Stericycle, Inc.

Hello everyone and welcome to the Stericycle Second Quarter 2022 Earnings Call. My name is Daisy and I'll be coordinating today's call. You will have the opportunity to ask a question after the presentation. If you would like to register a question, please press star followed by one on your telephone keypad. Please kindly only ask one question and one follow-up to allow others the chance. I would now like to hand over to your host, Andrew Ellis, Vice President of Investor Relations, to begin, so Andrew, please go ahead.

Good morning, and thank you for joining StairCycle's 2022 Second 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 such forward-looking statements. Factors that could cause our actual results to differ are discussed in a 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 September 2nd, 2022. To access a replay of the call, dial 866-813-9403 in the US, 226-828-7578 in Canada, or 44204-525-0658 outside the U.S. Canada and enter replay access code 770430. A replay of the webcast will also be available on Fair Cycle's investor relations website. Time-sensitive information provided during today's call, which is occurring on August 5th, 2022, may no longer be accurate at the time of a replay. Any redistribution, retransmission, or rebroadcast of this call in any form without express written consent of Fair Cycle is prohibited. I'll now turn the call over to Cindy.

Thank you, Andrew. Good morning and welcome to today's call. As you will see in our results, our second quarter builds on the momentum we observed as we exited the first quarter. Our disciplined and proactive pricing actions helped offset inflationary cost pressures, which led to a sequential quarterly margin improvement. Further, the frontline workforce shortage we experienced in the first quarter improved to approximately 10%. down from 12% at the end of the first quarter as we had fewer COVID-related absences and gained traction with our hiring. Turning to our key business priorities, I'll start with the quality of revenue. We delivered another quarter of overall organic revenue growth, growing 5% with secure information destruction, increasing 12.2%, and regulated waste and compliance services increasing 1.8%. In North America, organic revenue growth was 6.2%, with secure information destruction increasing 12.9%, and regulated waste and compliance services increasing 2.8%. Throughout the second quarter, we remained focused on executing our pricing strategy, utilizing our three pricing levers to help offset the continuing higher inflationary cost pressures we experienced in supply chain and labor-related costs which included higher wages, overtime, and new team member onboarding. We estimate that in North America across both our core businesses, these pricing actions, along with SOP pricing and fuel surcharges, significantly contributed to the growth rate. We expect that the benefits of our surcharge and fee pricing initiatives will continue to accelerate in the second half of 2022. For example, In the first quarter, we introduced the new service cost recovery fee for some North America hospital customers, and in the second quarter, we enhanced our recycling revenue surcharge in North America secure information destruction. These contributed approximately $5 million in revenue in the second quarter and are anticipated to contribute another $20 million in the back half of the year. Turning to operational efficiency, modernization, and innovation, I'm excited to share an update on our latest innovation, SMS Revolution. This internally developed and newly patented technology modernizes our processing of sharps. This technology is currently installed in two of our facilities with additional rollouts planned. We've already seen sharps processing capacity more than double in the two facilities, leading to at least a one shift reduction per facility. Continuing our trend of modernizing our facilities to drive operational leverage and safety improvements throughout our organization, we have begun constructing a next-generation incinerator to support operations and strengthen our medical waste competitive position on the West Coast. This facility will replace our recently decommissioned incinerator in Utah. We anticipate that this facility will be operational in the next 18 to 24 months. Looking ahead to the North America regulated waste and compliance services ERP deployment, we remain on track to deploy pilots in the second half of 2022 for subsets of our customers in preparation for the rollout next year. As we are now halfway through 2022 and considering the current economic uncertainty surrounding the impacts of inflation, foreign exchange rates, and interest rate hikes, we are updating our guidance for the rest of the year as Janet will explain later. I'll now turn the call over to Janet to review our financial results.