Good morning, ladies and gentlemen. Thank you for attending today's Stericycle Q1 2022 earnings call. My name is Jaquita. I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with the opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to your host, Andrew Ellis with Stericycle. Andrew, please go ahead. Good morning, and thank you for joining Stericycle's 2022 Q1 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 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 U.S. 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 May 26, 2022. To access a replay of the call, dial 866-813-9403 in the U.S., 226-828-7578 in Canada, or 44-20-4525-0658 if outside the U.S., Canada, and enter replay access code 281677. A replay of the webcast will also be available on Stericycle's Investor Relations website. Time-sensitive information provided during today's call, which is occurring on April 28, 2022, 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 Stericycle is prohibited. I'll now turn the call over to Cindy. Thank you, Andrew, and good morning and welcome to today's call. As Janet and I will discuss, we are encouraged by our overall organic revenue growth this quarter. Like all companies, we navigated the unprecedented convergence of COVID-19 variants, labor shortages, supply chain disruptions, and accelerating inflation. On our call, I will highlight the positive trends we are experiencing with improving staffing levels and how our quality of revenue initiatives are able to mitigate accelerating inflation, which is providing us the confidence to reaffirm our 2022 guidance. During my introductory remarks on prior calls, many times I have referenced the resilience and dedication of our frontline workers as they face continued challenges. This quarter further demonstrated our team members' commitment to servicing our customers as we overcame a 21% shortfall in driver staffing in North America in the H1 of the quarter due to COVID-19 related illnesses that were clustered in specific markets and hiring challenges due to the nationwide driver shortage. In March, we began to see significant improvement in COVID-19 absences, and our recruiting team made substantial progress, which collectively reduced our driver shortfall to 12%. As I reflect on our staffing journey over the past 18 months, we have insourced and invested in our recruiting team and technology and increased wages in numerous markets to improve staffing. These actions, coupled with our strengthened employee value proposition connected to our promise of we protect what matters, contribute to the momentum we are seeing in our ability to attract talent in a challenging market. Turning to our key business priorities, I'll start with quality of revenue. We delivered another quarter of overall organic revenue growth with 2.1% growth in the Q1. We remain focused on our pricing strategy and continue to execute on our three pricing levers to mitigate the higher inflationary pressures we saw in supply chain and labor-related costs, which included higher wages, overtime, and new team member onboarding. As a reminder, our three main pricing levers are as follows. One, for all multi-year contracts, we adjust pricing at contract anniversary and renewal. Two, for all new customers and purchasers of our one-time services, we adjust our rates at point of sale. Three, for many of our customers, we also have surcharges and fees that provide inflationary cost protection for commodity and other price volatility. Examples include our new Service Cost Recovery Fee for some North American hospital customers, fuel surcharges in Secure Information Destruction, and a portion of Regulated Waste and Compliance Services. Our recycling recovery surcharge in North American Secure Information Destruction. Our pricing actions have gained momentum towards the latter half of the Q1, including our adjustment of surcharges and fees, which provide the most flexible mechanism to help offset inflationary costs. Throughout 2022, we estimate that we will introduce approximately $25 million of pricing from the surcharge and fee lever, excluding fuel surcharges, which are offsetting fuel costs to mitigate supply chain and other inflationary cost pressures. As we have stated before, these charges generally lag the immediate impact of inflationary pressures. The benefit from all of our expected pricing initiatives is included in our 2022 guidance, as shown on slide 11. We continue to expect that these initiatives will have a larger impact on results in the H2 of 2022. Turning to operational efficiency, modernization, and innovation. I'd like to update you on some important developments which also tie directly to our continuing ESG journey. First, I'm pleased to announce that we will be expanding our capacity in the New York metro area in the Q2 with the expected launch of our new medical waste facility. This facility, located in New Jersey, is another important achievement in our long-term facility modernization plan to strengthen our medical waste capabilities throughout the Northeast. Similar to our Northern California waste facility that went operational in the Q3 of 2021, the New Jersey facility will strengthen our environmental efforts as it is strategically located to improve the efficiency of our network by reducing vehicles, fleet miles driven, fuel consumption, and greenhouse gas emissions. This modernized, automated facility is also anticipated to process waste more cost efficiently and reliably and improve employee safety. Our design efforts have focused on sustainability, including the use of a closed loop system that allows us to recycle steam that is used for heating the facility's washer system, as well as utilizing new technologies that minimize overall emissions. Second, I am excited to share our launch of our latest innovation, SafeShield medical waste containers. These first-to-market containers are coated with an antimicrobial protectant, and the all-plastic construction is made with 15% recyclable content. The antimicrobial component is an additional protectant that further reduces the potential spread of infection and odor. The containers also feature an improved design and standard sizes that are nestable and stackable, allowing for more efficient transportation and storage. After completing a successful pilot in 2021 and further innovating our solution based on customer feedback, we plan a nationwide rollout of the SafeShield medical waste containers over the coming years. The launch of this initiative is an important step forward as we standardize and reduce our container network from more than 150 container sizes to less than 20. Our focus on sustainability as we developed this initiative is also reflected by our work with plastics recyclers to pelletize our old containers and sell them as recycled raw material. Further, because of SafeShield's high quality construction and durability, it is expected to last considerably longer than our existing containers, reducing our demand for plastics in the future. Looking ahead to North America Regulated Waste and Compliance Services ERP deployment, we remain on track to deploy pilots in the H2 of 2022 for subsets of our North America Regulated Waste customers in preparation for the continued rollout next year. Our disciplined and detailed approach is a direct reflection of the complexity of the regulated waste business. Finally, last week we announced that we had reached agreements with the Department of Justice and the Securities and Exchange Commission, as well as Brazilian authorities to resolve the FCPA investigations which focused on conduct prior to 2017 by employees in our Latin American operations. Resolving this legacy matter represents another important milestone in Stericycle's business transformation journey, and I am happy to put this matter behind us. Over the past several years, we have focused on fully remediating the issues identified during the investigation. This includes instituting new policies and procedures and internal controls and building a culture of compliance, integrity, and accountability that aligns with our core values across our entire global organization. I'll now turn the call over to Janet to review our financial results. Thank you, Cindy. I will start by summarizing our Q1 results. As noted on slide five, revenues in the Q1 were $664.2 million, compared to $668 million in the Q1 of last year. Excluding the net impact of divestitures and acquisition and foreign exchange rates of $17.5 million, organic revenues increased $13.7 million. Of this increase, Secure Information Destruction organic revenue growth was $18.4 million, which was partially offset by a decline in Regulated Waste and Compliance Services organic revenues of $4.7 million. As noted on slide six, Regulated Waste and Compliance Services revenues were $452.6 million. Compared to $473.6 million in the Q1 of 2021. Excluding the impact of divestitures and acquisitions and foreign exchange rates, organic revenues declined 1% in the Q1. North America Regulated Waste and Compliance Services organic revenues increased 0.1%. Underlying this modest 0.1% increase was approximately 2.3% growth from maritime waste services and 1.8% growth due to quality of revenue initiatives. The growth in these areas was mostly offset by a 4% decline in COVID-19 related transactional volumes, such as vaccine and testing waste and patient engagement related call volumes in our Communication Solutions business. International Regulated Waste and Compliance Services organic revenues declined 4.7% in the Q1 as pandemic-related waste overclassification volumes decreased from a peak in the H1 of 2021. As noted on slide six, Secure Information Destruction delivered revenues of $211.6 million compared to $194.4 million in the Q1 of 2021. Excluding the impact of foreign exchange rates, organic revenues for Secure Information Destruction increased 9.5%, mainly due to higher recycled paper revenues, reflecting higher SOP pricing, partially offset by lower SOP volume. In North America, Secure Information Destruction organic revenues increased $14.7 million or 8.8% compared to the Q1 of 2021. Recycled paper revenues were up 73.5% or about $10.4 million compared to the Q1 of 2021. The increase in recycled paper revenues reflected higher SOP pricing, partially offset by lower SOP volume. Additionally, service revenues were up 2.8% or about $4.3 million, with service stops up slightly year-over-year. In international, Secure Information Destruction organic revenues increased 13.6% compared to the Q1 of 2021. This change was mainly due to increased service revenues as the business continued to recover from the economic impact of COVID-19. Income from operations in the Q1 was $5.9 million compared to $59.1 million in the Q1 of 2021. The $53.2 million dollar decline was mainly due to, one, increased cost of revenues driven by higher operating labor costs from wage adjustments over time and employee onboarding costs of approximately $11 million and higher supply chain and other inflationary costs of approximately $8 million. Two, increased selling, general, and administrative expenses driven by higher legal expenses of $12.3 million, mainly due to an additional accrual of $9.2 million related to the FCPA settlement. Higher bad debt expense of $5.1 million as a return to a more normalized level, higher selling costs of approximately $4.8 million, and higher medical claims of approximately $3 million. The higher operating labor costs were mainly associated with maintaining competitive wages for existing team members and increased starting wages for new hires. In addition, overtime costs rose as a result of labor shortages, increased absences due to COVID-19, and lower productivity associated with training of new team members. Higher supply chain and other inflationary costs were mainly from higher vehicle rental and maintenance expenses as we see continued delays in replacement vehicle deliveries, higher utility expenses, and higher costs associated with supplies and disposable containers and liners. While few costs have increased, they have been offset through our existing fuel surcharges. US GAAP net loss was $14.2 million or $0.15 diluted loss per share, compared to net income of $26.1 million or $0.28 diluted earnings per share in the Q1 of last year. The difference was mainly related to lower income from operations of $53.2 million, which was partially offset by lower income tax expense of $10.9 million. Cash flow from operations for the three months ended March 31st, 2022 was an outflow of $38.8 million compared to an inflow of $62.6 million in the same period of 2021. The year-over-year decline of $101.4 million was mainly driven by the timing of changes in net working capital of $67 million, including accounts receivable and accounts payables, and lower cash generated from income from operations of $34.4 million, as shown on slide nine. Adjusted income from operations was $59 million or 8.9% as a percentage of revenues, down from $110 million or 16.5% as a percentage of revenues in the Q1 of last year. Adjusted income from operations declined 760 basis points as a percentage of revenues due to the following higher costs: ongoing IT operating expenditures from our ERP system of 200 basis points, labor costs of approximately 170 basis points, supply chain and other inflationary costs of approximately 120 basis points. Bad debt expense of approximately 80 basis points, selling costs of approximately 70 basis points, and medical claims of approximately 50 basis points. Adjusted diluted earnings per share was $0.32 compared to $0.71 in the Q1 of 2021. As illustrated on the bridge on slide eight, excluding the net impact from divestitures and acquisition and foreign exchange rates of $0.02, the remaining $0.37 year-over-year decline was driven by $0.15 unfavorability associated with higher labor and supply chain and other inflationary costs, $0.11 unfavorability from higher ongoing IT operating expenditures, and $0.11 unfavorability from higher selling costs, bad debt expense, and other. Our Q1 DSO, as reported, was 63 days compared to a DSO of 55 days in the Q1 of 2021. This difference was mainly driven by the timing of North America Secure Information Destruction customer invoicing and subsequent collections due to the ERP deployment, as discussed in the prior quarter. Capital expenditures for the three months ended March 31st, 2022 were $37.5 million compared to $24.7 million for the same period last year, with the $12.8 million change mainly attributable to the timing of cash payments. Free cash flow for the three months ended March 31st, 2022 was an outflow of $76.3 million compared to an inflow of $37.9 million in the same period of 2021. As noted on slide nine, the year-over-year decline was $114.2 million and was mainly driven by the timing of changes in net working capital, lower cash generated from income from operations, and higher cash paid for capital expenditures, as explained earlier. As shown on slide 10, at the end of the Q1, our credit agreement defined debt leverage ratio was 3.81x. We amended our credit agreement to add back the FCPA settlement amount for purposes of calculating our adjusted EBITDA used in the credit agreement defined debt leverage ratio. Our net debt at the end of the Q1 was approximately $1.65 billion. As we look to the remainder of 2022, we continue to anticipate that adjusted EPS will be lower in the H1 of 2022 compared to last year. The H1 of 2021 did not have the same level of inflationary pressures from wages, supply chain, and other cost headwinds. In addition, compared to last year, we have higher ongoing IT operating expenditures associated with our August 2021 ERP deployment now reported in our ongoing expenses. We expect the remainder of 2022 to benefit from the pricing actions that Cindy mentioned and improvements in our frontline staffing. We are reaffirming our 2022 guidance reflected on slide 11. Of the approximate $90 million FCPA settlement cost accrued over the past three quarters, approximately $80 million is expected to be paid in the Q2 of 2022 and was included within our 2022 free cash flow guidance. We expect to pay the remaining approximate $10 million of the FCPA settlement in 2023. We are also reaffirming our long-term outlook as summarized on slide 12. I will now turn the call back to Cindy. As we wrap up the Q1 of 2022, I'm reminded of the tremendous progress we've made towards transforming this organization. Our dedicated and talented team continues to focus on our five key priorities and serving our customers while navigating the convergence of external risks, including COVID-19 variants, supply chain disruptions, and accelerating inflation. We are encouraged by the staffing improvements we are seeing and the solid pricing actions that we are implementing as we look to the rest of the year and beyond. As always, I'd like to thank our customers, our team members in the communities we serve, and our shareholders for their continued trust in having Stericycle protect what matters. Operator, please open the line for Q&A. Absolutely. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question comes from the line of Michael Hoffman with Stifel. You may proceed. Hi, good morning, and nice open to the year. Hope everybody's well there near Chicago. Cindy, Janet, I just wanna make sure I wrote all these numbers down really fast, looked at the PowerPoint, and think I understand. If I pull out the COVID impact and paper, you're trending in the North America, slightly over 4% organic growth in your medical waste business, and you're just under 3% in document destruction. That's the big takeaway is that you're in that 3%-5% zone. Yeah. The service, you know, in North America, if you look at the service revenue and Secure Information Destruction, it was up over 2%. If you do all the puts and takes with the regulated waste management services in North America, you see underlying growth in our core business areas as we had this crossover of decline in the COVID volumes as we started to see increases in your core volumes, you know, from maritime, from elective surgeries, et cetera. You do see in International a decline year-over-year because of the overclassification of waste's unprecedented highs last year to this year, and then Secure Information Destruction International is also recovering. Okay. In the 2Q, can you give us a sense of how we should think about what that non-recurring headwind is? We make that adjustment, right? If I've got a baseline of 3%-4% organic of the two businesses, but what's my headwind? Yeah. It's unclear exactly how the headwind and COVID in this crossover will occur, but we are encouraged by the core underlying growth through the quality revenue initiatives and maritime and others. I would say we expect to see that continue as the COVID declines, you know, abates as it works out of the system. I don't have the exact crossover for you because we're watching it closely. You know, that's the trend we're seeing. I think. Anything to add? Yeah. I think, Michael, you're right. What we did notice is, as we all personally reflect, and have to look at our own, you know, vaccination cards, a good bit of the vaccination effort for the majority of folks, let's just say here in the U.S., that was a you know January, February to you know June, July effort to get you know however many millions of people got the vaccine. We see it. It all didn't happen in one month, but it has a bit of a tail. It's a bit difficult for us to know exactly when, but I think, you know, we are encouraged, you know, as we're starting to see other portions of the business come back, whether it's shred, whether it's maritime, you know, we think international is still pretty solid, even though, you know, the year-over-year comparisons were difficult. I think that combined with a lot of the pricing actions that we've put in place that we believe certainly for Q2 and moving forward throughout the year will be kicking in. I think it's, you know, a difficult. It's not great for precision, but I think directionally, you're looking at it the right way. Okay. If I remember all the data we've been looking at, the peak is sort of in the middle of that range timeframe you gave. Yep. It sort of starts to ease a little bit. Yep. Optically, this probably isn't greater than a 4% headwind. It's probably something 0%-4%. If I'm modeling, and this is not guidance, but that's the right way to think about it? Yeah. I think there is some headwind from COVID. I think it's more pronounced internationally still than it would be in North America as those headwinds start to subside. Okay, cool. In your page 11, I want a little bit of clarity. There's the numbered footnotes and then there's the asterisked footnote. The numbered footnote says the guide still reflects year-end of 2021 FX and SOP, but the asterisks suggest you've incorporated current FX and SOP. Does the guidance re-reflect that currencies are moving and SOP's up a lot? No. The guidance, you know, stayed with the same rate. We stay in the same range even with those dynamics going, so we didn't really adjust the assumptions in the guidance. Okay. Optically, I think currency looks like, between the three of them, they might actually counterbalance each other. Two are down, one is up. Right The SOP is more positive, so that's a tailwind relative to the guide. Yeah, if paper continues, it could be a tailwind. It has, you know- Right It has. We've seen that most of the foreign exchange headwinds are in, you know, the European markets right now, right? Yeah. Which is where most of our business is in, international. Okay. Can you share with us what your timing plans are for the ERP rollout domestically for medical waste? What's the thoughts about when that's gonna start happening in earnest? Yeah, I think, you know, we're trying to be as prudent as possible and to mitigate as much risk as possible, yet still drive the business forward. There right now is a growing chasm between the amount of data we can get out of the Secure Information Destruction side of the business versus, you know, it's really continuing to highlight, you know, the lack of that same type of information that we have on the regulated side. So we're all clamoring for the same thing. But I think, we're still moving forward with some pretty strong pilots that we think are very important. As you can imagine, we. You know, for shred, we just had to worry every facility did the exact same thing. We had just a couple services. For this one now, with us having red bag waste and sharps, pharma, consulting services, and in some of those customers also a shred component, this is much more complex in terms of its build and in terms of its testing. Each one of those aspects of that portion of the business all have different, you know, data requirements. We feel comfortable as we move through this year, we will launch, you know, a couple pilots to get us through in order to learn from, to adapt, and then continue with the rollout. Hopefully, these pilots will be comprehensive enough that we will have viewed every possible aspect of the business so that we can work very diligently to clean things up before we go with the I wanna say a broader launch. Janet, any other color? Yeah, I'd just say, you know, the plan is, you know, over the summer, we're gonna actually load the functionality capability for our RWCS into the platform. Unlike before, when we were taking everything out of development and moving it into production, we have a full production instance of SAP and all the other suite of systems. Now it's about loading the code, which is a significant step, and we plan to do that this year, and then deploy pilots would put the capability into small markets to test it. That's the plan. A couple of really big steps this year to test what we load, and then based on those pilots, you know, if we need to tweak more, we go right into deployment next year. Okay. Just to be clear, there's a change of timing of deployment then? I or maybe I had a misperception that. Yeah. That domestic was being deployed in. Yeah. We always intended to do pilots this year and then decide. That's what I said last quarter. As we've looked at the timing of loading the code and the pilots, the update is we more definitively can say we think it's gonna go into 2023. Okay. Would you end up doing both domestic and international at the same time? I'm sorry. Go ahead, Michael. Go ahead and finish. Would you expect to do both domestic and international then at the same time at that point? International has launched on the data side already on trying to get the team together, working on the data aspects of cleansing. I don't know if we would launch at the same time, but we have started the motion on international, and we'll sequence that appropriately. Okay. Thank you very much. That will be on a different and more modest deployment, but you know, probably by country or by business. It won't be as, you know, the risk profile that you know, we see with moving our WCF as you know, most of the business onto a platform. Got it. Thank you. Thanks, Michael. Thank you, Mr. Hoffman. Please be mindful to limit one question and one follow-up. The next question comes from the line of Sean Dodge with RBC Capital Markets. You may proceed. Yep. Thanks. All right. Good morning. Cindy, you mentioned the pricing levers you have to help mitigate the inflation pressures. Can you give us maybe just a little bit more detail on how much of those you have in place now, maybe what proportion of contracts you've been able to push those across thus far? Should that proportion grow? Maybe how much of a lag those tend to work on? You know, I guess you're reaffirming guidance for the year. It implies a pretty steep back half ramp. Just a little help understanding maybe the visibility, the confidence you have on that. You know, Sean, I appreciate the question 'cause one of the things that I think, thank goodness we've done from a quality of revenue perspective is clean up data, clean up. We've worked very hard with contractual language just to even standardize those across both business units. It's certainly positioned us very well for the levers that we have. Just as a reminder, you know, lever one contract gets and it has an anniversary or is up for renewal. Obviously, we are sitting with customers and renegotiating at that time for increases based off of, you know, current inflationary headwinds. That's one. Second one is today, if someone were to call our shred business this afternoon, we've had several iterations of new rate cards. We used to be a company where you put out one rate card for the year. We've now the commercial modeling and the commercial strength is now where we are far more dynamic and reactive to both market conditions, economic conditions, and competitive conditions. We're changing those point of sale rate cards for transactional business immediately. I think that that has helped. Then the last thing is surcharges and fees. A lot of companies have them. We finally have language in good bit of the contracts to be able to push them through. We've got a new Service Cost Recovery Fee. We have recycling recovery surcharges, and we have that capability. I can tell you, we've already adjusted those. We've already taken our recycling recovery surcharge. We had that in place, I think for the last year and a half, if not two years. We've actually, you know, readjusted that one a few times already this year. For the Service Cost Recovery Fee, something similar. You make your estimates last November for what you think you want them to be coming into January first, and then you see that January isn't matching, you know, inflation continues, there's still issues, so we've made adjustments. I would say that towards the latter half of Q1, certainly into Q2, a good bit of these are in full force with the contracts that are available to take them. I think that's what gave us confidence as we looked internally, you know, to reaffirm guidance. We believe that that flexibility in turbulent times, as we can continue to adjust, affords us that opportunity. Okay. Thank you. Then the driver shortfall earlier in Q1 you mentioned, and the significant improvement you've seen subsequent starting in March, can you put some numbers around that? How much of a drag did that create on costs early in the quarter, and how much has that now reversed out as you exited the quarter? I guess you said labor was a $11 million headwind in Q1. How much should that abate, you know, as we kind of roll forward into Q2? You know, Sean, I'll start just with some directional, and then, if there's anything else that Janet wants to add, she can. You know, our average was 21% down in drivers due to a good bit of it was we came in down this year because of the driver shortage. We've been running, you know, less than optimally because of that. This is. We were hit with Omicron. This was the most impactful COVID disruption that we've had since the beginning of the pandemic. When we had, you know, 21% on average across all of our facilities short of just drivers, that isn't the company-wide workforce, just drivers. That meant, you know, a 79% average of people available to work, and that wasn't the same across every building. We have some facilities with, you know, as few as eight and 10 drivers that, where we had two drivers, you know, available to work on any given day. When you see that, we jumped into protect the customer mode. In order to do that, you know, we infused travel cost, expense, moving management people, moving support staff, whether it was flying people to more challenged areas, whether it was driving people, putting people up in hotels, doing the things we need to do because we realized with as many national and big customers, and then quite frankly, even just local customers, everybody depends on us to make the service that they expect. I know our teams worked tirelessly. There was a tremendous amount of overtime. There's a lot of working on Saturdays, a tremendous amount of working on Sundays. When you put that type of effort into it, obviously it shows up. I can tell you anytime you go from 21% as an average and it has quieted down, and now it certainly isn't optimal, but when you can cut it to 12%, there will be easing of the travel expense, and of all the other, there'll be easing of overtime. There's gonna be some easing of some of those other pressures. Janet, any other specific color? Yeah. You also asked the trajectory here. We are seeing easing and momentum, you know, as we mentioned in pricing, but also in the cost easing. We still expect the H1 this year to be lower than, you know, the H1 of last year because we start lapping two key things. We have the ERP cost that is now in our normal operating expenses, and we had, you know, very little inflation in the Q2 last year. We actually started to see that increase in the Q3 and then the Q4 into this quarter. You're gonna have a natural overlap of that. We'll probably see some inflationary pressures just like every other company in the Q2. That will be about the pricing actions being strong and us mitigating the costs that we saw due to the acute labor challenges we had in the Q1. Those are the two key dynamics. Yeah. The only other color I can give you, Sean, is this. In March when we started to get some folks through the door and our HR team was really pulling through some candidates for us. An awful lot of the new folks that we bring in spend the first, you know, bit of their training sitting in a seat with another driver, you know, still doing just one route. When you talk about the tremendous amount of onboarding costs, training costs, testing costs, a lot of the other things that we saw with, you know, with the efforts that the team put through, you know, as we get back to a normal rhythm of hiring, I think a good bit of those types of things, you know, don't have the same trajectory. Okay. That's very helpful. Thanks again. Thanks much. Thanks, Sean. Thank you, Mr. Dodge. Again, be mindful to limit your questions to one and one follow-up question. The next question comes from the line of David Manthey with Baird. Please proceed. Yeah, thank you. Good morning, everyone. Do the pilots you're running this year make up a material percentage of overall revenues of RWCS? No, they don't. It's interesting. We were able to find discrete areas that had small revenue impact but covered the capabilities that we needed to test. Right. Which is ideal for a pilot situation. The risk profile is not high on the revenue, but they do accomplish what we're attempting to accomplish, which is testing capability. They're small but complex. Yeah. They do all the waste streams. They have all the complexity with the data requirements. Some even cross over and combine and have a shred component to it. For us, they're really good microcosms of what we're gonna see. Okay. For my follow-up, I've got a two-part question, so I hope they'll allow me. Go ahead. the time here. Yeah, go ahead, Dave. Go ahead. Go ahead. The first part of it is, yeah, Cindy, you mentioned easing in terms of the driver situation, and my sense is what you're talking about is turning overtime hours into normal full-time employee hours. Probably, you know, it's more expensive than your base, but it's less expensive than overtime. Can you put a metric around that? When you say that situation is easing, what's the net uplift you're getting on the cost side from an improvement in that driver metric? You know, I think, you know, Dave, at this point in time, one of the things that I can say is this: It has eased. Anytime you go from being down, you know, having 79% of the workforce show up to be able to drive to 88%, you know, you get some improvement. However, we still do have more overtime than we should. We still do have hiring that we have to do. I don't think that we actually, you know, have it down pat yet as far as exactly what is that gonna be. I just know that, you know, we've seen our ability to see some reductions in overtime. We see our ability to travel and expense. I think it was a tremendous headwind for us that really wasn't expected for the first portion of Q1 for us to deal with. I don't think we're certainly not out of it yet. Janet, any other specifics? Yeah. When you look at the drivers of that, wage adjustments we expected. We knew we were investing in wages, which everyone do as we went into the year. The overtime was higher due to the impact of the Omicron, you know, going into the shortages, and the employee onboarding costs accelerated, which is actually good news for us. I would say, if I had to guess, most of it, I would say about half is in the wages side, which will continue, but we had planned for to cover, and the other half was in the overtime and onboarding costs year-over-year. That would be my best estimate on that of that $11 million that you saw in the wage inflation that we saw year-over-year. Okay, that's helpful. I guess the ultimate question here is you reiterated the guidance, and I'm trying to understand where that confidence comes from. I mean, we're sitting here at $0.32 EPS. You need to get well over 50 on average for the remaining three quarters to get to the low end of the range. I mean, we just talked about one of the items, I guess this $25 million will help. That's $0.06 or $0.07 a quarter. I'm just trying to bridge the gap to get from where we are right now to where we're going, and what's the mechanism or the key mechanisms that drive that type of improvement from here? Yeah. There's three aspects of this. There is the pricing leverage. We quantified the one which is the fastest you can put in place, other than for the, you know, new rate cards, which is the surcharges. That was not even including the fuel surcharge, which does cover our costs, and we've had for a while. The other two levers are powerful as well. When you look at all three pricing levers, they give us the momentum to have flow through to cover costs. Two, we're seeing, subsiding of some of the, you know, acute situations that Cindy said in the Q1, and we have planned for the other inflationary elements. Third, we also have the year-over-year, you know, comparative in the H1, that we, you know, ease in the H2. We see productivity kicking in, which is what we were missing in the Q1 because any productivity we're gonna gain was chewed up by the travel costs and the shortages and everyone just doing their best to service the customer. Those are the levers that are normalizing and we can gain traction on, and we have planned to gain traction for anything that we saw in January and February as we leave March with momentum. Okay. That's helpful. Thank you very much. Thanks, Dave. Thank you, Mr. Leach. The next question comes from the line of Scott Schneeberger with Oppenheimer. You may proceed. Thank you very much. Good morning, all. I guess I'd like to start first on the destruction side of the business. Yeah, I think, Janet, you said service revenues were up, service stops up slightly. Could you just speak to the demand environment, you know, with reference to work from home and how you see that trending? It sounds like pricing's up a little bit more. If you could just speak to some of the initiatives there. Thanks. Yeah. Just for all the listeners, our secure information destruction revenue is split into two parts. It is the recycling revenue we get from recycling the paper where we have, you know, contracts that are, you know, SOP or Sorted Office Paper-based, and that was up significantly. Volumes were down, pricing was up. On the service stop side, where we get paid by the stop, in North America, our service revenues were up 2.8%, and they were up higher internationally. In North America, I did say that the service stops were up slightly higher. We are seeing continued recovery in that space, and we're pleased by what we're seeing there. you know, really nothing to call out other than shredding continues to deliver what we expect it to deliver, and we'll gain momentum through the year. Okay. Thanks on that. You'd mentioned a moment ago that your fuel surcharges have been in place, and it sounds like full coverage. Could you speak again on, or just elaborate a little bit on how they're structured? On the full coverage, is there much lag? Then kind of a bigger question to that is, what is energy, and what types of fuels, as a percent of total company costs? And if you can break that out at all. Thank you. Yeah. Fuel used to be a little under 5%, and now it is at 5% of our overall cost of revenue. The fuel surcharges are constructed, as Cindy mentioned, in parts of our regulated waste services business and pretty much all of the secure information destruction business. The way they are indexed, they pretty quickly cover, you know, the cost, maybe a one-month lag at most, depending on how the index is going. Those have been in place for a while, so they've always been part of the margin, you know, kind of flow through components if you look at our basis points. You might see as the cost increases in the base, you know, a slight, you know, change in the margin, but it's not like other companies that are just putting these in place now. They've been part of our dynamic for a while. Did that help answer your question? Great. Thanks. Thanks. Yeah. Yeah. I appreciate that color. Yep. I'll turn it over. Thank you. Again, ladies and gentlemen, if you would like to ask a question, please press star one. The next question comes from the line of Alexander Leach with Berenberg Capital Markets. You may proceed. Morning. Thanks for taking my question. Just to clarify, on the last question, the surcharge surrounding fuel costs. It sounded as though last quarter that you could only utilize surcharges with some customers, but by the sounds of it's now or not now, but it's almost all customers that experience a surcharge on fuel. Is that right? No. What's interesting is we do have it on a portion of our Regulated Waste, and we have it pretty much across our Secure Information Destruction, but those two combined cover our fuel costs. We feel that we're appropriately covered, whether you have full coverage by a customer or not. That has been an existing dynamic for a while. I hope that clarified it. Right. Yeah. That's useful. Thanks. I was just wondering, you know, what proportion of contracts are you amending at renewal versus anniversary? You know, is there not a concern that it's gonna take longer than half a year to build in pricing flexibility into contracts, given that they range from, you know, three-five years in length? No, I think. You know, that's a great question. Conceptually, every contract that we have, and an overwhelming majority of the contracts are roughly three years in nature, some are longer, but not most. Every year they do have an anniversary, and it's at those anniversary dates that we have an opportunity to you know to take a look at economic conditions and then be able to pass some charges through, whether it's a CPI or whatever. There's a steady flow every year, as is the normal rhythm, even last year or the year before. As we've gotten better with our contractual language, it's been easier for us to be able to have those anniversary, you know, CPI infusions and then for the renewals, you know, to go through, whether it's negotiation or whatever, to talk about new terms and conditions for the contract moving forward for the next three years. I think it's been a normal rhythm, and it is pretty steady throughout the year as we're signing up, you know, many customers today for a brand new day, and we'll do the same thing tomorrow and every day as the calendar flows. If I could just slip one more question in. Sure. Just on, you know, staying on the topic of pricing, you know, historically there's been a proportion of customers that have been a little bit more price sensitive than others. You know, is there any concern that, you know, if you put through a number of surcharges through to customers that, you know, leveraging any further pricing will be difficult in this market? Yeah, I think. Yeah, it's a great question. In terms of who Stericycle is today, we're very aware of several things. We're aware of the engagements with our customers as well as the competitive conditions of the marketplace. Like everybody that's in our market and certainly, you know, adjacent markets or even completely different markets, everybody's experiencing these same types of pressures. So to a customer base, you know, it's engagement with them. It's making everybody aware. It's having conversation. It's doing the things that you need to do as all companies are right now in order to, if you will, push through what they're seeing in terms of headwind pricing. So that's, you know. We don't. We are, I think, going about it in the right way in terms of engaging with our customers and then also understanding what the market will bear. Yeah. I also would say that most customers across all segments, including hospitals and others, are seeing price increases, so they understand the nature of the underlying costs that are happening across the board. You know, we have a very good acceptance rate. A lot of what we said, of the $25 million that Cindy mentioned in script, is already in market. Okay. Great. Thank you. Thank you. Thank you, Mr. Leach. I would now like to pass the conference back over to Cindy for closing remarks. Thank you, Jaquita. To everyone listening to this call, we greatly appreciate your interest in Stericycle and your shared excitement in our future. Thank you very much. That concludes the Stericycle Q1 2022 earnings call. Thank you for your participation. You may now disconnect your line.