SRCL - Earnings call transcript Q2 2019

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Operator

Good day, and welcome to the Stericycle Second Quarter 2019 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. At this time, I'd like to turn the conference over to Jennifer Koenig, Vice President of Corporate Communications and Investor Relations. Please go ahead.

Jennifer Koenig

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

Chief discussion the Cindy involve Financial Zelenka, Seward, be today risks Officer; Officer. Chief Bill On will Janet and Miller, uncertainties. call statements includes today forward-looking Executive officer; and Commercial that The Chief

in Our could harbor press are differ discussed from the safe differ detail those forward-looking earnings in such greater to actual Factors actual that Risk U.S. and our results in the results statement release our with statements. filings Commission. could Securities significantly Factors described cause within our in Exchange and in the

trends. performance financial disclaim update to revise should past of use and any our any considered performance or other than obligations. forward-looking should legal Our or a with not reliable anticipate indicator in We not be regularly to accordance historical obligation investors and results statements future results future

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

and certain the business and to which we unreasonable would impact regulatory on because information and relations items not or additional on be is reconciliation be found Please events, unanticipated operational included GAAP Stericycle's most other in reconciliation comparable non-GAAP adjusted could an release, and guidance can possible it press intangible that predict note material. schedules acquisitions, optimization divestitures, For be provide earnings GAAP website. the to amortization, please effort which the refer provide matters, a litigation transformation, of investor without to reflecting results reporting settlements basis measures, future compliance or in our certain

also Throughout specific from call, quarter investor our website. we may earnings today's presentation. for comments available call the the Finally, to correspond this relations second presentation, our is on reference slides which prepared

the turn Cindy call now over Miller. I'll to

Cindy Miller

XXXX call. to continue several progress you, priorities, conference Jennifer, our our the our we've call, company. important of transform welcome we our earnings Since work against last made second quarter key and to Thank as

that going our key call, recognize highlight focus, ahead, confident as On of improved work work drive team, a of lies lot remain shareholder of management address excited but the made new business value. we and today's we forward. performance to and areas prospects a As and the we've hard progress we we'll about

quarter. the on Focusing

revenue year. line the decline early the of the pricing in with in quality performance began reflects Our impacts and and revenue was of excluding office exchange macroeconomic we expectations earlier initiatives sorted this rates significant implementing that foreign paper impact

primarily our was in a influenced From pressures profitability by we third-party and hazardous waste by disposal. cost disappointed the were related business primarily performance, which macroeconomic to factors perspective, the

are moment. and these We revenue actively through in short- touch pressures on in cost executing quality effort, plans offset and efficiency to operational the I'll which long-term a

current no our of guidance in of are longer-term diminishes factors opportunity core our year-to-date adjusting the and This way result a XXXX results, As in downward. we businesses. confidence

As business we core our our we on market. our continue efforts strength services, on this must to regulated in refocus growing the capitalize

offer. the value that appreciate customers and we differentiation services Our provide the we

to have We drive foundation and growth long-term strong value. a which from

debt rationalization, and on remains key implementation cost improvement, five focus priorities, portfolio and include: of restructuring efficiencies operational revenue, XXXX readiness. Our Stericycle's ERP leverage which quality the

I portfolio initiatives portfolio do our to in providing on significant time updates time, focus look A further the portion For committed we to continue businesses. devoted is opportunities. These of sharpening remain future. forward pursue rationalization, core to to my and our take rationalization, and we

the Janet remains additional commercial quality our restructuring plan. financial which earlier capital flexibility. and revenue, completed leverage To debt will structure and for restructuring of to quarter, debt provided few on in more Focusing moments. a the in organization review a We detail committed balanced refinancing a improvement. this drive multi-staged

share beginning the provide following governance, to well details more contract the already highlights. and on as new additional these expansion plans Bill are as we will of initiatives quarter pricing and impact results. implementation of one see Just favorable

everything riling how name on few. efficiencies, practices, is focused aggressively to do we just labor For and to practices, metrics, team we a operational billing work do the to cost challenging standards it, to from

you operational We several continue call. initiatives, to which on I execute first mentioned the on to quarter

eye, We are in of collection the to of additional route advance the to performance opportunity at operations identify we implementing ERP costs. truck we new our new improvement look expand improvements as we continue identify in a mobile And help opportunities, and with fleet. reduce dashboards to use us to critical continue our

system. of the ERP Transformation cornerstone finally, of global our And our Business implementation is the

advance of the The primary leadership the During company. development our priorities to quarter, of performance on are implementation Canada for team completed to in second the the readiness long-term remain on and year. continue ERP I progress key and track in these of and we committed our next pursuit improving steadfast the the U.S. We activities.

our take it and their While value to many customers, the like thank members shareholders We'd and confident and the time will company's ability our transform for to support. remain team focus, proposition in strong business. foundation, continued the we

helping I'd over Officer. Janet And on June our shape starting in the Chief has to finally, Since business turn I our Zelenka, like as who future. become Financial welcome before immersed our has to and is Bill, to call joined X, Stericycle already she

the service overview line lines. will performance of top our provide Bill Now of an

William Seward

Thanks, Cindy.

and a service with to quarter, they is which customers the building foundation the the the and revenue market. It our confirm quality rely differentiated is upon trust their Stericycle That initiatives. And communities trusted Stericycle expertise cross-section This to as quarter, and connect the expertise with last interactions our we're value partner I you protect of they help customers. Stericycle on that clear these I serve. of to privilege brings thoughts businesses preliminary had shared people, a their the

results review to like the quarter. I'd Now second revenue for

impact the offset acquisitions in million our quarter $XXX.X decline Waste foreign events a and and million Secure quarter. Services $XXX.X revenue the closed XXXX. by were QX for Regulated second the net during of for by $XX.X by impacted in compared revenues of million revenues quarter, Organic revenue Compliance was rates Destruction the growth Services and divestitures exchange Total Related to and significant Information fewer SOP and in Communications Previously reduced pricing. Recall negatively was

Regulated Waste of $XXX revenues and growth million reflecting organic million. $X.X were Services Compliance

Importantly, we've in years the The delivered in organic this two growth selling. is pricing the in from business. that contract processes to our governance the commercial introduced the growth first that benefited making year. earlier refocus This this on changes this quarter we're value were reflects RWCS and business progress organization

discounting. encouraging We also see trends among continued health to lower including care customers small

delivered the recycled declining the paper implemented steep will prices. Organic accounting to trend. declining surcharge was SOP we In recycling continuing surcharge the ongoing partially paper paper a X.X% market for fluctuating decline when million. Next, steady The recovery or August, Secure be of revenue pricing, pricing. help headwinds the quarter created $XXX.X in Destruction offset revenues Services indexed the Information offset growth X.X% growth and to recycled by in will

exchange million XXXX waste $X.X Communication and Related were from $XX.X as to the impact reflects Services down revenues one events Industrial of to XXXX. and the divestiture hazardous when U.K. and Services foreign the million unfavorable for from business. million, QX year million Recall in of were down divestiture revenues smaller U.K. compared $XX.X business. and QX excluding fewer $X.X ago casting due the $XX.X This as well million, Manufacturing

benefit governance pricing and beginning As are Cindy, to of contract the the mentioned changes in our initiatives see by process. we

to the We U.S. Canada. that and invested In These to geographies, new additional realigned investment deep our our the teams the the to governance market. enable marketing, more Stericycle and expand recently leveraging compared across strategies, development, and brand product contract to to marketing will continue leverage use and us through business approach. training go-to-market that brings pricing. the This enterprise expertise and committees expertise development emphasizes siloed previous teams of and lines support digital quarter, support we also new value second we our our in as the structure our

With realigned on will our in step and focus new a commercial customer teams next driving revenue quality growth. be place, the of heightened

growth We customers. over on have existing been reliant from

we convert new a strength be and customers, our and future to our our Going targeting forward, in capitalize expertise bigger of and marketing the play we customers new people on role will will ensure much to growth. initiatives sales

call like for the and they've our our work done commercial teams supporting acknowledge turn to commercial Before transformation. the thank I'd I Janet, to over

much work have We do. to

the However, by our I'm changes we businesses encouraged by to the the embrace core willingness growth we and of are in showing implementing. our teams are

to I quarter. now call Janet this the for review welcome additional to financial results

Janet Zelenka

I've the to Thank a in the see can you, with been fortunate new I our society team core Bill. part I of past, Bill in business bring Stericycle of with to possibilities and transformation. the the Stericycle. and brand, the Like and at well-executed Cindy, and lead growth the we to value ahead. the become great the clear transformations I'm potential pleased appreciation joined leadership customers opportunities be the strength markets reality a that for of and

During job, I've first and and team business on evolution, the on jump be comprehensive two in the and approach part I'm to right the next the parts focused impressed my technology to chance of of associated with phase months into business. excited business. to of been the had all transformation. the into the and as I've The discipline drive Stericycle's company execution we the strength the right commitment the by planning is areas performance, drive

CFO. I have three as priorities

including environment efforts weakness advance for we material an effective, First, efficient remediation. to stable controlled must and continue

the improving will and current built-in year. automated to ERP controls, design the controls our While state on this provide and our continue team of many of focus will execution

margin Second, flow leverage I'm I'm balance on reducing management committed cash through and free initiatives. cost and to sheet. driving reduction the improving expansion, our focused cash debt

multiple Stericycle's with as the global commitment manual former of to benefits forecasting, a on in company's services. including clear. system a successful moving with to share who of current a intensive planning, worked processes, processes ERP reporting has ERP systems, and operating shared finance the implementation the After one CIO, quarter I experienced financial are Third, focus organizations

the shift let's second focus quarter. that, for to the financial With back results

a were the As of of revenue revenues second operating in rental as favorable. pricing a was $XXX.X disposal in Bill year. were quarter percent SOP quarter flow-through Income percent and and pricing primarily the This due SG&A including third-party pressure to which operations expenses last in was variance administrative to waste of for and slightly the quarter hazardous maintenance million. $XX.X $XX.X RWCS increased compared million from and noted, or total revenue general higher costs, the of costs. second Selling, million equipment as and

one-time for loss loss year-to-date GAAP Cash a decrease share and This a pretax was operations net on charges $X.XX loss in was $XXX related to diluted of share early higher $XX per related second costs. net and the charge debt million year. capital. including diluted result change operating $XX.X and per last of million compares of $X.XX flow earnings the compared the extinguishment period That was quarter working in last to from of primarily of year. million the to

were for for to the variance ERP were $XXX.X bad internal driven billed $XXX.X last our million million macroeconomic revenues million higher and which in primarily the $XX operating percent million one-time million impacting was This and which improve comparative the to increased second and reserves Capital was in for Adjusted year. SG&A higher implementation. factors to to increase processes An to costs expenditures controls million in This and XXXX higher primarily ERP adjustment expense, $XXX.X in the compares included $XX.X EBITDA by of year-to-date as was expected insurance claims. a expenditure $XX the last our revenues ERP. capital by a investments $X.X including year, expenses, rent driven older million of debt and of compared implementation. quarter

new mentioned, leadership pursuit Stericycle's of remains a team. efficiencies operational As priority Cindy for

cost-effective we and more pressures, long XXXX. and third-party are Adjusted haul on to for cost costs Our waste operations procedures second the $X.XX address teams in numerous labor, the standardized To mileage providers reduce use routing. efficient disposal hazardous metrics-based focused more current and $X.XX operations. activities score and are through efficient reduction, engineering to of operating compared EPS operational was cards of pursuing quarter

interest is share EPS RWCS on pricing on Slide $X.XX year-on-year the tax; $X.XX this $X.XX quarter gains $X.XX adjusted from and higher from As the XXXX. $X.XX and to compared and from $X.XX expenses; XX, following: illustrated of higher to SG&A from costs; variance from the repurchases due C&RS; higher macroeconomic operating factors; from the absence on expense bridge in

the in capital as for days compared million the second outflow expected XXXX. in was XX XX a of expenditures cash loss The DSO days increase of change of to inclusive Our net result of a and the quarter Free capital due an ERP implementation period. to in working the was flow expenditures net $XX.X capital.

amended at Our quarter. is end defined agreement the X.XX of ratio debt under debt-to-adjusted-EBITDA the was the

June, in and debt the in with Cindy $XXX in the raised mentioned As notes draw flexibility. million billion Stericycle term with with company off senior financial to we paid balanced from million provide of capital private an in along revolving more line a year loan. five refinancing our We notes. structure our our Combined its placement closed $XXX unsecured an opening, incremental $X.XXX restrictive credit, of additional

the As a our of amended part X.Xx March for covenant credit we to refinancing, limit XXXX. terms through of of facilities debt-to-adjusted-EBITDA allow

are exceeding We term on any on mitigating our spending to used our focus risk continued divestitures a portfolio through will of leverage loan. controls The be portion rationalization. ratio the proceeds pay of to debt and additional covenant of down

and year full commodity rates Given XXXX reflect the updating cost performance increases. SOP continued are to our pricing, of the the for through exchange June, financial operating foreign challenges we guidance

by effective on tax Additionally, A XXXX year-to-date EPS shown a Slide is and revised higher expense is XX. impacted higher rate. guidance interest

year We the for billion. million. range $XXX EBITDA the in in be is be expect of of billion to revenue to to Adjusted the to $XXX range $X.XXX full XXXX million expected $X.XXX

$X.XX. be adjusted in $X.XX of EPS will expect range We the to

in the We of including million to million investments $XXX $XXX to range be expect ERP. capital in our expenditures the

I back turn the Cindy. to will now call

Cindy Miller

Thank you, Janet.

quarter from of restructuring key disappointing, revenue, focused on ERP team parties: improvement, the implementation and cost portfolio readiness. efficiencies the debt were rationalization, results and operational While remains leverage quality our

of approach attack. we a priorities each have of a plan do, work with We deliberate lot to our but of to continue

dedicated for of the value firmly Q&A. our the team, open With and believe line change trajectory drive our our shareholders. we we Operator, long-term please can help for

Operator

Instructions]. [Operator

Scott come Our first question Oppenheimer. today will from Schneeberger of

Scott Schneeberger

obviously paper in start, I a guess being -- quarter release discussion some the big its surcharge and to had impact implemented. a where like of used in prices I'd on the

to impact the the surcharge? just little is the bit you And elaborate guidance a the If year? could on for full what with occurring what's

Janet Zelenka

a in This in We paper a Janet. that. the we did then is pricing built guidance decrease in the factor modest around continued and range

the and of by of range portion of driven good paper EBIT the the our a revenue so range, forecast And range part EBIT is pricing.

the in I'll surcharge. to our to on then was that it forecast. impact thought business, the an prudent of over the include guidance Bill we turn explanation Given for And

William Seward

Yes.

We our that growth that We today's we to we is continue it. surcharge come price. in So be surcharge feel we The to at the competitive fact and actually about acceptable need the on website, we to surcharge an momentum, takes about and of The want had the business. were maintain sensitive X% to growth. at information of effect today. our will the and paper quarter very available on want good Shred-it

Scott Schneeberger

to the please. noticed questions for I working this working in I guess, curious of CapEx, operational others But we save later. capital. some year. was address issues some decrease that, then I If expenditures on see guidance could capital, capital And

on bit could you little that. a If elaborate

Janet Zelenka

capital on expenditures, our range expenditures took we wanted think capital to that in can guidance. money we because year save The Janet. reflect the we and down some is in This this the guidance

over the a other are look combination year-to-date In challenges the capital, things, then working driver far year-to-date adjusted change operating the terms of at been biggest fees of through of of capital variety the of And time some item. performances to have can the a 'XX our working from by flow flowing you that cash 'XX. but is of in

Scott Schneeberger

absolute And that Janet, or that CapEx pushout year, next a saving? clear, be is the on just to this to savings year an is

Janet Zelenka

looking now, for savings. Right -- absolute into looking

looking want they're accomplish, to to and accomplish be for an planning engineering you am savings. so procurement to cheaper ways for those better we As team, in know, what and I actually ways and put we've

Operator

question of will next Ryan come Our today Daniels Blair. from William

Unidentified Analyst

This wondering of of little kind expand I you've is a goals on kind at you middle that and Nick kind you're in expand in you bit. if set in where on just just for coming ERP or that, the the bit could Ryan. but can I rollout set of am know quarters. the expect you little to the of if you're a in

Cindy Miller

the is Nick, This question. Thanks, Cindy. Yes. for

I've and enabled actually many, it talked many As just growth, This finish. before, -- about We're testing testing revenue, training do times and other business, those quality core the important that May along this many to build bright us I've I bright the me build, mentioned of is really is. spot completed of by and particular types for of those third year the how been is mock primary think, have revenue year phase. the the in things, wrapping we has up with our has The spots business, ERP.

well are hasn't defects. We that And we So bumps. without testing its of certainly it. been portion the into found have

that two which think taking types critical critical are that a more collect, ability defects, handful as we worked need the to the affect fixed are order, things We your items to are to implementation declaring and a whether much to to running that of are that or if those day are potential ability I been But it's of in can found for percentage. book of aren't bit ability things still them the defects bigger be of things. items under prior your your day-to-day have they a the can believe very And on. business, those because are revenue, then I be That's really in the positive me, little all all those exact to smaller efforts.

Thanks efforts. and very tremendous specifics. of I work, we're that a of and our think just the proud asking. we're on and the encouraged very for they're transformation, those doing amount pleased still very working So team is

Operator

from Michael Stifel. question of Our will Hoffman next come

Michael Hoffman

sales numbers are going major of current understand to so -- the bridge Can prior we midpoint? the change the on? with and the dollar EBITDA that midpoint specifics we of What what's

Janet Zelenka

Good Michael. is Janet. This morning,

Michael Hoffman

Hi, Janet, welcome aboard.

Janet Zelenka

Thank you, you. thank

on So paper. primary drivers the are side, the revenue

prior that the you You a the seeing revenue two have the divestiture the as FX, FX -- impact. external propping are of we're are in impact. changes the It's And the paper so paper in wasn't our there we guidance. and majority is which do have that impact probably largest in guidance we have the ones, the

it's side, pressures the EBITDA external factors on adjusted half and the cost On on half that seeing. we're about about

Michael Hoffman

nine portfolio X.X. the sort X.X. right, to on helps. guidance of months current on rationalization you bought maths go I balance the sheet, the Cindy, That you're of do midpoint to in Okay. the debt, so on the yourselves If at

So what are of end March the between the doing X.X? we to and now not trigger

Janet Zelenka

Michael, that question. take I'll

So we're you us ratio our achieve this with not below looking that our this the I'll debt-to-EBITDA we covenants, we and at are closely keeps guidance an issue modeling and in guidance our covenants. that range comfortable have and will tell

Cindy Miller

for as Michael, also I reference efforts. be something think thanks put your and And question. and five one into to first some been it rationalization certainly, a tremendous time being put to with of talk portion that and has bringing continues fruition truly I time was team's about of the amount key priorities, to the into portfolio referencing rationalization. my portfolio

So move even I'm sure efforts we as there forward. be continued will today

is us center and in our terms it of of front So focus. all for

Michael Hoffman

to and and to sell take put what two suggested? them can So done to I something together. you've Janet be accomplish able to the [Indiscernible] answers together

Cindy Miller

we are second we -- how half looking make second believe again, don't numbers sure obtainable. our half, No. we for our Michael, -- working, are and and are -- that's its for that I to

carrying as sell size which to to We to would we're include it, year. even that there There's assets tomorrow, depending opportunity. would today, those them. of something the that And we to versus that to order an were could to we closing, period time, to Agreeing can and accomplish for know if guarantee will that any take whole time for say, have sell the the we all be be rest imagine, no X, if to on the the need up of the in things would have the we that of get effort close. of to the even it it going momentum; we hey, you do

coming it yes, goal. that any still So But and covenants not second based for on the half type helps, with focus, in numbers yes, is is the us, of we're -- in books. the and off of even it divestiture yes, it figured the and is

Operator

next Capital come Markets. question our Silber And BMO will Jeff from of

Jeffrey Silber

the continue what's discussion. to the XXXX, in ratio? of just terms prior March After leverage Sorry covenant

Janet Zelenka

Yes.

up. keep Let It does that me going pull down.

So I after X.XX. it's March think, XXXX,

Jeffrey Silber

details... Great. follow up Okay. can I off-line get the to

Janet Zelenka

detail on our there's disclosures in XX-Q. Yes, in that our

Cindy Miller

have you. than Sure, be but give you fine. That's that to more that there, afterwards. yes, happy we out Thank we'd to

Jeffrey Silber

look XX-Q. appreciate I into I can it.

back Moving to operations.

impact this can the kind quarters. about cost. third-party elaborate, waste that remember the that quarter? talked And different be discussion great. something You if of happened in don't just would disposal hazardous that I you it Was of prior

Cindy Miller

And Yes, executive that's think broader complete a and finally leadership question. focus to the great no. And goes now it a of I efforts a team.

Let me give you an example.

would but portion Bill of we we've he of started developed, needed So are the we beginning the after of cost know, speed that sophistication, we the which has impact you on the months brought at will seeing commercial immediately in team. an QX, are his now say, discovery the put later, what first we it. the big into initial really QX, recognized the to not that about to same some and and And let's as rocks improve jointed -- the on results five And Bill to the very at business. say, I engineering side, side end immediately. mid middle of and joined change of get

some because The patch didn't of a now, we terms them the portion cost business, it. isn't what right limited the whole that's But disposable in together. a lot large operations what third-party we material the stages of along we costs of seen. us But analysis in of systems are And we've are provide with that engineering our are early to we've of in a it identified right to some hazardous our system lot capability now in full a down from that leaders system the second till our also truck in in the in our is, had back, errors peeling that bought our of in up to how at we maintenance found that are weeks, we of we've looking specifically some at we even group, target fleet programs identified last of we've have folks terms going leasing, engineering looking just of we midway -- on. some issues quarter structure. strategy, and making leasing, terms rental couple been big and through in of we've and drill about have taking Remember really the that

identified And we're And visibility business I part, driving sea you of on a based side. half greater to in like I numbers legs, are the signs that, you And its positive the a amount change, numbers, benefits. in make deck address fix to good of any second have executive commercial it of put will, is problem, a business, the costs we're once any the know that those and early believe same and team's other sophistication fact I half. can an stages what have which don't then and but second like level have we ability have I our into Improvements my to that's the we've of to built anybody cost there you hands team part is second really for this half reaping on confidence -- all shape done opportunity this and but you into systems leadership the second in affording year. in our bid to us on good want say confidence why is core getting in think absent changes if half that of exactly

Jeffrey Silber

sounds appreciate prepared It like really question. that for color. you're the I

Cindy Miller

knew we coming. one of I those think was

Operator

will America Merrill of today come Our next of Bisbee Gary question Bank Lynch. from

John Hanna

is from just quarter Jay broader you guys? guide this last perspective, This changed May of when Gary the what's morning. in we in I last terms guess, spoke to on Hanna down really for from a

Cindy Miller

into you all Facts more -- of start for even wrapped changed was think me, be of it. -- you a I ton. and little end sure, if share from you finished insights can then that one at here of don't about that we had $XXX is first I a quarter. I'm to to a just And knew to end able not one Jay, we need around bit Janet it. we and I'd mind, our But have quarter the quite head example. tell I'll on things $XXX. that to I'll good give July April to end what bit second of get paper love

that's that -- all. EBITDA bottom it looking able it's other paper some that makes the a match to about there $XX a you've plant, the are at at are ton of we to it's things and time. all with. think quarter, from issues to were you what anything are, fact and I it's else at that trying And And think been quarter, our to happened associated incremental but helped say I line line, optimization, could to I not a the doing, about taken I've speed I which of I flows whether $XX drop hope we've it drop balance your When in we're a talk answered ramification not cost have beeline uncovered the in faced in line. question, right it's in while to dashboards, insurmountable been decline that the but don't I much quarter, ton looking Janet, to in you been makes which that those that at like delevering it that, for obviously things all we've a certainly a over a paper. to if direct And a three in no month with bottom look the quite we're mitigate, that, those looking when but $XX that would controlling underlying the have know That's through period that direct and operational bulk time to know a couple improvements we plant to aren't haven't went see months, over to any -- hours, at time the it just half back that of year, that some of drastic re-routing workloads speed add. mileage

Janet Zelenka

completely. agree I Yes,

will has he a see We if follow-up.

John Hanna

queue No, I by pressure Could just no. U.S. the one That's that? good. with saw in ways. regulated shed regard And guess, I to on a declined you within medical again pricing be second then, waste little the more would X%. light my that

So well. detail more as there maybe a little

William Seward

from. that question, a Pricing be pressure could I in you little specific on more am you're medical where coming waste, wondering

John Hanna

regulated pressure Well, waste, this pricing in much within you really and discussed we out it called on call. detail haven't

hoping could explain maybe I pressure out focusing some some some forward? workarounds are So on of alleviate you that guys there, to help initiatives was you going

William Seward

Yes.

now am I if is -- refer of that encouraged in feel at a by plan. asking than you're as most often had all line what with to We space, right So I on to specifically better we what in the trends. in instances. our planned we coming and SQ in is are first misunderstood, terms in I long-range long-range about we particular, want plan, comment the of sorry, our Discounting,

two with encouraged first the years. good bottom overall the RWCS that. line feel So growth is, about And we're showing in its we

feel and diluted for we was out exclude of had X.X% when paper. we second a the X%. good that you of saw waste somewhat trends that We So up know shifting medical quarter feel the and the also we weather growth We to move by the quarter Shred-it to business, about about growth in that good first there.

like. price, feel which we've a detail, good where about you I can we significant more headed got pricing So number of with go initiatives, into we're if

John Hanna

Yes. That great. be would

William Seward

our Yes, first committee is, we've started hospital about give and we've space instituted number really one you so of we say seen and We for feel data change, point. has review That months. a deal good organization. with what throughout our maybe team that of can a lot I I would one couple the embraced

the spent the our got leveraging that first but hospital aggregate on in we who changing for value of our changing kind the the So comp trained where pricing plans the months folks six Last for most hospital the an first have that's an of mentioned the to deal time in in we committee, more bring in the not we half group also market. some a the or price in been team increase aggregate. We've just price to X%. year the about pricing, there. governance, we we've double months of year contracts six review on in some changes year saw space, This digits seen following decline first I the of renewed

across So rest to space, our of our the and cetera. are feel we're outside making scheme those to impact impacts teams, changes our having to take the to Shred-it business international we U.S. hospital pricing looking the we're the like in et an

Operator

next question David come Our Manthey today from of will Baird.

David Manthey

paper side you on business, of that in about prices the and if set on growth volume the a think segment. the paper First all shredding for minute

stops trying tons been of to to bin get You've in I average of much since talking about like versus that you X% just service actual tips volume number would anything seen X% understand know that, the XXX,XXX material that growth? growth, reason I'm pricing I last growth two the to volume you actual or How ask, collected on you've the a track years. I that acquired think, don't help The handle over is of or us if Shred-it. detail.

Cindy Miller

Yes.

focus, the really discipline Bill that expanding minute. -- of terms I of at has for Information really Secure continuing been think certainly David, is quite that's is that and we're want you the commercial I of, evident in And the will. Destruction been the with we say the that is really it's we jump that if to to when want side see done let so Destruction and The a Bill of -- from to focused. XX% anywhere current across say, question. really market are value customers is looking a that in things in bit I'll forming, extremely really still more no out I one type set of Information of there business Bill much unvended. The drive have a the just a estimate But great XX% businesses with policy. to that is is Secure

doing get think, in that your in that Bill's to see side hey, where have I we are us new farm that not opportunity for grow. our say, I been, making point is the for terms hunt it, So to terms what of in Bill there volume. is of that the We think XXX,XXX can I has believe in but of still from I we just and folks And know commercial we tons efforts efforts now been terms business.

I that. color little detail more bit towards think he can a give and

William Seward

for question. the Thanks Yes.

the not reliant teams been So board converting customers. base existing business, customers I new new across are Shred-it would over side the we've business. but our our to and of in we that on somewhat just looking say on of to acquiring the absolutely pivot

of into said disciplined teams pricing, to And evolution customers create in commercial comments, function We've kind around as pricing winning added competitive Stericycle but as is I converting reorganize the a commercial of on the our and to staff next lot team in done so to opening my work to a label. pricing. in our business teams step a focus new the we've

David Manthey

it X.X% historically second, SQ RWCS, if just assume contracts terms of Okay. wondering as get escalation you've are also the with new I'm changed could revenues declining? to you what they contract price consistent are you in in the that And the place, address is And these done anyway? or safe that have within still organic,

William Seward

things. of couple a So

And of terms I commercial is our market. is First restructuring, that increases historically and much we in in with discounting as mentioned very earlier on price have price we've the proceeding mentioned where online. that stream. on as going calls, and are still previous restructure we're we focus total revenue of all, with the

those we've at on right We a what prices, now, with are done look we're plan but taking previously.

Cindy Miller

to say I'll thing that, to But David. one add

terms pricing some terms of, probably those actual from instituted ago, a upgraded years we continuing the you things, can ago While talking several I we've point, of whether are practices years CPI tell have in completely that in Bill's of and revamped several many it's we from pricing pricing ago, been have types capturing but and or discussed with acceptable the about of are years practices, those the to as been moving forward. might

to when -- to. I the to history looking kind set sure what terms you referring of wanted a would were at from line in that be of of So we perspective, if want I historical make demarcation it

David Manthey

that you more pricing than the When Okay. less going history? forward or that are say you practices Cindy inferring are

William Seward

So I'd say that. here's what on

an ironies places pricing you reliant the price a if some about talked street, I'd all trying at with we in We've the of across moved right and on places streams word one in our little kind on we're that's argue there to our approaches. emphasis where and our over ensure to that say under-reliant. approach pricing about go the getting we've were the about now the business will, were of would value So I entire where the revenue some fashion. approximate kind for were go-to-market right we when historically paid of the direction.

we've an how governance made as we what changes and do in of terms to So number example, of can our contracts. contracts renew a we with

We are increases. price in hospital without space no doing our contracts longer

the also I'll of outcomes our highest to bottom to just that we not line with some were We arenas not where compensation mention are in no sales that longer retroactively in And beneficial our we programs pivot the little were Stericycle line. found for are adjusting putting price the changes bit a payments. that in

paying So Stericycle. for that people be to they're pay it's sure best highest The the designed for when achieving there our our we're is people our less, payouts we best now the outcome going outcomes paying for Stericycle. to the folks are design to not make

Cindy Miller

And think aware to that, one just been I've Dave, that of. I made thing

practices, up that experience for coming been terms pricing a ago, think tell established we in the market believe I terms parameters Bill's how other can we specific out the currently based That's our up is, of I were SQ on at are -- in to for commercial certainly pricing of comfortable I on that the set but of moment way competitive the this settlement practices principles you, the operations in and in while things done how will feel landscape. of works. a and and it terms sum and the are that side in -- comparing are

any comfortable kind don't really I I discussed sure as Dave? and historical I to are from having from new perspective guidelines with those -- to perspective. historical the very opposed hope that would of make So come helps, anything a that want we set

David Manthey

Thank Yes. you.

Operator

follow-up question Stifel. next Our a Michael from of Hoffman is

Michael Hoffman

occurred So X.X% organic to does I growth, in that clarify solutions? XX% upside the hazardous that just want Bill, waste exclude the

William Seward

No.

Michael Hoffman

Okay.

absolutely a LQ? in decline are of not revenue SQ you're quality slower So not, seeing rate necessarily ex improving that but that's negative, a of in and you

William Seward

accelerating Both as at Michael. of true, first part rate comment, your on. the it's faster going those things of And a times are

our as had years, couple said of able in time we And a first growth to I are earlier, show So in best movement. for the we aggregate.

Cindy Miller

yet, proposition training on rocks had kind just thing through bit class was completed if referenced have Michael, everybody it, the And quickly, I think, too this We've place mistaken. but put to pretty I a intensive board, chance week big sales negotiating, it little put mention a rollout evaluated not I through, team. a in of of the that there and one good think, that for value started not the we a key just just some just and did I'm and teams this has earlier. came of Bill put

William Seward

design sure the feel expertise XX going to out getting folks just listening those good we to are team the that fact are have we're bringing call are our for they're trained in the about that change. is the paid customers. that that make week our really we value to are and again and folks Atlanta, probably this the got and hospital in We've a there who being embraced down And space,

Cindy Miller

feel there change -- down was and involved to it share show it a today, the in disappointment holds masks key -- talked to what looking we the the terms signs positive management team the really to about in really to our hold, that that had business. priorities ability embracing is, the deep that at are I really overall So how of business future the that while about in I said Michael, as and change we and are folks core don't doesn't show points the we to that it that and it's fact is, continues continuing are the point take the excited we -- so earlier,

of appreciative that. questions, about a So so very chance to excited that really discuss we the had and

Michael Hoffman

waste I you had And internally, mix around hazardous not M&I it's which solutions revenues, roughly million, then unique $XXX call book a think and is million waste the hazardous hazardous to of M&I, waste. the one challenges last whole It's follow-up of disposal. ESol $XXX is of whole

You're dealing issue. critical this with

Cindy Miller

you and know... Correct,

Michael Hoffman

issue Real then of is... that

Cindy Miller

And sit us the the on. We for visibility one to to we disposal. issues, be Yes, and and cannot are of is, want victim you have I -- third-party say anything. spot things to now

we the to can believe things have got second the given I that appropriate year operators second strategy. of results, folks fleet the terms field and terms the what board, lay in visibility hitting that that's optimism we've our lend half, more accountable which Information guidance. I getting and built the And that's of direction, across full will strong issues about in appropriate into half. also itself us to and Destruction. given held strong our the We to mitigate into has guidance the we and excited picture cost out the of talked get about in me But Secure terms plans in improve

helps, So environmental and of you're how is in hope the in but Michael, M&I on spot just the that of terms not solutions that portion business.

Operator

of Young from Our come next Morningstar. Matt will question

Matthew Young

Just million 'XX just portfolio your SQ discounting this feel of you years as a was still four was think $XXX period, 'XX you bulk ago, through several And year you call pricing. It I that means tracking the to it, that expect, that the work the for put the total think losses. will is mostly the for year? of and good that to a initial roughly do follow quick like discounting clarify, out up sounds on that but about guidance

Cindy Miller

we we to that numbers possibility it see question I statement and and track question we for internally we minus all exactly think, in what thing I the systems the percentage, that's of the Matt, plus fair is -- The can there's always But be your to a very our abilities terms have, able $XXX to believe with for million. that true. could a be be certain think a it It's would trends the seeing million, encouragement in be, margin very it or to the did important have million, go couple the if are we the not that trend moving it's $XXX continued to be pressure us it right $XXX that But fact steady give of and And it years. they've importantly, continues forward the more last whether over that it's are on volatile in million, been that put whether turns direction. close. $XXX whether to out business. as is

now control are of that. We in

I negate destiny now But as in want Regulated the factors your with know, in control winning of the are and is game. discounting business. the in thing of an we and RW was to don't in all are are the and changing that in those new terms business, our one it be I'm the Bill of signs that revenue of leadership seeing Waste streams fair -- along encouraged, in of and the of team terms that's terms to issue, our point, I quite over We that, rest fact I anybody to doing business, and along churn think farming hunting,

Matthew Young

That good. sounds

be? of So, or general few general, there, whether not by this is off we're in that about and bulk expected have -- it's the to the but a guys here idea million is you dollars it where

Cindy Miller

Matt. on spot You're

William Seward

Yes.

Matthew Young

sounds the that both commercial SQ? include And Okay. would working LQ, initiatives, Bill, the the on then it on also is so clarify, you're another like just -- to question

William Seward

Yes.

Matthew Young

In terms incentive the of and structure? the commissions

William Seward

Yes. Yes.

team. -- In changes, six. way sales ahead probably people change and got commend our say We've we've got I mentioned commission of we've north I mid-year. earlier, We terms the too those for wouldn't to hospital and or many. easy done not of It's in that cases, gone probably, probably I three as particularly structures, incentive two the plans embracing and

the yes. best the your the best best probably or And the evaluation question, being that answer make change So payouts that a that they other sure are right examined plans have and now, with under company align for in reward XX They're word, all we to to next year. XX outcomes for outcomes.

Cindy Miller

company, to a it. ERP the the there whether following came and A, a hats change day terms B, to and talked understand but time a for potentially to just who that wasn't make can, to you, our that one things. a that, are to with now, have very momentum and we thing culture the my an in I and if sign in add do, that implementation of anybody And rates we that the about, off that the and group the is moving I transformation. listening, seen that build in, with as And of That's folks Bill a breeding runs in the evidence the doing I they're folks looking Matt, that well are here we're they're into that organization deal and to rules want has easy out called and marching and those that to just change all or growth people that's review and have change and culture folks we've that positive of a those change. that the over there the now me did that it, our within all we me and wasn't folks, going organic who rates, folks the do. change folks actually much our orders work a tell sales of and it's embracing within all too it one And of to embraced set belief, disciplines Bill to has it what can there's as other come something is in continued for called lot growth the forward is following the me are easy about are to sure change, force see, lot and success transform of have this success had successes committee, set has of and with asked that

William Seward

sales design question, pay add comp that just on to And the not that I to want is less.

And outcomes are thing and worried to the for your company. We are in line them. Cindy I at was the bottom drive investing important, pretty as people to this other long the it question, that we which the think that paying our about hinting think, I as starting aligns is realize are not with hard,

I as I structure. organization mentioned, feel in of they is And to successful we've think as them and trained now invest under new guidelines So be a if new today. the people group got going this to these getting

So that. we're to optimistic on more and come

Matthew Young

guessing That's on about just that's you quick had China And what's last I Right. question know paper imports, thing? issues same I'm talk there's one real but helpful. prices. not OCC behind with Could price SOP the I and the the been decline?

Cindy Miller

No.

had has of all go the anybody Any a rate think that goes and any core is ripple they terms of there's it the actual factors XXX% of of as the tied terms it time looked taken the tweets as in it forth, wars, and ripples in has from further is or effect the whether terms we discussions affects back RISI followed potentially it of and of China bigger. -- dependent issue, that that the trade at everything, all look. out paper any China, of in that X% on into paper know, get I get any a potential

take we used paper And didn't caveat, to that's us, think helps fact now for we zero. at forecast stating looking terms for the year, is rate. general that half thing it what couldn't I rate run that building. So in to one we're where of at We plan the paper. we looked the that are this of just a at second we And

to drive and sight after to get to to focus has of see. we problem. Just the costs conservatism our we But you need that that having done We tongue-in-cheek, but -- the with that of terms believe tell our we've drivers continuing the then we business. -- revenue, to main to all better that plan are value of and continue the did grow portion am need now I be best line can mitigating range, so of in the into I of the we

full are -- get second results. our got but get to we've we started the are and eager half, we plate So for eager to a

Operator

session. remarks. for and Miller, time, Ladies I'd will like and any Officer conference the Cindy President our to conclude Chief this question-and-answer back Executive At this over gentlemen, to turn closing

Cindy Miller

Thank your you What everyone is your Allison. we interest continued we to in like appreciate call, listening would very say Thanks. this Stericycle. much, and time to on

Operator

today's We concluded. now presentation. attending has conference you thank The for

You your may now disconnect lines.

Stericycle (SRCL) 1 Aug 192019 Q2 Earnings call transcript