Stericycle, Inc.

Hello and welcome to the Q1 2023 Stericycle earnings conference call. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during the presentation, please press star followed by one on your telephone keypad. I'd now like to hand over to Andrew Ellis, Vice President of Investor Relations. The floor is yours. Please go ahead.

Good morning and thank you for joining Stericycle's 2023 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 such forward-looking statements. Factors that could cause our actual results to differ are discussed in the State of Harbor Statement and 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 StairCycle's Investor Relations website at investors.staircycles.com. The prepared comments for today's call correspond to an earnings presentation, which is also available at StairCycles Investor Relations website. Throughout the call, we will 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 25th, 2023. A replay of the webcast will be available on StairCycles Investor Relations website. Time-sensitive information provided during today's call, which is occurring on April 27, 2023, 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.

Thank you, Andrew. Good morning, everyone, and welcome to today's call. Overall, I am pleased with our first quarter performance, which is in line with our expectations for the year. We saw solid performance and progress across our key business priorities. Turning to our first quarter results, our revenue performance benefited from the commercial actions started in 2022, which included leveraging our pricing actions. We delivered another quarter of overall organic revenue growth, growing 7.2%, with secure information destruction increasing 11.8%, and regulated waste and compliance services increasing 5%. We are showing good progress on our quality of revenue initiatives that I discussed last quarter, which includes our commitment to expanding service penetration, improving customer implementation velocity, and deepening customer partnerships by developing enhanced customer solutions. In the quarter, gross profit margin expanded 130 basis points, Our actions on operational efficiencies, particularly in the areas of staffing and reduced overtime, have helped us offset increases in other cost areas such as fleet and facilities, allowing revenue growth to largely flow through to gross profit. We continue to be encouraged by what we see being reported in the market with hospital staffing levels shoring up, return of elective surgeries, and return to office trends. As a market leader in our core businesses, offering solutions and compliance support, we are well positioned to take advantage of these trends as they evolve. Our infrastructure modernization efforts, including existing and additional future treatment capacity strategically placed in key geographic areas, positions us well to support growth in our customer base. Further, we are pleased with our cash flow generation and strengthened balance sheet. With regards to our operational modernization efforts, our new incinerator under construction in Nevada remains on schedule to go live in early 2024. We also have 20 additional projects underway, which include new autoclaves and conveyance systems. Regarding our fleet modernization initiative, although vehicle deliveries remain behind schedule, To date, we have received almost 80% of our outstanding orders and anticipate receiving the remaining vehicles by mid to late summer. Looking ahead to the US regulated waste and compliance services ERP deployment, the team is currently immersed in testing and readiness preparation, and we continue to anticipate deploying it in the second half of 2023. Now turning to debt reduction. We improved our debt leverage ratio to 3.05 times a 23-point improvement since year end, and we remain on track to achieve our three times debt leverage ratio in the first half of 2023. This is our lowest debt leverage ratio since 2015. Finishing with portfolio optimization, in April, we divested our operations in Brazil, which was our last remaining Latin America business for an investing cash outflow of approximately $28 million. This represents our 13th divestiture since 2019. I'll now turn the call over to Janet to review our financial results.