Earnings call transcript Q4 2022

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

Operator

Ladies and gentlemen. Hello and welcome to the Q4 2022 Stericycle Earnings Conference Call. My name is Maxine and I'll be coordinating the call today [Operator Instructions].

I’ll now hand you over to Andrew Ellis, Vice President of Investor Relations to begin. Andrew, please go ahead when you are ready.

Andrew Ellis

you Stericycle's thank Earnings Fourth and Call. morning, for XXXX joining Quarter Good

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

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

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

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

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

the investors.stericycle.com. most For be recorded, will presentation. can found This refer website. is slides website. the Replay the available Relations the end reference conference XXXX. written the information the is at call on may available replay. redistribution, information today be call, prepared which today's is hour in in additional XX, and without no being call, approximately after Stericycle Any of specific measures, provided to February until call for is at of is Stericycle’s Stericycle's presentation, correspond today's available may XXXX time press the Throughout March and reconciliation occurring Relations comments retransmission Investor expressed release, of Investor be Relations section investor also Time-sense during which an or consent on longer XX, at comparable replay which accurate from form a call on of please this our website we GAAP any U.S. prohibited. The to rebroadcast to information Investor event call earnings a one the schedules the Stericycle's in

Cindy. now to I'll the call turn over

Cindy Miller

Andrew, fourth quarter workers, to earnings I'd you, Thank our that all discussion today's thanking protecting and line supporting members frontline expectations. quarter matters. customers especially team pleased and were our start I am our fourth to with to our like by call. our what and share welcome off of in for results our

million, included revenue optimization. free continued leverage, quarterly cash margins, organic reduced of improved generation expanded Our at flow portfolio results X.X%, growth and $XXX.X debt,

increasing business XX.X% Services on organic executing Compliance and X.X%, by X.X%. with Secure to focus Waste Information Destruction, revenues we I'll Compliance company, and a grew our Waste Secure five with revenues in As Destruction increased of and quality increasing and start X.X%, continue which priorities, led key XX.X%, X.X%, on and Regulated grew revenue. North Regulated grew Services America, Information Organic

commission six, expectations our and margin growth handful The standardize simplifying million the accountability of pricing These sales our of to Two, include a Four, model providing foundation the the organic results and redefining insights function we value while and forecast and data year. for consistent, of the that and enhanced the to revenue as approximately the levers types Deal in following. commission practices into value started in the of have contractual the and deployment Since harmonizing terms fee pipeline based XXXX. from include infrastructure commercial quarter performance revenue revenue of throughout on training that rates proposition surcharge tools higher implementing million a governance. plans drive and over fourth improved pipeline selling process. governance competitive conditions. greater plan committee process sales. recycling overall ensure conversion creating extensive commercial customer and lifecycle. improving service mindset. growth, standard disciplined, first One, cycle, the performance launching management service sales XXXX, global to incremental $XX consistency opportunities expansion over cost sales and language the excellence throughout to ongoing resulting These includes on sales part quality and working plan a growth across benefits pricing, our XXX disciplined, contracting, competitive performance drive incentivize administration. with performance recovery Three, draw to revenue of to better manage our that ERP been and and allows greater part in New transforming review two contributed $XX differentiation to opportunities a And and value and sales sales a us Five,

these in customer which compounded support advancing by X% organic evolution annual partnerships developing to on three service focuses elements key are penetration, place, velocity and deepening With customer we our the our growth phase implementation revenue next foundational commercial to improving enhanced X%, customer of areas solutions. now of expanding to rate

through will targeted is newly to area expect grow we to will leverage value created provide expanding win, we customers. our upsell Drawing offerings, and insights increase sales service customers retain the and our initiatives we which first data cross-sell from penetration. The infrastructure, and

to closing customer takes improving accelerating focused a is time velocity. speed on deal is area to This the customers. decreasing second revenue servicing by it The of initially implementation from amount

plan deepening the continue operate. opportunities sustainable is solutions revenue drive and partnerships products to in enhanced commercialize create customer innovative their we and our additional which working we customers, by employees, safer expect we for developing will solutions, and customer to communities as environments we area third more The

keen efforts autoclaves teams past replacement years been for these will network haul we existing operations I autoclaves long now and facilities route opened teams incinerators, the concentrate greenfield has priority, key and have business new safe and facilities to on our innovation. four a In will focus areas. move and as and throughout and modernization made fleet upgrades four engineering fleet. improvements efficiency, and This XXXX, our next rationalization our operational and modernization. our shield their on modernization, to Infrastructure and shredders three system and container network over improved

The at first on set North sustainable technology art its America believe of emissions. will new in facilities system to Nevada. continue in In the waste water our We minimizing incineration incineration our progress. focused bar high will the through design area facility of this be and aimed and medical engineering infrastructure state the and teams construction modernization facility capacity for operations usage, finalizing XXXX,

system upgrade In plan capabilities. we leverage XXXX, to also XX and deploy facilities new and over

area fleet route is The and replacement haul improvements. long network second and

We are on replacing focused modernizing efficient more our and vehicles. and trucks trailers with

more XXXX we and to began are was deliveries. see by equipment this haul supply in hampered long improvements network starting chain disruptions, While Route in XXXX.

network, container hauling. which contribute through The to removal some customers, over modernization expected near margin facilities, have SafeShield from a new long rationalization and is These our service we of improve time. combination locating strategically reduced our facilities investments third expansion project. to model, final area anticipate We our routes operational internalizing will routes party are our haul consolidating and

sizes To are in the we have X,XXX North next been we over reminder, These date, years. completing and SafeShield award in over winning with protectant from rollout anticipate and standard an feature coded deployed more reduces types are than the and while allowing potential XXX design a improved As and America infection the an containers XX. storage. odor. transitioning durable of containers transportation nestable less four for container over to stackable minimizing that efficient antimicrobial which spread They more also are

this collect continue four our to Waste and functions Services our cash share pilot, been pilot Services we Based rollout to in to Compliance Rico. Waste to I'm half customers. regulated have is smoothly our and and Turning that XXXX. bill the from second commercial and as of on months our in operational deployment, Puerto ERP Compliance plan the to are able ERP US service, successful we onboard, excited ERP the we Regulated running into now

Now debt turning reduction. to

optimization, a free XX leverage Portfolio close X.XXx a for or we We ratio business with in points. Finishing million of objective three flow the and leverage our divested to by million. debt million ratio $X.X Solutions Communications in debt finished our XXXX. divestiture result debt in a by generation we end Spain of $XXX.X with December, getting cash first in hitting As we year-over-year improvement quarter joint and our the times for of venture reduced America of $XX Sanypick of Plastic January anticipate divested strong and proceeds, XXXX North

reduction. and XXth the These applied since debt XXth are proceeds XXXX divestitures and our we towards

Communication key our our communication related the result, a to investments us it Solutions As fourth other the core the final and in legacy priorities and and ERP business. is opportunity on from services divestiture afforded focus company. the businesses like has and deployment business

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

Janet Zelenka

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

As fourth noted the quarter of compared $XXX.X in on revenues XXXX. five, $XXX.X slide million million, to were

Information Excluding and of Of foreign increase, divestitures growth the was impact $XX.X million, million. million Destruction and revenue of $XX.X an Services $XX.X was and Regulated million million. million, increased Secure $XX rates $XX.X Waste $X.X revenue acquisition to unfavorable the revenues exchange organic organic of Compliance organic growth of

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

our exchange foreign Regulated divestitures and organic customer existing rates, X.X%. X.X%, acquisition, and include of Regulated for Services $XX.X pricing million Waste fees. Compliance and impact an driven or and by Waste North revenues Compliance leverage, the and and grew America Excluding increased which contracts, Services organic pricing new mainly surcharges pricing three revenues

collected Information fourth decline with national we of or the was mainly International being per lower and Waste due million quarter. X.X% to which fourth hospital hospitals staffing challenges. Destruction $X.X million, compared compared volume by volume pounds site the was quarter $XXX.X Compliance in quarter and of $XXX.X revenues waist Secure to XXXX. Services in revenues offset organic to the in a due flat, to fourth from growth, volumes Overall was declined of XXXX. million Regulated delivered new believe decline accounts, sites This

of the recycled mainly higher environmental exchange surcharges, paper rates, Information other organic Excluding Destruction and impact revenues increased pricing, by XX.X%, Secure for foreign pricing. and SOP to driven fuel including revenues and due

North mainly to and In Secure about year-over-year. global revenues by XX.X% revenues paper XX.X%, pricing. growth SOP XXXX. contributed the higher fourth For recycled revenues million XX.X% driven In this the the service increased service million, recycling organic Recycled compared full our year in were increased change the due contributed fuel Of fourth Destruction The organic was was revenues including million, to surcharges, XXXX, $XX.X XXXX. than quarter Information Secure contributed the XXXX, revenue paper of compared environmental America, to surcharges. volumes growth, recycled international, surcharges. approximately more mainly paper of Destruction reflecting flat This or of quarter quarter $X.X or the recovery and and $X.X fourth X.X%, Information X.X%.

were trends inflationary and collections Income incentive from as vehicle self-insurance regulatory mainly million fourth and $X.X compliance was $X in of due fourth the our was operations of costs expenses the expense lower mainly revenue million, $XX.X offset $XX.X of in million, That million, levers $XX related lower expense we $XX.X utility million These million for to in of allowance to reserves favorable compared in increase lower accounts, $X.X approximately debt pricing bad flow improved lower $X.X last and the resulting of annual Commercial expense quarter, wage year. adjusted fourth claims. the million litigation million due quarter million. to and following. by doubtful of higher and $XX.X of due lowered compensation partially through to quarter settlement the

$X.XX operating These partially $X.XX higher was difference Additionally, lower X. expense million. related FCPA $XX a income points, XXXX These million. $XXX.X the XXX quarter, vendor to higher organization. compared share compared was debt basis revenues income in cost as of flow from and or on revenues, points, headcount we into XX.X% $XX.X year-over-year a of approximately per $XX.X XX partially $XX The utility points. million or capital in our ended share self-insurance DSO million. and per which fourth was of XX The diluted of driving approximately $XX.X for of percentage networking payments basis to the year offset $XX income improvements has Adjusted translated related basis X.X% Cash overtime compared diluted as driven the inflationary share model basis $XXX.X of basis of in in was basis and Adjusted our per annual was productivity by percentage as offset $X.XX payments loss diluted of incentive expense of fourth earnings were million expense XX, of last year. illustrated lower Bridge earnings mainly fourth the to year. quarter or XXX loss to flow optimizing million, mainly in of by from two quarter year income net to approximately operational $XX.X compared $XX.X a million bad operations quarter of XXXX. decline or of Timing staffing Adjusted payments million points, of higher interest by XXX $XX.X were as offset million. December wage operations XXX partially costs operations from costs million and the compensation mainly $XXX.X of $X.XX on throughout savings points. focus slide $XX.X higher of our revenue the the operations improvements million in through XXXX, driven million, and was lower million of on days, increased points, from of settlement for last Net by vehicle

$X.XX and from divestitures incentive Excluding bad from $X.XX self-insurance the $X.XX, acquisition expense compensation by SG&A exchange from to a and of lower from foreign debt lower mainly $X.XX remaining of $X.XX expenses, was and and increase $X.XX of the due $X.XX annual impact through, year-over-year lower favorable revenue $X.XX, rates, of other. taxes expense flow an driven

utility from shared XXXX, related million, million offset $XXX in for with the $XXX.X for $XXX.X and costs compared were and These $X.XX were vehicle of million higher previously from is Capital wage expenditures $X.XX inflationary by expense. interest $XXX XXXX partially to guidance to million. line I which

$XXX.X Free flow XXXX cash in XXXX. million, compared for was million $XX to

slide of by $XX.X to million on payments decline due million, X, lower mainly operating mainly $XX FCPA to attributable expenditures infrastructure higher driven the noted and timing $XXX.X settlement million and investments. of of year-over-year of payments cash As the the cash was capital operational

on flow achieve third in of as expected As of $XX fourth our improved XX the collections, guidance provided quarter. which free how a to reminder, we from was within million to free million. million $XXX I million from $XXX About approximately the follows. expansion improved million to range cash Sequentially, third quarter cash the $XX flow million would our $XXX

Destruction on collection million payments, to stated with which of less deployment North by and ERP vendor This lower XXXX. efforts million million. which expectations. within our is $XX our from from lower substantially $X was below approximately quarter, improvement capital of expenditures, driven million less catching range our in of in target the million spending $XX which the $XX up Information $XX $XX America Secure billing was line interest was in million payments, in

Our XX seven from days. reported XXXX. the fourth to improved the is quarter fourth XX Sequentially, quarter, days, fourth quarter DSO was the compared quarter XXXX to days third DSO in

end the quarter sequentially the debt leverage to almost the at a $X.XX quarter by the third defined credit turn. XX, agreement the was debt was half ratio the $XXX.X slide in Net from of to our XXXX quarter, the year our debt for ended XX, leverage reduced X.XXx, fourth improved net on fourth quarter, December reducing compared XXXX shown third billion. As fourth approximately ratio quarter, to million

XXXX. slide on results XX, revenues billion billion the compared to year full $X.X Turning $X.XX to in were

lower Secure Compliance when of was are million of the Excluding organic XXXX. recently was in results the revenue Services and XXXX normalized vehicle flow North commercial revenues Regulated accrued $XX.X XXXX. compensation XXXX, and expenses Information Waste Plastic, had IT divested Solutions $X.X higher million, XXXX. acquisition compliance unfavorable and offset of of revenue in million $XX growth settlement pricing million. debt utility resulting revenue XXXX $XXX.X as onboarding expenses growth and costs headcount now $XX was of These our organic deployment Of to approximately of for the compared August in incentive to businesses, Income in revenues million, higher litigation $XX.X their $X.XX from self-insurance to were expense due our expense The $XX Sanypick were and partially organic costs higher was XX, $XX.X from the ongoing ended million overtime America leverage, million, ERP million, approximately million FCPA approximately of $XXX.X XXXX year and increase bad XXXX $XX.X impact and higher $X.X $XXX million. adjusted million Lower facility of of million million. Communication lower costs million, ERP million $XX.X settlements the reported and and to million, $X.XX we divestitures of lower increased Destruction regulatory $XX million billion of December associated rates related $XX.X $XXX.X expenses, through exclude in million, in an operating $XX.X $XX.X operations million in by most wage foreign exchange expense annual versus revenues for XXXX implementation with compared expenditures operating mainly of of approximately increase, $XX.X billion and $XX.X ongoing inflationary million

related divested per to mainly remaining million. When to compared their an divested million The normalized August foreign compared EBITDA. $X.XX from from are adjusted diluted million $XX share, from expenses. or for share XXXX, $X.XX operating $XX the generated related overtime operations loss and costs net ongoing deployment deployment XXXX. ERP decline XXXX, exchange our from reported the income rates, in $X.XX from in on million ongoing XXXX acquisition The with as million expenses, higher $X.XXdiluted Plastic to to per IT Solutions million $X.XX utility results August adjusted operations businesses, of reported now ongoing results In to XXXX $XXX.X was $XXX.X higher and $XX in previously and $XXX was due would expense. was XX, associated million bridge IT in of discussed. ERP EBITDA $XX.X XXXX of in share Sanypick $XX.X their in EBITDA $X.XX Communication excluding approximately was $X.XX million was approximately XXXX operating costs compared Adjusted with inflationary illustrated to or Net million, $XX.X loss impact higher of diluted difference earnings decrease from year-over-year a was been Adjusted income costs, with mainly XXXX. exclude divestitures wage the XXXX vehicle from XXXX, and these on $X.XX as onboarding higher ongoing per $X.XX earnings headcount, driven interest associated on our higher by costs and have slide XXXX, $X.XX, in

by $X.XX flow typical the the through, taxes. offset lower non-recurring partially startup of ERP from in third were These quarter and from for $X.XX $X.XX XXXX challenges revenue

for adjusted contemplated half call fourth referenced following XXXX, EPS our second As and of looking quarter of statements this half was EPS the the of guidance of our the first XXXX in forward earnings of in harbor XXXX of in $X.XX. as discussed the adjusted as anticipated XXXX, includes $X.XX opening provision at our than call. The our in better safe

current is and for and Our macroeconomic XXXX slide shown which XX healthcare as staffing considers is guidance follows. on shortfalls the headwinds

divestitures. grow we X% been base expect of has X% $X.XX a billion, to organic to normalized which for First, on revenues

adjusted $X.XX EPS XXXX Second, was

generate $X.XX of two growth $X.XX of stock-based underlying recent per to to $X.XX. to and divestitures, be higher baseline EPS taxes incentive we income interest share in expect range is for by to margin higher operating $X.XX. is tempered adjusted results compensation normalizing and XXXX, adjusted approximately a of $X.XX XXXX and costs anticipated expected to $X.XX earnings our $X.XX, the after In

recent cash our $XX million, normalizing Third, million. after results free for was XXXX flow free baseline XXXX flow divestitures, cash $XX is their two

settlement As a FCPA reminder, million paid $XX in we the of XXXX.

that end we XXXX $XXX million our of takes expect range approximately to million to expect portion million. and pay in in mentioned, anticipate to times we Fourth, the cash by costs. we expenditures quarter XXXX, the $XXX related cash generate consideration $XX capital will This of or and $X leverage monitor free of hitting for the $XXX we Cindy million. of settlement in XXXX. FCPA FCPA In to into $XX remaining objective as to $XXX first the million paid for Fifth, three expectation ratio of flow close getting a million our million adjusted debt

statements. slide also on long-term We and updated shown which of current into divestitures macroeconomic providing takes are anticipated trends the recent includes and as outlook consideration our looking impacts XX, forward

continue to X%. achieve growth we of a compounded organic First, to rate to X% revenue expect annual

Second, allow flow adjusted We and and rates our free going growth forward, have measure since EBITDA business on IT in focusing will a with dollar believe the as away will rate included to guidance base performance operating baseline, XX% EBITDA enhancing cash investors cash absolute by transitioning now metrics full to metrics average be we to of from we target. these flow year. year growth of an through adjusted we free conversion our adjusted consistently the of an our XXXX ongoing costs EBITDA XXXX achieve our ERP annual expect XX%

at that achieve $XXX term in to between cash flow impacting into $XXX are flow of guidance. beginning on based cash a EBITDA These least flow expected between translate XXXX. than expect is the This reflected conversion cash XXXX of to and rate to XXXX metrics business XX% to the the We outlook short XXXX, free XXXX. in million $XXX of macroeconomic adjusted previous lower trends in due mainly million million free range a XX% free

pricing. current million, divestiture to does rate inflationary mainly recent million higher long-term persistent staffing cash contemplate million, and growth interest to business currently $XX not anticipated higher discuss a flow the prolonged estimates is recession, healthcare In to in tax The outlook anticipated or interest payments and $X Communications million items on future conversion for other anticipated the Solutions will This rates. future, EBITDA I environment, free SOP the of income outlook cash certain impacting we and and based based adjusted context on outlook challenges of This exchange including and $XX payments foreign rates volume. had environment. flow which for $XX commodity the free known assumptions, of of $XX $XX current

It any excludes Cindy. acquisitions also back call the now and I turn divestitures. will future to

Cindy Miller

Thank Janet. you,

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

Operator

Instructions] [Operator

Our first question today RBC Markets. comes from Capital from Sean Dodge

Sean Dodge

morning. Yes. And guess congratulations quarter the free Thanks. first flow to on there. to was performance. Good a get lift the I target fourth big It cash

So think well done. left, Maybe $XX pricing some adjusted pull levers quarter. I underlying think we drivers question. you just or that million been see over the those of out? the first about cadence should starting you XXXX? with pricing the can the pretty growth I XXXX that, in of the were, much course tapped fourth How guidance, benefits I be the it'd still divestitures. the just on off from getting Cindy, the my of guess X% the said the to X% base revenue surcharges you've via for those

Cindy Miller

get think we've going the thanks reminder, to got on customers, And was yet. that And surcharges No, win got the free everybody But job just a by Shawn, started that question. a thanks new and I for that involved. That for haven't fees. flow. have quick great so recognition cash sites renewals, we price, three we've got we we're new we've ways to

of I QX you XXXX. as as if we surcharges. the let's could. And We, everybody, capital at inflation felt of especially, that in of quickly So the reacted look we push

of in, that XX say, a the fees some to and day to got if warning, some wasn't, give QX, these end or In coming. of let's the QX, contractual surcharges. a fees then will, it we of got you've of you lot and kind XX language, of other are days the So beginning of really end

to that put in So necessarily hits may you. you the it inflation them doesn't day implement, but hit

where awful have things certain opportunity So, an it, renewal as And new contracts open have weren't we time, cards, over got will we've increase the year. haul, in just And to lapse of of new a the new X%, going did lot those base grow haven't point at year. the will whose go new opportunity into open customers put our we yet, this to X% had But last customers look with that will we all hit prices, in. contracts are tariffs that already we as long be at yet. we base the some we lot will have then an built customer into negotiate customers that rate to we

So encouraging I I Businesses doctor, are work think have in with the positive. that are coming stays and the those What economy the of hospital stable, surcharges signs surgeries think to relatively have the I of other hospital, back, a another are things conjunction, to back have we don't But are back But yet. hit nobody they're we some inflation side right think fees. hasn't also runway seeing I are to expects. we are is people are in reference if high now think visiting going opportunity couple elective not, shown itself still to in be coming now. all positive that a visits we

maybe will target. think I well hit and I are normalize, to you capture that positioned think if growth revenue things we as

Sean Dodge

Okay, and then the ERP.

transitions kind Rico North most or in guess the just in North you you the worried the of long pilot rollout So you rollout regarding about? expect the and elements at are one, point, you year. how America, the you're there when said can updates American completed to I And this that should any Puerto Are that second take? of begin half share

Janet Zelenka

this is Hi, Good Yes. morning. Sean, Janet.

enough would Rico, what a be revenue second we the part that Puerto follower, out would a US on fast confidence US. anticipating the from of are of in on roll is at now the success of the smaller think And we once. we the working Because share. that's we Canada half have right So what based much be Puerto year team Rico, the learned and to

So get the really, would this year. we bulk in

we're I'm So in so The our that and the general businesses. commercial production. not is or side because worried services ledger production, the about the system about in the for that What worried is team the about the plan. and invoicing And shared is we're that WCS. is good operational this not is of targeting. news or or most for both worried vendors moving payables I'm is what

from So was this. that a we're side is The shredded we people who already news to the commercial the know good infield operations explaining And how they're this and Puerto that X,XXX success. the works, side Rico. good really focused have to how RWCI use on in happened this of the

is it years all area getting the data. due key clean and of data our convert move it, different as standardize it, captured is acquisitions it to the ways platform. the So the multiple into functionality data don't and that I it, as in certify WCS it much ready think to it's was for

Operator

next comes David from Baird. Manthey question Our from

David Manthey

Good guidance you. bridge could your maybe $X.XX you at first of you midpoint from $X.XX. call it provide question, the look if to provides at clear My of base the slides a EPS, from XX XXXX us very everyone. morning, the the bridge segments you EPS XXXX major XXXX XXXX of Thank to the what

Janet Zelenka

Yes, you, David. thank

which have So thanks from out, we go of the new we base X.XX, for the do it a Comp with to oriented capturing X.XX. will that Sol a adjust

to But you're also cash margin debt. a core upside are on and through primarily get expansion of drivers bad lower free benefit due compensation And and side get So payout. throughout really one EPS key key we our at growth. if also some incentive looking from do, the drivers revenue we are we it's some the flow flow

we've year-over-year, look captured we As receivables.

measures a to to see pathway clear really we that the get growth. So different by

David Manthey

seems the like next outlook over very would Okay, gives and the margin. X% to be growth you four XX% think, to out you EBITDA longer organic revenue this X% years, what the I then, but stretch on in to XXXX if growth confidence EBITDA level XX% term XX% reasonable, something

too, here just are about So the drivers the where that level? from talk behind we to you improvement if are key what

Janet Zelenka

things a question, been three working great last And the convergence we've of over years. Dave. So it's all the really in business the

volume drive, quality and continue in the in call into areas phase So the it is the the quality drive to of of market. next what of And the we pricing and commercial excellence revenue revenue contracts. these price will

the lower some get get expense new fully one having there. from uplift million get autoclaves, that you cash year will the modernization, a through, America, an system driven you that it new as be autoclaves On going still million, so this and back mentioned, be offset until international incinerator you'll cash get platform, North that coming by $XX platform, you platform, operational with we off the taxes take, everything and the continue new systems is are see the a $XX then and the office we to reduce optimization, reduction, we modernized Cindy of that we then new to taxpayer. route eventually so RWCS, get live, system in the interest everything higher efficiencies, efficiencies not are when get in leveraging by the will debt, And that to

So that flow is confidence EPS the adjusted put that to rate. out growth gives free and conversion us bridge rate that cash that

Cindy Miller

unfortunately, have one, in it's great never a to that's story, bigger and picked have the think those I question, would essence, journey, of in we things, year. one relatively this hit in all Dave, And

fine we of are things to we we have would pandemic, this still We These been mentioned along about going Janet that. have would in, close doesn't. liked. would If you journey, a have had are the adapt we a to the a chugging converge those already would still been focused but more that that have go a result, facilities would But are with the all pace as been without ERP little it to expectations engine we the And bit converge, we're we out as tuning we those than could we things, in goals targets we'll whatever line and when handle that's see think that have But and sight more they're terms they through in and little just, linear that are a that’s much, unfortunately, of that's, together well hitting maybe there how marketplace. see maybe thing. type growth. on we of

we've had within making but out So as is good very the I high they when they not linear. but that question, created journey, We sure appreciate didn't transformation of been just some recession laid terms everybody show inside but should opportunities this intentions in has the maximize focused or plans, or sometimes potential I this up organization these we inflation hit. think have on really pandemics that some

Operator

from from Our Michael next question comes Hoffman Stifel.

Michael Hoffman

earnings Not you're and weird it? Hi, you. is that expectation with. that I about EBITDA your a have given line Can anything and you-- bail us tell for into EBITDA? start between per baseline at a ‘XX to because sure thank not back the that think what for Janet, and compounding is If to disclosing one Can Cindy which midpoint the share you're setting it's your the EBITDA? the to there not you

Janet Zelenka

so asking, what Yes, Michael. I you're understand

interest And are adjusted impact. wouldn't in the just with we're we would gave that expect we which say the to you an impact levels we XXXX. XX% EPS we depreciation but to conversion, increasing tax XX%, we unfavorable think the is when I this deck so is $X.XX rates on range rate So because but in impact, more guidance, impact X% $X.XX, have in income the about $X.XX know assuming expense. tax to slide it's unfavorable to a respect expecting This of normalized in X% effective and that

the FCPA are some primarily the basis, those EBITDA. at would you in of we on indications an you're back if have is item GAAP estimated. of of adjusted have So And also that that adjusted into the areas of costs looking expectation we an key area the EBITDA,

Michael Hoffman

Right.

the to and it sales growth. X% Okay, back X% to go then to

seeing So unit just SOP what growth versus the you're for assumption, unpack the price term? mix ‘XX, we long so your not and understand Can the in compounding. term long you between ‘XX

Janet Zelenka

seeing story, we market, in on tailwinds elective get we is headwinds in volume, We're right to Yes, could the growth But And if say we're so recover would that is there. in the range. on more I now to then index as our things the think a which range RWCS actually the have as and hopeful volume some price we forecast good I in lower WCS, due range. the surgeries. to higher both our shred

sustainable So we power I that have indicates think through year. pricing it next that's

estimated it in December those the at the year. rest what of SOP key our SOP, pricing And for ended are In revenue. through terms assumptions the we of

Michael Hoffman

it accurately? that And so what's number just all we have

Janet Zelenka

have will someone that. to I clarify

Cindy Miller

It’s believe. XXX I

Janet Zelenka

XXX. Yes,

Michael Hoffman

questions. many so more Okay,

Janet Zelenka

lot can hopefully news, okay, the hope, we we good thrown a Well, is information of I so --. slides, have the we'll Michael have out script, in the everything

Cindy Miller

we there's lot Yes, to that. a digest, do and understand

Operator

question of Scott comes from Schneeberger next Oppenheimer. Our

Scott Schneeberger

end XXX. that quick. real that's I'm Good December you Are on following you. you making that morning. through --? the Janet, SOP Thank you extrapolating just of Or up ‘XXXX? are

Janet Zelenka

Yes.

So we don't predict SOP pricing.

it's proven to be think predict. to I hard

flat So we just year end as as guidance assume of the a expectations. through an so our assumption, that

Scott Schneeberger

Thank should you. the some so or quarter look? how it cadence How Just first year to next thoughts does out more you How back we're the compare year that? that gate about through year-over-year? the through of think And in XXXX. is on we And question, Maybe do appropriately? then sequentially expect half? out of modeling -- of the may come this

Cindy Miller

see was We last not it than looked cadence. reasonable quarterly first we of the a we it's same sort where cadence when different at the half. year is half significantly steady second the the fairly that actually, had So

then as surcharges cards into levers will other and other of rate Now continue first our carry we the our but the pricing be to rest rate renew do momentum levers momentum our pricing Increase to quarter the into carry the things. start contracts.

of , stable we on see have we'll if seeing you I headwinds do what will volume, we're in relatively terms think of for see a we based us macroeconomic we expect, today, kind volume. as know not see that we what impact. But So the

et QX cash however, bonus and side, areas due outlay any pain, interest payments, cetera. are the cash On or heavy QX to

are QX QX and outlay in quarters, higher cash your So generating quarters. cash you do see that in and QX, our higher and QX seasonality on cash,

Scott Schneeberger

then to you the quarter three. you'll further that? Thanks. one guiding congrats target of two for down you've is What do into time. questions you're your going capital. What get we debt did one first be by But going some a for leverage think three great should like that for reduction the forward? achieved It your final, reduction end with about or I'm and all should you job of will And budge on thereafter? And my achieving ‘XX, debt how of to outline reduction. about Because sounds think leverage we kind use it and the this

how about mentioned to as term guided have on in think a longer revenue linear, that are otherwise, free How second of not you of question you you. part CapEx your flow needs CapEx cash like it's qualify? going for the percent And then capital element guidance? is lot is ‘XX. should What or of the sounds what, in you for Cindy, a we we Thank CapEx it spend facilities.

Janet Zelenka

to All quarter the I'll be similar, right, to reduction we're, hit think so or the the yes, we we'll a close. debt first in clear, for three just times get get

be going just it the clear closer think in the hit to we second it'll quarter to first So we're in quarter, get quarter, there. but first or be

we year. that In of our we do will generate, use capital how cash terms this we for have expenditure a

for invest need leave our from at at be opportunities, to capital we're first we will this cash, to us But what major all if in our reducing future, prior through year as look projects, with on priorities other use you that And years cash after debt generate capacity you continue of by debt, debt execute amount the opportunities apply we've in well, we'll you does and priority us do investment and people first see everything our and we'll priorities people allocation our as we business. it debt. money limited of that. spend the in in to is the capital So to IT ourselves. to to but the But goes look the engineers learned as

will opportunities other is of I the is for plan. if to debt from as based have one but forward, want have sure if it move the major investment the projects of team complete will maintain don't those on terms heavy success I some range precise I that we the we target get And And three capital. think then incinerator like maintenance we of making on before, modernization the to don't, not in with capital, it's range is times we grade. you've a working going long the what we probably center right the I major term in enough think projects, to of seen

probably So it more would in have range. the to be X.Xx

buy just something generate. generation I both of So get answered that I And to may cash naturally miss the I anything? that is think questions. Did we we your

Operator

next Steinke question Kevin from from comes Research. Our Barrington

Kevin Steinke

around how like your macro Good comments guidance just macro X% that. comments morning. Is impacting growth It Or that more XXXX. on are for to you sounds just you the clarify X% it maybe see and the organic into I XXXX. correct? wanted some revenue to any making headwinds

Janet Zelenka

there's some we seeing durability the headwinds. of that are some in So

do we think elective current recover surgeries do, faster, of they that us having. If pace I so recovery than will And that will they're the recover. help

of is X% So that's to I'd some why you say tailwind, key What drivers. headwind a factored so we have X%. that's that of the of And did in. one range versus have that

pressures a market. and persistence people So and the seeing then that inflationary lot some level, at of the there's EPS of in the are

high. because persistent not So It's based are It's about today, some if on we just fuel. appropriate were, that have containers other given costs, products. those and stayed inflation, based about based on rent cetera, it's of current we're would petroleum and mitigate, what et seeing I utility say that

that factored line. we which is bass is the that why XXXX, persisting So in of in kind

factored us some tailwinds are opportunity. could that into headwinds So and range, give

Cindy Miller

a the at Kevin, of fee, fee, even site and independent an subscription a volume ways. independent one, a on a performed, revenue that. pull reminder and fee, per then pounds a that and important we not look I with for about that to doctor's the different be ways, volume pull pound if office new look at Number and Because hospitals volumes, not of could weight, is it's just accounts. we've and might weight, of And so as we look weight, companies that how actual we metric. national out volume turns And volume many our, a XX% a how weight what accounts, has are an that a that's take get general subscription got for or the customer, we national everybody, us, Volume of be subscription at hospital off surgeries covers two then But every example, based lots talk XX% we customer, it's may and of Yes, when matter. we'll that's different in pounds volume, think a different pulling about the there's out different, are and everything hospitals. we'll into, elective place that out all price to generates. new lot, physical in will may component

news, and So they're are for back to going out us, are we'll great about, going they're that's see up. hospitals talking and people about and And to hospitals, visits doctors. back

those because of of opportunity us a a generate positioned as returns that surgeries that come normal. show elective volume. More continues types to waste. surgeries be there well That importantly, the lot we're some And that that encouraged. the a the if should handle they for assumption and at knees, care hospitals And And in bit in health these and we're point an hopeful to improvement. in network kind time, we're good back to of is of staffing orthopedic that does, hips,

was volume wasn't. when was business. on the more meant weight customers But we so So positive, flat we that us, of volume were for new but the say winning terms bringing on were volume both in sites. in We in QX, actual, sides of sites

are in but and to get that's staffing back more QX I to line, comfortable hospitals yielded the office. more look people had flat ‘XX, going for So feeling as kind doctor's think of a said, in Janet that hospitals

that think for elective I be to follow surgeries. that's think us. And good will time I a

Kevin Steinke

very That's great. color. other helpful one. one just And Okay,

or destruction know If Rico potential the potential disruption in going any rollout around guidance, learnings on the of comments you've in you assumptions lot any Puerto but any that. to rollout, secure well contemplated ERP in there information pilot from the impact revenue sort I the XXXX a is of just the from US. had

Cindy Miller

any we surprises hit. and confident Puerto that a on we we've and the give shred hit it And little work in few Kevin, of to came think very more Janet Ahas gates that's have the I'm would a We pretty Janet, those you're them, certainly through chose color. usual from, you of calling of months can learnings you kind do why comfortable quite or did it I Rico we've feel pilot in had maybe So it. out specific learnings. snafus think I to had side with the but

Janet Zelenka

the was we EPS of people that $X.XX have the look conversion, data time you the a first time doing if cetera. it first XXX that for that et system putting a at and at into disruption for about the knowing new production shred Yes, range at we the attributed couple only look

not be, I our be risks have any risk think we're there. that ranges factor. a cover potential to working And

Operator

our Q&A concludes That session.

back So Cindy hand Miller remarks. over I’ll for to closing

Cindy Miller

Thank you, Maxine.

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

So thank you very much.

Operator

you Thank you, ladies and gentlemen. This today's concludes call. Thank for joining.

lines. your disconnect now may You

Stericycle (SRCL) 23 Feb 232022 Q4 Earnings call transcript