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 1 on your telephone keypad. I would now like to hand over to Andrew Ellis, Vice President of Investor Relations. The floor is yours. Please go ahead. Good morning, thank you for joining Stericycle's 2023 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 and our earnings press release and in greater detail within the risk factors in our filings with the US 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 will reference specific slides from the presentation. This call is being recorded and a replay will be available approximately 1 hour after the end of the conference call today until May 25, 2023. A replay of the webcast will be available on Stericycle's 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 Stericycle 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 Q1 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 Q1 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 U.S. 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 x, a 23-point improvement since year-end, and we remain on track to achieve our 3 x 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. Thank you, Cindy. I will start by summarizing our Q1 results. As noted on slide 5, revenues in the Q1 were $684.3 million compared to $664.2 million in the Q1 of last year. Excluding the net impact of divestitures of $16.6 million and unfavorable foreign exchange rates of $10 million, organic revenues increased $46.7 million. Of this increase, Secure Information Destruction organic revenue growth was $24.9 million and Regulated Waste and Compliance Services organic revenue growth was $21.8 million. As noted on slide 6, Regulated Waste and Compliance Services revenues were $451.3 million compared to $452.6 million in the Q1 of 2022. Excluding the impact of divestitures and foreign exchange rates, organic revenues increased 5% in the Q1. In North America, Regulated Waste and Compliance Services organic revenues increased $22.4 million or 6.5%, mainly driven by our three pricing levers, which include pricing in existing contracts, new customer pricing, and surcharges and fees. International Regulated Waste and Compliance Services organic revenues declined $0.6 million or 0.7% in the Q1. This decline was due to lower waste volumes compared to the Q1 of 2022. Secure Information Destruction delivered revenues of $233 million compared to $211.6 million in the Q1 of 2022. Excluding the impact of foreign exchange rates, organic revenues for Secure Information Destruction increased 11.8%, mainly due to pricing and higher recycled paper revenues. In North America, Secure Information Destruction organic revenues increased $24.3 million or 13.4% compared to the Q1 of 2022. Of this 13.4% growth, service revenues contributed 10.8% and recycling paper revenues contributed 2.6%. The service revenue growth was mainly due to our three pricing levers, including fuel and environmental and recycling recovery surcharges. Recycled paper contributed approximately $4.8 million more than in the Q1 of 2022, reflecting mainly higher SOP pricing. In international, Secure Information Destruction organic revenues increased $0.6 million or 2.1% compared to the Q1 of 2022. This change was mainly due to pricing levers offsetting reduced volume. Income from operations in the Q1 was $40 million compared to $5.9 million in the Q1 of 2022. The $34.1 million increase was mainly due to gross profit improvement of $16.5 million, primarily driven by revenue flow-through and lower selling, general, and administrative expenses of $22.6 million, mainly due to lower adjusted items and bad debt expense. These were partially offset by a divestiture loss of $5 million. US GAAP net income was $11.2 million or $0.12 diluted earnings per share compared to a net loss of $14.2 million or $0.15 diluted loss per share in the Q1 of 2022. The $25.4 million increase was mainly due to higher income from operations of $34.1 million, as I previously explained, partially offset by higher income tax expense of $5.6 million and interest expense of $4.1 million. Cash flow from operations for the three months ended March 31, 2023, was an inflow of $49.5 million compared to an outflow of $38.8 million in the same period of 2022. The year-over-year increase of $88.3 million was mainly driven by accounts receivable of $32.9 million due to an improvement in days sales outstanding, higher operating income of $30.8 million, lower annual incentive compensation payments of $22.3 million, and other networking capital improvements of $2.3 million. Adjusted income from operations was $84.7 million or 12.4% as a percentage of revenues, up from $59 million or 8.9% as a percentage of revenues in the Q1 of last year. Adjusted income from operations increased 350 basis points as a percentage of revenues due to the following. One, gross profit flow-through of approximately 130 basis points mainly due to pricing. Two, lower selling, general, and administrative expenses of approximately 210 basis points, mainly due to improved operating leverage against higher revenues and lower bad debt expense. As noted on slide eight, adjusted diluted earnings per share was $0.49 compared to $0.32 in the Q1 of 2022. Excluding the impact from divestitures and foreign exchange rates of $0.02, the remaining $0.19 year-over-year increase was driven by $0.20 from gross profit flow-through, $0.01 from lower selling, general, and administrative expenses, and $0.01 from lower income tax expense and other. These were partially offset by $0.03 from higher interest expense. Capital expenditures for the three months ended March 31st, 2023 were $36.4 million compared to $37.5 million for the same period last year. Free cash flow for the three months ended March 31st, 2023 was an inflow of $13.1 million compared to an outflow of $76.3 million in the same period of 2022. As noted on slide nine, the year-over-year improvement of $89.4 million was mainly due to higher cash flow from operations of $88.3 million. Our Q1 DSO as reported was 56 days compared to a DSO of 63 days in the Q1 of 2022. The difference was mainly driven by prior year timing of North America's Secure Information Destruction customer billing and collections. As shown on slide 10, at the end of the Q1, our credit agreement defined debt leverage ratio was 3.05 x, and our net debt was approximately $1.45 billion. As Cindy noted, we divested operations in Brazil in April for cash consideration paid of approximately $28 million. The cash consideration included coverage of debt-like related long-term liabilities, which will be removed from our balance sheet in the Q2. The transaction is expected to result in a Q2 divestiture pre-tax loss of approximately $100 million, mainly due to non-cash accumulated foreign exchange adjustments of $72 million. In 2022, the business in Brazil was unprofitable, unfavorably impacting adjusted EBITDA margin by approximately 20 basis points on a consolidated basis. In April, we made substantially all of the remaining FCPA settlement payments, which totaled about $8 million. Our Q1 results were aligned with our full year 2023 guidance as shown on slide 11, and our guidance ranges remain the same. I will now turn the call back to Cindy. Thank you, Janet. Earlier this month, we had an opportunity to host a senior leadership summit, which was attended by over 300 leaders across our organization. This was an amazing opportunity to celebrate the progress we've made in transforming this business over the past few years and engage and energize the team on advancing the next aspects of our journey. As always, I'd like to thank our customers, team members, 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. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Today, we ask you limit yourself to two questions and one follow-up. Our first question today comes from Sean Dodge from RBC Capital Markets. Your line is open. Yep. Thanks, good morning and congrats again on the great progress in the quarter. Cindy, maybe just starting, if we could start with an update on the inflation or the cost backdrop. You know, I guess diesel's been in a pretty steady decline for six months now. What's labor been like and how costs been trending for trucks and supplies? You know, I guess the surcharges and structure you have in place now, are those sufficient, you think, to continue offsetting all of this? You know, are these not normalizing fast enough where you think there still needs to be some work done around, maybe incrementing some of those out? Sean, thanks for that. That's a great question. Actually, what we are seeing is, you know, inflation, we still see it in and it's not equal across everything, but I'll give you an example. While we are starting to see some of our vehicles that we had ordered come in, so a little bit of supply chain ease, the one thing as we are seeing continued inflation is when we look at maintenance costs and we look at rental costs, they still are pretty elevated. For us, you know, that's something that really hasn't changed. It behooves us, you know, we're gonna be in much better stead once we get that full vehicle fleet or vehicle order in, so that we kind of get out of the rental business, and then we've got newer vehicles that will not have as much maintenance required. If you take a look at inflation rates that are in a lot of the leases for our facilities and a lot of other things that we signed that came up for renewal during times when inflation was exceptionally high. If you wanna say even, Q1 of last year when it broke a 40-year record high. We still have leases that are gonna continue with some of those pricings in there because you obviously sign them for, you know, a certain year period. You had mentioned wages. I think the good news on wages for us is our staffing has stabilized. You know, as I've always said, with a stable workforce, you know, you can start to make some efficiencies and really drive some good things. However, you know, that stability has come at a higher wage rate, kind of a run rate than we've seen. I don't see that getting, you know, We're not saying that's getting any worse. We're very pleased with where we are. Obviously, those continue to be in the run rate of the business. Overall, I think there are still some pockets where we're seeing, you know, some pretty strong inflationary pressure. We'll see how that continues throughout the rest of the year. Okay. Just clarifying. On the contribution from the two surcharges, Janet, I think you said 130 basis point lift to gross margins in the quarter. My math would put that at about $9 million. That would be down just a little bit from the $10 million in the Q4. Is that just because there was some pickup you captured early in last year, and so the $9 million would be incremental? Or why else would that decline sequentially? You know, if we think kind of this year, you shifted the SOP schedule up again. I think that went into mid-February. With that in place now, how should we think about kind of surcharges, those contribute incrementally in Q2 and maybe over the remainder of the year? Yeah. As you think about Q1 and our ability, we put surcharges in in RWCS later in the year. We didn't have any in the Q1 of last year to speak of in RWCS other than some existing legacy. We continued to modify the floors that are existing on the SID surcharge for paper and just continued to tune all our pricing levers that we had, which are three through last year. What you're seeing is the benefit of all those levers hitting Q1 very solidly, where we didn't have as many in place or, you know, and some were not even existing in Q1 of last year. Sequentially, you're going to get noise just based on, you know, what's happening in the, you know, the scheme of things. We're really pleased that the sustainability of the surcharges, and as we go forward in the year, you will see that, you know, we're gonna lap some of that pricing that we put in the market in, particularly in the second half of the year. That's why the Q1 is looking, you know, that strong in that surcharge range. Okay. great. Thanks again. Thanks, Sean. Our next question comes from David Manthey from Baird. Your line is open. Hi, good morning. along the same lines here, when you think about approximate contract pricing, so the other two levers beyond surcharges, when we think about the 5% organic growth in RWCS, approximately how much do you think is related to those new contracts that are priced higher? When you think about those two levers of pricing, I assume some of that carries through the year. You probably have additional actions through the year. Does that remain constant or move up or down? Yes. You know, if you look at our 3%-5% growth rate for the year, we are reiterating that, and that's because you're gonna stop some of the pricing actions. However, we continue to leverage both of those pricing levers, which is renewals, and also in the beginning of the year, the CPI that we put in contracts, renewals at higher pricing, and continue to tune surcharges according to what we see in inflation. I'll turn over to Cindy if she has any other thoughts. Yeah. I think too on the RWCS side, David, it's important to note, as we had said, you know, Q1 of 2022 was a very difficult quarter for us. You know, if we take a look, I, you know, I mentioned the inflation. We had tremendous staffing issues. There were just major supply chain disruption. Really, we were still kind of getting our sea legs from the ERP deployment in shred. Well, that's on the shred side. On the RWCS, I think as we move throughout the year, a positive note, I think, is the return of elective surgeries as we move through. This won't be purely- Our plan is not to have it purely be a price story, which this year's quarter-over-quarter turns out to be as such simply because we didn't have those pricing levers in Q1 of last year. We see and we're very encouraged by the return of elective surgeries. All hospitals don't rebound at the exact same time. However, we built into this year's plan the thought that surgeries would come back. For us, it was a positive sign that we're seeing that. I think, you know, RWCS is well-positioned to continue to hit the plan for end of year. Okay. Thank you. Second, Janet, when we used to ask about long-term EBITDA margin targets, you would tell us that most of the free cash flow improvement you expected to see was due to higher profitability across the P&L. Then we could back into EBITDA margins of low to mid-20s. Does that map still hold for the changes that have happened to business as well as the adjusted free cash flow targets that you moved last quarter? Just trying to get a read on ultimately where we're headed. Yeah, our long-term outlook stays the same as that I issued in February. Does that answer your question? It is that. I believe it does. Yeah, 13%-17% adjusted EBITDA growth rate, which drives those higher margin rates and the free cash flow conversion rate- Yeah ... of 50%-60%, with the following then and through 2027, and then an annual CAGR of 3%-5% in revenue growth. Those are all. Yeah, directionally, David, you're definitely. You're on track. Yeah. Yeah, sounds like it's in the same ballpark. Okay, thank you very much. Yeah. Thank you. Our next question comes from Scott Schneeberger from Oppenheimer. Your line is open. Thank you. Good morning. For first question, I guess I wanna focus on Regulated Waste, organic growth acceleration looked good. How did that compare to your internal expectations? What were some of the drivers? Then kind of separately as an add-on on that theme, what are you expecting out of used paper prices just going forward? What are you seeing on that trend? Janet, maybe now a commentary on what% the surcharges cover on that. Thank you. Yeah. Yeah. Scott, this is Cindy. I'll take the first part of your question. I think we're pleased with RWCS. We are on track with our internal expectations. Again, I wanna say, you know, if we look at Q1 of this year versus Q1 of 2022, everybody, not just Stericycle, everybody woke up to over 9% inflation. It takes a little bit for anybody's pricing machinery to be able to implement if a company's gonna make any changes. It takes a little bit of time, whether it's contractual language, whether it's sitting down to figure out exactly where are the costs coming from, you know, what's the best strategy moving forward. Our year-over-year Q1 versus Q1 comparison is, you know, certainly skewed heavily towards price on both the shred and the RWCS side. We built that in for this year. Our plan is, you know, we plan on delivering, which is why we reiterated our guidance in terms of, you know, what we're gonna grow on 3%-5%, you know, right down through with adjusted EPS, free cash flow, et cetera. I think overall for us, it was a good execution quarter for us in terms of not looking at it compared to a weaker comparison, but looking at it internally, we're pleased. We believe we've made some solid progress on a good bit of the key priorities and certainly, you know, driving towards making this year's goals. In terms of the coverage of the paper surcharge and where we see paper rates going, I'll start with the paper rates. We updated our footnote in the guidance to say we looked at the recent paper trends as we look forward, and we still kept our guidance ranges the same, which means that we're able to manage that. The reason we're able to manage what we're seeing as a recent decline from our original SOP paper rates is the ability of the surcharge to cover at least 50% of that on a revenue basis as it goes down. That shows up on the service revenue versus the paper revenue, whereas where price shows up. Yeah. I think, I think, Scott, one of the other things, I'm not quite sure if this was also what you were asking. It still works out to be about 90, let's say 90%, is a service fee-based revenue stream, and about 10% is from the RISI rate from the surcharge, or from the RISI rate itself. Yeah. The, you know, times the volume of the paper. Okay. Thanks. Appreciate that. I wanna touch briefly on divestitures and just kind of inorganic profile. Brazil being the last in Latin America, just curious commentary, what should we expect on divestitures going forward? What inning are you in? What would be left there? Any consideration on acquisitions at this juncture of tucking anything in? I realize you have a lot going on going into the summer, but just thoughts on the inorganic side. Thanks. Yes. Scott, great question. I think for us, obviously we've said core is the shred business as well as RWCS. We continue to look at all the markets and take a real good market analysis as to where's our opportunity, not just to grow, but to grow profitably in terms of our expectations for us to really drive the company forward to hit the long range plans. You're right. We've had 13 divestitures since 2019. However, we've also had one acquisition. That's why we changed portfolio. We changed it. It originally came out as portfolio rationalization, you know, we started the engine of divestitures. Then we morphed it to optimization because we realized that couple things had to happen. Number- It started with, we had to get a stronger balance sheet. Once you get a stronger balance sheet, once you get a more control of, you know, of the financing, you have greater flexibility. For us, we continue to evaluate all of our opportunities. I think we've shown a pretty strong track record in terms of certainly the divestitures, but even the acquisition, which has been contributing nicely. For us, I think we continue to have portfolio optimization as one of our five key business priorities for a reason. To your point, we are looking and evaluating everything. You did bring up one very good point, though, Scott, that I think is important to note. As we come into Q2, we are looking to deploy the larger portion of our business on the ERP for the second half of this year, which means starting in Q2, as you start training, as we start getting into that rhythm before you flip a switch, many of our people who already are doing great things, you know, working very hard, they will now start to take on two jobs. You know, if I look at the engineering department, if I look at, you know, a lot of the operators, if I look at a lot of the, our IT folks. You know, those folks have a great job right now, and they're working very hard. That ERP deployment means Q2, they start to take on additional responsibilities, and we start to borrow from Peter to pay Paul in terms of applying resources to the immediate at hand. For us, whether it's, you know, acquisitions or divestitures, like you said, the group will be quite busy as we continue to move through the year. Thanks. Appreciate it. Great job on getting that leverage down too. Congrats on that. I'll turn it over. Thanks. Thanks much, Scott. We appreciate that. Our next question comes from Scott Levine from Bloomberg Intelligence. Your line is open. Hey, good morning, everybody. Morning. Good morning. I wanted to drill down on the pricing just a little bit more. I don't know if you can estimate for us how much of this is sticky versus temporary pricing that you think might have to be adjusted downward if we see inflation abate in a meaningful way over the next few quarters? Yeah. You know, Scott, that's a very good question, and we have been—y ou know, certainly anytime that you put price increases into the market, whether it's in your base rates or whether you're looking at it in terms of surcharges and fees, you always have to look, you know, forward. You have to be able to say, "Hey, what's happening in the market? Where are we? What's happening with customers?" For us, as we come into this year, what we're starting to do and what many companies do is you start to take a look at where is your base rate and figure out what's the adjustment that needs to be made with the base rate so that you're not necessarily just looking at surcharges and fees. You've got to be reasonable enough in there that you have flexibility throughout the year based off of what the market gives you, to your point, hey, what's sticky and what isn't? I think as we continue to win new business and we look at growing the volume portion of the business that is in new sites, remember, we measure volume in terms of actual, whether it's a ton of paper or it's a pound of waste. We also measure volume in terms of are we winning new customers? What is the volume of new customers we're bringing into the fold? For us, we're starting a, you've got to have a complex strategy that also helps combine, what you're looking at, and what you're selling at in terms of your base rates so that you can start to see what will the market bear moving forward, outside of, you know, something that's based on whether it's a paper price or it's based on a fuel index or it's based on inflation. I think key point, for you to bring up, and I can tell you right now, while I can't give you the exact science to it, I can tell you it's something that we are looking at every day. I'd just add for in the Secure Information Destruction surcharges, we have two that are fuel and the one that was paper that I mentioned earlier. Those flex with commodity prices, but we keep tuning those based on, and we keep penetrating the market based on those as well. Got it. Great. Thank you. I know you guys don't really focus on breaking down like the smaller customer side versus larger customer side much, but I was wondering if you can say whether there's any meaningful difference in trends you're seeing between either of those categories of customers. You know, my sense was that the hospital side was where maybe you were seeing more pressure, maybe that's improving a little bit more, but any more color you can provide regarding, you know, that customer, you know, segmentation would be helpful. Yeah. I think, you know, That's pretty insightful, Scott, in terms of how we look at things. We're looking at hospital accounts, so, you know, the really big hospitals, the IDNs, the big networks. We are looking at national accounts, you know, a company that would have a, you know, a need for us in a lot of different cities, but they may not be really big places. We look at the independents. Those are more the, you know, the doctors, the dentists, those types of offices that we see, you know, certainly in downtown, but then also in the rural parts. I think what we are seeing is not all things, and I said this earlier, not all regions and not all areas of the country are equal. We're seeing some areas where some of the hospitals have shut down some of their satellites, if you will. I wanna say kinda getting smaller and stronger. We are seeing some similar things with some of the independents. However, in terms of what are we winning and at what price are we winning, we're very pleased with the commercial organization and the rhythm that they have going right now, really driving more metrics into the business, really driving more information that we're getting from the market based on the technology that we currently have, and really making some better strategic regional decisions in terms of pricing for us to be able to win profitably. I think we are maturing in that process right now. I would say, you know, we're winning across the board in those three segments, specifically in RWCS. I think that's attributable to really the maturity of the quality of revenue rhythm that we have going over these last few years. Understood. one last one if I can sneak it in on the- Sure. Go ahead. ... so the leverage, you know, I don't remember if you had a target on where you expected leverage to hit by the end of the year or anything along those lines, but obviously the leverage has come down meaningfully. Just wondering if there—y ou know, on the capital return side, I'm guessing there's nothing to you know, think about for this year maybe, but for next year. Is there any elaboration you can provide, whether your thoughts on the capital program and whether, you know, capital returns may be in the offing for 2024, if not, second half of this year? Thanks for the question. We're pleased with the 3.05x. We did have a target to achieve 3 x by the first half of the year, with a chance of it in the Q1, and we came awfully close. That was our target. We still anticipate getting to that 3 or below by the Q2 of this year. After that, we're gonna be focused on investing in ourselves for the rest of the year and the ERP deployment. The free cash flow generation that we have will continue to be used to pay down debt or our capital program internally. As we get to 2024, we may have opportunities for other use of capital. As you mentioned, we haven't really refined that to a, you know, discrete menu. However, what would be on the menu? As Cindy said, we've changed portfolio rationalization to portfolio optimization, so there's potentially opportunity for tuck-in acquisitions. Yes, you have the rest of the menu of options. You know, as we mature on that and get through this year, we're very head down on delivering what we said we're going to deliver. Those are options we will have in the future to explore. Got it. Great. Thank you. Thanks, Scott. Thank you. Our next question comes from Tobey Sommer from Truist Securities. Your line is open. Good morning. This is Jack Wilson on for Tobey. In terms of the 3%-5% organic revenue guidance for 2023, how should we be thinking about the growth cadence for the remainder of the year with the one to two growth and the return of electric surgeries built in? I think, Jack, welcome. It's nice to have you. We're looking forward to engaging with Tobey. Just I think a couple of things that we have to really temper and take a look at. We've got a major deployment for a technology system, our ERP portion, going in for RWCS in the second half of this year. We've built a lot of things into this year's plan, but we believe that, you know, all things aren't equal. Remember, this quarter shows, you know, shows really big numbers in terms of revenue growth, but it's compared to probably one of the most difficult quarters I think we may have faced in Q1 of 2022. I think what's more important is what are we looking at for 2023? We see positive signs in terms of hospitals getting their shoring up their staffing. We see positive signs in terms of people starting to go back for elective surgeries, remembering that it isn't the same for every hospital. It isn't as if a switch flipped and now everybody's back. But as the hospitals recover, we are well-positioned to take advantage of that, knowing that as soon as we get into the second half of this year, really with preparation in Q2 and then deployment in Q3, you know, we've got a few other things that are gonna be going on while we continue to service the customers that we have. A lot to balance here, but I think a 3%-5% growth in terms of, in terms of the target is a good number for us to drive for, towards. Okay. That makes a lot of sense. Just maybe one on sort of the new facilities coming online in New Jersey and Nevada. How should we be thinking about the regulatory environment in terms of getting these facilities sort of completed and online? I, you know, I think anytime anybody talks about, you know, regulatory and trying to get something passed, there is complexity there. The good news for Stericycle is this is where we live. This is the arenas in which we live, providing a very vital service to communities where all of our facilities and where we do our work. For us, we're very pleased with the progress. Specifically, if I could just mention McCarran, just as McCarran, Nevada is gonna be about a 100,000 sq ft facility. We're gonna have two incinerators there. It's one of those where it is a waste to energy plant. We're gonna recycle all the water that's used to process the waste, so it'll be a zero process water discharge. It's expected to be the cleanest med waste incinerator. I think it's exciting for us to see things advance. We've got a very strong public relations and public affairs team that right now are certainly working with our operators to make sure that we're. You know, it's important not just to have a facility. You've got to make sure that you've got all the permitting, and we are well on our way, you know, to have that happen so that we can have McCarran open sometime in first half of next year. Excellent. Thank you so much. I'll turn it over. Thanks, Jack. Our next question comes from Kevin Steinke from Barrington Research. Your line is open. Good morning. Good morning. In terms of Secure Information Destruction, you know, you're about, I guess, 18 months out from the ERP deployment in that business. Just wondering what you're seeing in terms of your ability to drive new customer growth in that business, you know, maybe based on insights you're gaining from the ERP and, you know, just how would also are return to office trends playing into, you know, the volume outlook and, you know, potential new customer growth? You know, Kevin, that's Really good question with reference to the 18 months. One of the things that I think we are very, we're happy about, anytime people come back to the office, you know, that's a good sign. I also have noticed, and I'm sure many of you have too, that for everybody that's coming back to work, there is another company that's announcing, you know, some pretty big layoffs. It isn't as if, you know, the world is looking anything like 2019 yet. However, I think anytime, as I said, folks come back, that's great. Your question was, where are we with the ERP deployment? Here's what I think I'm most proud of. In that 18 months, we've gone from, "Hey, everybody, here's an issue, here's a bug in the system, let's fix it," to now we are, with the technology, we're now looking at all the enhancements that we can make, which is really where you wanna be in that kind of crawl, walk, run scenario. You start off fixing, you know, what bugs are in the system, and then you figure out, okay, this is running, you get it running smoothly, everybody becomes comfortable with it, you start to understand data, and then you see, all right, with this data, if I had this enhancement, I would get that much more granular, and I'd be able to fix something further upstream than what I can see right now. I think we've morphed from the fixing things into the enhancing things, really starting to leverage data. We're looking at everything from route rebalancing, certainly on the operations side. I think the other question you asked is, we are also now leveraging a good bit of that technology to improve the commercial rhythm, the sales rhythm. One of the things that you would have noticed is on quality of revenue, we talked about improving customer implementation velocity. Well, that really means from the time, as an example in Shred, somebody signs up a customer, how quickly can I get out there to make that first service? When you're very manual, that can be very cumbersome and very labor-intensive. Right now with technology, that is affording us the opportunity to reduce that, or speed up, I should say, to improve the velocity from the time of sale to the time we're actually servicing a customer. I think leveraging that ERP, we are hitting on the cylinders that we had outlined, and I still think that there's some runway for us to continue to improve. Okay. Thank you. That's all I had. I'll turn it back over. Appreciate it, Kevin. Our next question comes from Brian Butler from Stifel. Your line is open. Good morning. Thanks for taking my questions. Hi, Brian. Just on the first one, I know margins aren't really broken out between the two segments, but when you think about them, you know, in the improvement that you saw in the Q1, any color we can see on how Regulated Medical Waste or the SID kind of are trending? Are they moving apart or are they still kind of in, you know, very close? Yeah. Both are in the same range of margins, and they both are staying aligned in that range. Both are good margin businesses, and that's why we consider them core and you're not seeing a divergence there. The, you know, the difference is a little bit more on cash because SID is a lighter cash investment model than RWCS as we modernize it. Both generate cash, and SID is a nice contributor for our investment thesis that we're doing across both core businesses. Okay. Then you talked about elective surgeries kind of improving in the back half, and that was kind of built in. Do you have any color on the maritime activity and where that stands and how that fits into the guidance for 2023? Yeah. I think we're seeing any time that customers are coming back and taking cruises, it's good news for us. I believe that remember, sometimes that revenue has a hint of seasonality to it, but I think where we are internally with reference to maritime, we're very pleased in terms of the growth in terms of the amount of cruise ships that are out and running and our ability to continue to process it. It's maritime's a good news story. Okay. Maybe, my last one to follow-up. I know you talked about the optimization of the portfolio, just wanted to make sure I understood. Is there anything really less outstanding? Obviously, you're looking at all the time what fits best, is there any big items that remain or really you've pared down now to what you see as kind of the core? You know, Brian, great, good question, but unfortunately not one that I'm gonna be able to answer in terms of giving you specifics. The last thing that Stericycle would ever wanna do would be to put out there, something that is potentially, you know, that we're looking at on either an acquisition or a divestiture, you know, certainly prematurely. For us, we just continue to look at the market. We continue to drive, you know, a creative revenue. We continue to drive the commercial organization as well as the operations portion, to work as efficiently and as they possibly can. So within those parameters, we've got a pretty good track record and I think we're gonna continue down that path. Apologies that I can't tell you, anything more than that, but quite frankly, we've never really done that. Okay. Thank you, for taking the questions. Our next question comes from Michael Hoffman from Stifel. Your line is open. I apologize to double-teaming. We have had calls this morning, so we're overlapping. Following on Brian's question, I guess you're not done is a fair answer, though. There's more to do. You won't tell us what it is, that's fine, but there's a little bit more to do. It remains a key business priority, Michael, so I appreciate you highlighting that. Good morning, by the way. Good morning. I'm drinking quarterly earnings out of a fire hose this morning. I'm sure you are. Sorry. We're as a matter of fact, when I heard Brian come on, I figured that's where you were. It's- Yeah. ... we appreciate you taking time to catch up with us. The other question, Nevada is gonna come online next spring, but you've been moving waste around the country 'cause to your credit, you closed Utah to manage the community relation. Volume had to move. What's that incremental cost for moving that? 'Cause I'm assuming you're bearing it. Yeah. Well I'll tell you, While we won't give the specific in terms of the cost, I can describe it for you. Number one, facilities that are all around, all on the West Coast are right now overburdened, so that's taxing equipment, it's taxing our people in order to be able to continue to provide the right type of service. Number two, we've got third parties involved that we really wanna be out of the third party business. We've got that with reference to, you know, whether it's disposal capabilities, incineration capabilities, long haul capabilities. There's an awful lot of third party, which quite frankly has been quite expensive as we take a look at this last year or so. Good bit of costs have been flowing through that have been difficult. Then, just our own long haul. You know, certainly far more long haul runs from the West Coast to different parts of the U.S. than we would than is optimum. When McCarran comes up and running, remember, a facility opens, you make sure everything works, you get the rhythm of the facility, and then you, then you start to, you know, build yourself up to capacity and capability. I like where this is positioned. I really, we're very, very excited about not just what it's gonna do, certainly what it's gonna do for us internally, but for this being the type of facility that we're building, this is really gonna set the model and the standard, moving forward in the industry. That's exciting. All the other facilities that surround this area on the West Coast, I think they're gonna get a big sigh of relief, 'cause sometimes you can push them too hard as well, where they run beyond, you know, they're not efficient either. We get this facility online, I think we're gonna see. I think the operators are gonna be very happy, but I think most importantly our customers are gonna be happy in the fact that, you know, we're gonna be able to continue to grow and provide them terrific service. Just to be clear for everybody listening that, first half of 2024, a lot of that goes away and therefore having nothing to do with the ERPs and all that, you just open up a new facility and rebalance the operating leverage of the model for that alone. Yeah. I think that's one of the things that we had looked at, when we spoke to everybody about, you know, guidance and long range plans and those types of things. We do have that taken into consideration in terms of opportunity. Just remember, it isn't a switch flip. It all doesn't. I think for everybody listening, it isn't, A, the door goes open and all of a sudden everything goes away. We've gotta work through some things. It. Again, it's a crawl, walk, run. However, the long-term outlook for us with that facility, when we do get it all up and running, we do get rid of all the other contracts that we have, with third party. We work on making sure that we rebalance the routes. We make sure that we've got our internal network going. That's a process, and once that's there, to your point, Michael, that's how we see our way to, you know, providing the long-term outlook that we did, you know, with some pretty good adjusted EBITDA growth rates and some free cash flow conversion rates. Okay. Thanks for taking the extra question. I'm sorry I was late on your call. No problem. Appreciate it. Thanks for your time. This concludes our Q&A. I'll now hand back to Cindy Miller, Chief Executive Officer, for any final remarks. Thank you, Elliot. To everyone listening to this call, we greatly appreciate your interest in Stericycle and your shared excitement in our future. Thank you very much. Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.