The prepared comments for today's call corresponds to an investor 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 March 28, 2024. Replay information is available in the Events section on Stericycle's Investor Relations website. Time-sensitive information provided during today's call, which is occurring on February 28, 2024 may no longer be accurate at the time of a replay. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Stericycle is prohibited.

I'll now turn the call over to Cindy.

Cindy Miller: Thank you, Andrew, and welcome to our fourth quarter earnings call. I'd like to start off today's discussion by thanking all of our team members for their dedication to our customers and their great work throughout the year. Their commitment has been instrumental in our successful performance across all of our key business priorities. Over the last five years, this dedication has allowed us to make tremendous progress, as illustrated on Slide 11. On today's call, in addition to unpacking the results for the quarter and this year, we will also unveil our next generation of key business priorities which are focused on the next phase of growth for the company, building on the foundation we have established. I am pleased to share that our fourth quarter results were generally in line with our expectations.

Our quarterly results included: Regulated Waste and Compliance Services organic revenue growth of 3.1%; expanded gross margin by 150 basis points, we are seeing the benefits of cost savings from productivity initiatives that supported a sequential quarterly improvement in adjusted EBITDA margin of 220 basis points; debt leverage ratio of 2.85x; and portfolio optimization progress with the divestiture of our business in Romania. Throughout 2023, we continued to focus on our five key business priorities. I'll start with a recap of our accomplishments, beginning with the successful deployment of the ERP to our U.S. Regulated Waste and Compliance Services business in September. In Europe, we made upgrades and enhancements to the Secure Information Destruction technology and made meaningful progress planning for our Regulated Waste and Compliance Services system transformation, which kicked off in earnest with our international team members last month.

I'll now provide a brief recap of our quality of revenue achievements in 2023 across three key areas: expanding service penetration, improving customer implementation velocity and deepening customer partnerships by developing enhanced customer solutions. We expanded our service penetration by launching cross-selling capabilities for our Regulated Waste and Compliance Services and Secure Information Destruction sales team members in the U.S. We also expanded Secure Information Destruction partnerships with large health care group purchasing organizations, which we expect will accelerate our ability to cross-sell and better penetrate the markets we serve. With regards to improving customer implementation velocity, we improved the speed to revenue by cutting in half the amount of time it takes to close a deal and begin servicing and providing value to our complex hospital customers sooner.

Throughout 2023, we strengthened our customer partnerships by conducting customer-focused workshops throughout North America. These sessions generated excitement for our enhanced compliance services and award-winning container solutions. Our most recent customer loyalty scores reflect the high level of value our customers receive from our services. Additionally, in support of our U.S. Regulated Waste and Compliance Services ERP deployment in September, the commercial organization was focused on supporting our customers through the system transition. In the second quarter of last year, we achieved our goal of reducing our debt leverage below 3x and have continued to maintain our debt leverage target. We have come a long way since 2019, having improved our leverage over 1.5x and reducing our debt by over $1.5 billion.

Portfolio optimization has been a major contributor to streamlining the company and our debt reduction since 2019 as we have completed 19 divestitures and exited 10 countries. In 2023 alone, we divested eight businesses and exited six countries. This helps simplify our business and will allow us to better focus our efforts on driving operational and financial performance in our core services in key markets. Turning to operational efficiency, modernization and innovation. In 2023, we completed over 20 infrastructure upgrades, including installing five new autoclaves, six new conveyance systems, two new shredders and an upgraded wastewater treatment plant at one of our North America incinerator facilities. In the fourth quarter, we successfully expanded an Ohio facility to handle future medical waste growth.

Since 2019, we have introduced improvements to more than half of our waste processing and treatment facilities in North America, including installing more than 25 new autoclaves, six new boilers and refurbishing more than 20 additional autoclaves and boilers. We have also reduced the average age of our North America fleet to less than four years since 2020 as we've continued to focus on modernizing our powered and non-powered units. Our engineering and operations teams have been focused on the construction of our newest incinerator facility in McCarran, Nevada. In November, we successfully installed foundational equipment including the incinerators and boilers. We remain on track to complete the construction phase of the project in the first half of 2024.

After construction is complete, we anticipate moving into the testing phase, which includes regulatory review. Once testing is successfully completed, we expect to ramp up the processing of waste with a target to achieve full production in mid-2025. Leveraging our transformed foundation as a springboard, we are positioned for growth and excited to introduce our next generation of key business priorities. These are: one, commercial and service excellence; two, operational excellence; three, digital implementation; and four, strategic capital allocation. I will turn it over to Cory to share his thoughts on our commercial and service excellence key business priority, and then I'll talk further about our other key priorities.

Cory White: Thank you, Cindy. Our commercial and service excellence key business priority is focused on driving profitable revenue growth delivering a differentiated value proposition and creating a seamless customer experience. This includes enhancing sales, service and product excellence to win, retain and grow strong customer relationships. Through our sales excellence initiatives, we continue to focus on our market-to-quote capabilities, including quality of revenue, digital marketing, e-commerce and contract management. Utilizing the ERP, we expect to further enhance sales excellence by gaining greater insights into sales opportunities, driving pricing intelligence, expanding market presence and enhancing sales productivity.

Service excellence is focused on delivering a seamless service experience through all phases of our customer life cycle which includes: one, making it easier for customers to manage their accounts through improved digital touch points with our enhanced online customer portal, including real-time waste tracking, trending benchmarking and sustainability reporting, accessing compliance training, requesting new services, making service changes and visibility to invoices; two, enhancing our customer experience by leveraging ERP-enabled tools to solve issues on first contact; and three, utilizing modern routing and tracking technology in field operations to ensure on-time waste collection and container management. This initiative is expected to strengthen customer relationships and further enhance our value proposition.

Finally, product excellence focuses on developing and launching enhanced solutions that deepen our customer partnerships, support our customers' safety and sustainability goals and promote further adoption of existing products and product innovation. We continue to commercialize innovative solutions and products that drive additional revenue opportunities while fulfilling our purpose to protect the health and well-being of health care organizations, commercial businesses, and communities we serve. I'll now turn the call back to Cindy to provide an overview of the remaining three key business priorities.

Cindy Miller: Thank you, Cory. Turning to operational excellence. This second key business priority is focused on driving margin expansion and cash flow improvement by leveraging the following: a skilled and dedicated workforce focused on safety, service, savings and sustainability, modern technologies, new and updated equipment and infrastructure and a modernized fleet. In 2024, we expect workforce management in our retained businesses to drive approximately $40 million to $45 million in savings. This reflects an approximate 6% year-over-year structural reduction in our workforce. Of the $40 million to $45 million savings, approximately $8 million in savings is expected to come from the reduction in force we announced on our third quarter call.

This reduction took place in October and resulted in approximately $3 million of severance. Over $20 million in additional savings is expected to come from the targeted reduction in force that is occurring in the first quarter of 2024 with an estimated $5 million to $7 million in severance that we anticipate incurring in the first quarter. The balance of the cost savings is expected to come from continued careful hiring and attrition that began in 2023. On our new digital implementation priority, we are beginning to strategically explore our next generation of capabilities using the foundation of our modern ERP system. We anticipate that digital, data and AI capabilities will help us to further deliver commercial and service excellence and efficiencies across our network and shared services.

The fourth and final of our next-generation key business priorities is strategic capital allocation, which has the following foundational elements: a targeted debt leverage ratio between 2.5x and 3x, investments in the business to maintain and modernize our infrastructure to drive growth and efficiencies, portfolio optimization including accretive tuck-in acquisitions using a disciplined acquisition and integration playbook and consideration of the potential for share repurchases. Consistent with this strategic capital allocation priority, in January, we successfully completed the acquisition of a Southeastern U.S. regulated medical waste company. In 2024, this business is expected to generate approximately $4 million in revenue. We expect to integrate this acquisition into our new ERP technology platform in the second half of 2024.

We are proud of the transformation journey we have been on and we are excited about the next generation of priorities we have outlined. We look forward to updating you on our progress on future calls. I'll now turn the call over to Janet to review our financial results.

Janet Zelenka: Thank you, Cindy. I will start by summarizing our fourth quarter results. As noted on Slide 5, revenues in the fourth quarter were $652 million compared to $670.4 million in the fourth quarter of 2022. Excluding the impact of divestitures of $28.6 million and favorable foreign exchange rates of $5 million, organic revenues increased $5.2 million. Organic revenues in Regulated Waste and Compliance Services grew $13.2 million while Secure Information Destruction organic revenues declined $8 million. Secure Information Destruction was impacted by lower commodity index revenues due to lower recycling revenues and lower fuel and environmental surcharges of $18 million, partially offset by higher service revenues of $10 million.

As noted on Slide 6, Regulated Waste and Compliance Services revenues were $439.9 million compared to $449.3 million in the fourth quarter of 2022. Excluding the impact of foreign exchange rates and divestitures, organic revenues for Regulated Waste and Compliance Services increased 3.1%. North America Regulated Waste and Compliance Services organic revenues grew $10.1 million or 2.8%, 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 grew $3.1 million or 5.1% in the fourth quarter, mainly driven by pricing. Secure Information Destruction revenues were $212.1 million compared to $221.1 million in the fourth quarter of 2022.

Excluding the impact of divestitures and foreign exchange rates, Organic revenues for Secure Information Destruction declined 3.6%, mainly due to lower commodity index revenues reflecting more than a $100 reduction in sorted office paper pricing per ton year-over-year and lower fuel and environmental surcharges. In North America, Secure Information Destruction organic revenues decreased $5.9 million or 3% compared to the fourth quarter of 2022. Recycling paper revenues in the fourth quarter of 2023 contributed approximately 5.9% of the decline or $11.5 million due to lower sorted office paper pricing and lower tonnage. Service revenues contributed approximately 2.9% of growth or $5.6 million due to pricing, partially offset by lower fuel and environmental surcharges.

Approximately 50% of the lower sorted office paper recycling revenue was offset by a recycling recovery surcharge, which is reflected in service revenue. As a reminder, on the third quarter call, we discussed that some national customers were reducing their store footprint, which led to a contraction in their related service steps. This contraction continued at a slower pace in the fourth quarter. In International, Secure Information Destruction organic revenues decreased $2.1 million or 8.4% compared to the fourth quarter of 2022, mainly due to lower recycling revenues and fuel and environmental surcharges. Income from operations in the fourth quarter was $37.1 million compared to $59.1 million in the fourth quarter of last year. The $22 million decrease was mainly due to the following: a gain on a divestiture in 2022 of $15.6 million, lower Secure Information Destruction commodity index revenue margin flow-through of $10.2 million, higher bad debt expense of $8.1 million mainly due to a lower fourth quarter of 2022 bad debt expense level as a result of improved North America Secure Information Destruction collections and higher incentive and stock-based compensation expense of $7.1 million in 2023.

These items were partially offset by margin flow-through of $18.9 million, including cost savings from productivity initiatives. Net income was $14.9 million or $0.16 diluted earnings per share compared to $31.8 million or $0.35 diluted earnings per share in the fourth quarter of last year. The difference was mainly related to lower income from operations of $22 million. Cash flow from operations for the year ending December 31, 2023 was $243.3 million compared to $200.2 million for 2022. As shown on Slide 8, the year-over-year increase of $43.1 million was mainly driven by lower FCPA settlement payments of $72.8 million and lower annual incentive compensation payments of $22.3 million, which were partially offset by accounts receivables net of deferred revenues of $68.5 million.

Adjusted income from operations was $84.5 million or 13% as a percentage of revenues compared to $90.6 million or 13.5% as a percentage of revenues in the fourth quarter of last year. Adjusted income from operations decreased 50 basis points, mainly driven by lower Secure Information Destruction commodity index revenue margin flow-through of 160 basis points, higher bad debt expense of 120 basis points and higher incentive and stock-based compensation of 110 basis points. These were partially offset by margin flow-through of 340 basis points, including cost savings from productivity initiatives and margin expansion through portfolio optimization. Adjusted diluted earnings per share was $0.54 compared to $0.60 in the fourth quarter 2022. As illustrated on the bridge on Slide 9, the $0.06 year-over-year decrease was driven by $0.09 from lower Secure Information Destruction commodity index revenue flow-through, $0.07 from higher bad debt expense and $0.06 from higher incentive compensation.

These were partially offset by $0.16 of margin flow-through. Capital expenditures for 2023 were $131.3 million compared to $132.2 million for 2022. Free cash flow for 2023 was $112 million compared to $68 million in 2022. As noted on Slide 8, the year-over-year increase of $44 million was mainly driven by higher operating cash of $43.1 million. After considering 2023 adjusted litigation and severance payments, free cash flow excluding these two items was $138.5 million, which is approximately $30 million below our 2023 free cash flow guidance range of $170 million to $190 million. This difference is mainly driven by the timing of U.S. Regulated Waste Customer billings due to the ERP implementation as we are holding and reworking some invoices for our largest customers to ensure accuracy.

Turning to the full-year 2023 results on Slide 14. Revenues were $2.66 billion compared to $2.7 billion in 2022. Excluding the impact of divestitures of $101.6 million and unfavorable foreign exchange rates of $0.1 million, organic revenues increased $56.3 million or 2.2%. When 2023 and 2022 results are normalized to exclude the revenues from divested businesses, revenues were approximately $2.63 billion in 2023 compared to $2.57 billion in 2022. Regulated Waste and Compliance Services organic revenue growth was $71.9 million, while Secure Information Destruction organic revenues declined $15.6 million. Secure Information Destruction was impacted by lower commodity index revenues of almost $50 million due to lower recycling revenues and lower fuel and environmental surcharges.

When considering Secure Information Destruction's organic revenue growth over a two-year compounded annual growth rate, it grew 6.6% since 2021. Income from operations for the year ended December 31, 2023 was $77.3 million compared to $153.7 million in 2022. The $76.4 million decline was mainly due to change in divestiture net losses of $79 million, higher incentive compensation and timing of stock-based compensation of $22.7 million, lower Secure Information Destruction and commodity index revenues and the corresponding margin flow-through impact of $18.5 million and fleet costs of $10.5 million. These were partially offset by margin flow-through of $41.2 million, mainly from cost savings from productivity initiatives and lower bad debt expense of $7.1 million.

Net loss for 2023 was $21.4 million or $0.23 diluted loss per share compared with net income of $56 million or $0.61 diluted earnings per share in 2022. The difference was mainly related to lower income from operations of $76.4 million, as previously discussed. Adjusted EBITDA was $420 million in 2023 compared to $432.2 million in 2022. The $12.2 million decline was mainly due to inflationary and supply chain costs of $25.5 million, higher incentive compensation and timing of stock-based compensation of $22.7 million and lower Secure Information Destruction commodity index revenues and the corresponding margin flow-through impact of $18.5 million. These were partially offset by margin flow-through of $51.1 million and lower bad debt expense of $7.1 million.

In 2023, divested businesses generated a nominal amount of adjusted EBITDA. When 2023 results are normalized to exclude results from divested businesses, 2023 adjusted EBITDA would still have been approximately $420 million. Adjusted diluted earnings per share was $1.89 in 2023 compared to $2.04 in 2022. As illustrated on the bridge on Slide 17, excluding the impact from foreign exchange rates and divestitures of $0.04, the remaining $0.11 year-over-year decrease was driven by $0.19 from higher incentive and stock-based compensation, $0.15 from lower Secure Information Destruction commodity index revenues, $0.09 from higher fleet costs and $0.08 mainly from higher taxes. These were partially offset by $0.34 from margin flow-through and $0.06 from lower bad debt expense.

I will now turn to our 2024 guidance, which includes forward-looking statements as contemplated in our safe harbor statement as referenced at the opening of this call. Our guidance is shown on Slide 18 and is as follows: One, we expect to grow organic revenues 3% to 5% on a normalized revenue base of $2.63 billion. Two, we expect adjusted earnings per share of $2.20 to $2.50. This assumes approximately a 14% growth in adjusted EBITDA on a 2023 normalized adjusted EBITDA base of $420 million. As shown on Slide 19, this margin growth rate anticipates revenue margin flow-through of approximately 4%, cost of revenue efficiencies and cost reductions of approximately 9%, mainly driven by our workforce management actions and operational initiatives, and selling, general and administrative efficiencies and cost reductions of approximately 4% mainly driven by our workforce management actions.

These are expected to be partially offset by commodity impacts of 3%, mainly associated with sorted office paper pricing, which assumes a range of $125 to $140 a ton and fuel estimates for 2024 from the U.S. Energy Information Administration. Compared to last year, we anticipate that the first half of 2024 will have a more challenging paper pricing year-over-year variance as the sorted office paper price per ton was above $200 on average for the first quarter of 2023 and above $185 on average for the second quarter of 2023 and the second half of 2023 pricing return to the historical average range. Three, as noted on Slide 20, we expect to generate free cash flow of $210 million to $265 million excluding additional interest payments due to redeeming the $600 million bond with proceeds from the revolver and severance payments.

Excluding these two cash outlays, we anticipate an adjusted EBITDA to free cash flow conversion rate of 44% to 55% in 2024. Severance payments in 2024 are expected to be approximately $5 million to $7 million. The additional in-year interest cash payments from redeeming the bond and higher interest rates are expected to be $14 million to $19 million. When we redeem the bond, interest payments will shift from being semiannual bond payments to monthly revolver interest cash payments. And four, we expect capital expenditures of $140 million to $160 million. Regarding the timing of free cash flow generation through 2024, we anticipate the first quarter to be a use of cash as it includes our annual incentive compensation payouts, the semiannual debt interest payments and the timing of accounts receivable collections.

Because of the heavier utilization of cash in the first quarter, we anticipate that our first quarter debt leverage ratio will be above 3x and then is anticipated to return to our debt leverage ratio range of 2.5x to 3x in 2024. I will now turn the call back to Cindy.

Cindy Miller: Thank you, Janet. Our focus on ESG and sustainability is an ongoing pursuit, which we actively incorporate into our everyday practices and into our strategic business plans. In early February, we received our grade from CDP, and I'm excited to share that we achieved a B score, our highest rating since we began filing with the CDP three years ago. This follows on the heels of four recent awards on diversity and sustainability that recognize the continued maturation of our organization. With that, 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.

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