Stericycle, Inc.

Good morning, and welcome to the Stericycle Incorporated's first quarter 2021 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Andrew Ellis, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining StairCycle's 2021 First Quarter Earnings Call. On the call today will be Cindy Miller, our Chief Executive Officer, and Janet Zelenka, our Chief Financial Officer and Chief Information Officer. The discussion today includes forward-looking statements that involve risks and uncertainties. When we use words such as believes, expects, anticipates, estimates, may, plan, will, goal, or similar expressions, we are making forward-looking statements. Forward-looking statements are perspective in nature and are not based on historical facts, but rather on current expectations and projections of our management about future events and are therefore subject to risks and uncertainties. Our actual results could differ significantly from those described in just forward-looking statements. Factors that could cause our actual results to differ are discussed in the safe harbor statement in our earnings press release and in greater detail within the risk factors in our filings with the U.S. Securities and Exchange Commission. Our past financial performance should not be considered a reliable indicator of our future performance, and investors should not use historical results to anticipate future results or trends. We disclaim any obligation to update or revise any forward-looking statement other than in accordance with legal and regulatory obligations. On the call, we will discuss non-GAAP financial measures. For additional information and reconciliation to the most comparable U.S. GAAP measures, please refer to the schedules in our earnings press release, which can be found on our investor relations website at investors.staircycle.com. The prepared comments for today's call correspond to an earnings presentation, which is also available at StairCycle's investor relations website. Throughout the call, we may reference specific slides from the presentation. This call is being recorded, and a replay will be available approximately one hour after the end of the conference call today until May 27, 2021. To access a replay of the call, dial 877-344-7529 and enter the replay access code 10153262. A replay of the webcast will also be available on StairCycle's Investor Relations website. Time-sensitive information provided during today's call which is occurring on April 29, 2021, may no longer be accurate at the time of the replay. Any redistribution, retransmission, or rebroadcast of this call in any form without express written consent of StairCycle is prohibited. I'll now turn the call over to Cindy Miller.

Thank you, Andrew. Good morning, everyone, and thank you for joining us. I would like to recognize our team members in the essential role StairCycle plays in protecting what matters, the health and well-being of our team members, customers, and communities. Throughout the first quarter, we continued to innovate to match customer demands and strengthen customer relationships in a safe and sustainable way as they continue to fight the pandemic. As a result of those efforts, in the first quarter, we delivered strong and continued organic revenue growth in regulated waste and compliance services and generated solid cash flow driven by operational performance. Secure information destruction revenues improved sequentially quarter over quarter, despite continued disruption from the pandemic. Stericycle plays a key role in managing the reverse logistics associated with COVID vaccination-related waste, which contributed to our organic revenue growth this quarter. In the U.S., over 200 million doses have been administered, and medical waste from many of those are coming to Stericycle for disposal through our mail-back solutions and from the mass vaccination centers we support, such as the United Center in Chicago and Citi Field in New York. On today's call, I will start off by providing an update on our behavior-based safety culture transformation and then provide perspective on a few of our five key business priorities. As a reminder, they remain quality of revenue, operational efficiency, modernization and innovation, ERP implementation, debt reduction and debt leverage improvement, and portfolio optimization. I'll then turn the call over to Janet, who will discuss our first quarter financial results. Following our opening remarks, we will take your questions. First, let's discuss our behavior-based safety culture transformation. Safety is fundamental to Stericycle as an organization. In the first quarter of 2021, we continued to build on the significant safety improvements we made in 2020 and further improved our vehicle incident rate 5% on a rolling 12-month basis. We completed the defensive driving program and training in North America and are well on our way to roll this out in the international market. Turning to the quality of revenue, we delivered a strong first quarter in regulated waste and compliance services, with organic revenue growth of 6%, driven by a combination of the net positive impacts of our COVID-19 services and quality of revenue initiatives that I have shared on prior calls. The 6% organic revenue growth is comprised of 3.8% growth in North America and 16.4% growth in international. Turning to operational efficiency, modernization, and innovation. I previously described the modernization of our facility to manufacture mailbag kits, which significantly increased our productivity and our capability to meet the demands of our customers providing COVID-19 vaccinations. As a result of this modernization, we increased our production capabilities by 400%. We are well positioned to continue to provide strong support of this important global vaccination effort. I'm proud of how engineering and operations optimize the manufacturing processes and continue to stay in front of vaccine-related waste demand. And our mailbag service represents only one of several ways we are supporting the reverse logistics of vaccine-related waste. When considering all of the services we offer to dispose of sharks, including mailback, we could handle well over 700 million needles in North America on a monthly basis with our existing capacity. This highlights our ability to handle the entire U.S. vaccine rollout, even if it was accelerated. The transformation of our operations goes well beyond our mailback center. We have developed a systematic approach for optimizing and standardizing the design of our medical waste facilities. In North America, we are implementing larger autoclaves in five of our facilities, along with automated solutions that will improve safety, increase productivity, reduce operating costs and increase capacity. We are on track to complete these optimization upgrades in three more North American facilities in 2021. Internationally, we just completed two similar upgrades in key locations to support our UK business. I will now turn to our North American ERP deployment. As previously communicated, we shifted the majority of our planned deployment of our North American ERP system into 2021. Our current expectation is that this summer, we will start deploying the North American Finance and Accounting Procurement and secure information destruction portions of the ERP system, subject to passing several go, no-go gates that are standard leading up to deployment. The planned finance, accounting, and procurement deployment includes our North American general ledger, the integration of our source-to-pay platform with the ERP, and implementation of enhanced budgeting and forecasting functionality. The secure information destruction deployment will be conducted in several phases and includes commercial, operational, and order-to-cash functionality. The new commercial tools and functionality will automate existing processes and enhance our quality of revenue initiatives. The new operational functionality will include routing software that integrates with our ERP platform and will provide enhanced container management and tracking, which supports our operational efficiency modernization, and innovation priority. We anticipate completing the phased deployment to all North American secure information destruction facilities by the end of the fourth quarter. Following this deployment, we plan to implement the North American ERP for regulated waste and compliance services in early 2022. We will continue to monitor deployment readiness and timing along with the evolving pandemic dynamics that could impact our business, customers, internal control environment, and the safety of our team members, and we'll factor them into our deployment timing decisions. Lastly, I want to provide a quick update on our credit-defined debt leverage ratio. By generating $62.6 million in operating cash flow in the quarter, we were able to further pay down debt, and we lowered our leverage ratio to 3.28 times compared to 4.5 times at the end of the first quarter of 2020. This improvement continues our progress towards achieving our long-term debt leverage outlook. I'll now turn the call over to Janet to review our financial results.