a at one changed I guess Investor as try patient to lot cross-selling you, the of I volatile. months just We portion volatility was Day the communications that, one leveraging there know Thank going really this or good about of story few XX quarters? What's we've go a grow last back. the be back that heard If more that's the had, in on been the you technology has the Has well, new of the to recall that?

Charles A. Alutto

we want you that call, take did we quarter. on has have that that but well. one me you We give that's that as visibility will weren't those to now followed talked calls. say on QX the last know say on. I Last Let think reduction it. about what I you in volume would there stabilized in in I a was quarter QX. on stabilized

We as XX New that Investor years that LiveAnswer it ago. we have spoke Day on months in or gone the was about two York; platform, on

all new technology. that careful be platform. putting to customers not onto new the We want existing about have We customers converted on

bit that you the be our as that obviously, the including patient business. LiveAnswer, from of away we call side on continues the call So take grows, to does that little opportunity, what or think, automation an automation, volume And communications for the business. a

Gary Bisbee

well, build-out given few from last but is hazardous about here some – I over profitability of thanks. business. a us had Okay, on one you improve helps, those just international you. think waste. know substantially where than challenges lower you're think step the as you international there just obviously much the take and window faced over if comes the should is else how lower with Thank of years haz the clearly pruning that's real thoughts update margins is you've something think then anything probably next is back, and of several-year the few a to Can the don't key years I But give really the has hazardous And improve I to has ERP the you've are margins or And U.S. we driver businesses? the on margins in I still what evaluating. strategy a said waste portfolio the

Charles A. Alutto

Yes, there. I'll some give color you

you if last think operations. I improved Secure incrementally months, the That's of come Information our look geographies. our across XX some over the with at Destruction internationally, efficiencies results our international of EBITDA we've margins

Our hazardous of M&I the had Latin internationally, a the the our did Latin results. waste from America. hazardous – number QX reasons waste We of good That's the one everybody, business UK quarter. hazardous a for for just hazardous And business really predominately we waste actually had divestiture business. business the waste America now strong

I on about Gary. talked earlier it, I touched it on. think you

looking operations we're transport and very, like haz XXX-plus margin. international waste in made our we've that to then South the to revenue has savings efficiencies. financial operations. very portfolio. shredding, business international, lastly, We've Long the low implemented UK drive have cost a that and patient decisions will The a haz SG&A do of patient with We global we systems. UK operations. have A on both transport, a and lot XX systems, term, get ERP waste Africa And it at once EBITDA

to continue at performance respect we the to financial as well. the So with portfolio look

Operator

Manthey Baird. David question next with our comes And from

David J. Manthey

Hey, good afternoon.

Charles A. Alutto

Hi, David.

David J. Manthey

RWCS First few is customer in stabilizing any believe next at see growth there reason here? moderate shouldn't maximum and point the growth behind pricing even you, is to or the start if quarters some to is of churn that off, probably

Charles A. Alutto

discounting Listen, we're than SQ QX. encouraged was we by better had anticipated.

to want wait or another we think two. quarter I

I impact. to think victory initiatives we that the we want take there to think are implemented declare don't yet. starting I

though, business. the remember, occurring got discounting we've to still in have you that's think I

of half had Although it's And we at through anticipated, the XXXX. through that through of second first half – still an anticipated better to – than the it's elevated least occurring. we amount continue

So realistically in us this see with XXXX. a opportunity turn and in along goal, I this business. goal around it it, is our to looking long-term think the to at start for that beginning growth That's is still to

QX, another before on about we be want So I Again, encouraged those that. it's today plan continue but we'll three by we the we see. so and did definitive to ago. quarter months than see was XXXX think get to better But we going results growth, we're just all or along that feel that

David J. Manthey

Charlie, the other the than rate And, Is it's better? it is now? saying your better of but direction expectations, you've been change getting going

Charles A. Alutto

have we David. The better be for getting year. way to hadn't a estimates I each we have say And discounting million remember what $XX that for anticipated, quarter, million that then it's that is $XX that the will we

So it we in lower anticipated. came than

lower it better. getting So is is than we thought. Discounting

Our the churn rate is in direction. right better and trending

So what mean I that's by better.

well. I I think we've that think again, added that talked We give long-term good on a so get can us, don't $XX want that. on maybe that Cindy again, ourselves out we investment, is as but some to million of encouraged, about and touch quarter, a for journey this lot. ahead color to We're on

Cindy J. Miller

David... Yeah. And,

David J. Manthey

Charlie, getting Just discounting so don't misquote that better. saying not you, is I you're

thought was was. we it know don't what You're but it's you than getting to be, going thought better it saying you

Charles A. Alutto

that It million we correct. a discounted getting were going and is we number $X in – had less that's thought to discount, we Yes, we QX.

David J. Manthey

quarter Is not? it still or worse getting to quarter

Charles A. Alutto

No, No. it is No. not.

David J. Manthey

Thank at. you. getting was I what that's Okay,

Charles A. Alutto

you, Yes. it. get I No, I got David.

Cindy J. Miller

David, is And, Cindy. this

Just some Charlie of had the bit little a of follow-up, mentioned investment.

of specifically to positive just the think business. or of mentioning. forgoing update, for plays strengthening, overview the and it improving of specific a of increases think things focused laid was was we're limiting that just and earlier price performance positive, out we initiatives really a couple some long-term also customers, And that number an the relationships seeing this year strengthening from on that the what the very we've Just to results of I is Charlie been general a

the had little management think customers, model about some bit results then account and But that. a with from positive we're also investment field engaged getting sales of one on other and that talked some more, the We seeing we're promotion talked predict and would of the additional one some seeing our very changing channel measurable marketing I digital And think traction that I these we some early maybe investments. future in some work. indicators which I are brand think was on, about in opportunity,

when we that look that's when macro everything very into you we level, So think at also that consideration. encouraging take

David J. Manthey

Could Thanks. Okay. I...

Charles A. Alutto

David. Thanks,

Operator

Hoffman next our with from question And comes Stifel. Michael

Michael E. Hoffman

Hi, taking... thank you for all

Charles A. Alutto

Hey, Michael.

Michael E. Hoffman

you doing, are How Charlie?

Charles A. Alutto

Good.

Michael E. Hoffman

Cindy, welcome on board.

Let we measure we're me of lead KPIs to what with, are And those for impressions? so you've a think looking see been are? understanding month? there what, the the the KPIs make that you're an and there? since the you of be What's things What three in bring are will being result how weeks, you on first as your that a coming impact? going perimeter What do

Cindy J. Miller

for I things. a of think – and, Michael, thank the couple you welcome, just

help is background the results I'd well talk my from suited I've position. XX certainly been comes and and believe attracted last something anything I business on I to years. is for about from think technology. and getting transformation, productivities talking the synergies from we because that market we're maintain industry raised benefits to that benefits ERP else about from a reaping And that originally First, that pretty Stericycle When the reaping an been leadership expected

that think overall I right in some I falls think line. So observations. then And just

and change, eager whole which diverse the about. initial of and think a welcoming excited backgrounds. get they've taken transformation pleased I'm me, with to there's very look team, to been and see referencing I'm plans engage to has I and strong effort, And very and of openness and I've at course feeling business ERP of business feeling got team I folks supportive. and the a it's that extensive being think just that business a pretty transformation very designs. I experience

there. my And very are results that in confident ability four plan feel under with very I to the comprehensive, confident out very coming this into they're belt, our quite think I thorough. deliver weeks I'm

the part team, be way can. So helping Stericycle it's look an of contribute I honor and that in to to I forward any

Michael E. Hoffman

million for of this the Okay. to to rate million year-to-date million? what's $XX Charlie, $XX target the million $XX $XX the run year,

Charles A. Alutto

so that the follow be to Yeah, I slightly exact tracking get according would that it have the number, would the Michael. we quarter up number. I of from plan, $X $X million or that, with exact had. less maybe you say can we're I million don't better about and three-quarters

Michael E. Hoffman

So mid... take the

Charles A. Alutto

it in had we slightly staged QX increments. came and quarterly And happen QX expected. as QX in to So again, better. in came

So year little we trending better $X about to we're than bit a date, thought million. by

Michael E. Hoffman

Right.

$XX.X would be? take get multiply I subtract it $X where million, I So by and it about XX%, million,

Charles A. Alutto

correct. That's

Michael E. Hoffman

Okay.

back complicated away way think million organic that underlying So away gave X-C, is show medical for in light three-quarters and then and called so come – Changes, of Disaggregated of in growth that math I pieces that, when a and do you there the else I growth. I – get can but interesting I to waste. and you paper and – an take table, $XX.X Revenue adjust forth, Table everything organic in on and think about If so this year-to-date the out there's and this number

Charles A. Alutto

some you give we've things me of you before. given let that So the

then came in of we by we're Destruction And and we high Information little we revenues expected in as If Michael, day, Secure ago. pricing, end from at out We were if had that SQ the M&I take better international. we on range than going about our course segment. our and thought regulated quarter. think And had you year growth the X% probably of lot at range number end driven well. higher a look expectations the the roughly the range, the high end waste where at be the of bit of continued A you – still of to great were a compliance the at end about for from quarter, the for that you have the we transport to where of certainly and the is of exit, patient a of exceeded on be the and year, being overhang

the in growth still but dealing business. business. the So growth still lot We're a SQ there in with underlying is of pricing, struggling, obviously, there's

Daniel V. Ginnetti

talking that we're that, those transportation you're and taking add, and appears XXXX revenues, continue that growth, we're to at those have to when we're just organic the this mind and to within be in things looking patient still and and about an Michael, disaggregated contracts been exchange. a remember, down through that to exiting get in out have to as well, it keep we comparable quarter. But acquisitions, headwind divestitures, foreign like includes

doesn't in It QX, organic mirror, you'll so us to get And the and once improves. does behind in improvement comparable growth. Now there. you'll in That captured begin see an are affect rearview fall that see off, the there. those those fully

Michael E. Hoffman

Okay, Dan.

you make think might patient trans of to the The is impact just and and the have organic, just let $XX.X back include confused me $XX.X Africa just would the million the million, but organic, Clean sure. which I business. Room is selling repeat me, South

Daniel V. Ginnetti

confuse Yeah. Michael. want to I you. didn't

out off. organic not if you ran in and so will throughout. of a that carved recall, divested, yes, had certain we we as of we that divested contracts we remained growth and So Those that patient contracts those our retained are remain coming within number were that, transportation, a portion those

of to So highlights that's why that. give I tried

Michael E. Hoffman

million So that's serves, to. about And memory if $XX referring that $XX million? was my you're what ,

Daniel V. Ginnetti

Yes, that's correct.

Michael E. Hoffman

you're So that the winding organically. those $XX.X million reflects also down

Charles A. Alutto

correct. That's

Daniel V. Ginnetti

That's correct.

Michael E. Hoffman

Okay.

that rest much organic that's the of the overcoming better. that growth So is

Okay.

Daniel V. Ginnetti

Yeah. Yeah.

Michael E. Hoffman

start the year per earnings date number move I'll XXXX? share make all that year-over-year think is building FY that so we sure change, convert we what to in we when about to right, contribution on. All The XXXX

Daniel V. Ginnetti

the asking. what referring mandatory did, think that is think the we I I repos I believe, convertible you're to is of what you're preferred

Michael E. Hoffman

Yes.

Daniel V. Ginnetti

$X.XX. had It And guided was the quarter. We in year for that to $X.XX the an was in total. additional $X.XX

Michael E. Hoffman

Okay. authorization. open us an of a telling you And point have then that made you

sitting, So be given where prepared to the and stock market is in you are the stock? buy

Daniel V. Ginnetti

consider Michael. and at And part state Yes, remain future is as time in being we of to exists from are to flow reduction do strategy of part delever opportunistic where company. and with that does continue we but as to amount able allocation strategy. have. Share the repos debt to we'll the point do cash the continue devoting our to important we of very We remain capital ERP this acquisitions today, certain when cash opportunity business investing we're capital in of are continue of system. we our in our we're Obviously, when and point to repo our the a a and need will transformation comfortable invest allocation a me our to

Charles A. Alutto

priority think on reduction. debt is right the now I

Daniel V. Ginnetti

Debt reduction, yes.

Charles A. Alutto

To and well. on as down, opportunistic shares get be we'll the the then leverage common Michael,

Operator

from Capital. Hamzah next our comes And with Mazari question Macquarie

Charles A. Alutto

My we've Hamzah maybe if acquisition, is maybe first going hospital business then Good back And the today Capital barrier evening, medical (USA), with the tends but look in is we market for forward? What barrier Good frame about us. had doing? if this business. Disposal you a entry be change entry. technology, structure cover the How self-inflicted, forget evening. to Mazari you to Macquarie due these - solid at from to question waste we you are waste, realize to step but Inc. just Hamzah. re-pricings –

build or an can you think $XX,XXX autoclave for $XX,XXX. now I

So frame business. the an barrier entry in just impact stock. it's help Clearly, had on this to us

us you. maybe Thank understand help that. So

Charles A. Alutto

building a that. you're more to think It's maybe expensive a do I small office very autoclave than in or instruments. $XX,XXX, Yeah, $XX,XXX for doctor's

to boilers You've the got operate units.

You've got handling. material

than So there's units. goes that lot more into the just a it

autoclave. to have You the permits get the

I about entry low say, people As and you think medical hear high or they're both right. when to waste, entry, folks, always think barrier to I explained barrier have to I

a the of access has that their disposal somebody won't to it's generally waste the doesn't to or incineration. to with of business the be hospital higher portion have On and side a because own hospital incinerated, hospitals barrier business, entry do

the higher. aspect, to into is to get going business from be So hospital the that to entry barrier

SQ the has always barrier the entry small. been business, to On

to your You need have of – even really don't Hamzah, even cost don't to autoclave. want point, to autoclave, you an an if the you debate

The the and You can permits get can most go a small a can you to you density. you that out, there is of that from and be for treat go party entry pick an waste to would waste. real hauler can it route bring barrier go truck, And so have to third waste incinerated, to does to up SQ a not autoclave. can

it route that time, you have Most entry takes local our time, build at one a the and You Stericycle out, to to of has density, that barrier a contracts, contract. a density. start route a building competitors so has is long contract. everybody account

customer. a that So I the barrier of to SQ for think is somewhat entry

Daniel V. Ginnetti

And, Hamzah, I would add to that.

other if the waste hazardous really our with them we but their entry of that use of just that direct One you're hospital, The about intangible for needs, – to enjoy yes, with is medical that us pharmaceutical barriers help and customers their vast the multiple needs they can have. needs. thinking a the breadth customer have their we relationship fact not of we majority services and services,

Great. - Macquarie CPI-plus in Capital the pricing? but solidifying services pricing see business? is Hamzah called Information in out maybe remaining again more solid of We do million (USA), pretty this to terms needs handle compliance Inc. And can you headwind the this hospital have barrier their service. a inflation. relationship services SQ, in once waste We now is because then We aggressively. we med QX that's labor much well. handle that resources have our waste And I How the see that next the the this, breadth frame really I helping we lot in, competitors. headwind. And guys the can can us, behind we're of is missed We Secure customers. their tell entry year? Destruction. $XXX of we would with of Mazari big a versus as then can Even we inside We a And

And headwind business we do pricing how Just power? with a for is left? then have investors, this pricing much

Charles A. Alutto

$XX we're that we CPI-like business, get going like to better We've some XXXX. in of There's this. elevated million where it's through in to million discount, there's always think than think saying, about Hamzah. another do talked and pricing it's next We be think increases. us the elevated gets I CPI-plus business, can we the pricing year, middle of $XX type a

once SQ in we and and given of churn price there's we and get of the in hundreds have of the have. we a large think, CPI-plus customers But the the price always this, get thousands we number in of customers level We market through that space. though, can price-sensitive, Those customers, discounting some range. are

Operator

question Schneeberger next Scott Oppenheimer. comes from our And with

Scott Schneeberger

Thanks. Good evening, everyone.

Charles A. Alutto

Scott. Hi,

Scott Schneeberger

little from and a cash Hey. drivers Could there? Could like bit bit Thanks. ops CapEx? were we the It guidance you decreased. about looks both speak into for get little a

Daniel V. Ginnetti

Thanks, I'll one, that take Scott.

we into if not revised that a announce settlement time, not flow. consider to making would then takes. the we making our and payment. did So was be cash that remember, year going free other we obviously had year $XX few at $XXX that would we and settlement quarter, in know we this $XXX you'll At a we did the be midpoint In did a started million quarter for million of full guidance million. payment, and puts Last

well our With you about We from challenge items, for adjusting have anticipated did for little out by it's our about we million. and there. regulatory to continue expect million in legal expectation about numbers, million C&RS are, to for year, you'll in less we QX. the we that forecast one-time when our and to did bit the talking this And the a on in ability as saw $XX see going where about we're those. then although we our $XX $XX lowering as the a QX But full in guidance adjusted and give EBITDA quarter or higher unknown had CapEx related we're we we're to cash would expectations be do compliance. an trending CapEx don't QX remember then year, balance not of And we

that. system, had our improvement it two don't strong We days. of very quarter that out with benefit. we're be had down come is QX and But bit purchase state. $XX across part we cash make very a of which forecast of would so a replication Take about were We're we very thought of QX, And quarter. that. of assume slow to a just would the future a those our DSO midpoint us don't QX, of we to outflows pleased because gave a we – implement going that have order sure pleased our be the little of It to excited is an new that, of guidance, million. did about to Certainly we in which

the a We expect bit company to our and our will little remediation advance of in next systems. towards step flip that that our state work of But great quarter. future a weaknesses was material

Scott Schneeberger

legal last that was Thanks, talking quarter. Dan. about helpful. I remember

one-time should remnants? quarter? there year And the in trickle we more this done? so little Is about is year items we on expected year? than fourth this you unique into next considering how like lower the there legal? think budget were trickle next these a the then And lot Are Is a CapEx

Charles A. Alutto

Scott. Thanks,

through both QX. legal me the them. Let those take quarters. did do of It's legal lower three We anticipate We higher in be first have expenses expenses will that unpredictable.

to unpredictable. through as As investigation we're those going But we're going it's again, so diligently manage you the know, well, as as possible. FCPA

your in point, will to anticipate QX. those though, think lower be I do we that

to X.X% X% run always revenue. we've CapEx, as far As to

I the think X.X% sight line and anticipate paid good be it. of in think QX capital anticipation QX cumulatively for than get middle for We of so higher the have year a projects in But next the we're to the that do again, quarter. that X% at and in the close will right is we're respect to year. for CapEx I to we are with committed X.X%,

Daniel V. Ginnetti

year our That's realistic a next it I be a south dramatically it it's think And have also, of some future put that as our up. state transformation. we but we're business That Remember X% bring revenue, but number. there, up, devoted CapEx operating of bit. an we'll it expectation be the of could the will to little shouldn't out up

Scott Schneeberger

appreciate I it. will turn right. All it I over. Thanks,

Charles A. Alutto

Scott. Thanks,

Operator

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

Isaac Ro

afternoon, guys, thank Good you.

Charles A. Alutto

Isaac. Hi,

Isaac Ro

EBITDA got just helpful. flow I million you've then you that the on I If a to $XX in pricing, little context? was is we if a reduction litigation cash it? wanted the at last reduction What a bridge, give free bit actual for bit on Why change, $XX that? tailwind the new of from fact the one consider the little EBITDA, to million just maybe extent quarter. two thanks was was which that a guidance paper versus bridge maybe for title us the underlying was sense of, and the that quarter? putting – the look rest. was what Could and of by the in way, items, And That this

Charles A. Alutto

what continued in that take question believe investigation had QX. winding I QX? the the of litigation that was was from Let that your is ongoing to down, do FCPA with change QX but Most that, me to

QX. And paper think your QX I'll answer what was respect let I pricing, with amount then in the question one. of was that over the So that Dan on of SOP impact to

that remains knows, for everybody The contaminated SOP and Chinese paper paper level. coming on mixed XX. market strong XX. elevated market The at into Just ban so has an elevate SOP it's helped

$XXX Although pricing. most impact of ton. to started in the of have our paper We it range an with $XXX a stays on U.S., year a does

Our current to year a is range $XXX of guidance $XXX for ton. a

Daniel V. Ginnetti

I'll touch on the EBITDA impact.

that you our million bring press midpoint came $XX that the release You did about $XX cash. at the that, you down When look in in tax-effect of we the that EBITDA by midpoint you saw about that's guidance million. when gave,

had America. in temporary That in we Latin $X million of guidance. change big as impacts the was movers you in our some of that, about probably Some saw,

of a a going million have top able $X comes did see, into to increased continues exchange came at level million you $XX be there. it EBITDA. from flows that That's squeezes contribute guidance about we million off the to that to the to little then to be is our they're And about smaller million, events $X amount. only handle The the Foreign but with of having, about combination about number of the C&RS. that, midpoint headwind. That's certain refine maintain a of and even a to staffing you about EBIT happening reduction – Obviously, though through. down $X going we're the of to of we ranges as $XX EBITDA. QX, SOP out bit, million to

So million to as would the things the about million think based I an $XX those you're get $XX adjustments of thinking standpoint, about to on QX an EPS a from off you EBITDA.

Isaac Ro

rates up, long-term items. follow us ranges you. then those to the on your gave and guys slide have all that's revenue on time of correct just all gone me noticed detail And level I'm And thank and guys for first into if goals think I Great, you earnings I wrong, for that that. growth XX, you

detail five-year it would the periods. to reasoning year those in as end to So the start we helpful a you. we more might get can period for rolling period, or those ranges? And the commit Thank that of to what's quarter assume what know part to then Over and your a that, be basis? little that ranges, and fourth on maybe led just clarify call

Charles A. Alutto

when lot time, I those to out implemented. ERP closing so on as introduced we is those have there slide. not little been put numbers that's that. more this always business the think benefits Dan transformation slide it A Actually come well. color first earlier now after it add year, a can a We a of we've had on

Daniel V. Ginnetti

shared reliant a our the rolled five-year graph out and transformation, Obviously, we business graphs. implementing when on we plan those majority Again, of the those ERP on is systems. the are the Yeah.

the completed In long-term expect rates The growth the we in growth of we've on in and the of the system that a from would out you're long-term continue going that deploy you, that rate training to EBITDA there on really Just be the to of that tailwind the see XXXX following XXXX, savings in seeing and The you're building, ERP to ERP. all implementation. XXXX we'll comes initiatives be XXXX. testing, ERP BT majority focusing rollout EBITDA they remind and XXXX. in in U.S. and Canada,

bit XXXX. build, a within we XXXX, you're track beyond prepare on those as BT it; once capture a is growth We XXXX XXXX, spike going test, that is see in the was that and deploy. XXXX a spike rates we initiatives those those really to And ourselves. getting up for. communicated and try we're train, event that really in really and But again, and So to up of that XXXX

Isaac Ro

got Thank Okay, guys. you, it.

Charles A. Alutto

Isaac. Thanks,

Operator

you, That million deal joined, $XXX And $XXX but new million. I more was just Macquarie one. guys know assets, was Hamzah a Just plan, the it you. also have didn't we the you you. restructuring down? Thank one, Mazari just was two Capital. divest the a follow-up. go guess question (USA), know she I you does a does questions. with I cost Capital Inc. restructuring Thank COO Hamzah from And those change have to Thank then material two, assets, that and I Mazari if with had - plan Cindy ERP Macquarie now?

Charles A. Alutto

early derisks on, on we divest that assets. if a an system there's didn't assets get It at if Yeah, not the operating it. a We'll think effort were I Certainly, a it or depends cost we we on of look I'll decision the at the take strategic I depends the would system. probably do we do the Obviously, what system, of significantly, building to lot made that. it with savings. that I updating the would don't that. and if first selling. know for looking cost That's and on divest, or again, what derisks that we're financial something put going Hamzah. we But to it C&RS, We how what of one. mega-processes how the assets, implementation, some think we kind building. it have time, into it We're when ERP divested one certain, divest and impact be we're thing I implementation for because

Certainly, asset lens is that in make or decisions we ERP on not at look one we the that. we'll stays on So as whether portfolio. put an

On that? thoughts Cindy, the any restructuring, on

Cindy J. Miller

for thanks Hamzah, the Yeah, question.

help getting to the just to not join going I'm is all, the excited things with at restructuring. help the chance a to and change that it most get the a provides operations should to think team is of I the the I company teams then me that don't restructuring about One engage synergies we the that of into with that think opportunity greater continued the really productivity work the and doing. results the detail get is field and the all and efficiencies to the team an to drive from

change to go support Capital the appreciate great - been I to questions Macquarie and here Hamzah forward. So That's get last I we me things, augment minute. help on not engagement it. great. (USA), it's Mazari field think you Inc. Thank but taking beginning, as to for for my

Charles A. Alutto

Thanks, problem. Hamzah, no

Operator

And Hoffman a with from we have Stifel. question Michael

Michael E. Hoffman

question other million $XXX tease out Thank just you. to The follow-up the be $X about the to billion. would guy's

be Just Business business The the $XXX end I million. is Am has pieces it's transformation that. there million $XXX about I right? clear, of transformation probably are component, $XXX about low to take two ERP ERP. if to million. a

the you about we're If $XXX comes think out million savings, somewhere and business is in to million, SG&A? $XXX $XX the peak of ERP essentially to transformation, that annualized $XXX year million and million probably in probably between

Charles A. Alutto

I – to think five business Way, refer five-year as $XX you we period. think we'll the transformation, million million you internally $XX that the if it look over will over Pay incur and which at a reoccur that about

the of savings revenue SG&A at coming when you'd office being routing is shared you majority an fewer in revenue A we ERP back think million. part And don't the if then ERP. So think $XX majority in is that this inefficiencies I $XXX actually of as we've lot want, about million, but we systems. implementation is component broken are we the I the cost cost just of marketplace. is obviously that's and and from important of would well, SG&A, point. think and some took there of out ERP, obviously and the benefits Obviously, a if say say so the savings on of

we can you Michael, the it just tells X. that the It's BT out going we're have quarter, I you So into to million actually well. math, if to you math did so yourself. on each that can And some on slide that tailwind $XX was table a because the the put the as on simple $XX you do do on yes, almost slide there. believe million, tailwind XXXX

So the tailwind times a that's related million-plus out. you'd rest to transformation, get number that ERP. business that you and and helps four, take Hopefully around to probably $XXX

You got it?

Daniel V. Ginnetti

X. slide was It

Charles A. Alutto

to you occurred do gives this good of now X on tailwind Slide you in sorry. when XXXX. – breakdown so I'm can going savings those a X, what's it's Slide happen

Michael E. Hoffman

$XXX All do approach, about I take million $XXX you splits how OpEx If that between $XXX SG&A? million, and and right. roughly think that million

Daniel V. Ginnetti

level systems, IT able consolidate on our would improving and It's to out to I out some remediate It's processes of processes. more really It's on really early to able is Cindy of taking being have what that's and that her the field how take a to it to through. of to to manual recognition. that added SG&A. routing company being end-to-end our certainly things can then flows real-time this But able lean part feedback material haven't and that. we never being metrics-driven for like being analytics truly organization daily probably do. and drive optimize being IT, our our efficiencies flows, the tell to us heavily a advantages one our this weaknesses the big about career and able data in certainly And ERP transactional of and work talk and revenue of and enjoyed this, of be offers done in operation. able the we the but we've billing

Cindy J. Miller

routing visibility how have for visibility now predictive talk make to between independent or to one real them see that look we they with get the to look analytics on that because pickups need more we between it's make a vehicles, we this Dan. in greater data think having the savings, out I two, whether we about we whether routed can a are accounts, look across we will having we road. any fuel overtime, opportunity there's us get that our difference can the amount moving Thanks, can even whether in things density, maximize, drivers, and more it's forward. take can there's better and predictive, manage bringing so all engagement all a there, businesses for run can miles, we across of I and we when any real-time routes of I tremendous a in how reduce opportunity particular when we crossover the have, down to business no a tremendous just take think that savings, day-to-day how in think daily we right the huge the at in miles, of Michael, various of how And the get utilization it's that of optimizations that that on

Michael E. Hoffman

Okay, thank you very much.

Charles A. Alutto

Thanks, Michael.

Operator

we And have further time. this no questions at

Charles A. Alutto

worldwide Thank you, of each and thank team. closing, want to every operator. member I In our

the Destruction and businesses and track Secure quarter Compliance Information exceeded to and latest our in Waste on Services Our deliver performance are expectations Regulated XXXX. for solid

on addition, In team work continues the to our to remains budget. transformation that together and track on business ensure

dedication Thank for and truly evening. is you, bright successful everyone. work future Your Have and great a at provides and Stericycle. appreciated a

Operator

Thank does call. disconnect. today's for you now may conclude This your you conference participation,

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.