Frank ten Brink – EVP, CFO and Chief Administrative Officer Richard Kogler – EVP and COO Mark Miller – Chairman, President and CEO

Ryan Daniels – William Blair David Manthey – Baird Scott Levine – JP Morgan Jonathan Ellis – Merrill Lynch Jason Rodgers Scott Schneeberger – Oppenheimer & Co. Barry Mandel [ph]

Good afternoon, my name is Rachael and I will be your conference operator today. At this time I would like to welcome everyone to the Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. (Operator instructions) Thank you. I would now like to hand the call over to Mr. Frank ten Brink, Chief Financial Officer. Please go ahead sir.

Welcome to Stericycle's quarterly conference call. Joining me on today's call will be, Rich Kogler, COO; and Mark Miller, CEO. I will now read the Safe Harbor statement. Statements by Stericycle in this conference call that are not strictly historical are forward-looking. Forward-looking statements involve known and unknown risks, and should be viewed with caution. Factors described in the company's Form 10-K, 10-Q, as well as its other filings with the SEC could affect the company's actual results and could cause the company's actual results to differ materially from expected results. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after this date that may bear upon forward-looking statements. Now to the results. The results for the fourth quarter are as follows. Revenues grew $22.5 million, to $274 million, up 8.9% from $251.6 million in the fourth quarter of '07. Internal growth, for the company was $21.7 million or 8.7%, after adjusting for negative foreign exchange impact of $13.4 million. Domestic growth was 7.2% and international growth adjusted for exchange was 13.6%. Domestic growth consisted of SQ up internally over 13%, LQ up over 9% and returns management revenues of $15.3 million. Gross profit was $125.3 million or 45.7% of revenues and SG&A expense including amortization was $52.2 million or 19% of revenues. Net interest expense was $8 million and net income was $39.1 million or $0.45 per share. Now the balance sheet, at the end of the quarter the revolver borrowings were approximately $440 million. Currently, $225 million of our revolver is hedged at an average fixed rate of 2.81% at LIBOR plus 75 basis points. The remaining $215 million is floating at LIBOR plus 75 points or the prime rate, whichever is lower. The unused portion of the revolver debt at the end of this quarter was approximately $198 million. We purchased 534,768 shares of common stock on the open markets at an amount of approximately $27 million in the quarter. Cumulatively, we have purchased approximately 11.7 million shares and we still have authorization to purchase an additional 4.61 million shares. The CapEx in the quarter was $11.8 million and our DSO was 57 days. The cash provided from operations was $54.3 million for the quarter and $210.6 million year-to-date. And I will turn it over to Rich.

Thanks, Frank. We want to thank each member of our worldwide team for their solid performance and continued commitment to our customers and shareholders. We enjoyed strong sales growth in all of our business segments during the quarter. The SQG growth was primarily driven by Steri-Safe, with three out of four new Steri-Safe customers choosing select and preferred. Steri-Safe contributed approximately 63% of total small customer revenues. LQ sales growth was driven by the continued adoption of our Bio Systems offerings and new LQG med waste contracts. In summary, we ended Q4 with over 418,000 accounts of which over 407,000 were small and the remainder large. Now, I'll turn it over to Mark.

Thanks, Rich. I would now like to provide insight on our current outlook for 2009. Please keep in mind that these are forward-looking statements. During the fourth quarter, we completed 13 acquisitions, 8 domestic and 5 international. The incremental revenue impact in the fourth quarter was approximately $1.3 million. The annualized revenue of these acquisitions is approximately $40 million. Now keep in mind our guidance does not include future acquisitions or divestitures, and related costs, which would be expensed as a result of the new FASB 141 R. We believe that the analyst EPS estimates will be in the range of $2 to $2.04, which we are comfortable with. We believe that analyst revenue estimates will be in the range of $1.16 billion to $1.18 billion, depending on assumptions for growth and foreign exchange, and we believe analysts will have estimates for net income between $175 million to $179 million, depending upon assumptions for margin improvement and interest expenses. We believe analysts will estimates for free cash flow of $175 million and $185 million with capital expenditures or CapEx anticipated between $50 million and $55 million. In closing, we are very exited about the tremendous growth for opportunities in 2009 and beyond. We thank you for your time, and operator we will now open the call up to Q&A.

(Operator instructions) Our first question comes from the line of Ryan Daniels. You line is open sir. Ryan Daniels – William Blair: Hi, good evening guys. If I could just ask a couple of quick housekeeping upfront, could you give us the total Steri-Safe accounts and then percent on premium, and then the additions for Bio and LQG during the quarter?

Total Steri-Safe is a little bit more than 132,000 and percent on select and premium is just a little bit over 29%. And then LQG adds were 56 and Bio Systems were 71 new accounts. Ryan Daniels – William Blair: Okay, great. And then Frank, I think you mentioned upfront that if we adjust for FX the organic revenue growth was fairly close to 9%, I assume there is a little bit of headwind in there for fuel too given the drop in energy prices we have seen. Have you guys tried to determine what organic growth would look like if we kind of out that impact on a year-over-year basis?

Year-over-year it is fairly about a couple of percentage points. Ryan Daniels – William Blair: It will be a little bit over 10%?

Yes. Ryan Daniels – William Blair: Okay great. And can you discuss – do you have any hedging programs in place, I know most of your costs obviously are incurred over in the foreign operations, but did you hedge your FX at all, is that pressuring the bottom line given the precipitous drop we have seen particularly in the pound over the last few months.

No, we're kind of naturally hedged as a service business since all our cost in country is also generated. It is mostly payroll. We don't make anything in one country and ship it to another. So the intercompanies and the like. We have intercompany loans. Those are not hedged either, though there would maybe some exposure. We had some in the fourth quarter, which is why we had higher other income and expense and that was probably about $850,000, which was an intercompany predominantly between the UK and Ireland. But that was more intercompany borrowings from each other. Ryan Daniels – William Blair: Okay that is very helpful, and then two more broad ones and then I will hop back off into the queue. Did you guys have any success during the period in trying to hold some of the energy surcharges or maybe lagging those a little bit? In turn, did that drive any of the pretty substantial operating profit improvement we saw year-over-year during the quarter?

Yes, you know, our goal with fuel surcharges has always been to recover the impact of the increased fuel costs and the way we do it, which we have discussed many times is, it is a continuous process where we first analyze our cost, and then we look at customer contracts and we attempt to match the two. So, our goal really is to recover our cost, of course, as we said before it is a lagging process and in some cases you're not able to recover the cost right away. I think the thing probably that everybody just needs to keep in mind is when you are passing through surcharges or reducing surcharges it can have a corresponding impact on your revenue and your gross margin percentage comparables period over period. Ryan Daniels – William Blair: Okay, that is helpful. And then the last question I had, I know there has been some new noise out of the EPA about pharmaceutical waste and changing that to hazardous waste, is that something that the potential growth driver for you depending on how that gets finalized coming up here in February.

(inaudible) rates are still being discussed, but we already are involved in pharma waste for our large pharmacy customers, and we positioned ourselves irrespective of those rates to continue to expand that business. Ryan Daniels – William Blair: But would those if they come out like they are currently written via a growth driver, is that kind of neutral for you guys?

I think it could be an opportunity since this will be a harder hit on some of the incinerators that are on-site at hospitals, and that could be an opportunity for us. It is a small market that is remaining but that could be one. Ryan Daniels – William Blair: Okay, perfect. Thanks a lot guys. Nice quarter.

Thank you. Our next question comes from the line of David Manthey. Your line is open sir. David Manthey – Baird: Hi, thank you. You mentioned that 67% of your SQ revenues are Steri-Safe, could you talk about the percent of total SQ growth in the fourth quarter that was driven by Steri-Safe programs?

We don't break that out. We don't break out how much the growth is from different components of volume and alike. David Manthey – Baird: Okay. Second, in terms of the currency impact, I don't know if you mentioned specifically what the impact was on top line and bottom line, but could you talk about how that was relative to your expectations when you gave guidance back in October?

I think if you compare it, it was $13.4 million compared to the prior year. If you compare it to what really hit it was in the third quarter, we were probably about $10.8 million down compared to the third quarter, and when we gave guidance, the guidance that we gave probably is – probably about $3 million delta between our expectations from that time and what actually came in. David Manthey – Baird: Okay, and then final question for you, did you talk about what you would consider the most cyclical part of your business if any?

Really there is very little cyclical nature to the business. The only kinds of things you see that are really very minor and not material in variances, as you might say in a pediatrician’s office towards the late summer, early fall as kids are getting ready to go for school and shops. There is some minor increase, but it is really not meaningful at all and how it affects our numbers. David Manthey – Baird: Great. Okay, thanks guys.

Thank you. Our next question comes from the line of Bob Levine; your line is open sir. Scott Levine – JP Morgan: This is Scott Levine, JP Morgan; I am guessing that's me. With regard to acquisitions, obviously a pickup in activity, were any of the deals notably larger than any of the others or were they all kind of roughly same size approximately give or take. And can you remind us maybe or update us regarding your thoughts on what the acquisition pipeline activity might look like in a slowing economy this year?

Yes, the acquisition pipeline is very strong. We are definitely north of $50 million on revenues. It is robust. There is definitely less competition out there for deals. We did 13 deals in Q4 that is a total of 22 in 08. In the last quarter, 8 were in the US as Mark said, 5 were in five different countries. So nicely spread. The sizes, no one really stands out fairly much across and so I think a very good quarter for us. I mean it looks, again the team has been increased to take advantage of the market that we are in and so clearly want to invest more and do more. We think that the benefit of synergies that we can give gets a better selling and price for a seller and still a very good IRR for us. So, we think it is a very good environment for us. Scott Levine – JP Morgan: Any of the five internationals in any new markets or all an existing?

They are all in existing. It mainly was in the UK, Ireland, Chile, Mexico and Canada. Scott Levine – JP Morgan: Okay, and then turning to the returns business, I think you said $15 million in changing revenue, a little bit lighter than your average quarter in ‘08, would you – would you guys update the returns forecast? I was thinking you guys had 78 million to 88 million or so forecasted in terms of guidance for ‘09. Is there any update to that?

Yes, actually we are taking our guidance up for that sector to a goal of 90 million to 100 million for 2009. One of the acquisitions, we did was in that space and we will continue to expand our footprint and we continue to see an awful lot of focus on attention to recalls. And it is just busy now; it is one of the things that is tough to call a timing on. Scott Levine – JP Morgan: Got you. There is no change to the organic growth outlook there. One last one, you know, with regard to EPA regulation here in – the EPA and their crackdown on incineration, are you seeing any opportunity for increased outsourcing potentially in your LQ segment there?

Yes, I think it is obvious whenever the EPA tightens up the incinerator operating rigs and it really falls disproportionately on the small incinerators, some of the hospital incinerators and that will provide an opportunity for us to become the outsourced provider for them when they shut down. Scott Levine – JP Morgan: Okay, thank you.

Thank you. Our next question comes from the line of Jonathan Ellis. Your line is open. Jonathan Ellis – Merrill Lynch: Great, thanks and good evening guys. One of you just on the acquisition front, the company you mentioned in the returns management business, could you talk a little bit about which end markets within the returns management business that company serves?

For the same type of customers that we serve today in the universe where we have products being pulled back from the marketplace for either written credit or a properly managed recall and they had service offering in that same capability. Jonathan Ellis – Merrill Lynch: Okay, but just to be clear, I know historically your focus had been the pharmaceutical market. Does this company's serve other markets as well?

Yes, they service as we do consumer-based products as well as pharma products. Jonathan Ellis – Merrill Lynch: Okay, and could you speak to the multiples you paid for these, both domestically and abroad.

If you look at it on an MPV because it is about the price was little bit to half, more than half in notes and the other half was cash upfront. It was a little bit less than six times EBITDA multiple. Jonathan Ellis – Merrill Lynch: Okay, and the other companies you acquired in the United States as well as those abroad are they all traditional medical-based companies or they in other types of businesses?

Yes, there were on the regulator waste business, yes. Jonathan Ellis – Merrill Lynch: Okay, great. And just in terms of your SQ and LQ growth for the quarter, should we assume that the impact from fuel surcharges, which you mentioned I think was a couple of percentage points on the top line, would that be fairly evenly distributed across both SQ and LQ?

Yes. Jonathan Ellis – Merrill Lynch: Okay, and then just finally on your outlook for the coming year, any update to your growth targets for the domestic business and the international business, in terms of I think you said 8% to 10% domestic, 7% to 9% international.

Yes, I think if you look right now it's about 8% to 10% for our SQ market and if you look at LQ, international 5% to 8%. Jonathan Ellis – Merrill Lynch: Okay, I am sorry, and you said the international market was–

That is the same 5% to 8%. Jonathan Ellis – Merrill Lynch: Okay, thank you guys.

Thank you. (Operator instructions) Our next question is from Jason Rodgers; your line is open sir.

Good afternoon. Looking at the field cost in the quarter, I'm not sure if you gave this out but you have what that is as percent of revenue, fuel and energy costs were in the quarter?

6%.

8.0.

6.0.

It was 7.6 last quarter, 6 this quarter. And that is that energy charge, fuel and energy.

Okay and how much did that detract from the gross margin looking versus last year?

I mean if you again look year-over-year you're talking overall about a couple of percentage points as I said as part of the surcharge.

Okay, and as it stands now with fuel costs, do you see that number continuing to decline?

Well, I think I stated before we have a process and methodology where we continue to look at it, and we will analyze what the surcharge is, match it up with the customer contract and our cost. Right now fuel seems to be stable, but no it is stable for a week and then it continues to move around. So, it is really an ongoing process and I don't think anybody can forecast (inaudible) number. We are really diesel and energy based; we are not gasoline-based. So, we are in a little different market than what you see at the pump.

Okay, and looking at the returns programs, you mentioned $90 million $100 million as the target for ‘09, do you have what that figure was in total for 2008.

74 million.

Okay, and do you have a target for Bio Systems for 2009?

In terms of number of accounts we will probably be sort of comparable where we were in ‘08, north of 200 new accounts.

Okay, and have you seen any changes given some of the constraints in budgets of hospitals in the competitive landscape and the competition trying to lower prices in the current environment?

No, we actually haven't seen that. We have a pretty broad menu of services with Bio Systems to RMW as a pharma waste, training. So, I mean, we go in, we sort of put the whole palette in front of the hospital and I think it provides good value to them and obviously it gives many different ways to service them and increase our revenue.

And no changes as far as hospital spending for your services.

No, we really look at more of those changes, what we have seen and heard of is more of a CapEx within hospitals but not on a day-to-day like operational and on us we are an necessary service.

Okay, and those acquisitions you made during the quarter, did I hear you right, did you mention only one was in the returns management business. The rest was –

That is correct. Out of the eight domestic, one was in the returns management.

Okay, all right. Thank you.

: : Scott Schneeberger – Oppenheimer & Co.: Thanks, good evening. Following up on the hospital spending, do you guys foresee if there is a sustained downturn in the economy throughout the year and pressure on hospital budgets and hospital volumes, you know, what is your sensitivity to that? Just a broad overview question.

Well, I think what we have seen in the past and what we have seen in these recent times, we haven't seen volume decrease caused by the economy. Also, as a reminder to everybody about roughly 84% of our revenue stream comes from the relationship or billing where it is a monthly service. So it is based on a container activity, not a unit like a pound or volume driven. And if you look at the type of volumes even digging in different hospitals and different types of clinics, we just don't see that the change of volume in terms of procedures. There may be people not doing certain tests or procedures but it doesn't affect what is ending up in our waste stream or the service levels that we are providing. Scott Schneeberger – Oppenheimer & Co.: Okay, thanks. And on the SQG side, have you ever seen during past economic downturns, perhaps consolidation and might you see some of your customers leave the system in a sustained downturn?

I think you just see sometimes or either may – people may retire or combine offices of join group. But often for us that creates opportunity because when there is a change of infrastructure, there is still a need for service of some kind, and this gives us an opportunity to talk about the Steri-Safe programs and the high level of services and they still generate waste. So even if you take a regulatory framework in the States, it may require 28 days or 32 days minimum storage time. They may be set up on a monthly service and that is what really drives the billing modality as to service. So whether that container that we pick up has 10% less or 10% more than average, it really doesn't really affect our cost structures or billing structures. Scott Schneeberger – Oppenheimer & Co.: Okay, thanks. And so just to reconfirm it, sounds like the organic – the domestic organic growth remains 8% to 10% SQG and 5% to 8% LQG. So really the only change that we see in the updated guidance is from the acquisitions in the quarter.

Again those rates do not include the acquisition. So that is correct. I mean if you look for the guidance change from last time, it is up about $0.03 because of the acquisitions. That is correct. You then have kind of your FX headwinds, the foreign exchange into international units, and that is an offset with some favorable interest rates in productivity and mix. Scott Schneeberger – Oppenheimer & Co.: Great, that is helpful. Thanks. On the acquisitions, both domestically and excluding the one of RMS, domestically and internationally, could you give a little color on mix of LQG, SQG there?

It is too early normally within these deals, but I would say overall I think it is not bad to assume may be a 50-50 mix. Scott Schneeberger – Oppenheimer & Co.: Great, thanks. That is helpful. Just a couple of quick other ones, there is a $1.5 million expense on the other expense line, could you take us little deeper on what that is?

Say that again. Scott Schneeberger – Oppenheimer & Co.: On the – in the fourth quarter on the other expense line, $1.5 million charge.

The other was higher and that was predominantly, we normally in a quarter would have maybe 400,000 to 500,000 in a quarter, now it is like 1 million, 4 million, 5 million. That was predominantly intercompany foreign exchange. They were some payables due between the UK and Ireland and that was predominantly a shift for them between the pound and the euro and that was about $850,000. So, it is pretty much a one time. Scott Schneeberger – Oppenheimer & Co.: Thanks, and finally, any change in what you're seeing in receivables that are – things that are past 90 days perhaps, any just trying to gauge customer out there?

Collections are strong, DSO was down a day in the quarter and we have continued to see good collection sense. Scott Schneeberger – Oppenheimer & Co.: Great, thanks very much.

:

Yes, could you discuss the gross margin trends in both LQ and SQ?

I think if you look again right now margins in SQ mid-to-high 50s and LQ in the mid 20s. Those have obviously come down a little bit in the overall trend in the last year because you had that compression as a result of the fuel surcharge. Again that is just surcharge and then as Rich already explained, revenue is up, but you kind of get $1 revenue and $1 cost.

Right, right. What is the average revenue for a Bio System customer these days?

It is still about 35,000-40,000.

And what is going on with pricing?

Nothing, it is fairly stable and then really no different swings or whatever versus the past.

Thanks.

Thank you. There are no further questions at this time.

So we thank you everybody for your time and attention. We look forward to bringing in another great year and we will talk to you in 90 days. All the best.

This concludes today's conference call. You may now disconnect.