Stericycle, Inc.

Good morning and welcome to the Stericycle, Inc. third quarter 2021 earnings conference call. All participants will be in 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 your telephone keypad. 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 Stericycle's 2021 Third 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 prospective in nature and are not based on historical facts, but rather on current expectations and projections of our management about the future events and are therefore subject to risks and uncertainties. Our actual results could differ significantly from those described in such 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 US GAAP measures, please refer to the schedules in our earnings press release, which can be found on Stericycle's Investor Relations website at investors.stericycle.com. The prepared comments for today's call correspond to an earnings presentation, which is also available at Stericycle'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 December 2, 2021. To access a replay of the call, dial 877-344-7529 and enter replay access code 101-60097. 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 November 2, 2021, may no longer be accurate at the time of a replay. Any redistribution, retransmission, or rebroadcast of this call in any form without the 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 our third quarter earnings call. Overall, our results of the quarter demonstrate that we continued to execute on our key business priorities. We delivered on our quality of revenue initiatives, driving organic revenue growth in regulated waste and compliance services. We also achieved an important milestone in our transformational journey, the launch of our ERP system. I couldn't be more proud and excited to share some of the benefits our team members and customers will begin to experience because of this new platform. At the beginning of August, we went live with the ERP capabilities for secure information destruction in North America for our operational and commercial processes, as well as our overall North America financial and procurement processes. Today, more than 5,000 team members are using the new ERP across eight key business processes, transforming us to a modernized data and technology environment. The improved processes encompass the following. Market to quote, which is how our commercial organization identifies and onboards new customers and manages contracts and renewals. Source to pay, which includes our procurement of goods and services and the payment of vendors. Tire to retire, which includes the technology and processes we use to manage our global workforce. Order to cash, which is how we process customer orders all the way to invoicing and cash collections. Collect to dispose, which includes the comprehensive processes to service our customers. Customer experience, which is how we manage the overall relationship with our customers. Plan to perform, which involves the planning, forecasting, and monitoring of business performance. And account to report, which is how we close our books and report our financials. Our focus for the fourth quarter is to continue tuning and enhancing the platform. While it is still early in the rollout, let me outline a few of the impacts and improvements we're beginning to see from the ERP. One, we have improved the quality of our automated data flow. The technology-enabled data flows are moving us towards more streamlined and automated processing of our business, which we anticipate will improve service, optimize the deployment of assets and minimize the need for manual intervention. Two, we have also launched an enterprise data lake that is being filled with data from the new systems. We are excited to begin harnessing the power of this data lake, which provides powerful analytic capabilities, including capturing daily revenue and cost trends. We believe this information will drive better real-time operational commercial decisions and leading to optimized business performance. Three, we are improving our customers' experience. We have expanded our digital customer experience capabilities for enhanced and simplified customer onboarding and service delivery, streamlining sales and customer service processes, and expanding self-service tools to deliver an integrated customer experience. Four, We are scheduling and servicing our North America secure information destruction customers through the ERP, with 98% of orders being automatically routed to our dispatch system, a significant improvement over prior processes, which included manual intervention. Our new technology allows us to automate scheduling and route rebalancing, which we expect will result in route optimization and greater efficiency. Five. We are invoicing North America's secure information destruction customers through the ERP. The system is also providing real-time insights into revenue trends by facility location. The power of this technology is its ability to organize, process, and present data, which will enable us to better understand our customers and their needs. Six, we are processing both secure information destruction and and regulated waste and compliance services North America vendor invoices through the new system and leveraging the technology to remit payment. Our North America vendors and their invoices are being routed through our source to pay system following automated workflows that help ensure appropriate review and approval prior to payment. We now have a fully automated flow of receipts and payments into our general ledger. giving us daily insight into expenditures. Seven, we are closing our books in the new ERP, which was designed with an effective and efficient control environment in mind. The ERP automates several key controls, automates numerous manual journal entries, and streamlines our overall close process. Additionally, we built a new profit and cost center structure that will enable future insights into profitability. We are early days in harnessing the power of this technology and the value of the data generated, and it's going to take time for us to unlock the full potential, but we are encouraged by the system improvements we've experienced so far. We have made great progress in the last three months and will continue to work over the next several months on fine-tuning the system and our processes as we build efficiencies, in our operational execution. Looking ahead to the North America regulated waste and compliance services ERP deployment, we couldn't be more excited. The secure information destruction deployment has taught us many things, and we will leverage those learnings for the North America RWCS deployment in 2022. I couldn't be more proud of how our team members came together for this deployment and for their adaptability to a new way of working. Turning to our quality of revenue initiative, we delivered another quarter of overall revenue growth of 2% and organic revenue growth of 4.4%, which is in line with the revenue growth range provided last quarter. Regulated waste and compliance services had organic revenue growth of 6.8%, comprised of 6.9% growth in North America, as we continue to see recovery in maritime waste services and elective surgeries, and 6.2% growth in international. Overall, secure information destruction revenue declined 1.1%, as North America revenue declined 3.4%, mainly due to the complexities associated with this large-scale ERP deployment. This decline was partially offset by 14.7% growth in international, We are encouraged with month-over-month improvements in revenue within secure information destruction as we make this system a part of everyday life. We are pleased to see improvement from August through September, which has continued into October. Moving to operational efficiency, modernization, and innovation. I'm excited to announce that our new Northern California regulated waste facility came online during the third quarter. This is an important achievement that secures and strengthens Stericycle's medical waste capabilities in Northern California and furthers our commitment to sustainability. This facility provides a 75% capacity increase to better serve the healthcare needs in heavily populated Northern California. This strategic location is expected to improve our network by reducing vehicles, fleet miles driven fuel consumption, and emissions. This modernized automated facility also is anticipated to process waste more cost efficiently, improve employee safety, and be more reliable. We believe its opening enhances our ability to grow our business in the region and improve customer service. As mentioned last quarter, Stericycle is not immune to the impacts of inflation, a tightening labor market, and supply disruptions. These factors continued to impact us in the third quarter, primarily resulting in higher labor costs and delays in receiving services and materials for our capital expenditure projects. On September 1st, we divested our operations in Japan for approximately $11.3 million. The team continues to make strong progress executing on our portfolio optimization initiative as this marks our ninth divestiture since 2019. Proceeds from this divestiture were applied toward debt reduction. I'll now turn the call over to Janet to review our financial results.