SRCL - Earnings call transcript Q3 2019

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Operator

Good day, and welcome to the Stericycle Third Quarter 2019 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference call over to Ms. Jennifer Koenig, Vice President of Corporate Communications and Investor Relations. Ms. yours is floor the ma'am. Koenig,

Jennifer Koenig

you Hello XXXX Stericycle's quarter joining call. and thank conference third for

On will call Janet the today Zelenka, officer; Chief Chief and Executive Financial Officer. be Cindy Miller,

risks includes statements today discussion The that involve and forward-looking uncertainties.

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

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

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

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

other intangible be certain amortization, events, unanticipated be regulatory reported could Please divestitures, provide the business predict and material. in to compliance an or GAAP certain litigation, is on the unreasonable settlements would matters, items included operational it and we acquisitions transformation, guidance adjusted and possible basis provide optimization future and a which of non-GAAP reconciliation not impact without effort results reflecting or that note and

the corresponds today's may Throughout comments we also prepared the the third website. from call on presentation. specific for our Relations available presentation, slides reference quarter Investor Finally, is to earnings our which call,

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

Cindy Miller

call. welcome to you, Thank and Jennifer, like everyone to I'd today's

that pleased is the our key new I am with underlying and the some benefits to initiatives. priorities of a leadership see on just to few months introduced I February execution the of a in organization the Following beginning team, report

passing in important week, our progress achieved. business transformation, are each milestones and With we overall

the journey, are advancements encouraged multiyear the but we are I a and by momentum we am making building. is transformation Our

the the Summarizing results for financial third quarter.

us enabled Secure deliver core organic Destruction Regulated growth Our revenue actions Waste and businesses. in quarter of to another Information quality improve to our revenue Medical

These recall rates, Communication factors, Services. lower in pricing including and by lower exchange and and paper offset were foreign volumes gains Related sorted primarily macroeconomic office

an we in annualized guidance demonstrated range From of the the adjusted improvement perspective, prior EBITDA performed over our and sequential quarter.

largest capital. reduction we generated as approximately the million decrease a XXXX. by $XX.X since to cash debt of us debt our to actions free of third our working net flow quarter quarter the Importantly, This strong net result quarterly improve operations in of enabled million, $XX and

Of note, are the signs third improve gross and quarter the October. right These the are good Company we and proceeds We shareholder the long-term constructively remain divestitures deliver from drive value. three during on closed dissatisfied moving profitability, in all results direction focused to exclude improving. the growth, that that continually

Before recent our performance financial the highlight I'd key provide more in five detail, to priorities. Janet update on announcement reviews and an like a

role for Chief on First, the to Cory of White I'd to congratulate Commercial expansion Officer Stericycle. his like

on impact and will change commercial the and drive XX Cory's from and by portfolio we benefit improvements, am across operations, in identifying Communication of realigning I Cory in an we on to transformations that the April, Services joining rationalization. made experience confident years Related continue healthcare as After quickly business executing business organization.

employer Officer, that remain Commercial in role Senior his rejoin previous a allows departed family Chief Bill in Our Stericycle Atlanta. Bill to his and Executive former to Seward,

is five our transformational key As we on journey, continue priorities executing critical. our

ERP these As efficiencies, a debt rationalization, priorities cost portfolio reminder, revenue, the implementation. reduction and leverage improvement, are operational of quality and

retail Within on Telephone Related small North pharmaceutical Answering the Services and divestitures this American closed Focusing our on business and month. portfolio a divested Communication Services, returns three we business. rationalization, we

of fourth sale will all modestly in efforts the from the we in substantially rationalization applied progress reduction improving encouraged $XX.X these be of our international, million debt Gross closed will operations our quarter, I here and three to continue. of our portfolio on proceeds our transactions Mexico. In leverage. by am debt

result guidance divestitures, these we As will are businesses, of these of the for a impact reflect XXXX which full-year our adjusting Janet shortly. cover removing to

Cash As of mentioned We is free debt flow reduction making second debt key approximately component of a progress the priority, and leverage our are $XX remain net focus. our reduction earlier, flow and steadfast in debt we million improvement. a we improvement reduction and cash our our towards in on applied quarter. leverage initiative generation

to of revenue. third Shifting priority, our quality

plans to across see we expand our organization of sales committee, sales review deal our We and the all continue continued organization. to commission benefits the which realignment, redesigned of

in These Compliance efforts of U.S. organic growth saw and quarter hospital in in growth Regulated strong another driven primarily by Information Destruction. sales resulted and Secure We organic Services, Waste the internationally. within performance

quarter, $X the benefit million to helped The margin the pricing. revenue recycling decline implemented SOP approximate in in an offset and in August recovery in which continuing us surcharge contributed

foundational to the sustainable solid is organization this support With growth. commercial improvements our building momentum year, made

organization performance on our we both centralized operating Long-term, challenging optimize and that and decision improve and across making processes goals to standardized the organization. do we service operational the across are financial last levels model towards priority, cost to matters, and a to Turning safety what operational measurable of fourth our do goals we and drive it. all the efficiencies. on efficiencies I organization mentioned include transitioning how call the significant

lost include in traction stops in workdays. in about of year-over-year missed reduction our XX% a and indications Early businesses XX% core of a our reduction

fifth priority, business let's the efforts. our remain and Finally, readiness training We testing, the focused system. on ERP our implementation of discuss

quarter on of global in the next module providing our human resources in call. an quickly the of are Janet this We be first the year. later will investments approaching deployment ERP update

over I will to to call financial our now review Janet results. turn the

Janet Zelenka

Cindy. Thank you,

revenues of initiatives. $XXX.X compared our reflects million QX key impact As the to noted, the million, drive Total Cindy were for to actions XXXX. $XXX.X our our results quarter of in

in Waste Services Secure in Regulated to impact and the lower our exchange Communication was primarily and growth a and due in business by events. pricing, organic offset Compliance rates, Services Destruction recall Related performance Information decline fewer foreign the SOP and of Continued

Regulated to Waste $XXX.X revenues XXXX. $XXX.X QX compared Compliance in million Services and million were

foreign last growth the positive of portion Excluding quarter, which slightly impact, higher Waste X.X% hospital across organic than business in reflects internationally. Healthcare and exchange Waste growth Medical performance was and Hazardous our

XXXX. Destruction Information revenues QX Secure Services million $XXX.X in $XXX.X delivered to compared of million

a Excluding growth the impact when a declining backing rates the negative and prices, was of X.X%. revenue SOP impact acquisitions, exchange organic growth out was organic healthy revenue X%, of foreign

QX and lower revenue Related million fewer about reflects events divestiture XXXX. the Communication $XX.X to revenues $X.X UK compared XXXX recall largely were the million and texting This due of of business. to Services million $XX.X in QX

compared by million of and exchange million organic reflects XXXX. was the Services growth to foreign Manufacturing $XX.X revenues which slight Industrial of rates. X.X% driven impact This performance, were offset in QX by $XX.X international

operations to last from $XX.X million, the quarter in of loss GAAP third operations quarter income in was of from million year. compared the $XX.X

$XX.X impairment from to million the a million non-cash operations $XX.X XXXX. income charges was related Excluding divestitures, recent from three of million, decrease $XX.X of

million million incentive operating SOP million costs driven exchange partially by related favorable The lower $X pricing to $XX compensation. and and $XX.X foreign by settlement higher Waste a litigation in and from Hazardous decrease offset was

third largely third absence GAAP operational highlighted, in The effective operations compared of last per change the quarter quarter per compared to gains on previously as the was to on was quarter tax repurchases share a items year. due share and $X.XX diluted to earnings of diluted rate loss share loss the the the from lower of this $X.XX of XXXX.

period GAAP cash year-to-date $XXX.X operations to year year. million the a action prior Small of. flow payment comparable Quantity settlement compared million, million from included last during was customer $XXX class The $XX.X

due to as payment, to previously for lower operating $XXX.X the and operations prepaid and annual million software. cash incentive Excluding described mostly XXXX performance from settlement XXXX compensation payments decreased flow in

$XX.X million the million million Capital last ERP year. to year. implementation expenditures last were year-to-date included XXXX $XXX.X million $XX.X for compared $X.X compared to

$XX Adjusted higher last million primarily EBITDA Hazardous This in to third was variance by operations. and million, exchange year. rates and $XXX.X the and driven million million $XXX.X was pricing of to costs quarter SOP $XX.X foreign due compared Waste in

was $X.XX EPS Adjusted XXXX. quarter of third compared to in $X.XX, the

and Slide by quarter $X.XX compared the from SOP year-on-your unfavorability favorability to the on unfavorability from bridge repurchases and due variance was EPS illustrated $X.XX foreign the this and to rates; $X.XX from costs; As exchange $X.XX share on unfavorability expense. operating adjusted offset following: on X, partially absence the XXXX; tax, higher gains of interest on

second DSO When compared normalized quarter of to days for XX execution resulted three improvement collection initiatives. the from during The days XXXX. of divestitures, the of XX was days

reported as as assets which DSO receivables of the XX reclassifying included days, was for sale. held effect QX Our in

generation from cash million $XX.X which us to cash This to to cash $XX quarter, report generate collections. operations actions free of We reflects million are of and year-to-date. pleased free flow in moved our the improve flow

the ratio defined as amended add stock EBITDA was compensation the debt-to-adjusted expense. Our the of X.XX the end debt backs quarter includes agreement, which of at under

ratio cash leverage three Our in third flow quarter that excludes any the October. divestitures proceeds and closed from

spend Business provide investment review few in on to rationalization like a to an minutes update portfolio I'd now and our efforts Transformation. our

As Cindy mentioned earlier, in October. three divestitures Stericycle closed on

assets, third we the impairment of assets charges reported divest As businesses and held intention these for of sale our result of classify to $XX.X quarter these million. a in non-cash as

Business investment. like Transformation, I'd to provide update to our an Shifting on our

million $XX.X has million This in total million invested XX-Q, $XXX to Business capital initiative in expenditures estimate of to-date, for Transformation prior inception programs our the since early reflected the provided $XXX and million for the the to in in in life. close by in program As third our the expenditures XXXX. leadership the million February, XXXX schedule totals $XXX.X quarter program’s operating $XXX company in

distinct efforts ERP saving expenditures initiative, and pricing business efforts. management project capability cost categorized such as commercial to system fully its the into implementation. expertise, two have the and the two, investments Business my ongoing I Transformation and and One, understand initiatives In

expenditures this million generated related. was or half have savings and Since invested Business $XX business has approximately This operating results. XXXX offset capabilities. cost spend from to severance XXXX. savings reported Any almost generate of by been was the the Company initiatives the the programs About business and Transformation $XX build challenges of million in about and all inception,

investments that in operations anticipate XXXX. efforts We our saving part ongoing and of will in generally business capabilities become

primarily we've in implementation, Regarding million, inception, expenditures, approximately for in $XXX invested million and the operating American $XX million capital North of the deployment. $XXX about since ERP comprised

costs $XX and our fourth expenditures. and benefits another around on rationalization XXXX We ERP earnings other anticipate an impact the between portfolio evenly drivers during of factoring million call. providing quarter business update be program anticipate required the split will of We XXXX next overall operating in and capital in

guidance. to Turning

to the was We impact reflect Prior impact guidance QX will which are divestitures to performing the ranges recent the for updating within full-year our removing our ranges. Company results. divestitures, XXXX of the

reflects XX quarter estimate Slide impact on foreign shown as for pricing guidance of SOP revised exchange the the our the and fourth divestitures, the to current addition In for rates.

to to We expect $X.X full-year the in $X.XXX XXXX the revenue billion. billion of be for range

adjusted EBITDA $XXX the of We in to the range $XXX full-year to be for million. expect million

We $X.XX. expect the the in range adjusted for to full-year be of $X.XX to EPS

of the range of due $XX full-year payments. a We free we $XXX the the cash fourth to expect million, which you in today $XXX providing in capital for million reflects $XX million Also, quarter. to at estimate with full-year of expenditures be timing million are the least to flow

call I will turn back the to now Cindy.

Cindy Miller

Thank you, Janet.

we as of see on and are are is results. our our And mentioned we with focus on progress quarter, This our earlier, beginning but journey is our thus transformation key pleased a our impact some the to far. priorities long-term, I

times There thousands change thank and hard proud to them, as on remain members to of team around priorities. were committed your all delivering work our send we Stericycle globe efforts I'm I the of if of heartfelt supported you. not these very a who our constant in hundreds, of

remain on this for momentum customers service and in back value this will will moment, dissatisfied, while our focus breathe to we providing We so driving on we get exhale constructively We build work. to then long-term superior as shareholders.

With that, for Q&A. operator, please open the line

Operator

Thank you, ma'am.

have question-and-answer with Instructions] we will go from first Please session. [Operator The We will Scott question begin now Schneeberger ahead. come Oppenheimer. the

Scott Schneeberger

guess I the in half certainly pricing Cindy, business? some very we success in start much on You had Thanks LQ. could morning. good and RWCS in first

transition a If the on to adopting maybe you that Thanks. over then an to could or progressing? progress Quantity give how customers? how report Small us you're update that's And

Cindy Miller

question. thanks, Scott, the Sure, and for

with the we're that seeing I'm very pleased commercially. So results

the sales work as whether was of salesforce, reforms Just foundational it committee. and a the that much reminder, the I the of plan a review deal realigning referenced, some pretty incentive the

hospital of the good of into has space bit focused specifically the Most first. Regulated the been revenue portion a and that stream that within the Waste training business went of that efforts and and

So when it comes be the right would away. place the strongest some that that to reason results see we'd of

with what what XXXX. first I about just X% we update we to in was time, an comparison or a were believe Renewal giving kind for showed total – comparison. I talked group, of as shared of about last had shared It to Just revenue. the XXXX half deals, the away

And this and and in to growth last growth. through continuing year September, even through a seen September, tell a you double-digit away year double-digit giving January quarter, we versus reported I XXXX strong that XXXX, last, can to improvements And stronger track X% last year. that, this we're negative percent, still so we've

us, We've trained. the story for So this. is

We have focus.

other training streams on the and now and that and revenue We the same Regulated have and in portions taking and team with investment Cory effort a momentum space Waste. hospital on within the that of other right turning are initiatives type towards White focused the his energy

but early I come. days So more think in certainly to that,

deal the units, the also Information and there it's been throughout Secure some some to Environmental see well. we're as has piece business kind our group. Destruction review traction other And starting rolled out Now of committee whether of Solutions

but positively terms speaks to in So it some momentum. early growth have and early get ability organic signs, our some to me, days, of

question. thanks that. I So your hope Scott, for answered I

Scott Schneeberger

that year tail And targets are? it's that. guess Thanks. the original Small customers. spoken say the with discounting would of – Yes. be end certainly appreciate appropriate Stericycle the it regard historically price and helpful. there Quantity plan. follow-up versus some some was had to Where you is I it to This we would I

Just on you're may looking consider how give that and you going an us how that update forward? at

Cindy Miller

that here a of to understand I Scott. of what that's and in things can any we follow-up dealing concept think stay this discounting. that's great I Sure, is And here's commercially of say, terms that's business one the

past. different least within at years, based or last Stericycle has meaning some issues the taken historically, discounting a of think the the on I several in on of

into think want of – normalcy starting So discount. but negotiations, commercial morph also to to we're which today, the I I transactions and say, includes don't

to and where to and trended thoughts, see historical we have we've some we a the think I around kind bow commentary what I say to such. were still what we to we and So is is wrap of are, of as believe expected

I okay, date on issue. last October a day X, think when no of saying, actual this end couple I've you can times say, the previous gone record there on is was of

What we're terms internal we're of is and we customers. in value providing to and change tell to trajectory our ability signs I have you can the our positive that continue to goals of going give that the service the

the is So we out, where we're it negotiations forward, I been to going customers, of was in and particular had but you're I talk not the it to about asking, stream are business. continue think and to laid We're to terms track revenue short where one moving believe, going about on within talk discounting. continue answer, to it unique with

to of do that. includes by answer. That with able if pleased forward portion very and national are his my some go I'll And first those opportunities. Quantity of going the team, some terms sales types days, encouraged in and that revamping very group back further, be of very is things. but they our to early his to looking And deep, elbow the what much I'm the the though, to Small not So Cory last I I'm accounts, is of inside think to of its accounts, that. piece

Scott Schneeberger

nice Great, the forward the quarter. in And with steps thanks. job

Cindy Miller

Thanks, Scott.

Operator

Daniels with we William And have Ryan Blair. next,

Nicholas Spiekhout

exits. can your the are for I'm if just in more those I And And the guess assuming Spiekhout question. in businesses? Nick is you more any my Ryan. for little This about lower talk criteria a now? Thanks start to company bit guess, margin there your were kind taking right what bank for guys. off Hey, are I exits? of

Cindy Miller

Yes. Thanks Nick.

was closed And was divestitures, C&RS, were what all of can so is rationalization divested, in that they October. one the them here Mexico. three concerning two as we The portfolio The we say? mentioned,

sure geographical international to got focus from core continue we've a So non-core. an that versus to or on perspective, we make

think grow? a we we in Where of the not total These well, three. very greatest have you're million where that piece in And the $XX.X that's all from as factor key looking we businesses made right. So do do terms opportunities? is what we're other think evaluations we've its strategically at I were can revenues

So certainly things, go those And all not And focused. the continue big, as move we think portfolio I to factors. into but we're going that's rationalization forward. where we're to of drive

that's So where are. much pretty we

Nicholas Spiekhout

Hey. Go ahead.

Janet Zelenka

is to well. be as Hi. lower-margin This Janet. businesses They tended

Cindy Miller

revenues to about I that, gross the it – were Yes. wasn't those – thought The make just that And want was I Nick, that $XX.X I make on sure are proceeds. sure if clarify. that million. to those

Nicholas Spiekhout

have you. $XX.X Like kind guess, Yes. how run come out QX we Or a And follow-up, broken into much that like accurately at out million of if of can more provide like lines? little you model detail the if you so rates, kind coming of divestitures future? that bit with I a there Got then has guess I out the all? business going different as more that at the is

Cindy Miller

and you lines, – coming the the that that they terms primarily of New international, then where C&RS in of were is So question Mexico me? business asking is were service in and out it's

Nicholas Spiekhout

Yes. Yes.

majority So it of was like large C&RS? basically that to is be like the going

Janet Zelenka

Answering C&RS. two were because was announced Services the that Right, businesses X-K. in discrete divestiture earlier Telephone we One of the a

total if of we the was proceeds up that the that the largest you gross So part add announced.

Cindy Miller

Yes. clarity, Nick, a of bit too. little

often. that types also it's appointment of And where got to a might of patient post-discharge have this things. think talk recall. That's then give and bit platform. it's it's kind those follow-up, helpful, [Technical you care, scheduling, idea Difficulty] then C&RS’ still engagement in we an about a little scheduling, just be We I expert we've

revenue third about and So XX% C&RS I'm going a you to probably of about the of in give remains, remain. employees directionally,

would divestitures, gone the FTE so we've of got about still in remaining third X,XXX about I the think business. with the full-time have equivalents a

that your do hope terms of type ability any I helps to So modeling. of in

Nicholas Spiekhout

just And to I I I that. paper a appreciate your that's ago, Thank going? guess, pretty Great. I had prices you. they how re-contracting you quick. receptive really was quarters on clients. mentioned that? know of Are couple wondering

Cindy Miller

So surcharge? it want I And hitting that right? make the just you're sure asking about to I'm

Nicholas Spiekhout

bit to a of sort off Yes, of exactly. passing that clients? back risk Yes, the

Cindy Miller

Sure.

So recovery strong We in really can take rate being just for let's put in eligible a there. surcharge, of of on terms language terms frame ones you, that as I contracts, weren't language is automatically eligible renewed, those contracts that on contractual it. tell in had recycling contracts, the eligible and get the based

strong we So for on mid-XX% were very contracts take that the rate. a had a in high-XXs, take from eligible, rate,

So that terrific. was

recover of at of and those for anywhere It's terms in for – index. in should an us, website. XX% expectation that decline. it And to from a remember, original taking it, our it on But is should what it did was our bring XX% the look

So a it off risk it's the rate, tables. based and isn't fixed of

that strongly mentioned pretty directly got this it. quarter $X feel pretty we with we to So that the we I much million attribute in surcharge. third can

not of quarter. But was I the just $X for million note, August and that think September, full

going revenue. forward move of the in a us fourth So quarter, give as better barometer of to in a much terms we quarter full the pretty it's

it's pretty see it tracking being that terms to laid your of and it – out. headline question much how is, hoping as how able was we plan had in I'm But went. So to it's anticipated answered

Nicholas Spiekhout

hop a taking again, questions. Awesome. Thanks. helpful, appreciate Have good guys. Once I'll day. you Very off. my

Cindy Miller

Thanks Nick.

Operator

have with Stifel. Michael we Hoffman Next

Michael Hoffman

revenues taking got question? specific last Can that? Could Janet. a the in I clarification answer what be about EBITDA. Thanks sure the ask I'm and not Hi, we sold about questions. Cindy, for I understood

Cindy Miller

and three sold. proceeds was total that No, apologize not it Yes. it million I was for Total That's the sold $XX.X revenues we received EBITDA as lined that nor Sorry. out. that. me, is total for was

that will just we fourth we've million quarter, towards $XX.X got in applying want make our sure debt that directly the to I bank be reduction. So for

a better the I million So degree. clarifies that $XX.X to hope

Janet Zelenka

the business, about we remains, of sold And about C&RS. as XX% about sold C&RS also mentioned, we of remaining we what's in XX%

Michael Hoffman

Okay.

the sold So confused. you XX%, that's I part got

Cindy Miller

remains. XX% Yes,

Michael Hoffman

Okay.

So revenue, $XXX to about doing business this million just million basically, of frame of so it, $XXX that's gone? is what's XX% is a

Janet Zelenka

I'd I look you, probably If how at that were it. would be

Michael Hoffman

questions. – I Okay. I just that. how sure adjusted a understood basis, both move trend All does Back great GAAP in on Janet, that forward? basis wanted to make my SG&A, on right. and to

Janet Zelenka

on Well, the the cost we're SG&A encouraged by savings we're seeing side. initiatives

the do, – part, in traction team a with the bright as of just we is also to we're But basis, the we're a GAAP you've areas then had for we last that did have, a SG&A. save on motion money. million commissions was gaining sales for in settlement mentioned, where trying that some we line of alignment spots trying the heard to litigation One and sales know, some our it's so that And was that in the the call, that and we have on few seeing a just most one-timer. numerous we're you across tractions comp

Michael Hoffman

is million number. depreciation? That's to number right GAAP $XXX quarterly? net So use That's the of the

Janet Zelenka

spot So forward, the a think is going I bright into mean, as going there's range costs. what I mean, continued and EBITDA, going, built forward. manage continuing seeing to where and I we're that the takes SG&A but of it's I puts we're

Michael Hoffman

but nearing the report in benefits get it, quality that in there on compression you medical the Hazardous want Waste I the business services, strip Okay. hazardous regulated you North SQ the table about price a You or it in America, follow-up of clear talk is end out if the in when evidence in can the to is Healthcare waste Q plus LQ? waste an revenue now? that we

Cindy Miller

a for of the then on says, think we say to wanted get SQ, I – organic Scott we to are looking continued that are believe be, me, point the we core of question an the where in to we we're going growth question going regulated seeing that are we as perspective, are well. and And think after earlier would end see which continue can waste? we point Yes, clarity from a with to hospitals, your I business to

I saying other We're to and that things a is think focused grow. be we got out. ability to to what we've roll A lot more the lot on have of we're it. continuing training

you negotiation we in different all quantity transactional – is As the imagine, very think right what excited And and organic about being than I the do can some small opportunities growth. accounts, hospital of is see and revised or sales our continued encouraged under that side of very now. more but I'm moving forward to

Operator

The next question Bisbee of we Merrill Gary from Bank with have will come America Lynch.

John Hanna

the Jay this Gary Good This is morning. morning. Hanna for on call

related Just business? sort the that on we waste of going $XX that you last out back hazardous costs, that is the for to up sort cropped million of issues should quarter hit assume this pointed higher to

Cindy Miller

being look think earnings in question, to share, per taking which certainly down from it's bridge, something we're the take years. an $X.XX apples-to-apples that look as a at on are you fair at. But compared earnings And looking a I a focused quarters, per Yes, previous it. and they're if not on we're of prior at is the comparison effect terms share we

just give couple in that of doing. little color a that we're of a things Let in terms area me you

is there. on days safety road included goal, and So take I early XX% pleased on to me, in towards that I'm this, note, days that the us so out and starts service in a all lost about at everyday. positive workforce get think look improvements, with stable – if I reduction that's it and got helps safety. a think really We've work to you a

towards if more a given missed of that's As as punch all the example, that, mentioned concept clock, of result some drivers wheels terms a direct towards a and we've I in an out stop. and We've you before to time their to then inside positive. before pickups, threshold will. I've driving a XX% cross facility color And missed, of Inside first their improvement or AM kind think they're of had in on come, the

some traction minutes but to I anywhere inside But and about making to at not in business time, don't enough XX of obviously here's running we're that where think we've those in now, looking will. had lines AM business it, we half. especially from our yet. some some cut highlighted XX done. We're we're that the destiny, if full bigger Right lines, in And were buckets towards we you third-party costs, what control

We probably large have line, maybe eight probably about that are – seven we – to about third-party want I say, engage whom of in what with And have that third in vendors or done quarter, seven We've or going big during we've business renegotiate we've said, we gotten those seen of to I – many opportunity signed. contracts. is, an to contracts. were we the had them and three

out we've see forth, we seven costs. a to see working So should benefit in from, you're them an will or anywhere we renegotiated, the say, future eight get and I'm of improvement let's say, when the of awful our lot three you back of XX% that and signed, that. pleased to X% terms on contracts, those

being can. But big an down in again, we bucket operator costs you, It's driving we are And can systematically for us. But that's heart. not the total. buckets at tell a where I very

where pleased much drive much, better not are that and we savings. in to those got to continuing We are get with we've category. And

John Hanna

color. then volumes looks are just from some you Okay. was business, Thank give follow-up you on how trending on improvement for that just and Could sequential there expectations the pretty quarter. your like an us from last here? nice there, And update my is M&I

Cindy Miller

Yes.

degree, bit a having of But been destiny specifically at here. that in much own the we play a business, we get that as M&I of I as as Volume's business good couple on to don't there's in control should, think mentioned, problem. to our unit in things particular up had that handle a not we've not costs really – we to the line. where have greatest

a more – down necessarily costs our volume gotten or type focus. getting terms of of we're story. up me, to a better the is not handle so And and that we've more It's little volume in – a

where because that's it to not to got that's near So need we continue, be.

of more much as a we've the So I that's story, think really volume not problem. pretty seen would say, I

John Hanna

Thank you. Okay.

Cindy Miller

Thanks.

Operator

we'll Manthey will The have from Baird. next come David of question

David Manthey

good that your the wondering the in. help mentioned understand I plan. when fourth Cindy, everyone. went in morning, commission was for you Hi, ERP In OpEx And million us if monologue, you mentioned this in $XX quarter. this Janet could redesigned then

in XQ? trying down to in in going it Just Was about here just trying that is third in to trying put the all like around Is the run anything the XQ? million. in SG&A, this unusual context there big understand a just to sequentially something put looks to step-up too, $XX came quarter? SG&A And of some forward? I'm the going reduction it I'm rate normal context there that's by

Cindy Miller

great questions, you sales – David. question can Janet redesign, then and to I'll what with reference for No, fourth the the first both the that you incentive that – kind I had and team plan tag of OpEx take Yes. quarter. tell portion $XX I'll million

in plans. So, a mentioned sales Chief was untangle there. pretty on incentive had started, times, call different redesign, Bill that was the talking I on think pretty Commercial previous lot about is to much – Officer, sales That's we there's – we redesigning our XX complex, comp many plans and and It he we Seward, commission. who this over

that have the think So we that group mostly elephant, that on customers focus, one effect handled that the bigger our bite in some the sales I focus in into around and we would made in sometime hospital most Regulated changes was of folks that gone portion, of and of Waste. to started of March, those we have

and we of sales Believe a of year, folks, of full-blown benefits on of next realigned making quarter into going close top So line changed first XX% plans, should on field it and some the Stericycle. overhaul more that well them. where have more for sales progress end incentive sales all XX% to them as of year, by both and probably of to the more as inside people growth the we're

plans, has isn't want traction one focus with another days really it of believe has piece And behaviors. out. early training. $X.XX are rolled we showing other terms changing And to that on a where component – that is, focus key I So just for been comp we've us strong been it that of good the some better the in

on negotiation we're go that, with that So revision any think, of selling I value, type and value hand-in-hand we're has and people more making. and focusing skills retraining to

have So we plans, to forward. little roll we out color redesigning as on that's a those and bit move of more

that I'll talk I roll it give little able And about to we out, color be and to more some anecdotes. can them bit a think get the done, as training with we

you'd Janet, for to the expense million any like or anything the comments million? So on $XX $XX SG&A add ERP or OpEx

Janet Zelenka

Yes.

me let $XX So that clarify million.

which the get is in XX-Q was is that of out of but table in it. transformation, the lot I the earnings, which business questions the a adjusted So context on of

So above adjusted this not be the EBITDA, first. hitting line in would

and evenly between split capital expense. operating it's Secondly,

$XX is is line, the the for So it's be about expenditures putting and consistent, would only not million should below ERP our that operating – run of say, with in. that that I rate normal

the heading year. the just for So I providing end numbers where answer for question? of we're your ERP, we Did that the was as some clarity aggregate

David Manthey

some to Thank Yes, extent. you.

just break the sales give and the part and U.S. this you down to quickly we and model divestitures so second just us EBITDA for know The thing. international the here, how Can on pieces?

Janet Zelenka

we and And was our part it small And majority that operations. those of would vast the sold Mexico a about they international And So the XX% of I eternally. we say was of low-margin C&RS revenue about businesses. released really retained were C&RS. the haven't XX%. line

David Manthey

you. Thank

Cindy Miller

Dave. Thanks,

Operator

with Next Steinke Kevin Barrington of Research.

Kevin Steinke

Good morning.

that divestitures? as something make well. to and factoring pricing sort rates to also revenue – Just exchange Or is sure the there you the the all in and are sorted office in items, the paper – of for change also wanted guidance changes in on guidance related other is

Cindy Miller

Yes.

we reflecting I businesses. good and I that on an is half basis, and range, but about see divestiture to lower-margin tend business, the to see, that, it's the change due of look FX and about on the to a that. recall of divestitures, to revenue half FX. is – due the third is at the due that due is to continue the chunk of and again, are chunk a divestiture, predominantly, a piece at When and about the we lumpiness the to EBITDA divestitures, in a look to is is also the chunk and divestitures, due good So I based hedge range divestitures, good When

Kevin Steinke

the Okay, the your so helpful. and under on transformation that business Janet, low? leadership that that with great. $XXX was target team, been That's million $XXX prior spent what And that too has then far discussion given million of of to implication the is target prior is

Janet Zelenka

Yes.

parse saving There two because expenses And in some out, mostly was trying and business lot a question, future track. And was capability, confused on part $XXX prior were answer to first of that and the the $XXX the that and investment. is ERP? the to XXXX, that's utility of target no. the was million I are investments. all mostly severance-related So into that parts: And cost million get is I split was on roughly

and mark. ERP the $XXX number are as number, at of the of a look subset that. to you you So actually the then we is when part add other, And it, million that coming

I of the parts to on deeply vast looking indication if deployment additional million split an all that give that so $XXX trending to estimate, costs – And million that year. XXXX. will XXXX clarification wanted number. are we that majority, to $XXX and see be between the towards is are will a we Recognize give some prior the And not us. that the The will of is into behind development XXXX two in

in and in getting training. readiness testing, are We we are

really – get cleansing are is system have on we data if and in just we the will, defects fixes So you to any deep final remaining running. defects development, and any the up

So are us. costs all those behind

And year as because America. have mostly development then for next additional focusing look really North may we deployment some requirements is we're internationally costs. now the and we beyond, So primary on

Cindy Miller

– the And color ERP. terms I'll give where a of just we training if from mock little are now Kevin, in four. number end-to-end our I on We're

put them Chicago. testing. team a all America, probably Just we're frontline North all we around doing lot have not about members of perspective, things in here But in of X,XXX engaged, to

that about X,XXX members have team we So are actively engaged.

I and of nine I – closed. defects, think about in numbers about are this mock, we XXX XXX those the found another think about

is, one, having quite good defects. we as defects a a had critical you critical in kind had through. I one, you – of those mock thinking Whereas worked remember get we zero the mock few team The was at to news of mock start when can four,

the the well, terms has progressing how of with team in. and in and does are and that looking ERP actual So the pretty put efforts I I'm the think all energy and we how system we're design, look? pleased

Kevin Steinke

Okay. the update. That’s to Thanks for great hear.

Cindy Miller

you. Thank

Operator

of have we Jeff next, Silber And BMO.

Jeffrey Silber

I still lack you've somewhat information. question system. issue the to a from past But Or ERP the reporting to the taken to is related guess happen? do ERP at implementation much. so perspective perspective management Thanks timely we of or for improved that this the for was in the all since know wait I that a information over? Has have management

Cindy Miller

of think you're and clear. let ask see capabilities? about I me asking? Really, talking of like – just if what kind I'm have Is real-time Jeff, any – me to you're data kind let back to we it that you what make is, developed

Jeffrey Silber

closer to but real-time would be had even Real-time you wonderful, then? what than

Cindy Miller

would gotten us this, wonderful. will greater from that's answer a first not Real-time be is visibility. is perspective I We've that no. anything the advancement right. you're of Yes, system's afforded any you tell What

we visibility. them processes a of getting spreadsheets our where we them can are or chairs, the that's discipline what timely But started our that may easier the way from anything bring up with see real-time I own through have in perspective, you, out add to have what – people not while pipeline, tell our capabilities we developing together right have what's expenditures improved else to evaluate here's together, procurement, processes capital down get I and and timely gone internal or fiscal data that better so old-fashioned put way some actually we've of Excel a

to That's, Janet, discussion, we still some a I at Dan America know – areas more enhance I a look take and discipline if trying lot Culotta, leading International, if but Engineer; combined technology albeit look where Ginnetti, our that. and the of put North Dominic to we manual, will think, Chief to with attributable I Moore efforts have proactive Rich both just

Jeffrey Silber

Okay. great. That’s

able be you greater I or all running? even – once guess, So up be and next beginning should have we system to should the year, improvements is

Cindy Miller

base. That's the and that got That's lined if Jeff. bit to all now, goal, make say got concerned And our about businesses I'm up chomping But turned very are kind defects done, say that to group we're ERP responsibility, this deployment it our headline, right us our we for I great. we've readiness, – on, the all okay. we've a – of forward. of a it's and moving all sure that's customer will through is this, while one

team voice talking in it's And me sometimes, gets not missed the start or numbers, members. this that and about or executive when we on leadership anybody else missed, team our

But our as we organic is, customers, everything as their win yet I got can't go as to to until that this a we're to keeping after so say, will we've growth we I that customers. on well. I on are loyal hearts. painless goal possible is seamless wait And But the going his know improve that get Cory Our efficiencies. doing we've timely making and team and cost data, sure can make that

numbers, It's the reports look them with take that. about things appropriate just that data sure want it's make So that taken customers and sure businesses. our care their we to not them that making I that help are of, at in just and and a we can all about provide

appreciate that question thank it. for So Jeff and

Operator

Ma'am. Well, no to Ms. call like to ahead back over conference We'll question-and-answer turn at conclude for go the we're showing further closing Miller like would the this time, now Cindy and session. turn to any questions. our remarks. I now

Cindy Miller

just folks to our chat. time look Greatly you, And and who for Sure. continued today a to that. in and to thank who next have And Mike. forward appreciate you. interest we have in tuned you thank Thank Stericycle, those

Operator

you the management and the ma'am, conference now has your today. this everyone. Take we team disconnect your great have day. care, and thank time, to for a call lines, The rest of again. you, also At may you concluded. And Thank time

Stericycle (SRCL) 31 Oct 192019 Q3 Earnings call transcript