SRCL - Earnings call transcript Q2 2021

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Operator

Good morning and welcome to the Stericycle Inc.

Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. to Investor conference Relations. like Ellis, to now President, Vice would turn over the Andrew I Please ahead. go

Andrew Ellis

Good morning and second quarter thank you for call. joining earnings Stericycle's XXXX

similar On that & such anticipates, Chief our we Officer. forward-looking The use Cindy expressions, Janet will words includes as our and Information the estimates, forward-looking uncertainties. statements. today will, Officer; we statements Zelenka, Officer expects, Executive goal risks making may, and Miller, Financial Chief discussion call today involve believes, or Chief are plan, be When

Forward-looking statements events nature projections and current based subject not of but are and are and and facts rather are prospective risks expectations future in on to historical about therefore, our management uncertainties. on

such to Factors actual within and our greater Our with cause our the are could differ earnings forward-looking in factors statements. Exchange Commission. Safe-Harbor differ actual press described results could statement, results that detail risk in significantly the and discussed the from and in US Securities filings release in our those

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

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

Relations call, the the Investor the specific sensitive in approximately will from and of the we A access September August X, at dial one to an is earnings code a XXX-XXX-XXXX available available which a enter Stericycle's press call, replay call, replay Stericycle's replay Investor correspond reference any the consent today's our until on For of the additional conference can also in Relations the also comments site hour being on information please Relations the found now slides for may call redistribution, provided be a of form Investor and expressed occurring call reconciliation The XXXX. the Throughout is longer after available to webcast at site. accurate over prepared and today during be on of Stericycle which retransmission the recorded Xth, replay Stericycle's website. the turn schedules access call end presentation, presentation. information Time To without is be call This measures, refer release, most applicable at will earnings time or US XX-XX-XXX. to today's is GAAP be investors.stericycle.com. which web of this prohibited. web to written replay. Miller. XXXX call of rebroadcast the Cindy I'll Any may no

Cindy Miller

Good their Information for you, call. and and matters. our continued of revenue thank morning Waste Thank continued thank earnings I'd Secure joining Services quarter to their and efforts customers, members in delivered focus on team our you Compliance growth and protecting our Andrew. serving our like Because dedication second for team Regulated to and everyone Destruction. we what members strong

transformation pleased achieved announce We journey. an ERP North significant milestone launched our At business for priorities. On of financial Destruction. will today's Information call, began the processes of few the by for start five key ERP phased our and procurement deployment and providing I on Secure update a operational flow, solid also I'm driven our by primarily beginning to we delivered that performance. in we've a August, the of also cash American

to will Janet, our modernization revenue, innovation, and and who As reduction implementation, reminder, call optimization. quarter financial over turn I'll they debt and leverage improvement remain operational results. quality discuss then the efficiency, ERP a second of debt portfolio

from by revenue in with trend total growth revenue growth growth quarter, In XX.X% revenue revenue had organic driven XX.X% organic consecutive Following strong of growth America, we America growth. which of our We our growth and revenue of the of remarks, in comprised a questions. X.X% a of continues initiatives total growth X.X%, and pandemic. primarily quarters we quality will Waste of delivered take ongoing four organic quarter XX.X% of your XX.X% of growth of comprised growth XX.X%, had had recovery Information Regulated Destruction revenue North North XX.X% Services Compliance in in and and the International. International. Secure second

addressing as As then, pandemic significant customer Like stops. stops. a we second too by many organizations, this was to compensation and XXXX, are our retention significantly we date, the business main and customer target, expanded employee driver team Two, half have the we And engagement of been three, three areas. through experiencing operational and first efforts. One, internal members. the recruitment. reminder, has team Secure Since we In particularly shortages, by in to impacted Information Destruction benefits. reductions in continued quarter attract organization our recover internal recruiting of needs impacted labor new members. competitive hire increase To XXXX, market and

been our turn the August, members years two that team North deployment us combine American market ERP the ERP North will IT of state processes we've went phased live our I and capabilities with businesses for and beginning that continuing all financial ongoing fuel will American our now to competitively for capabilities one, to Secure North deployment. and operational past through our with provide for of began This commercial are Stericycle compensated we America procurement they ERP digital, Information wage core in operational platform adjustments. transformation. art. onto provide will value our on the ensuring the focused of based powerful and Destruction. Over At data

forecasting streamline a in including for and of capabilities, and August, launch finance, capabilities. With foundation the enhanced implementation established procurement analytics budgeting and modernize we've

for We to Destruction commercial, drive operational Secure will Information quality priorities. revenue we also business key and leverage operational and that order-to-cash deploying began and technology our innovation of modernization

the believe of while disruptions, achieving commercial normally a hyper-care new first hundred members team be operational couldn't us To a customer from The assisting I being improving components several customer operational platform. risk and allows members. of we with have and we deployment, continually important in that continuity efficiency, milestone systems. business support Stericycle initiatives our now are And minimize support journey. the this minimize modernization approach, team comprised more team a are launched or our customers' efforts members further innovation For mindset. ERP which our phased all system customer to We these and in to the our proud added measures transition launch, of team temporary in transformation impacts

review call portfolio marks divest for team toward will signed our approximately divestiture which $XX ratio the our we and our Janet initiatives reducing fourth continue since optimization further our as an We financial the paying debt $XXX.X half of reflected debt ratio. execute and in through below results. applied compared divestiture to on now at continues By to of our our XXXX. on towards Xth quarter continues times times. million proud X.XX in This long-term times operations X.XX by the of the our million, progress we executing to XXXX. end debt turn this I'm this agreement in I'll leverage third our in flow debt to our Proceeds leverage will reduction. our progress be to This priority operating goal results. over first the XXXX, from three to make the debt cash debt, leverage second be quarter lowered improvement down generating Japan week significant of to achieving

Janet Zelenka

by I will summarizing Thank you, second quarter Cindy. our start results.

Destruction revenue slide million positive As the These million Regulated organic $XX.X $XXX.X impact million million. and quarter rates of in increases Waste $XX.X noted exchange offset increase, the organic the revenue Services last Compliance quarter and Information in four, million on was impact $XXX.X partially by was growth the million. revenues second Secure growth foreign compared were second $XX.X divestitures of were the of Of $XX.X of to $XX.X million. was year.

of As million Regulated and $XXX Compliance million noted in second on compared $XXX.X Slide X; the quarter Services were revenues Waste XXXX. to

increase as through reflects of and Of initiatives, volumes impact $XXX.X approximately revenues Of believe due $XX the exchange revenues XX.X% million Communication million X.X%. X.X% vast of higher North International foreign about waste, waste Compliance rates, the in of Secure from business customers in Services $XX.X X.X% as divestitures the organic about X.X% Services second the increase driven a organic to COVID-XX. X% Information our a American gains the revenues revenues accounted growth XXXX approximately $XX.X Waste the of increased second grew increase. waste improvement, container, offset related was by maritime impact the about in with is was Destruction by this quarter average COVID-XX XXXX. for revenues of North revenue quality X% to of grew we increased to per from or and elective organic pandemic quarter from an or in continues Regulated stops to quarter. growth, revenues, a Compliance and second XX.X% Secure recover million America, organic of service from Information $XXX.X million support were in the Regulated second attributable which and the Waste services revenue. compared Destruction compared quarter delivered to we These which surgery decrease XX.X% due the Solutions. the to revenue X% X% weight increased XX.X% In million majority pandemic. Excluding Services this

quarter about second service revenues through stops Destruction, America in two to related of our to revenue the stops generate compared customers XX.X% which revenues second For North Secure remainder. the recycled increased quarter and XXXX. comprise North paper, in Information in we Servicing comprised ways. which XX% American the

improvements significantly of impacted XXXX, pandemic, stops quarter restrictive the Recycled declined orders. revenues When quarter $X.X SOP $X.X to paper offset were directly reminder, As the revenues pricing, second up recovery Destruction and the and results $X.X XXXX, in totaling million. nominal the $XX.X had Two, Information increase quality economic along the million of to increase SOP due shelter paper was second XXXX. from compared quarter pre-pandemic this primarily was this million operations compared last reflected due million organic The the by service economic recycled Secure in as second against quarter quarter in revenues one, the second of compared business second from second revenues a the from XX.X% continued to COVID-XX. in evaluating of The of with revenue charges operations quarter quarter to second partially million. service by, to higher of quarter compared which down year. lower three, X.X% the quarter place impairment higher second $XX.X $XX.X million. Income Information In XX%. to, recover quarter increase XXXX are of of in XXXX $XX.X of XXXX million compared increased to divestiture organic was approximately and of second the costs Destruction as $XX.X million, This charges by XXXX in stops the to mainly impact or offset ongoing initiatives was continues XXXX. second Secure operating about increased quarter, leverage labor income international, the from volumes, more the

in decision with due timing as year. flow In accounts spent income Cash quarter to to increases compared with of to to As $XXX.X of $X.X team from merit normal XXXX first the increases was on from $X.XX year XX% XXXX, for to the difference normal operations a the or of and related mainly compared million share million I XXXX. the expenditures, of a the reminder, million half higher we explained second previously wage track our net for the members. diluted $XX.X environment related of due third ongoing US increase estimated to annual return in half per the overall million, to the last was in remaining the about year, related loss loss spin, $X.X we to in income business second to capital to we operating was approximately with last the from million and quarter. in quarter $X share the providing ERP $XXX.X diluted GAAP to defer The operations million earlier. our $X.XX expenditures impacts, cadence or This merit merit to made earnings higher net pandemic first a $XX.X labor XX% quarter. million shared. per attract competitive The costs second $XX.X million retain

tax by in mainly As million changes net incentive an XXXX in decrease on other of seven, million working XXXX income $X.X in $XX.X payments year-over-year annual nominal was payout XXXX, of a of payout versus driven slide illustrated $XX.X and and higher million. compensation the capital

XXXX as partially result of Additionally, of the in quarter related million recovery, and Adjusted non-recurring government-related XX.X% contributed the improvements the of XXXX second cash continued costs experienced revenue business the was $XX.X advance of approximately associated divestiture XXX payment from lower diluted by items, a offset mainly an earnings per quarter of Domestic divestitures of which higher a favorable by leverage approximately received points improvements compared Solutions of quality flow of million, were last including and as labor second in contributed Adjusted or which deferrals percentage share the debt Environment basis or and with service offset as operations million ongoing of to relief. margin million, income payments to balances. XXXX. revenues were a was businesses, in on basis million XXXX $XX.X $X.XX basis XX of from agreement $XX.X improved $X.XX income and XX.X% basis $XX.X approximately lower these points These up related in from Adjusted to points $XXX.X a lower operating economic interest due XXX operations from initiatives, pandemic partially percentage revenues, XXX year. points. of

As effective the on from higher interest foreign illustrated favorability improvement balances debt lower primarily operations, a result rates. rate, slide income $X.XX on tax levels a comparative with adjusted lower $X.XX due to following. eight, from of exchange expenses the $X.XX was favorability which favorability mainly the from income higher year-over-year, from was bridge favorability non-deductible from to due $X.XX of and expense, $X.XX

as was term quarter days of DSO was quarter to XXXX second second of revenues in related the of Capital XXXX. in receivables by the compared compared month from DSO Our in year-over-year. to days expenditures calculation, XXXX. divestitures When XX days in Short reported DSO driven quarter half the of $XX.X million of days compared in XXth, lower XXXX. to XXXX DSO capital excluding XX as trailing difference the ERP million to the movements the quarter, June first first of second second to the XX in XXXX compared XX were the XX impacting the a XXXX impacts mainly are XXXX. DSO The half $XX.X and expenditures was half first pandemic in

XXXX, capital from $XX.X million, $XXX delays. earlier. expenditures. shared million by million to due For half in $XX.X expanded change million capital in supply for $XXX represents we flow of half spending now full timelines $XXX to to as cash previously lower mainly $XXX due decrease million This was first chain range operations, Free was flow anticipate the our million of by XXXX the million lower first year of compared to a to The explained from XXXX. $XXX.X cash offset partially driven expenditures,

approximately XXXX at of of half X.XX agreement reduced of our quarter, $X.XX times, X.XX million debt was shown the debt billion. improvement credit As end first an and our in XXXX X; to was XXth, defined as by times. on of Slide times Net second the leverage June ratio ratio allowable $XX.X from the maximum below X.XX

due Although, some into like third as recovery for we evolving the to see insights of from would we the ERP-related to revenues, still the emerging as anticipated expenditures the to related year. provide operate pandemic, with I rest well what quarter uncertainty

for After quarter growth Looking normalizing quarter we XXXX, the in which so of it's our XXXX. from been in which in quarter of in the generating quarter third consolidated on excluding remember businesses, the impact to mid-single the digits second on the have the than expert past million and for forward quarter foreign approximately of important the couple pandemic XXXX. were the continue that less and quarters anticipate the impact of portions revenues third XXXX, impact organic during of the to but divestitures to third exchange third of XXXX, revenues, the Argentina solutions $XX.X rates, favorable business

and ERP, we for have ERP Information phased Regarding finance deployment the mentioned and as the portion our began launched Cindy American North Secure our Destruction. of procurement

the of $XX approximately spending the As line slide to estimate with $XX the spend range is shared. million million on ERP additional to track also the quarter noted XXXX, which in implementation in having on to IT in previously expenses IT I remainder in to we on annualized an third $XX ongoing to XXXX XXXX line are These be estimates we Beginning XXXX, ERP $XX operating of provided. Beginning million. system million total the previously I we operating ongoing for expenditure million to million ongoing estimate XX, XXXX operating the running expenses. $XX and $XX new ranges in are the with

plan XXXX. to the ERP Secure Services deployment Information North Compliance American Following we Destruction, for of in Waste the Regulated implement and phased

major ERP ERP well, in any additional of our While customer implementation impacts with disruption our and the to costs. days first potential has potential deployment system resulting are few as going the cause

Services into Compliance Cindy were Revenues and approximately to EBITDA quarter this divestiture in mentioned, recorded As which definitive result million. Japan $XX divest The totals consolidated sales loss week non-cash a of of approximately our we Japan's our business operations will agreement for million. for entered and $XX are Waste third International in pre-tax Regulated the approximately quarter XXXX. of second X% in

we Finally, committed our call outlook XX. long-term now will on turn I back as Slide to to Cindy. summarized remain the

Cindy Miller

beginning growth, and to ratio debt led double-digit achieving progress I'm you, five team deployment a continued by proud of transformation have North their throughout our the this organic for all organization, our of business significant portfolio steady in leverage priorities. our in improving ERP the further quarter execution second continued American improvements our against maturing milestone Janet. of members The Thank optimization. system,

protect Stericycle Q&A. we thank open and our open for line customers like in continued team the for questions, having please and serve Before our our and we what communities shareholders members matters. the Operator, I'd it up to trust for their

Operator

Dodge first Capital and Markets. Instructions] session. ahead. [Operator answer The of Sean Please is from now RBC will go the question We question begin

Thomas Keller

This so Sean. account being Keller I morning. five do bit you we on basis, about your the Thomas for good six know growth on account about some the than trends could revenue talk have questions. And a mentioned you sales you new about taking Cindy, the the to customers a how across core adds, about now or are before guess see and an you've as Hey, more I waste made longer-term little that? from had is changes ago? starting purge quarters business? Thanks medical seeing think lift for guidance you you're

Cindy Miller

Thanks so for much question. that

a point we're where seeing that grow for couple LRP to order our X% a continue in things to are is, got getting of think we to we of to initiatives. towards X% growth. We've to and are to of revenue quality on I that us continue looking hit revenue

us, return seeing for we've So we Waste. the a levels surgery of are in some before elective Regulated to seen

However, business we're seeing yet. back not still maritime

we're ERP the revenue on innovation good where whether that some the we of So, seeing of lagging the one of drive we the I continue is ERP priorities one more the launch revenue on us all side the thing. about of we're is, look initiatives. for the to frankly I on other. of to or business looking, But still then quality couldn't it's excited of things more portion any quite in portion right be modernization the can long-term, of think business our if help But and really really going a now,

a more us. be ERP it more data to then to through successfully, lot ability in good make our hone So some the harness get little things come then a of and as bring able and bit skill our to to we I think kind

Thomas Keller

margins; expect measures the you you're margins I been making the providing operational to that you initiatives to think little cost but turn been in restart a of ERP remainder working us come over sense you've Okay, on non-GAAP the QX give maybe Thanks. If offset margins EBITDA know got those can able costs? a have with how savings, expect that's still should then, and of the and to you associated benefits good the on bit? mostly you then you back the the we guidance, on generate, or So there. it not year? of progress the you can And helpful. do

Janet Zelenka

Yes.

So what this Look first, long-term. I'm happening see business a with going to with what's this to year. start and at we go

move to flow, that see XXXX below which going all, primarily at cash of of which year, the be expand the to generally in to been free to first line. we're it by least going driving expansion, to a costs we're gets by running is driven So what margin $XXX above us line flip that is have million the

take $XX into income continue my million we at and as to and a remarks. shift adjusted have in that them to adjusted that's $XX I will million move normal out So operations, cost mentioned prepared

at look to is going you're GAAP, see as at if we're movement. discrete few a items adjusted start our have number margin looking So, excluding, that to just what going to you expansion because

significant most see the year. I that's So of through happening rest thing the

Thomas Keller

you. that's helpful. Okay, for That's very Thank all me.

Operator

David is next The Baird. Manthey question of ahead. from Please go

David Manthey

think Thank is Janet, to systems know through morning. XXXX, get down? the you XXXX, we year? how when parallel see the we the or that's straight legacy we into but about should through you. assume step off, it should a is of I when ways running Good that the SG&A it that most we and keep ERP

Janet Zelenka

application. question the Yes. Thank on the you legacy for

to the before in our America, applications do operations. operations North I've we're need So international doing as support transition our all keep international of mentioned when portion legacy a good you do a the like are you legacy And going.

to So well. we're a operations platform modern move going to the have we until them international to going keep as

top So 'XX, good indicate safe I That's will through incremental that why that $XX IT of that you we XX an of see on XXXX, costs. legacy projection it's million all cost would the a to of million most stay. is not say, legacy to if

David Manthey

to the what changes the delays, ERP, here, can maybe to related chain clarify about and talking related expenditure you but some capital could statement made, on to that you Okay. clear you're why? then, seeing but outline they of are are that, be you you're none CapEx that And those maybe supply

Janet Zelenka

to. Yes, be happy

we're on the we're in -- projects not the not of ERP. that are working core most we're seeing So dozens dozens and the maintenance is delays growth of or projects doing, what

our work and sort you when So core adding initiatives change of delays some operations ERP are growth add I we're ongoing, normal to do but what the that refresh on up up that and doing which we're call are to the track. our in dozens cash, of seeing

David Manthey

you very Thank much.

Operator

The next is Stifel. question Hoffman from Michael ahead. of Please go

Michael Hoffman

this you try and seven Janet? How get doing in Cindy is are So where to creative questions ask and two. you

Janet Zelenka

Good, Thank you. Michael.

that getting so. good You're pretty at

Michael Hoffman

Yes.

the $XX where So, the just put just that million much we how basis us take to about to it? to help million SG&A that good step year, D&A, up million it. to think $XX that on to between splits then do And in Is add $XX a and million QX and $XX which into turns do how two? to next we

Janet Zelenka

I'll Well, you. so, direct and

basically And then and million be slides will If $XX the on $XX $X next That you to run similar annualized the for the rest in will operating the half million expense SG&A And year, be slide year. the and expenses. be second depreciation for deck, of is our essentially $XX has SG&A. then of a go to million to in it year the $XX one of will that normal that rate XX. an is $XX million million million to depreciation

Michael Hoffman

is there the baseline said not going sequentially? something QX to, data some on you as And

Janet Zelenka

terms IT In of costs?

Michael Hoffman

Yes.

started total... QX with the I if Just

Janet Zelenka

Yes.

of that. top We then running adding have on the legacy this systems and we're

Michael Hoffman

Right.

is year-over-year, sequentially second in directional trend the but noise appreciate much the I the what's so on question. the from year-over-year QX sales, then And into Okay. there QX?

Janet Zelenka

Yes.

same the in range probably is it's we're think seeing. what I

going We dynamics have so Michael, many it's interesting to on, watch.

we're variant be. on dependent cruise will is started the The what maritime. really to it But So watching has impact now sale.

things range road, see, the in the be so and emerging these to be have exceed. middle you shelter be a took we the drivers, to which go that an will but that given in the shut an all to impact again on it would range, in orders, opportunity is same happen don't we think dynamics seem we If we it. So, key down if up that if to what of starting will, open will and place on we business business,

a and it acutely business right in trends multiple core is our both now of So ways. to by business predict hard pandemic because impacted

Cindy Miller

Michael, anticipation if were talk think couple And perspective, a October then return-to-work schools August everybody if just more and was to to months were plans us at think September recently, weeks, definitely has about, Xst, the we there a you flop. most anticipating saying And one through, X. you from And sequential two of ago, recent hey, thing of that opening. I return-to-work were return-to-work coming almost to in just X, saw we look last headlines flip

are develop muscle for as that we think to able think monitoring So adapt then I I us, whatever situation we being circumstances the is the memory we've closely least as thing one And can. to at for some those are.

mentioned. what we and at had So, what I think bit are that just little Janet about looking highlight a

Michael Hoffman

Thanks. Perfect.

Operator

ahead. is question go with Scott from Oppenheimer. Schneeberger Please next The

Scott Schneeberger

Thank going inflation it's you. kind the level I year-over-year of pricing, what's know is, question Cindy, revenue the I'm in direct higher morning. to you to And lot of some noise that's large pricing on. are on just quality on just pressures. start out, labor cover specific how a comparison the question. initiatives I'll for curious, customers? discussed think trending your And Are you in Good Thanks. that? able and overall in is I But alluded you the there small

Cindy Miller

couple So, pricing. great Scott. And of question, a on things

we the markets understanding astute then in for the what think value customers. more of bring both the the getting more commercial in the with of team understanding the our our what's the value team, dynamics businesses. services and value, different And our and I market the fair across US in the operators we're our and marketing to is marketplace what

comparison it, this centralizing I that contractual think flow, and quality we it, of improve of language we're ebb process behind to where as kind includes revenue, we standardizing see more our improving getting continue be ago. and in as things. how us a been Certainly grow with customers for then our covered to years for to into we also but few different it build had Stericycle, we opportunities to for their

be than we to a organization commercial those been contractual able before. a cover from ourselves greater to better can maturing degree we're to whereby had think relationships we maybe I up stand So,

in think where I lot but I keep learn in And and we would market. an too. think tune from don't, I where So, say are what going is terms lot win, learn on from the a we that with we we in of we. price helps awful of that us any that what the contracts on

Janet Zelenka

just then the about saw revenues, about the X% Waste think X.X% in. is week of Services, which Regulated the to average and growth X.X% quality X% we yes, America increase. North like an the surgery I elective we Compliance And add at driven from of and increase container, by was due to initiatives. Of in about revenue the And COVID-related in from that

quality So line. include are issues new as as gaining they revenue bottom pricing to business well for And value. dropping of those the

Scott Schneeberger

Cindy, year of And Two been a COVID-related. it's guys. Thanks, it. Got services. yes, now, had since guess to them back introduced newly you very those you. three I were

be The the on focus I thoughts other know I'd area may on you for personal that's and a and had because a and the report progress company? love initiative what pickup coming was the Express information. existing been in Priority

Cindy Miller

non-healthcare great a PPE question. referencing, think that customers. you're Thanks up, our Yes, for I bringing

PPE popping all of healthcare customers running as the it's equipment. now COVID warehouses distribution non-traditional the sites up vaccination started you're about So the and more asking warehouses place, testing use the to then site. that over facilities it their people or And distribution and non-traditional first were talking

organic continue our those terms that of in revenue and We growth well adding of Janet quality those very with referenced. to had do to the to

well. dynamics read. on we the those what really and depends vaccines? to and headline the US, world, more it are roll don't out vaccines move well Will We across flows across I for of As continue as guess positioned there the know, be ebbs the you

So, really I think continue then, to positioned most like those. of us importantly our interruption what as where very will on the through to terms right ability give in innovate. with ERP, data we're we're the And But focused thinking now the I customer now. minimal focus we always about we're right new move is

I services it's sure become think in changes to putting nimble announce to we suffice what of we'll need. ready of more ERP ahead we might and So be our say, and this but it can they that that get very we're in to types make the any have really customers of new

Scott Schneeberger

Thanks. good. Sounds

Operator

next ahead. The Securities. Gary is go Bisbee from Bank of Please America question of

Gary Bisbee

Hi, good morning.

your amazing balance you you a when targeted you the lot to that just ago to getting on debt a It's priorities two X% continue talk sheet. just reduction. question a and pretty done about you to seemed Cindy, that, right first do say like and are there. years basically you've The job

here or want ramp Do M&A? allocation So or thinking How know the broadly go to year you and Do target from three below Thank reduction that I next that you when capital you would three? still longer year how change you from are about times do leverage be? the to you updating target debt what well that below evolving? is up the dated a guess are stock? thinking repurchase about getting Do more you. you after. thinking I about

Cindy Miller

unit When the on to executive the took just have and business And you and I Gary the quite being and work market process, is every and a has question, sheet leadership I with thing. right to we proud focused the improvement. it's about. well focused improve that do balance frankly then don't on in was Great stronger a because one And steadfast very and of just Board, as everybody No. am talk Janet doing as knows, choice rest done priority. the a position of other as opportunistic and team other the the sheet really every be the that to team it balance getting over got in here be that

if I of modernize. look you continued everybody's at think you our Gary, looking -- what which some ERP also company, at had to continue that. I if the But And in we rollout, the as invest in it to projects, would you bring dollar to expenditure think proud Janet about reduction. attention, to our about very debt I capital we just if So look talked investment, isn't are and of every

upgrade, while things amount paying to automate, a to tremendous We of do are down looking to internally debt.

those think we opportunistic the with now. as different to we right a lot balance changes I but be info of everyone, for So, be that focused sheet certainly opportunity on will come are us with more more I a there'll be make future we to bit we look share and to happy as and think an stronger things to than a

Janet Zelenka

Gary, And this Janet. is then,

want on debt the XXXX and no the they of XXXX, the Regarding leverage development. to to costs IT we is three. ratio and faster. line, that about add-back I pleased got we're with out the below there, above their get point And it an where longer guidance. real movement we to are ERP would the you with are close pointed to focused our of

a is leverage that factor for the calculation. So debt

Gary Bisbee

to of a risk a how good And the and for is few wage was of more then you labor about there and this this worse the you. drivers costs. timing Could Is your that Thank forward understand of an higher comment? the that fair get Yes, people of chunk labor of material use is or issue, is run just million enough. how rates is rate that but that are $X Okay. and other a question? big quarters? higher increases, shortages that you merit on of thinking essentially over the looking next wages, sort shortage I

Cindy Miller

think stands the of I Yes question a two think Gary, great one me I that to there's and things things. that's out

sign I don't and walk help any whether what's stretch where window. wanted marketplace workers months in frankly, hear the by is any of last drivers walked that or listen be there'll is to in and its plant of didn't And happening Stericycle one quite we over I a it's know the the in I've First as imagination. into place couple not immune or the

we if with of brought more you make to beginning to the labor in what shortage and a So, our sure we've hiring very that our on our the to probably competitive we're improve trying out not our getting specific immune do markets last on just compensation But in-house. say really then, point I at look wages our touch I years like and at that. year, to really the want benefits recruitment packages. for we two taking been focused will, and this And is, piece

retention we for and recruitment, So also initiatives. continuing to for were look at Ben whether our then comp it's engagement and and

So, on. add? you'd our done. continue to very do best proud focused efforts it's else conditions. And ability Janet, right challenging anything we've that I I'm I'm under for customers something like really think now some we've to of been the proud our to our of

Janet Zelenka

Yes.

that and the we're pointing was there is competitive One addressing. X.X as for underlying pressures says, out to we thanks couple timing a So, key look at which merit compensation due drivers. the of is the which Cindy

ramp up other we've that and support. to and the we the The heard, you did put ERP as quarter added next this for is in

So the do that's those we working but do dynamics have the usually our focused on two And are team of on there, going kind productivity have we ERP. that.

your So and systems put of leverage just we defense and in that modernized productivity so best that this improvements is it week.

help days have at So us a few our just that. areas those with the tools we're to and But didn't ago, challenge. opportunity are this beginnings we that of

Gary Bisbee

you. Okay, thank

Cindy Miller

Gary. Thanks,

Operator

Markets. question from is ahead. Please next Capital of The Silber go Jeff BMO

Jeff Silber

how just answer Thank so was quickly And As different much. wondering increasing might decide be the in Delta down now, business I their that holding a they back just some is could SIB impacted little lines? had you example one the you you that customers office bit, that drill to you if I'm is a prior and the an Variant, mentioned curious little up business, of later? services open started off the and

Cindy Miller

Yes.

think, coming they and customer to calling quarter-over-quarter Jeff, terms are they their an is they service stops it's in and improve shred businesses question. as we keep happy are great compliant. What understand with of I how continues want, businesses essential to the it really with back, are do

getting those calls. are we So

in go I'm of obviously Delta What with that. indicator settings, into when open because Variant, with very So in pleased back I of anticipating when would and more do terms stops as would I you do know say of up, is campus offices, an when back that and help be on volume. universities back more to think, do a eagerly we type businesses classroom are very, to employees reference bring schools

big said, changes the I example a use to two there businesses let's months starting like So in Delta the some go with ago announcements is of to discussion, back that. last weeks businesses couple going of Variant versus an as September back,

will written yet. is So, story full been normal, the I hit I get how but we think think business we're when it with very recovering, pleased when to or will recovery hasn't that

Jeff Silber

in all? about could really if that get talked reports timely to the at the the implementation. Okay. have make Are improved I to the management getting switch you I But know early. And place quickly? decisions past, Has inability quicker, so ERP can it's information. you team

Janet Zelenka

So this for is question. thanks Janet, the

from there's of first actionable possibility. example reports of with wait month, get and nothing just it, is there [indiscernible] the cetera is so in, the I'm week. do. will lot the is the team It's we to come had et and end it to is is first give said, So excited quicker, a getting now tuning but to the like I'll but in there, week, an came revenue someone like the you the I promise seeing

Jeff Silber

much. All hear. to great right. Thanks That's so

Operator

Barrington Steinke from go of The next is Research. question ahead. Kevin Please

Kevin Steinke

to and your ERP of to relation training In initiatives that, management the helping get are important about change morning. which you I that terms component always through ask Good wanted around rollout. in process.

are efforts you the in can that your management? in talk made that So about change front on investments being

Cindy Miller

start Janet, can bit. wants I and a to Sure, in then chime little if,

training change with First that the ERP. That management. component

management I of that us. One a terrific things for change catalyst the said was

the of the could do happened starting each to much change one last if year. silver way think businesses units, tomorrow, way that out look we way how we with business was had business, the the change I change have pandemic other, the our interact lining we anybody at

terms memory, in than So, today to to able is I of think really muscle hey, be we've we good different developed need a adapt. and yesterday

We Our today. need to customers' adapt. are able to needs be different

this. had So we've preparation I strong for think,

the team very with all well folks our associated planned rollout. the are think I and proud has that of very internal

that of day-by-day departments rollout issues company, up. sure knock the that as we make has the any been popped kind the continue systems unprecedented, of I to down potential think collaboration there have to within that between

adapting to I'm how So with change. pleased very we're very, internally

I we interesting it's as the better. we it we several and day We're continue some think out rolling ERP had know yesterday, have you with US to, ERP. of a about I've we an and just our talking on are have call the of calls that early is yet And one to the strength, know get operators, to times so phasing update calls the very, learning within phase, from overall. of of every an get The lot I'm on day good Stericycle. pleased awful And to phase have coming phase operators days, many on face things certainly them but it's I they much our yet. that the going we're didn't the through very and so

So, Janet management? about change any other comments

Janet Zelenka

Yes.

is of about think it's I'm the you how that how really the each you external both that. change there's we management. those with it, that addressed there's been help question two because partner processes, a to change. do on then passion me of aspects change plus is us to in human it's I from an And excited dedicated this has And the this of future. big team did supporting So, have before, the hard for And two, concrete aspects management with the head

customers front So, to roles business. on for we've the different and in example, suppliers the for the maps too, journey hard concrete the built

how and to that leadership procedures people changed. change to the I standard with our change approaching to attitude not both help where could that in then, going it in operating the And it's field to live it through of this before We interactive used example to help an training help with we and the how with collaborative and rolled has go have the and in leaders that, out training training what for get aspect before do which do human to of very with journey today virtual shifting and was positive people them resulted drivers the we facilities to of are and we've training, benefit person also hundreds for training. out too. a a that that built And facilities area to them in who

Kevin Steinke

management. lot great. It of gone thought sounds like and effort a Okay, into has change

hear. a last up your just started systematic to of you design secondly, about facilities. to started quarter to had you implement standardizing to is gains continue of waste approach going and to optimizing at good Is your few out you that And operational facilities. kind it are forward And sort cost be that? to rolled and out I a of medical that's you about wanted the So talked ask going what ongoing, of seeing all facilities that across or savings

Cindy Miller

it's us facilities is Anytime, a is try just modernize that Equipment different, I can. to the as very effort different, think as layout and different, as looks is internally a patchwork we really company much different. a Yes, standardize how said, large containers we've waste to of we it process acquisitions. definitely. is the looks different, XXX different for And the are

a to did we or we're about So, make And go should we've maximize can facility what our ahead and And we into team, in put and - out, going and sure upgrading systems with to process the that putting whether in engineering then be talk how if go it's that laid continue equipment would with some that, to ahead productivity new with new we facility. facilities. we be believe equipment. developed every how we

the is listed key it's very remains that it as big So and continues a part one priorities. of

modernize, we we we're to how going should do standardize put so facility look see be. can we anytime can efficiencies all things a to the So, anything gain that certainly operational that we or in to

Operator

of Ryan ahead. The from is William Please go next Blair. Daniels question

Ryan Daniels

for Ryan. for taking Hey, guys, Nick question. speaking Thanks the on

we've kind this the line cross kind being has trends quarters selling solid of wondering those is of kind wins much then of by couple is route? past RWCS? exhaust on existing said, with coming services versus kind new been that of So, driven regarding of of how back clients And client and how

Cindy Miller

you're to for of insightful mix appreciate organic got looking Very to you're Anytime strategy, and business have a your an you've Nick going healthy I growth question. it. and grow both.

I'd you also customer. back new my So hey, saying, the restarted. to they're get service then the next But customers are add coming and to like have

that. commercial very looking to of So group proud do and I'm we're the how

we a side So need services terms mix then that's to get we And revenue mix the say want that of the of the we do to efforts realized healthy organization needed initiative I of it's full quality commercial both. customers have selling, understanding in a strong a of of cross because of where our suite both.

new of services. to we've of those at including the any had all look having restart revenue back you starting growth we when are think other it's cylinders and selling, clients, customers organic I on their come because cross So, hit that

So of everything. it's mix a

Ryan Daniels

seasonality then, call guess there thanks. there a the Great, in of dynamics? out decline is side I of dynamics divestiture kind of any guess and I little to And on bit RWCS, quarter-over-quarter that's

Cindy Miller

Yes.

focus it's to underneath a The we're lag basically quarter-over-quarter, factor there is dynamics revenue times. course you seasonality that, RWCS can see when seeing you're And is that. continuing doing these that maritime underlying component the during in of there looking quality and So, a seasonality to well results but having of initiatives. the with continues from also

Ryan Daniels

Got Thanks, you. I That's guys. assumed. what

Cindy Miller

Thanks Nick. much, so

Operator

like session. to conference Cindy question-and-answer closing back to for concludes I turn over This our remarks. the Miller would

Cindy Miller

you, Thank Kate.

very appreciate we greatly future. on Thank listening Stericycle call, you shared much. the for your everyone to interest and in So excitement your our

Operator

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

now You disconnect. may

Stericycle (SRCL) 6 Aug 212021 Q2 Earnings call transcript