Stericycle(US:SRCL)2022-04-28 18:15Financial Data and Key Metrics Changes - Revenues in Q1 2022 were $664.2 million, a slight decrease from $668 million in Q1 2021, with organic revenues increasing by $13.7 million [30] - Income from operations fell to $5.9 million from $59.1 million in the same quarter last year, primarily due to increased costs [35] - U.S. 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 Q1 2021 [37] - Cash flow from operations was an outflow of $38.8 million, a decline of $101.4 million year-over-year [38] - Adjusted diluted earnings per share decreased to $0.32 from $0.71 in Q1 2021 [40] Business Line Data and Key Metrics Changes - Regulated Waste and Compliance Services revenues were $452.6 million, down from $473.6 million in Q1 2021, with organic revenues declining by 1% [31] - Secure Information Destruction revenues increased to $211.6 million from $194.4 million in Q1 2021, with organic revenue growth of 9.5% [32] - North America Secure Information Destruction organic revenues increased by $14.7 million or 8.8% compared to Q1 2021, driven by a 73.5% increase in recycled paper revenues [33] Market Data and Key Metrics Changes - International Regulated Waste and Compliance Services organic revenues declined by 4.7% in Q1 2022 due to decreased pandemic-related waste volumes [34] - The company experienced a 21% shortfall in driver staffing in North America at the beginning of Q1, which improved to 12% by March [15][16] Company Strategy and Development Direction - The company is focused on quality of revenue initiatives and pricing strategies to mitigate inflationary pressures [17][19] - Plans to expand capacity with a new Medical Waste Facility in New Jersey to enhance operational efficiency and sustainability [21][22] - Introduction of SafeShield Medical Waste Containers, aimed at improving safety and reducing plastic demand [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaffirming 2022 guidance despite challenges from COVID-19, labor shortages, and inflation [14][45] - The company anticipates that pricing actions will have a larger impact in the second half of 2022 [20][46] - Management acknowledged the ongoing challenges but highlighted improvements in staffing and operational efficiency [48] Other Important Information - The company reached agreements to resolve FCPA investigations, marking a significant milestone in its business transformation [27][28] - Capital expenditures for Q1 2022 were $37.5 million, up from $24.7 million in the same period last year [42] Q&A Session Summary Question: Can you provide insight into the organic growth trends in your Medical Waste business? - Management indicated that excluding COVID impacts, the Medical Waste business is trending slightly over 4% organic growth [52][53] Question: What is the expected headwind from COVID in Q2? - Management noted that while there is some headwind from COVID, they are encouraged by core underlying growth [55][61] Question: How much of the pricing levers have been implemented? - Management confirmed that they have made significant adjustments to pricing and surcharges, which are expected to take effect in Q2 [80][86] Question: Can you elaborate on the driver shortfall and its impact on costs? - Management reported a significant improvement in driver staffing from 21% to 12%, which is expected to ease travel and overtime expenses [87][90] Question: What is the confidence behind the reaffirmed guidance? - Management highlighted three key aspects: pricing levers, easing acute labor challenges, and year-over-year comparisons improving in the second half of the year [106][108]