SRCL - Earnings call transcript Q1 2022

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Operator

Good morning, ladies and gentlemen! Thank you for attending today’s Stericycle Q1, 2022 Earnings Call. My name is Jaquieda [ph]. I will be your moderator for today’s call. All lines will be muted on the presentation portion of the call with the opportunity for questions-and-answers at the end. [Operator Instructions]. to with conference Stericycle. like host, to now Ellis, Andrew would pass over the your I Andrew, go please ahead.

Andrew Ellis

Good morning, earnings quarter Stericycle’s XXXX and thank you call. for joining first

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

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

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

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

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

Cindy Miller

Thank and call. welcome and good you, Andrew, to today's morning

encouraged growth we accelerating unprecedented chain COVID-XX I convergence and revenue I supply will trends inflation, On As are able overall quarter, and to reaffirm which we with guidance. our accelerating our how will like all companies, the we organic experiencing mitigate highlight providing this quality are confidence of are levels to of disruptions improving discuss, call the inflation. variants, shortages, our initiatives is us revenue positive Janet and XXXX and our by navigated the labor staffing

workers many remarks the times dedication as my line our on of and During front face calls, they introductory prior I've referenced challenges. resilience continued

COVID-XX team members improvement in that made and clustered overcame shortfall related America our hiring a to collectively specific driver to to our nationwide which customers as North commitment shortfall began due team servicing illnesses to the the due March half first progress, our significant absences XX%. in recruiting markets driver substantial challenges reduced and driver In we in in shortage. we demonstrated COVID-XX see further staffing were of to quarter XX% quarter This in our the

in I over on technology, our to staffing. our journey coupled increased and promise our recruiting protect team “we reflect with the wages insourced matters” we and markets invested and are ability value to in actions past As months, we seeing XX numerous contribute the have staffing talent improve and connected a our of market. momentum proposition what to to employee in our These strengthened attract challenging

strategy team Turning quarter. delivered to continue with new growth chain levers the key in revenue. mitigate of saw We higher business wages, our supply with to onboarding. quality We remain included in quarter organic to overtime our execute pressures and higher pricing we the costs, focused priorities, growth labor first which inflationary revenue of three start on member I'll and and X.X% on another overall our pricing related

our for As adjust our rates have levers fuel cost Secure customers at volatility. pricing recovery provide in One, all other services, pricing adjust services, two, multi-year and compliance anniversary in and and fees for America and new are waste include surcharges North purchasers of Destruction cost Information inflationary one-time a for regulated customers Examples at service main reminder, contracts hospital of also portion for that Secure Information North many surcharge of new some and customers, we for of we surcharges protection our contract our and and and price all commodity America we Destruction. our fee recycling a follows: our three, as sale; renewal; three point

the supply costs actions inflationary quarter, cost we costs. mechanism offsetting that flexible from inflationary the momentum to of which will approximately of pricing mitigate million surcharge the $XX to help excluding lever, other our latter pressures. estimate first the half we and surcharges have towards fee are and surcharges chain pricing introduce fuel fuel Our most Throughout XXXX which fees, offset and adjustment gained provides including of

stated immediate XX. As impact as all pricing shown our we from on in these of XXXX generally the our included before, slide lag pressures. benefit is initiatives charges The inflationary have expected of guidance

these results We half continue a that second on will XXXX. initiatives to expect the impact have larger in of

developments our journey. ESG directly I'd innovation, and important efficiency, operational to which tied some on like modernization update continuing to you to also Turning

announce expected of new our our that to cost automated York and New will facility important the quarter Medical area located the facility waste be capabilities anticipated and waste is This the efficiently expanding Waste third long consumption quarter strategically the New in throughout California it Facility. pleased driven, metro in waste operational of improve I'm with will medical that facility our term in Northeast. by is our miles gas as and facility plan modernization launch Jersey reliably This in went safety. we facility also another achievement to the Similar improve our Jersey employee second fuel located the network in capacity strengthen First, of strengthen our emissions. environmental the to greenhouse reducing is New more vehicle, modernized efforts our process fleet to efficiency Northern to XXXX,

design allowing allows system system, with have to reduces focused content. is the containers is innovation, facility's an standard completing us minimize we Waste all-plastic that sizes SafeShield and and The an XXXX for more improved coming used share Medical this our of XXX recyclable antimicrobial design and the are containers sustainability, sizes Containers SafeShield Our rollout latest of an based plan new step years. and XX. I'm first-to-market our including solution efforts launch our reduce that for stackable important additional as recycle And made efficient an as and washer container is component the we use also construction network than second, storage. Medical are that that steam further is Waste nationwide standardize innovating more that heating excited launch successful on on closed to pilot well protectant, with Containers. as over the and less overall of container protectant odor. a spread The XX% for customer and anti-microbial The potential this initiative in a coated of than admissions. to infection loop further a nestable of feature transportation the After technologies utilizing our feedback, forward These

Our material. future. with our of the existing Further, quality to also reflected sell our work considerably durability, initiative plastics and longer in last demand high because and to them our for containers containers than developed reducing SafeShield’s as is this by is focus as expected sustainability raw recycled it recyclers plastics on palletized old construction we our

North North year. America our Services deploy we the Deployment, ERP on customers in track ahead subsets remain Waste for Regulated to pilots to preparation Compliance of America rollout XXXX Regulated Waste for next and second Looking continued in half of the

another week disciplined Our of And and of of detailed we as Brazilian the direct had that well as Commission, the the and reflection announced the and we represents Waste in journey, am employees department resolve approach complexity reached prior Exchange with regulated last important to agreements finally, justice Securities is American business business. a to put operations. behind Stericycle’s Resolving the conduct in to FCPA Authorities us. legacy which and focused this this matter by investigations our Latin matter milestone I happy transformation on XXXX

several with past across we policies of compliance, Janet to core the over turn fully This during and the the review remediating and focused and issues Over years, the to a call our internal I'll on culture that procedures new and instituting our investigation. financial now integrity includes results. identified building organizations. controls accountability have our align entire values global

Janet Zelenka

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

foreign excluding impact divestitures $XXX.X of $XX.X on $XX.X Of by which increase, to and slide of compared million, Services net revenue this $XX.X offset rates million, Regulated in of exchange $X.X As quarter and $XXX and million. of first revenues was was revenues were million quarter first Waste organic Information the Secure million, noted organic revenues the in year, decline acquisition, organic increased million. five, partially in growth last Destruction a Compliance a

revenues compared Waste slide first As and in Regulated million noted six, to quarter were $XXX.X $XXX.X the XXXX. million Services Compliance on

X.X%. divestitures waste International call decline and America decreased modest first volumes volume was engagement Regulated over related a COVID-XX such as related Services peak these revenues Solutions volumes, the X.X% initiatives. declined and to in by Services waste Waste of X.X% classification first due and Compliance of in organic in vaccine Waste first from approximately X% testing impact North in growth growth increase Regulated pandemic for X.X% declined revenues transactional waste exchange the in a organic this foreign and quarter, revenues Excluding as acquisition The patient services Business. half areas offset mostly Communications Underlying the of revenue quarter. rates, our XXXX. X% in increased was maritime the and growth and X.X% quality and organic Compliance related

$XXX.X Secure slide to on six, quarter Information Destruction first of $XXX.X million revenues noted delivered compared million in the As XXXX.

offset increased Excluding America, organic paper about or the XX.X% SOP the volume. first Information pricing, X.X% compared SOP the Information revenues partially higher reflected revenues mainly Recycled Destruction to X.X%, XXXX. in of paper increase North reflecting offset paper lower quarter Destruction rates, exchange by foreign partially Secure due quarter revenues Secure organic million up increased revenues volume. impact million for The to by higher lower of recycle compared In recycled pricing, XXXX. $XX.X to or SOP SOP of were revenues higher $XX.X first

wage up to Secure million and and settlement, $X and million, million; and supply increased an to was as the Information of from Additionally, slightly impact $XX due million were first $X.X million The approximately chain revenues were with million XXXX. selling labor competitive increased one, or continued a to higher expense expenses costs as with business million for first higher quarter $X.X approximately driven service debt of starting of by service million, million. return to decline due recover by bad stops Destruction in of operating X.X% increased $XX.X of selling, of legal to normalized higher a onboarding costs to associated administrative wages in mainly from from XX.X% for XXXX. and hires. and organic about year-over- compared time of higher members international, of quarter was revenues The costs economic driven approximately level, the due to quarter FCPA compared additional increased team the adjustments new wages $X.X operating $X million Income the other of first up higher $X.X related inflationary In the to maintaining $XX.X approximately mainly higher COVID-XX. existing cost accrual This higher increased general of employee or two, revenues $XX.X expenses $X.X labor year. and more mainly costs operations costs over change million revenues mainly service claims was medical the

costs see In other labor addition, liners. we inflationary and delays members. maintenance continued were rental to higher costs of as replacement increased rose a higher and associated mainly supplies shortages, productivity associated costs and expenses, expenses chain disposable and absences deliveries, COVID-XX containers due overtime result with Higher from supply with lower new utility and and of vehicle as training team in vehicle higher

at our loss earnings was have lower million, costs of operations have and diluted including driven million, supply million or share million $XX cash $X.XX per to or of million of from fuel increased, million diluted period $X.XX from The quarter X.X% of chain approximately first system an of from costs bad points; other existing by inflationary the tax related fuel quarter Ongoing million. receivable million basis XX on which was the points; and approximately of share outflow basis $XX.X U.S. as expense lower costs in selling was income labor shown While loss net offset as in a XXX the $XX.X basis of working points; was million from points our by points; down of $XX.X timing costs as accounts in to approximately through $XX revenues for a million operations and compared XXX months XX, $XXX surcharges. revenues last income Adjusted of they expense ended from year. XXX capital $XX.X of approximately generated points. XX was debt of the been approximately or and $X.XX percentage basis XX.X% from GAAP slide per income net declined offset $XX.X $XX.X of $XX.X XXXX. operations net in The the difference ERP operations $X.XX basis basis XX same XXXX. lower revenues, income of year-over-year from percentage per to quarter million to Adjusted as mainly from IT with income due was or points; an of year. last compared first first expenditures income and payable, percentage nine. partially a of medical claims Cash accounts of of changes compared XXXX decline of basis operating costs: higher share the mainly flow $XXX.X three inflow the following diluted of Adjusted earnings to operations March of XXX of

$X.XX rates decline As unfavorability from $X.XX slide supply on and associated other foreign inflationary eight, excluding chain unfavorability the $X.XX, costs, $X.XX illustrated and higher selling operating debt the costs, labor driven higher and expense bridge impact was and of the from net exchange other. $X.XX from unfavorability divestitures remaining and ongoing on acquisitions year-over-year IT higher by bad and with expenditures

quarter. was DSO Our driven year, of million for payments. of to XXXX million in compared March inflow cash of prior as timing of XX Information DSO collections in first quarter This in three three the $XX.X change days difference Destruction invoicing March Capital million same XX due $XX.X compared as timing customer compared ended first the to of ended to XX, to for for an months subsequent with cash quarter America a days months of reported to the mainly $XX.X mainly same the $XX.X North XXXX. deployment the the flow ERP XX, an attributable were and was the Secure by outflow the was expenditures $XX.X the discussed XXXX. million of XXXX period million the Free period last

slide for as was and on nine, mainly cash timing $XXX.X decline driven explained from from net year-over-year working capital, and higher changes generated the earlier. income cash capital was noted the As in expenditures by lower paid of million operations

quarter, credit leverage to agreement X.XXx. agreement agreement We our purposes leverage calculating at defined FCPA debt add debt of adjusted the the used for As ratio settlement amount of credit our defined the shown credit XX, end amended in back our EBITDA was first on slide ratio. the

at the was quarter debt billion. the net Our approximately first of end $X.XX

of the XXXX to XXXX, first that As continue lower adjusted in half will last of to remainder we look year. the we to be anticipate compared EPS

of wages, pressures supply and the have same The not other level first half of cost did inflationary from XXXX headwinds. chain

operating with last compared deployment August higher associated have now our addition, XXXX In ongoing our IT year in reported ongoing expenses. expenditures we to ERP

remainder of our from in pricing and actions XXXX expect to mentioned frontline We benefit improvements the staffing. the Cindy as

We quarters, $XX cash the XX. costs on slide our included three the are FCPA XXXX reflected is free the approximately quarter flow second Of $XX accrued to approximate reaffirming guidance. XXXX expected settlement within guidance XXXX past million our over was million in paid be and

million $XX remaining the to pay the FCPA We settlement expect in approximate of XXXX.

XX. are We our the to as turn also call will long now summarized reaffirming Cindy. slide outlook on term back I

Cindy Miller

reminded first of this quarter we've the XXXX, tremendous towards of made up wrap the transforming I'm organization. we As progress

talented priorities chain the customers while to focus disruptions and and continues variants, accelerating COVID-XX and supply of navigating serving convergence external key dedicated team including five on Our inflation. our risks, our

encouraged by improvements are implementing members our look we and having the are the matters. our solid their we serve always, the what open And I'd line our thank year the are that shareholders to We like for team as the as communities Q&A. staffing and please and we the for customers, to seeing beyond. Operator, of trust rest in we pricing protect actions Stericycle continued and

Operator

Instructions]. Absolutely! [Operator

comes question Hoffman a of Stifel. first from Michael with line The

proceed. may You

Michael Hoffman

a Hi! make in I X% in the and year. under the you're PowerPoint that with X X COVID Medical out the your numbers Chicago. near takeaway, Hope all in Janet, Destruction. and Document organic you're down North zone. Waste sure you’re over there that impact X% If big I Good That's just trending you're the slightly wrote nice America to to everybody's I business paper, in and the well – is to growth fast I pull Cindy, morning! I open just think really And these – understand. want

Cindy Miller

America, see in do servicer business of Secure increases you in North our the – areas in X% volumes in growth takes to North you at Management etc. maritime, your in started Waste if in Services America as this service COVID you look surgeries the the core you revenue see crossover it the with decline Regulated was core from from the as you all elective we puts underlying up had over volumes, know we and know Information Destruction, if Yeah, and the

then to because last do is see a climb wastes year-over-year unprecedented You share, recovering. this in and see you also over year classification Information the international, of Destruction do of highs International Secure

Michael Hoffman

Okay.

XQ, how we my a non-recurring So you two headwind? should us what is, a sense can about make businesses, what's X%, so but we think wind I've give of adjustment of in of got baseline that the X% organic head the right. that

Cindy Miller

so the the issues COVID growth will of core maritime are the Yeah, exactly headwind to by encouraged we unclear revenue and this in others. but quality and crossover it’s how in occur, underlying

abates So but I COVID we’re see out would say decline the it trends as as that's seen. the over we because watching closely, expect we're the continue – don't works continues know have the exact to you, of you system. cross I it that for

Janet Zelenka

there? Can something I say

Cindy Miller

Yeah.

Janet Zelenka

I the to right. vaccine. What to a effort the all vaccination just the however February in have July we reflect personally many folks, June, good the a vaccination U.S., bit as for of that got of people notice to get did was here look think effort at January, Michael millions of majority say and your we let's cards, our own

has happen we but month, So bit in didn't a one all It a of it. it tail. see

know back, it's the when, year-over-year know still think to were think comparisons we're shred, come see I to is the it's portions exactly though bit other even but pretty business international difficult. maritime, for we it's difficult you encouraged we a whether solid whether as are of So starting us

combined for throughout be with in lot So we’ve a actions we that certainly kicking forward place moving put I pricing that in. will the year QX believe and of the that think

it's at way. So for right – I I precision, think it's, it’s not but the directionally a you're looking difficult great think it

Michael Hoffman

remember the and then a of middle bit. data in been gave of peak starts sort is Okay, timeframe of if you little the to the it at, I we've that looking – range sort all ease

a If this not and think greater is the isn't I'm probably optically - than It’s modeling it. right to that's X%. this probably I'm something headwind. X% to but guidance, So way X% about

Cindy Miller

Yeah, there I some headwind is COVID. from think

pronounced in more as it still I start North than headwinds think be subside. those would it’s to internationally America

Michael Hoffman

I still footnotes numbered footnote. XX, Okay, cool. but footnote and year-end a the SOP, unclear, there’s suggest In the asterisk little of guide there's your ‘XX asterisks you've and mean, current. numbered The page says bit incorporated reflects FX then the

moving are So does up is the guidance a reflect and that currencies SOP lot?

Janet Zelenka

the the same those stayed assumptions guidance adjust didn't the in stay so we with going, the with rate. really the dynamics guidance. in range We No, even same

Michael Hoffman

optically each so Okay, one SOP three think so that's actually currency down if other; I they is relative might up. to the more like balance But the are counter tailwind them, looks between guide. two positive, a of is the

Janet Zelenka

paper continues are be It now, is which EMEA, European markets where in exchange headwinds in seen is foreign could right most that. Yeah, if – tailwind. a of has Most it right, international. the of we’ve our the know business you

Michael Hoffman

us what can the for the rollout Medical ERP are when start Waste? and with earnest? domestically What's about share thoughts that's in Okay, happening to going you your timing for then plans

Cindy Miller

the drive think as possible, the there we we've we're amount to Destruction have still you of is that out type I on really and to we business of possible yet of side as that right regulated that be prudent as versus chasm a Secure lack of continuing the the growing much now get mitigate same forward trying at highlight data Information – the risk business Yeah, as information it's side. the between looked can know is of

very very, for the think But same all still I some important. pretty we're we're forward we moving think thing. pilots So with strong that clamoring are

for of imagine, services. just worry had – the can did thing, same just we couple every you to exact you facility Shred As know a

much that in aspects and testing different of have more having customers all portion now, one its one its in some those the consulting those of of us This with is and data pharma, services in business terms red and of of requirements. For in complex Sharps, build of waste bag each also a terms this component. Shred

So we as through year. feel move this comfortable we

possible to couple in through will to a adapt then launch, comprehensive these out, pilots with enough roll will go – that up before get we and want learn things every the say we the continue viewed we will diligently pilots broader color? of the with us launch. from, aspect can Janet, and have be other I work We clean so to hopefully that of business, order very a to to any

Janet Zelenka

just other is, SAP know I’d Yeah, where and the instance we on all of summer we're our over production, you everything the full were for the to have capability to moving so going plan before WCS systems. say, a actually platform. load Unlike production functionality the and the suite development taking of into we into

So plan. plan that and It we the the about markets code, it, this that’s and to mark do now loading small put to is deploy pilots. capability which it's significant test a you year into would so know the step then some –

based year. those year really So test more, this of go if a to into we we on and steps next tweak then deployment big what couple pilots, to load we right need

Michael Hoffman

Okay.

be of is best then had there deployed a change of a So was being maybe and… the book just misperception or to deployment I that clear, timing

Janet Zelenka

Yeah, then year that's we always pilots decide, said to what last intended this quarter. and I

go XXXX. into the loading we definitively of more we pilots, going code at looked to we’ve and the we can think the is - As the can it's update timing say

Michael Hoffman

you same and guys international domestic keep both doing time. at would the Okay and

Operator

Hoffman. Mr. me Excuse

Janet Zelenka

and ahead go ahead sorry, Michael, I’m finish. go

Michael Hoffman

and that both do to then the expect point? you at international domestic same at Would time

Janet Zelenka

together, has trying side the on international working the aspects launched team on So already on the cleansing. to data get data of

we'll the have would we same if but So that the at I know appropriately. don't launch and on motion international, time, started we sequence

Michael Hoffman

much. you very Okay, thank

Janet Zelenka

And be know probably but you will different on a country and or more by deployment, modest that business. by

we won't you our be on to business risk it WCS you know you platform. a most know moving the know that as of the as with see profile So

Michael Hoffman

you. Thank it. Got

Cindy Miller

Thanks Michael.

Operator

the Thank Sean next Please with RBC from Dodge and one Markets. be to The question mindful you, comes Mr. Capital question of follow-up. limit line Hoffman.

may You proceed.

Sean Dodge

inflation contract of able you lag Yeah, what more thanks. you thus then much little give mitigate maybe you far? And pricing across out? of proportion Good grow? have to proportion a on how you tend mentioned Cindy the that placed you've how Can detail just morning! been Should much the help on. push to of work haven’t us a maybe levers Maybe pressures. to does those those

year know reaffirming half for I a the guess steep implies You ramp. pretty it guidance, you're back

a help maybe on have little just the So but visibility, understanding, the that. you confidence

Cindy Miller

very up. Sean, know one worked it’s of up a us standardize just question, contractual the those certainly of I we've data, is appreciate perspective quality goodness thank levers revenue across I hard we clean the to that think, both even You units from done because things We’ve positioned for very clean well with business the language, and that have.

we increases renegotiating based are has time an up is Obviously and customers so at for sitting for So of you know just current contract off with anniversary as a one. reminder, that's headwinds, renewal. gets or one, lever inflationary that

where We've both the far and are more had Shred new you for call one were someone put rate card and several the company conditions our we've if now commercial Second used be dynamic modeling the today now market We conditions. cards. business where one to is, commercial rate – and so we this out year. a iterations competitive is afternoon, to of conditions, reactive strength to economic

surcharges we're transactional those And is thing rate the fees. I helped. of think immediately, then that business and point sale So changing last has that – that's and cards for

actually a not already adjusted recovery already think similar. one for and those recovery if place half service recycling you and in have we we and able and fee, a – of lot the have have be contracts service taken language times got tell surcharge. two had the readjusted We've to those. I We've can surcharges recovery that We've of our few we cost bit I fee, good We last the companies and have to a a in something years. year, recycling So through. we've finally new push year that that recovery capability, them a already recycling this for

want You what so make that are made I November latter are January bit are into matching, say contracts with to and be these you you adjustments, inflation good then you see issues, that your and the of to force towards half last that still coming think would take for available January X, the there continues, full isn't estimates certainly into you them in we've of them. know QX, QX, a

believe us continue opportunity. as times we we that think us as I brings adjust, that or internally and affords flexibility turbulent to us can to reaffirm what know So guidance, that's gave looked we confidence you that in

Sean Dodge

how that we in Okay, How you seen shortfall create quarter mentioned the QX. put was into And quarter? in did you that a much much thank on of you that? the How drag in exited subsequent I you. can March, and said reversed of early now guess headwind kind significant the cost around out should in you as you've numbers driver has starting as that improvement labor then the the you forward abate much QX earlier an million know and $XX QX? roll

Cindy Miller

directional add, Janet wants know can. I'll and there's if start she some You Sean, anything to then just with that else

in of in came down of year XX% good a shortage. average the it due because to You we down know bit this that, our and driver drivers was was

you of this the the That most building. the you and COVID that since running of facilities you then short our companywide workforce, average know been with meant that available across just across that of were the know optimally isn't This had, Omicron. of work we've disruption – wasn't And average we've people of So to all When hit XX% than drivers, same pandemic. every a impactful was XX% because we beginning the just drivers. know less had we that. is on

XX know we have two day. know and eight some drivers few you drivers, given to as you with facilities We as available on where that had any work

a we as So any shows when amount down management as we put and customer that was you tremendous you into with tell even was you, lot Saturdays, flying teams staff, do, I of people to obviously order XX% and overtime. things There's is everybody many anytime whether protect the the the average, us it big I quieted of of a and go our can of up. type national There and support more in depends know and make to do expect was up it you service But it, it you because Sundays we then local realized from moving need people, difficult areas, customers, see customers, working it effort they on travel when in on working in that, challenged tirelessly. easing going and hotels, an people amount and easing certainly but Janet, pressures. we of to now can overtime. some to to XX%, tremendous jumped other a cut people, those worked There's there'll infused some – quite the travel you just mode doing putting all that to expense, optimal, moving and on cost, there know it will of other, be be driving easing color? it other be whether that, isn’t to frankly of specific the of when expense of

Janet Zelenka

you last still Yes, start we we here, because U.S. the The but in lower expect lapping know easing. at the you this momentum year, easing, also the first be we first mentioned so to are so but of pricing, [ph] the know cost as things. as key two half trajectory half of in year seen than and we you also look

quarter We overlap some that have so we’ll of costs inflationary see key in and company that just pressures those we be actually and acute the other had started in natural saw so this due second we then mitigating so fourth that, every the the We is quarter the increase our you pricing now the so to quarter, quarter very quarter, dynamics. third being the to second two the into like in last to and labor us have little in challenges strong a will going probably the and that inflation cost quarter, then the about are we first the actions see normal ERP you're operating know that had year. expenses in

Cindy Miller

training door And pulling candidates this. Sean new In HR that one folks with their still lot seat an through I team you us, the really route. that the the to first give through sitting in awful the of we can folks bit for get only color some doing you started in we just know March was and bring driver, other the of some spend another our is when

tremendous onboarding know the trajectory. types that hiring, bit saw normal back efforts with we you get of team talk you we of things rhythm have through, a lot the of of a know put I testing as when the amount you to So about same costs, don't costs, training good a think costs, of other the that the those things

Sean Dodge

helpful. Okay, that’s Thanks very again.

Cindy Miller

Thanks so Sean. Thanks much.

Operator

The Manthey be to mindful Please Dodge. you, comes line Thank and question. with of one limit follow proceed. Mr. David up your from Baird. one next question Again, to the questions

David Manthey

Yes, Good running of thank overall morning this make do of material RWCS? up Do they pilots you. you're percentage the year, a revenues everyone.

Cindy Miller

able were situation. It's the revenue needed discrete a covered areas we they don't. to that No, that’s small pilot had ideal that interesting. impact, We find for test capabilities but to

high but on do So Talk] testing attempting the [Cross capability. accomplish not profile the is we're which was what their risk revenue, accomplish to they

Janet Zelenka

They are small, complex. but

Cindy Miller

Yeah.

Janet Zelenka

they the data all they with requirement. the complexity have the So do all streams, waste

cross even it. Some and have to a and combine Shred component over

microcosms we're good us of are they to for So really going see. what

David Manthey

Okay, question, and I've me allow I time fault, the hope so two-part a my so they’ll here. got

Cindy Miller

ahead. Yes, Talk] [Cross go

David Manthey

you’re net improvement you know metric time and you driver base, what’s about first full an easing your put what of you cost The the around it's into is, say but side that? in sense When the that expensive you’re normal part the than turning is more that metric? situation in getting is from on of talking situation hours. employee hours terms it mentioned overtime you Can my Cindy is Probably than easing, it's expensive uplift overtime. a less driver

Cindy Miller

know you to You XX% things is drive show being can force eased. Dave, you the XX%, not has at that improvement. this, time it up down, some this of get work you of one you having I know think it's from go the I Anytime say know to able – in point to be

we going should. that still However, – have we to than we have do still do. are we have hiring overtime do more We still

be. seen I think is for travel we've I down it exactly pat our So you yet have know see actually and to overtime; [ph] what think I as in don't to that reductions our ability we some as that just expense. – know that far going ability see we

I for for to for deal portion think with. tremendous it us QX headwind was that really of first the us wasn't a expected

yet, we're I other but think any out So of not Janet don't certainly it – specifics? I think

Janet Zelenka

to which the when wage million on be we overtime we costs that look drivers in onboarding that, We so that of half adjustments, estimate because higher I onboarding it. into was you would it, shortages the and that which which is cover accelerated, impact the side the in wages wages at in year-over-year, Yeah, due so Omicron of investing the you going that my the and had to and if the it inflation other year-over-year. the actually would us. continue, saw we planned employee saw I good everyone for of news into knew wage went best I of that had would expected guess was for you The year. costs say most as overtime but know about in the will were we to is half $XX the do we say

David Manthey

Okay, that's helpful.

understand and the simply reiterated the hearing we're from? I $X.XX I'm ultimate you So that I is to where confidence guidance comes here EPS. mean question guess trying

we of on get this for to think million to the right going the just gap of to talked $X.XX low end what's to I we're remaining to get to $XX need one help three of here? the now the bridge type drive XX the average just that and items, will or from quarters we a about that where where key well $X.XX or range. mechanisms quarter. And guess mechanism trying that the the I’m are You over get improvement I from

Janet Zelenka

one Yes, does our switches, quantified other fastest surcharge pricing surcharges, the new was cover than which you There for we've so including cost of levers. can for while. put which in rate and the not and this. three you the is know fuel place, We even a the had the it the cards aspects is there's that

as powerful are levers two well. other The

quarter, look situations flow the first pricing So when that for of you the Two, three have we to we're and costs. us acute elements. levers, you know the seeing they Cindy at through said the of some cover planned momentum all inflationary subsiding to give in other

missing half the customer. productivity ease by that any first kicking comparative shortages quarter, in second gain the the the have going first and we we’re is travel in best to to up the also what year-over-year were in, because chewed costs the we and doing everyone see we their service and which then half productivity Third, just we the in was

on, So saw traction that normalizing momentum. we January for as the traction and we levers February those leave we to are we are gain and planned can with March have that gain and anything in

David Manthey

Thank helpful. you that's much. very Okay,

Cindy Miller

Thanks Dave.

Operator

question Manthey. Mr. you, Schneeberger of the comes Thank next from line Oppenheimer. with Scott The

proceed. You may

Scott Schneeberger

morning business. I of the side all. Good I'd Thank you much. very guess start on destruction like to first

you like pricing then home And reference service trending. demand think speak slightly. environment it how revenues to stops service were obviously, you sounds up bit little see more. you and Could said the I you just up, from that with a know up Janet to is work

If of you to initiatives there. speak can some just Thanks. the

Cindy Miller

So contracts we Information SOP down, significantly. up. the Sorted just parts. is recycling Office for get the split all paper, or Secure revenue Destruction revenue two were It where Volumes and are we that based into the was listeners, Paper our up was recycling from pricing that have

In they get the were service slightly internationally. did our North the service we higher. were by X.X% stops up I In stop. well upside, service and say higher America levers the up are up North paid that America On

are seeing pleased continued We by what space we’re there. seeing recovery that and in we're

what out to deliver, to expect call nothing really through the to know gain we deliver will you year. So than Shred it other and continues momentum

Scott Schneeberger

have or they how of then to at you And energy you kind then company your on what break total all? on is thanks speak much a little you there the fuel elaborate lag? place what On been you that. fuel that like full just bit a out coverage just is ago can and And – as a remind full if had a structured? moment in bigger Okay, types can of coverage. that you. of sounds that is surcharges and and are costs question Could Thank it again percent and mentioned on

Cindy Miller

on pretty Cindy all used fuel so of is and fuel are much Information and mentioned, in X% under they one at are part Maybe our a so and they've our our place in of quickly the of if constructed been cost X% a depending surcharges to index of constructed way have look those business they basis cost. at most Yeah, pretty flow-through is for going. of now points. a lag waste as while, services the But the revenue, kind you parts month it how business the of components margin, and indexed, Secure cover been the at – regulated you know little always be overall Destruction the

not help the other in the question? answer for in just a know it’s you base, our while. Did now. these increases dynamic cost They've the as companies see might part but your place you or slight So of a been change that in like margin, putting

Scott Schneeberger

that it I’ll turn Yeah, color. I over. appreciate

Operator

Thank question comes you. of line with Markets. the Alexander Berenberg Leach next Capital The from [Operator Instructions].

proceed. may You

Alexander Leach

Morning! Thanks my for question. taking

last it sounds quarter Just only but right. all it’s though surcharge of that experience is as to customers some now now, almost surcharges the clarity customers, question, cost, surrounding but on utilize you with that it’s last fuel fuel sounded the not surcharge that it on could that

Cindy Miller

No.

we our our cover but costs. So pretty Secure and of our what's is Information on have Destruction, we it fuel interesting two it portion waste have a combined those do much regulated across

existing that by that that hope and been not, feel I that dynamics a has whether covered, we an for customer you clarifies while. full So coverage it. have a appropriately or were

Alexander Leach

that five years not going range I in to just that half flexibility given three Yeah, length? amending year what wondering, concern was contracts, longer that's take in useful, thanks. it’s year that build Is And are pricing from contracts the a renewal anniversary. to you they to a of than in versus portion

Cindy Miller

– No, of it's in contracts great contract and pass but an CPI every through, a at to dates some – conditions nature, that's it's every economic have charges majority at at are so question, and have, the overwhelming an most, opportunity are some years but that they conceptually I think larger we year three not then look those an we to or whether able have a take do and be whatever. anniversary that roughly anniversary,

is steady the year the So year and rhythm, normal even as flow there's every before. last a year

as have three easier for those to it's us go through conditions years. new for contractual language, for for and you about So be to to been able with we've know the gotten and better whether terms it's contract negotiation or CPI our forward anniversary moving infusions, whatever, renewals, then the next talk the to

tomorrow So signing I think rhythm, same and today the up new every brand customers many, calendar do a and flows. it's year been thing are many as we’ll day we a day normal as it for throughout the steady the and is pretty

Alexander Leach

just if one in. set I could more question And

Cindy Miller

Sure.

Alexander Leach

there that that in staying customers on, any more difficult there’s pricing a of pricing, concern been customers a of bit historically little number leveraging proportion market? through of to others. topic on be price through sensitive been that put any the further a Is if surcharges have this you will than Just

Cindy Miller

very Yeah, terms we're is things. great a aware Stericycle I think in you know of question today, it’s of and several who

like of everybody's the markets, conditions We of markets even as customers, are the certainly aware different competitive our as in adjacent experiencing same of that's well completely the engagements types everybody and with market pressures. or and our the marketplace,

aware, making the companies to So in it's thing to it's order they what now engagement base, right are all need to as seeing are push through of with a do it's you doing if in it's pricing. everybody conversations, having headwind them, you terms will, customer

then in think you understanding I and know we with will the – what in bear. we our also don’t engaging it – market are terms of that's, So that’s the going way about right customers

Janet Zelenka

others all that hospitals including Yeah, would also and say increases. most price customers I across seeing your segments

very board, is happening in in million of market. a nature, we mentioned that and a costs know that her the you understand underlying we $XX the the script what lot they said the So have across already the at and Cindy are rate good acceptance

Alexander Leach

Okay, great. Thank you.

Cindy Miller

Thank you.

Operator

like Mr. for remarks. now past to over back closing you, I Leach. Cindy the to conference Thank would

Cindy Miller

Thank you, Jaquieda [ph].

So Stericycle call, to everyone greatly in your listening your shared future. interest appreciate and our in to this we excitement

you very much. thank So

Operator

Stericycle you XXXX That earnings concludes call. the Thank for your participation. QX,

disconnect lines. now may You your

Stericycle (SRCL) 28 Apr 222022 Q1 Earnings call transcript