Frank J.M. ten Brink - Executive Vice President, Chief Financial Officer and Chief Administrative Officer Richard T. Kogler - Executive Vice President and Chief Operating Officer Mark C. Miller - Chairman, President and Chief Executive Officer

Ryan Daniels - William Blair Dave Manthey - BAIRD Scott Schneeberger - Oppenheimer & Co. Jonathan Ellis - Merrill Lynch Scott Levine - JP Morgan Greg Halter - Soleil Group Chris Sessing - AMI Asset Management

Good afternoon. My name is Barbara, and I will be your conference operator today. At this time, I would like to welcome every one to the Stericycle First Quarter Earnings 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). At this time, I would like to turn the call over to Mr. Frank ten Brink, Chief Financial Officer. Please go ahead, sir. Frank J.M. ten Brink: Thank you. 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. With that, now, the results. The results for the first quarter are as follows. Revenues grew 22.3 million to 274.1 million, up 8.8% from 254.8 million in the first quarter of '08. Revenues grew 15.1%, when adjusted for the unfavorable foreign exchange impact of 16.1 million. Domestic internal growth, excluding returns management was up 8.4%, and international internal growth, adjusted for exchange, was 9.8%. Domestic internal growth consisted of small quantity up 10%, and large quantity up 6%. The returns management revenues were 19.7 million in the quarter. Gross profit was a 127.8 million or 46.1% of revenues, and SG&A expense, including amortization, was 52.9 million or 19.1% of revenues. Net interest expense was 7.9 million, and net income was 40.7 million or $0.47 per share. At the end of the quarter, the revolver borrowings were approximately 420 million. 225 million of our revolver is hedged at an average fix of 2.81% LIBOR rate, plus 75 basis points. The remaining 195 million is floating at LIBOR plus 75 basis points, or the prime rate, whichever is lower. The unused portion of the revolver debt at the end of the quarter was approximately 222 million. We repurchased 536,346 shares of common stock on the open market at an amount of approximately 25.5 million in the quarter. And cumulatively, we've now purchased approximately 12.2 million shares, and we still have authorization to purchase an additional 4 million shares. The CapEx in the quarter was 8.4 million, and our DSO was 53 days. The cash provided from operations was $76 million for the quarter. And I will now turn it over to Rich. Richard T. Kogler: Thanks Frank. We want to thank each member of our worldwide team for the solid performance and continued commitment to our customers and shareholders. In the quarter, we enjoyed strong sales growth in all of our business segments. The SQG growth was primarily driven by Steri-Safe, with three out of four of new Steri-Safe customers choosing select and preferred. Steri-Safe contributed over 64% of total small customer revenues. LQ sales growth was driven by the continued adoption of our Bio Systems offering and new LQG med waste contracts. In summary, we ended Q4 with over 420,000 accounts, of which over 410,000 were small, and the remainder large. And now, I will turn it over to Mark. Mark C. Miller: Thanks Rich. I would now like to provide an insight on our current outlook for 2009. Please keep in mind that these are forward-looking statements. At the end of the first quarter, we completed three domestic acquisitions. In addition, we close on the UK Cliniserve acquisition in April. The annualized revenues of these four acquisitions is approximately $17 million. Now keep in mind our guidance does not include future acquisitions or divestitures and related costs, which will be expensed as a result of the new FASB 141R. We believe that the analyst EPS estimates will be in the range of $2.01 to $2.06, which we are comfortable with. We believe analyst revenue estimates will be in the range of 1.16 to 1.18 billion, depending on the assumptions for growth and foreign exchange. And we believe analysts will have estimates for net income between 175 and a 179 million, depending on assumptions on margin improvement and interest expense. Analysts will have estimates for free cash flow of between 180 and 187 million, with CapEx anticipated between 50 and 55 million. In closing, we are very excited about the tremendous growth opportunities in 2009 and beyond. We thank you for your time. And we'll now open it up to question and answer.

(Operator Instructions). Your first question comes from the line of Ryan Daniels of William Blair. Ryan Daniels - William Blair: William Blair:} Yeah guys. Good afternoon. Mark, a quick follow-up on the Cliniserve deal. I understand that, that didn't close until the second quarter. But, it sounds like that is part of the 17 million annual acquired revenue, and therefore in your guidance, is that fair?

That is correct. Ryan Daniels - William Blair: Okay, perfect. And then, maybe a couple of bigger picture ones. I know recently, you have discussed adding a bit more resources on the M&A front. You've had a few active quarters. And I am curious, if you could provide a little more color there, is it more opportunities, new market potential, new offerings that you're targeting, any color there around the M&A outlook would be great?

No, the pipeline remains very robust. We have definitely over 50 million into pipeline, despite having done those deals. And good domestic, and that's again a number for the North American market. But internationally it's active. So overall, we are very energized, and the team is doing a great job. Ryan Daniels - William Blair: Okay, great. And maybe now that we're sitting four months into the year, I am just curious if you guys could comment on reluctance that you're seeing with the customer base about switching to Steri-Safe or converting up service levels, anything like that with the macro issues. Certainly, it doesn't look to be the case in the numbers. But, any color there?

I think I can address that. I think the sales team is performing well. And as you said, it shows in the numbers. The offerings, I think, are very still very attractive, in terms of giving value to the customers. And that's why we still have a very high customer convergence to the premium and select levels, as well as many of the new customers are going right into those levels as I indicated in my prepared remarks. Ryan Daniels - William Blair: Sure. And then, a few things for our model, can you actually give us the Steri-Safe clients and the percent on premium. And then, just the LQG business, the adds for Bio Systems and waste management?

Right now the total number of Steri-Safe customers is over a 135,000. And the percent on the premium levels is 30.4%. The LQ adds for the quarter were 56 or 58, pardon me, LQG contracts and 74 Bio Systems contracts. Ryan Daniels - William Blair: Okay, great. And then, maybe one last, quick one just on FX. If we think about the forward-looking guidance, are you guys assuming a specific, I am sure you are a dollar-to-pound, are you kind of modeling $1.40, if you will? Just to get a feel for how revenue could fluctuate based on where the dollar goes?

I think if you look right now, the forecast would not for us assume any major change versus the last guidance and the exchange rates we used at that time. Ryan Daniels - William Blair: Okay. So, pretty similar. Great. Thanks a lot guys.

And your next question comes from the line of David Manthey of Robert W. Baird. Dave Manthey - BAIRD: Hi guys, good afternoon. Could you tell us, is $0.5 million about what we should expect for acquisition-related expenses going forward?

I think that surely will depend on quarter-to-quarter. We don't include it in guidance. And in comparison to prior periods and prior years, we kind of from a point of view, excluded in comparing ourselves, because previously, as we all know, it was capitalized into the transaction. But again, it will vary from quarter-to-quarter. And it's difficult to predict. Dave Manthey - BAIRD: Okay. And in terms of that variability Frank, when you were talking from 0.5 million to 2 million, or were you talking from 0.5 million to 6 or 700,000?

Again, depends on deal volume. And so, it really depends. It's tough for me to put a number to that. It won't be 10 million, I can tell you that. But, it will certainly be commensurate with the transaction sizes that we're doing. Dave Manthey - BAIRD: Okay. And second, is there any impact from more aggressive EPA, either positive or negative, on your business?

I think the EPA effect is positive, as we continue to see more focus on trying to look at segregation of materials is topping our returns. And pharma services that the pilots were doing. I think the longer term affect of the change in EPA rates and incineration which will be several years out will have a favorable effect. So, and I think, those would be longer term activities. Dave Manthey - BAIRD: Great, thank you.

: Your next question comes from the line of Scott Schneeberger of Oppenheimer. Scott Schneeberger - Oppenheimer & Co.: Thanks. Good afternoon. I guess, if we could start out back on the acquisitions, could you guys break out magnitude of Cliniserve, or just kind of degree of magnitude within the four there?

I think if you look at the annualized 17 million, you're probably somewhere between the 15 and 16, somewhere in that range, depending on exchange rate for Cliniserve. Scott Schneeberger - Oppenheimer & Co.: Okay. That makes the other three fairly small. Could you give us a little more detail on those geographical in size?

Within the U.S. predominantly, let's see one was west, two very pretty much east. But, they were small deals, no doubt. The larger one was Cliniserve. Scott Schneeberger - Oppenheimer & Co.: Okay. So, those other three were all SQGs then?

They were predominantly SQG area. And at least more than half was SQG of there revenues. Yes. Scott Schneeberger - Oppenheimer & Co.: Okay, thanks. Could you speak to the just the environment for waste volumes at your hospital customers? Your numbers are holding up well, but just what's your -- what you are seeing there?

What we're seeing right now is that the volumes are holding pretty well. So, I think it's also important to remember that there over 80% of our business is really not volume driven. So, we haven't seen material effect. I mean, we do see some minor effects. I mean, a small dentist office may be closing, or something like that. But that really isn't material. And so, that's why I am pretty comfortable in saying right now that our business has not been significantly affected. Of course, the international side, we're dealing with a lot of national health organizations, where it's really not an issue at all. Scott Schneeberger - Oppenheimer & Co.: Okay, thanks. In the RMS business, what -- any change to what you anticipate for the year? Any -- is that fourth quarter sizeable acquisition progressing as expected? And I guess, just a kind of big picture, given the economic downturn, would you anticipate fewer or more recalls in such an environment? Thanks.

I think, first of all, our guidance is still the same. And we are -- our goal is to be 90 to a 100 in that space. Clearly, it's hard to predict the size of the activities. But, I think we are seeing the trends of more and more awareness of the capabilities. We are capturing more and more recalls. I think also in the environment the current political and legal environment is also very conducive to more attention and focus on recalls. But, for us, all we really need is wanted a few big ones. And we'd make our numbers pretty easily. Scott Schneeberger - Oppenheimer & Co.: Okay, thanks. Shifting gears again, pharmaceutical waste disposal of hospitals, seems like a large opportunity. And from what I am hearing, it's pilot is progressing into something somewhat larger. Could you speak to potential opportunity there and pricing strategy to the extent that you can, thanks.

Yes, I think we are finishing up the pilot as you indicated. We've had pretty good acceptance by the customers. We think that it's a very solid offering, and it s an offering that kind of ducktails with the other package of services that we bring to the LQG market. So, we'll continue to move ahead with it. And I think it's really too early to start talking about the average size revenue things like that. But, it's been very well accepted and as you indicated we're moving our pilot. Scott Schneeberger - Oppenheimer & Co.: Thanks. And one final one, any thoughts on swine food, and this could have an impact. We have sizeable in Mexico. And any potential thoughts on the international?

Yeah, I think, first of all, at this point we don't see any material impact to add. I think, it's on the global scale, it's hard to tell at this point what will be the ramifications and rollout. I think our initial read is that to CDC and WHRO on top of it. They're following up with people. They're trying to look at the right things. What would likely happen, we can have impact where the more people go for testing or go to see their doctor at hospital on any minor thing is probably not going to drive a lot of volume in the meaningful acres of be, maybe those throat swaps (ph) and cultures and gloves and masks, that type of thing. But, it's not a huge number. That wouldn't make anything in at this point. Scott Schneeberger - Oppenheimer & Co.: Okay. Thanks very much.

Your next question comes from the line of Jonathan Ellis of Merrill Lynch. Jonathan Ellis - Merrill Lynch: Thanks. Good evening, guys. First off, if we could just talk about the three domestic acquisitions. You mentioned the geographic breakdown, but I am wondering, are those all three traditional medical waste companies?

Yes, they were. Jonathan Ellis - Merrill Lynch: Okay. And Cliniserve, could you talk I know in the past, there has been discussion that Cliniserve has a higher mix of small quantity versus large quantity customers. But, would you be able to quantify as you do in directional sense of how much of the revenue is small quantity versus large quantity for Cliniserve?

Over half of their revenues would be SQ related. We are still fine tuning that obviously. When you get the customer list and you're really defining that. But, that's kind of the initial picture. Jonathan Ellis - Merrill Lynch: I see. And could you, in light of the messrs (ph) Cliniserve, can you give us an update on where your total mix of SQ versus LQ is in UK. And perhaps, may be pro forma for the Cliniserve transaction?

Yes, I think with Clini it did probably in the mid-20s as a percent of their total revenue. Jonathan Ellis - Merrill Lynch: Okay, great. And I know recently you established subsidiaries in Brazil and Japan. And I am wondering, can you talk about within your acquisition pipeline. I know you don't quantify what the size is abroad. But, are there any potential acquisitions in Brazil and Japan. Or are those much more longer term opportunities at this point?

Again on acquisitions, we will do transactions when we're ready. And obviously, to be ready in countries you need to have the infrastructure, you need to built the relationships. And that's really what's going on. We've been a little bit longer, as you know, already in Japan. So, that's been around with the joint ventures we have there and really, the licensing. So -- but Brazil is an opportunity for us. And we are learning more about that country. And that gives us a chance to then do a transaction and be ready to do it by having that subsidiary in place. Jonathan Ellis - Merrill Lynch: Okay, great. And then, just on the accounts base this quarter and you provided the overall numbers. But, I am wondering, for instance, on the LQ contract as a 58, does that include acquisitions that have been made this quarter? Or is that organic wins?

No, that's both. That total number is both acquisitions in there as well as the globe. Jonathan Ellis - Merrill Lynch: Okay. And would you be able to break down, what the contribution was from acquisitions versus organic?

We normally don't totally break it. But Rich already had given you that were 58 (ph) on the LQ side. Jonathan Ellis - Merrill Lynch: Okay. And this 58 news (ph) you're saying was all...

Those were organic, yeah. Jonathan Ellis - Merrill Lynch: Okay. Those were all organic.

Yeah, just to clarify again, because 58 medical waste contracts are all new organic growth, 74 new Bio Systems contract. What Frank was referring to is the total customer count, LQ which is the probably around 10,000 total LQ customers. Jonathan Ellis - Merrill Lynch: Okay. I see. And then just on the small quantity side, I don't know would you be able to give us some sense. I realize you haven't given this in the past. But, maybe even directionally, did more of the growth in the account base come from acquisitions versus organic this quarter, or vice versa?

More came from organic this quarter. Jonathan Ellis - Merrill Lynch: Okay, great. And then just finally, if you could talk a little bit, I know that there was a division you recently launched, specialty waste solutions division. And I'm wondering, maybe if could talk a little bit about what the strategy is there. And I realize it's probably in embryonic stage, reminder sitting (ph) it has to do with our offering document shredding, and spill management, and those types of services to customers. Can you talk a little bit about, are you focusing on large quantity versus small quantity. Is it something you do with the internal personnel or use subcontractors? Maybe a little bit of color around this division?

The group was really established, because once in a while, we have acquisitions that may also do some document shredding or some e-waste (ph). It's very immaterial. It's not a main focus. And as a part of that service coming with those acquisitions, we obviously continued to service those with those customers. And that's where that service is really residing. There is no specific focus from that point on that to really in that sense make it a lot bigger. But, it is more that have came in through acquisitions. Jonathan Ellis - Merrill Lynch: I see. So, you're just basically kind of formalizing the assets you already have as opposed to launch a new platform for a significant growth going forward.

Correct and it's more of division and not of division, it's more a legal entity issue, than it is really a separate division for that matter. Jonathan Ellis - Merrill Lynch: Okay, great. And just one final question from a cash flow standpoint, but based on my math, DSOs were the lowest point they've been since the first quarter of '05. And I'm just wondering, is there any reason why we may see more of an acceleration than we typically do on a seasonal basis in 2Q and 3Q, in terms of DSOs?

No, I think normally Q1 is a little bit better internationally. It has some prepaids (ph) in there. If you look historically, Q1 has been a stronger one. I think still, from an overall picture point of view, we're looking at mid-50s to high-50s, is what our trend has been. And that's a good number to hold to. I don't expect -- we're going to work hard to keep it down and to bring it down. Mark is sitting next to me and saying, Hey, common let's go. But, I think from a planning and forecasting honestly, it's conservative to leave it in the mid to high 50s. Jonathan Ellis - Merrill Lynch: Great. Thanks guys.

(Operator Instructions). Your next question comes from the line of Scott Levine of JP Morgan. Scott Levine - JP Morgan: Good afternoon, guys.

Good afternoon. Scott Levine - JP Morgan: Looks like, the free cash flow guidance coming up a little bit here. Is that purely the flow through on acquisitions, or are there any other changes working capital management or otherwise that are driving that number higher?

No, I think overall, we obviously had a strong first quarter. I think the working capital is going well. The investment we're making, and the focus is working. So, that part acquisitions contribute a little bit to that. So, I think the two main ones are working cap and acquisitions. And in Q1, CapEx was a little bit lower. So, it will help the free cash flow number just slightly. But, I mean, we are talking 2 to 3 million from that part. Scott Levine - JP Morgan: Okay and there is no change to the CapEx solid for the full year?

The full year we've still count kind of as a 50 to 55 from a range point of view, million dollars. Scott Levine - JP Morgan: Yes, but just about downside and to that number potentially, or is that kind of a good mean and steady...

No, that is maintenance and growth. We've always said that we're somewhere between the 4 to 5% of revenues. And so, it's more a timing that this quarter it was little bit lower. That's why for the year, we still feel that the 50 to 55 is a good number. And that includes growth again. Scott Levine - JP Morgan: Includes growth, okay. Turning to fuel really quickly, could you rough out again, the impact on the top-line and potentially, I don't know if it's possible to do so on the margin as well, how much the decline year-over-year roughly speaking. I think you've been talking about a 100, 200 basis point or so hit, or yeah, hit to the top-line last quarter. Is it roughly the same this quarter?

Yeah, I think overall, there is a bunny (ph) in the quarter just from the overall picture and fuel being lower a little bit. And so, it's a little bit. That contributes obviously, to the gross margin. And we'll see what still is going to happen for the rest of the year? Scott Levine - JP Morgan: Got you. One last one, very quickly, can you remind on the interest rates, fixed versus floating, total mix of debt?

We are probably fairly similar to last quarter, which was about just north of 70% was fixed, and the rest was variable. Scott Levine - JP Morgan: Okay, great. Thank you.

And the last question currently in queue is from the line of Greg Halter of Great Lakes Review. Greg Halter - Soleil Group: Yes, thank you. And I don't know, on the last question there, do you have the percent that energy was as a relation to revenue?

For the quarter, it was 5.1% for total energy. Greg Halter - Soleil Group: Total energy, okay. And is international now around, and I guess, maybe this would include Cliniserve, but around 24, 25% of your total business?

No, it's about -- in fact, because of the foreign exchange, we're almost 20%, 19.9. Greg Halter - Soleil Group: Okay. So, it's good.

Cliniserve wasn't in the quarter yet, okay. So, that is for the quarter Q1, not for the year. Greg Halter - Soleil Group: Okay. And I noticed on your website that you are handling the Postasio (ph) recall. Was any of that in the Q1 returns figure?

Very smaller amount. And typically, with that type of a product, it's more the communication, notification spot checking the like, because consumer would throw out that kind of product away. And it's really more just the infrastructure capabilities activity. Greg Halter - Soleil Group: Okay. So, that's a smaller type that you would handle in that instant?

Yeah. Greg Halter - Soleil Group: Okay. Thank you very much.

: (Operator Instructions). The next question comes from the line of Chris Sessing of AMI Asset Management. Chris Sessing - AMI Asset Management: Yeah, thanks for taking the call, my question. Given that the Cliniserve was kind of a tough one to get through. Do you think this is pretty much ends the acquisition activity in the UK?

No, not at all. I think the focus of the OFT was clearly, on specifically treatment, and incineration is still one of their main focus points. And there is many other m opportunities, both with the med waste and adjacent that we see opportunities within the UK for growth that have nothing to do with treatment at times. So, no, there is clearly opportunities there. Chris Sessing - AMI Asset Management: Okay. Thanks.

And gentlemen, there are no other questions in the queue at this time.

Well, we thank you everybody. And we look forward to having a great year and seeing you again.

This does conclude today's conference call. You may now disconnect.