Q2 2022 Stericycle Inc Earnings Call
Hello, everyone and welcome to the Stericycle second quarter 2022 earnings call. My name is Stacey and I'll be coordinating today's call.
You will have the opportunity to ask a question after the presentation if you'd like to register a question. Please press star followed by one or no telephone keypad. Please kindly only ask one question and one follow up to allow others the charm.
I would now like to hand over to hoist, Andrew Ellis Vice President of Investor Relations to begin Sir Andrew. Please go ahead. Good morning, and thank you for joining Stericycle is 2022 second quarter earnings call on the call today will be Cindy Miller, our Chief Executive Officer, and Janet Zelenka, Chief Financial Officer, and Chief information on.
Sir.
The discussion today includes forward looking statements that involve risks and uncertainties. When we use words, such as believes expects anticipates estimates may plan.
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 spare cycles Investor relations website at investors that Stericycle dot com.
The prepared comments for today's call correspond to an earnings presentation, which is also available at Stericycle Investor Relations Web site.
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 September 2nd two.
2022 to access a replay of the call dial 806 8139403 in the U S.
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A replay of the webcast will also be available on fair cycles Investor Relations Web site time sensitive information provided during today's call, which is occurring on August five 2022 may no longer be accurate at the time of a replay.
Any redistribution retransmission or rebroadcast of this call in any form without expressed written consent of Stericycle is prohibited ill now turn the call over to Cindy. Thank you Andrew Good morning, and welcome to today's call as you will see in our results our second quarter builds on the momentum we observed as we exited the first quarter.
Our disciplined and proactive pricing actions helped offset inflationary cost pressures, which led to a sequential quarterly margin improvement.
Further the frontline workforce shortage, we experienced in the first quarter improved to approximately 10% down from 12% at the end of the first quarter as we had fewer COVID-19 related absences and gained traction with our hiring.
Turning to our key business priorities I'll start with the quality of revenue we delivered another quarter of overall organic revenue growth growing 5% with secure information destruction, increasing 12, 2% in regulated waste and compliance services, increasing one 8%.
In North America organic revenue growth was six 2% with secure information destruction, increasing 12, 9% and regulated waste and compliance services, increasing two 8%.
Throughout the second quarter, we remained focused on executing our pricing strategy.
Utilizing our three pricing levers to help offset the continuing higher inflationary cost pressures, we experienced in supply chain and labor related costs, which included higher wages overtime and new team member Onboarding we.
We estimate that in North America across both our core businesses. These pricing actions, along with Sop pricing and fuel surcharges significantly contributed to the growth rate.
We expect that the benefits of our surcharge and fee pricing initiatives, we will continue to accelerate in the second half of 2022 for example in the first quarter. We introduced the new service cost recovery fee for some North America hospital customers and in the second quarter, we enhanced our recycling revenues.
Surcharge in North America secure information destruction.
These contributed approximately $5 million in revenue in the second quarter and are anticipated to contribute another $20 million in the back half of the year.
Turning to operational efficiency modernization and innovation I'm excited to share an update on our latest innovation SMS Revolution. This internally developed and newly patented technology modernizes, our processing of Sharps. This technology is currently installed in two of our facilities.
With additional Rollouts planned.
We've already seen sharp processing capacity more than double in the two facilities leading to at least a one shift reduction per facility.
Our trend of modernizing our facilities to drive operational leverage and safety improvements throughout our organization. We have begun constructing a next generation incinerator to support operations and strengthened our medical waste competitive position on the West Coast. This facility will replace our recently.
<unk> decommissioned incinerator in Utah, we anticipate that this facility will be operational in the next 18 to 24 months.
Looking ahead to the North America regulated waste and compliance services ERP deployment.
We remain on track to deploy pilots in the second half of 2022 for subsets of our customers in preparation for the rollout next year.
As we are now halfway through 2022, and considering the current economic uncertainty surrounding the impacts of inflation foreign exchange rates and interest rate hikes, we are updating our guidance for the rest of the year as Janet will explain later I will now turn the call over to Janet to review our financial results.
Thank you Cindy I will start by summarizing our second quarter results as noted on slide five revenues in the second quarter were $679 8 million compared to $672 7 million in the second quarter of last year, excluding the net impact of divestitures of $14 8 million.
Unfavorable foreign exchange rates of $13 7 million due to the strengthening of the U S dollar and an acquisition of $1 8 million organic revenues increased $33 8 million of this increase secure information destruction organic revenue growth was $25 7 million and regulated waste.
And compliant services organic revenue growth was $8 1 million as noted on slide six regulated waste and compliance services revenues were $448 4 million compared to $463 million in the second quarter of 2021, excluding the impact of divestitures and.
Acquisition and foreign exchange rates organic revenues increased one 8% in the second quarter, North America regulated waste and compliance services organic revenues increased two 8% underlying this two 8% increase was approximately two 9% growth from quality of revenue.
Initiatives, including pricing levers and one 9% growth contributed by maritime waste services. The growth in these areas was partially offset by an estimated 2% decline from lower COVID-19 related transactional volumes, such as vaccine and testing waste and patient engagement related call vol.
<unk> and our communication solutions business in the quarter, we estimate that most of the growth was due to pricing as volumes continued to be impacted by the year over year decline in COVID-19 related services and the lagging recovery of elective surgeries.
International regulated waste and compliance services organic revenues declined two 3% in the second quarter as pandemic related waste over classification volumes decreased from a peak in the first half of 2021.
As noted on slide six secure information destruction delivered revenues of $231 4 million.
Compared to $209 7 million in the second quarter of 2021, excluding the impact of foreign exchange rates organic revenues for secure information destruction increased 12, 2%, mainly due to higher recycled paper revenues driven by S. Sop pricing, partially offset by lower <unk>.
Volume in North America secure information destruction organic revenues increased $23 3 million or 12, 9% compared to the second quarter 2021 recycled paper contributed approximately six 1% to the North America secure information destruction organic growth.
As recycled paper revenues were up 57, 1% or about $11 million compared to the second quarter of 2021.
The increase in recycled paper revenues reflected higher sop pricing, partially offset by lower S. O P. Volume service revenues contributed approximately six 8% to North America secure information destruction organic growth or about $12 2 million with the majority of the increase driven by fuel cell.
Our charges service stops were also up slightly year over year.
And international secure information destruction organic revenues increased 8% or $2 4 million compared.
Compared to the second quarter 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 second quarter was $38 $1 million.
Compared to $55 6 million in the second quarter of 2021, the $17 5 million dollar decline was principally from higher supply chain wage adjustments and other inflationary costs of approximately $15 million higher head count overtime, and onboarding costs of $10 million higher bad debt.
<unk> expense of $9 8 million due to normalizing bad debt as well as continued North America secure information destruction billing and collection efforts related to the ERP deployment and higher adjusted litigation settlements and regulatory compliance expenses of $7 3 million.
These were partially offset by revenue flow through of $14 9 million lower self insurance expense of $7 3 million and lower annual incentive compensation expense of $7 1 million.
The higher supply chain wage adjustments and other inflationary costs were mainly from higher vehicle replacement costs higher vehicle rental and maintenance costs as we continue to see delays in replacement vehicle deliveries higher utility expenses and inflationary wage adjustments to attract and retain talent in the current labor environment.
Non inflationary labor costs were driven mostly by higher head count and over time to improve service levels, while fuel costs have increased they have been offset through our existing fuel surcharges.
U S. GAAP net income was $10 5 million or 11 diluted earnings per share compared to net income of $29 3 million.
Or <unk> 32 diluted earnings per share in the second quarter of last year. The difference was mainly related to lower income from operations was $17 $5 million.
Cash flow from operations for the six months ended June 32022, with an outflow of $18 4 million compared to an inflow of $149 8 million in the same period of 2021.
The year over year decline of $168 2 million was mainly driven by the expected F. CPA settlement payments in the quarter of $75 8 million other timing changes in net working capital of $54 $6 million, mainly driven by accounts receivable, reflecting the continued North America secure.
Information destruction billing and collection efforts related to the ERP deployment and lower cash generated from income from operations of $37 8 million as shown on slide nine adjusted income from operations was $82 million or 12, 1% as a percentage of revenues down from $105 7 million or <unk>.
15, 7% as a percentage of revenues in the second quarter of last year adjusted income from operations declined 360 basis points as a percentage of revenues due to the following higher costs ongoing operating expenditures of 220 basis points due to the shift in ERP costs associated.
With the North America secure information destruction deployment in August 2021 supply chain wage adjustments and other inflationary costs of approximately 220 basis points higher head count overtime, and Onboarding of approximately 150 basis points and bad debt expense of approximately 140 basis.
These were partially offset by commercial pricing leverage resulting in revenue flow through of 140 basis points.
Lower self insurance expense of 110 basis points and lower annual incentive compensation of 110 basis points.
Adjusted diluted earnings per share was <unk> 48, compared to 67 in the second quarter 2021, and as illustrated on the bridge on slide eight excluding the net impact from divestitures and acquisition and foreign exchange rates of <unk>. The remaining 17 year over year decline was driven by.
11, <unk> favorability from expected higher ongoing operating expenditures 11, Samsung favorability from higher supply chain wage adjustments and other inflationary costs and <unk>. Some favorability from higher head count Onboarding and overtime costs. These were partially offset by 11, some favorability from commercial price.
Deleverage, resulting in revenue flow through.
And two cents favorability from other.
Capital expenditures for the six months ended June 32022 were $70 million compared to $59 7 million for the same period last year with a $10 3 million change mainly attributable to the timing of cash payments.
Free cash flow for the six months ended June 30 of 2022 was an outflow of $88 $4 million compared to an inflow of $90 1 million in the same period of 2021 as noted on slide nine the year over year decline of $178 $5 million was mainly driven by the expected F C.
Settlement payments of $75 8 million timing changes in networking capital.
Lowered cash associated with income from operations and higher cash paid for capital expenditures as explained earlier.
Our second quarter DSO as reported was 64 days compared to a DSO of 56 days in the second quarter of 2021. This difference was mainly driven by the timing of North America secure information destruction customer invoicing and subsequent collections as discussed in the prior quarter and higher revenue in the quarter.
As shown on slide 10 at the end of the second quarter, our credit agreement defined debt leverage ratio was four <unk> times and our net debt was approximately $1 7 billion.
If the FCA settlement payments of $75 8 million in the quarter were excluded the credit agreement defined debt leverage ratio would have been 383 times as Cindy mentioned, we are updating our 2022 guidance, which as noted on slide 11 for the following forward looking items, one we are raising our organic <unk>.
Revenue growth range to $4, two 6% up from $3 two 5% two we are tightening our adjusted EPS range to $2 to $2 15 from $2 to $2 30.
This updated adjusted EPS range includes lowered net noncash expenses of 10 to 15.
Such as annual incentive compensation, and depreciation offset by higher cash operating and interest expenses of 18 to 22.
Three we have changed our free cash flow range to $80 million to $100 million from $125 million to $155 million. In addition to the anticipated higher cash expenses I. Just explained we expect about 10% to $15 million and lower net working capital in addition $10 million.
F CPA settlement payments that we previously expected to pay in 2023 are now anticipated to be paid in 2022.
Four we are narrowing our capital expenditure range to a $125 million to $135 million from $120 million to $140 million.
I will now turn the call back to Cindy thank.
Thank you Janet reflecting our commitment to sustainability I'd like to share two important updates first last week, we filed our 2022 CDP climate change survey. This represents another important milestone for our ESG program and includes expanded disclosures from our first filing in 'twenty.
'twenty, one second I'm excited to share that our chief commercial and Chief transformation officers are both in Jacksonville, Florida today to launch our five year partnership with the National Park Foundation, the nonprofit partner of the National Park Service Jacksonville is the first of several locations, where we are supporting <unk>.
Landscape and wildlife conservation with a focus on wetland restoration.
In summary, we're encouraged by our second quarter momentum the actions we have taken to combat inflationary cost pressures are starting to improve our margins and we believe these will benefit our results for the second half of 2022 as always I'd like to thank our customers team members. The communities, we serve and our shareholders for their continued truck.
And having stericycle protect what matters operator, please open the line for Q&A.
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Our first question is from Michael Hoffman from Stifel. Michael Your line is open. Please go ahead.
Thank you very much everybody.
Hope, you're all having a good summer.
Janet if we could start with the free cash flow.
And the fire hose of information coming out of some I've.
Heard the answer to this question and I apologize if you said it but I just need to walk through if I take the midpoint of the old guide, which was 130 in the mid point of the current guide, including having to pay the 14 million for litigation.
About $54 million difference.
So I know the litigation 14 of that I know the $10 million for the CPA, but what's the remaining Vertes I think I heard you say $10 million to $15 million for working capital. So we'll call that <unk>. So what's the remaining 15.
So some of it's the cash expenses that will flow through that's higher which we can.
We itemize for you. In addition, if you look at this slide we also highlighted that interest rates will be about two cents higher than prior guidance, that's a cash flow impact as well for the year. So.
It's basically the flow through of the cash items from the adjusted EPS, because we have offsetting noncash items and then the items you mentioned, so you pretty much habit Michael.
Okay Alright.
So when you gave guidance well actually I don't want that to be my follow up my follow up's on growth growth and quality. So this is for Cindy.
Think about the two business lines. When you think about your initiatives around the three to five.
Then underlying the quality of reps. So that's the operating leverage can we talk about what's happening inside so in the medical waste cusp.
Customer types between an independent hospital national accounts.
Are we starting to see.
Customer growth.
Or is there more churn because you're choosing to retire customers because they can't be quality.
You can't get the margin.
And I'm thinking of this in both businesses I mean, along those segments then on instead overall, whereas the new customer adds coming ultimately to help support the sustainability of three to five as opposed to the current environments price just because of all this inflation.
Thanks, Thanks for that Michael that's a great question and one of the things that I can say that we're very pleased with is we continue to see.
We continue to see sequential growth.
Zig and zag between which business unit on any given quarter based on our based on a comparable but for the most part underlying that is trends, where we are winning new business now I will say on the regulated side.
As you know there were steady years of decline specifically.
In our independent space the independent space is what we call it now.
We continue to drive our efforts number one we took a look in our our revamping of who we are we've updated an awful lot of the services that we provide the independence and as a result, we are seeing.
Improvement, there and certainly gaining traction.
And then on the the larger hospital side.
We are winning new logo.
We are I think I've said before regionally we are different.
You say market share regionally, where we're different sizes and different places and theres still plenty of opportunity for us to grow and I'm very pleased with the sales organization's efforts to win new logo and put us in places that help improve our density on the shred side.
We're very happy with that.
With an almost.
With a shutdown of the world and we continue to grow as we come out of that and as.
As our customer base continues to get back into the office certainly not there yet and the volume of paper may not be there, but I think that's a good story for us and that is a constant push on winning new business. So.
The team is very focused on the organic part of growth.
Okay. Those are my two.
Thank you much.
Thank you our.
Our next question is from Sean Dodge from RBC capital markets. Sean. Your line is open. Please go ahead.
Yes. Thanks.
Good morning, and congratulations on the strong EBITDA production in the quarter.
Maybe going back to the guidance Jamie in your prepared remarks, you mentioned during Q1, there's a lot of disruption extra costs related to the absenteeism.
Not sure if I'm missing something but to what extent the bit normalized in Q2, and then as we look to quarter.
Quarters, three and four are there still some elevated levels.
One time cost that should continue to paper are there are there other costs you can drop out that would be additive to the acceleration of surcharges that Cindy you mentioned I'm just trying to understand how to think about it.
And maybe the visibility you have on the EBITDA cadence going into the back half of the year, yes.
Sean I know I know you have set of Janet I'm, just going to jump in a little bit just to the few things Janet can give a little bit more color, but I'll give you an example.
That first quarter, when we came off of the new year down about 22% on average, which meant someplace, where some places were worse off we saw tremendous amount of operational expense that had to go into.
It was in overtime it was in moving and shifting resources to different places here in the country. So that we can help out to continue to provide service for our customers. So we had a good bit of that expense that quite frankly.
We then saw.
Some of that in terms of.
A.
A peak if you will in terms of Onboarding cost of new employees that we have now that we've put on.
So I think I think as we move forward a key for US is the continuing to.
Watch over time and continue to reduce it in places, where we have better staffing make sure that we pull those types of costs out and also we're very excited about seeing those new employees start to ramp up in terms of their ability to be more productive as you know when you bring somebody on board, they're not quite as they don't have the whole routine down Pat.
As someone who's been around for a few years. So I think those are two key things that we see to your to your original question about are some costs going to taper off.
For us to deliver in the second half we need to make sure that we're pressing on specifically both of those levers as we get into the back half of 'twenty to Janet anything else to add and.
Talk about the guidance for the rest of the year. It really is building on the momentum we saw between Q1 and Q2 as you remember that we had how we said that the first half was going to be worse in the second half and I think we're seeing the momentum that we indicated that we would see in this quarter and as we look at the ladder happen, what's underlying the guidance I would roughly say.
The improvement Youre going to see is about a third price a third volume and a third efficiency speaking to <unk> point about that we now have the staffing levels in a better place and that they are being trained and then they can drive improvements in the second half of the year.
Okay. That's very helpful. Thanks, and then.
And then I guess, if we step back from here despite.
It looks like it to be a more challenging inflationary environment.
Was the case when you first.
What is the long term guidance.
Left your your longer term free cash flow guidance of 400 million between 2024 and 2025 unchanged.
Maybe talk about.
Are these inflationary pressures and your ability to mitigate them with price increases is there anything that's changing there that maybe about the effectiveness of those affects your conviction.
Invention and your ability to achieve that $400 million I guess anything about what we've seen search are inflationary pressures in surcharges that maybe changes your your.
Views on that $400 million.
So I would say, we're certainly living in uncertain times in the economy.
<unk> inflation et cetera. So so we are managing through that and being very proactive about it but we did put that 400 million out there and if you look at our cash flow as we say for the year. If you add back or basically $90 million of payments that are going to go out for the F. CPA to that range you can see we're on the trajectory.
Murray for that $400 million, even in yet another challenging year in the world. So.
It's a lot dependent on our execution.
And we will continue to monitor the economic trends, but right now we think this business can generate the cash that we say.
Okay, great. Thank you again.
Thanks, Sean.
Thank you.
Next question is from David Manthey from that David Your line is open. Please go ahead.
Yes. Thank you good morning, everyone.
You noted in the press release timing of working capital items, and then you cited that accounts receivable were $55 million higher you might have addressed this in the preamble I apologize. If you did but does that tell us anything about the pricing actions or is it higher paper prices.
These are just randomness could you could you unpack that for us yeah.
The accounts receivable that we largely you see in the quarter largely driven by the secure information destruction remaining catch up we're doing on receivables.
You May have mentioned I heard me mentioned in the past couple of quarters. We think most of that will sort itself out by the end of the year Theres just some normal timing of other working capital changes and I am encouraged by the catch up Racine instead with the.
The receivables exceeding the revenue in the last couple of months of the quarter. So so that is that will write itself over time.
And I think it's just normal stuff that happens at the end of year with your cash flow your net working capital.
Okay and then.
Just more of an open ended question here I think you talked before about a third of your book coming up.
Throughout the course of the year and then of course, the surcharges and Youre trying to move as fast as possible to reach equilibrium relative to your inflationary costs can you just talk about how well you think you're positioned.
How close you are to being caught up at this point and.
And how do you think about the third and fourth quarter as it relates to those.
Are those.
Inflationary prices that your demand from your customers relative to the inflationary costs that you're experiencing on your P&L.
Yes.
Great Great question, I think one of the things that we're most pleased about coming out of that first quarter is that we talked about three pricing levers, we talked about adjusting costs upfront for a customer that we're just acquiring sometime today, a new customer we talked about having to pass through cpi's and renewals and.
To your point.
They are three year contracts, but we are engaged with them even if it's a three year contract. They do have an anniversary date. This year. So it may not be a renewal, but we are engaged with with that book of business.
Pass through CPI costs, which we've continued to adjust based on what current economic conditions are and then the other thing I think that really showed discipline and I think engagement with customers and our flexibility and I think.
More nimbleness on our part is we talked a good game in terms of being able to pass through fees and surcharges and make adjustments.
And then we saw momentum coming out of Q1 with our ability to turn those on meaning youre, giving customers. The contractual amount of days in advance to let them know what's happening you're out in one on ones with them and I think based off of the tremendous amount of work that our commercial finance and operations teams have done.
We saw about a 5 million dollar yield.
Those fees and surcharges in Q in the first half of the year really I would say it was end of Q1, and then and then Q2 as they all Didnt turn on at the same time, and we're expecting that to yield about $20 million in the second half of the year, that's that significant for us, but I think we're also looking at it proactively if we need to make.
Any other adjustments.
To any of those surcharges or fees, if inflation were to take another big uptick if we were to see something else I think our position of being more flexible is is we are in a much different stead today than we had been over the course of the last few years and I think that's a testimony to the team.
And then David just wanted to add if you look at our overall retention rates. They are kind of consistent with the historical trends, which I think is indicative of what's can do you thing and I just wanted to clarify some receivables were higher than sales I may collections are higher and so for the last couple of months.
Okay. That's all great to hear thank you.
Thanks, David appreciate it.
Thank you.
Next question is from Scott Schneeberger from Oppenheimer. Scott. Your line is open. Please go ahead.
Thank you so much good morning, it's Daniel on for Scott.
Im curious on volume it sounds like volumes, congrats you might be better overall.
Coming into the back half can you elaborate a little bit on the segment level and give us a bit more color on the drivers.
Yes.
I think are you asking.
Sorry are you asking drivers, meaning our actual service providers and the staffing situation or the drivers of revenue growth across any of the businesses.
The segment drivers of volume.
Yes, I think I think a couple of things.
Here's the best way to answer what we're seeing I think from an industry perspective. So.
In terms of.
We're continuing in our plan for the second half of the year is continuing on a positive growth trajectory.
Organic revenue growth and that's in spite of I think from an industry perspective electric surgeries still are not back to pre COVID-19 levels, whether it's I think there has been an awful lot of discussion about health care labor shortages doctors nurses and support staff.
What we're very positive about is demand it seems to be there as is everything that we're monitoring says that there is there is a waiting list and.
Unfortunately, it isn't matching the ability for the industry to staff it so for us.
We're continuing to see growth, but certainly not we're not expecting it to be.
To have some big surge I think that's going to continue to steadily increase.
We do see Covid continuing to decline home.
Home testing vaccination declines.
Do we see that as a stand still but we're very positive over the fact that maritime has now been there in order to take the place of some of that the Covid decline as we had hoped so I see that continuing moving forward and then on the shred side I think we're still we're still not settled yet I don't think the industry has settled yet in terms of everybody being.
Back to a what is the new normal I know there are still some major tech companies and some really big companies.
That have set targets of September one.
The beginning of the new year, so, but yet we're still very positive with the shred business.
We continue to see stops are increasing.
And they have sequentially.
Since the great Lockdown, if you will so I think that's a pretty good industry outlook and maybe an idea of what we see.
We all know as demand as the volume comes back it will be in hospital rooms, it'll be in surgeries and procedures and I think that that as we still see staffing shortages in hospitals, we're not quite there yet.
Thank you that's very helpful shifting gears a bit too.
Operational efficiencies.
I can speak to how you're progressing with initiatives like automation of route optimization, and maybe give us a feel for how offsetting that is too.
Cost inflation, you're expecting thank you.
Yes, I think those are great questions and things that as we're getting more and more folks in the door and where we're building up the stericycle team.
We're going back to the.
The core transformation portion of who we want to be which is a far more efficient.
Company, So we did see gains and.
Going through the pandemic, leading up to the pandemic going through it.
And then staffing did.
It did hurt us, but our goal internally is whatever we're going to turn around and give anybody as a as a yearly increase we've got to figure out how to pay for it from productivity.
Our focus for second half of the year for us to continue to.
Drive results is we do need to see improved reductions in overtime.
We are very.
Very focused on metrics that we now have specifically on the shred side of the business with this new system.
We are very focused on an internal metrics that align with our financials to make sure that we are improving productivity, whether it's it's how we handle volume inside a plant.
Whether it's driver capabilities on road, but theres, an awful lot of efficiency there and then on a broader note. If you take a look at the modernization or the automation that we're putting in certainly conveyance and a lot of the capital expense that we're putting into many of our facilities is making a difference and then you've got bigger bigger items.
Like this SMS Revolution.
Pat newly patented technology for Sharps processing anytime that you can put in a change of equipment and you can take down a shift that is helping us in terms of we don't have to go hire new folks we can redeploy those resources to other areas, where we may already have staffing shortages.
And we're reducing costs as a result, and potentially improving service. So those are all very exciting for us we continue to drive it and I'm I'm thrilled that the team is still doing these things in spite of the you know a lot of the challenges that.
That we are facing so thanks for that question as you can tell I'm pretty excited about our about us getting back to.
Our operational efficiencies.
Great. Thank you.
Thank you as a reminder, if anyone would like to register a question. Please press star one on your telephone keypad.
Okay.
Okay.
We have no further questions. So I'll hand, the cases for any closing remarks.
Thank you. Thanks, Stacy we appreciate it to everyone listening on the call. We appreciate your continued interest and support in Stericycle and.
We also appreciate your shared excitement and our future. Thank you very much.
Yeah.
Thank you everyone for joining today's call you may now disconnect your lines and have a lovely day.
Okay.
Okay.