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

Ryan Daniels – William Blair Scott Levine – JP Morgan Scott Schneeberger – Oppenheimer & Co. Jonathan Ellis – Merrill Lynch Dave Manthey – Robert W. Baird

Good afternoon. My name is Abigail, and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2009 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) I would like to turn the call over to Mr. Frank ten Brink, Chief Financial Officer. Sir, please go ahead.

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. Now for the results of the second quarter, revenues grew $11.5 million to $289.3 million, up 4.1% from $277.8 million in the second quarter of '08. Revenues grew 9.3%, when adjusted for the unfavorable foreign exchange impact of $14.3 million. Domestic internal growth excluding returns management was up 7.7% and international internal growth adjusted for exchange was 6.4%. Domestic internal growth consisted of SQ up 9% and LQ up 6%. Returns management revenues were $18.3 million in the quarter. Gross profit was $136.5 million or 47.2% of revenues and SG&A expense excluding transactional expenses related to acquisitions were $55.7 million or 19.2% of revenues. Net interest expense was $8.2 million and net income was $43.9 million or $0.51 per share on an as reported basis and $0.52 adjusted for transaction expenses related to acquisitions. At the end of the quarter the revolver borrowings were approximately $370 million. On June 24 ’09 we entered into a three-year term loan and initially borrowed $50 million. Since then we increased the borrowings by $145 million and we also have signed commitments for an additional $20 million. The proceeds of this new $215 million term loan will be used to repay the revolver facility. The interest rate on our new term loan ranges from 2.75% to 3.5% over LIBOR based and it is based on the company’s leverage. We anticipate that our after-tax interest cost for the remainder of ’09 will increase by approximately $1.8 million as a result of this new facility. The unused portion of the revolver debt at the end of the quarter was approximately $250 million and adjusted for the new term loan would have been $465 million. We repurchased 40,162 shares of common stock on the open market in an amount of $1.9 million in the quarter. Cumulative we have purchased approximately 12.2 million shares and we still have authorization to purchase approximately 4 million shares. Our capital spending was $9.5 million in the quarter, our DSO was 53 days and our cash provided from operations was $49.9 million for the quarter and $126.2 million year to date. I will now 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. During the quarter we enjoyed strong sales growth in all of our business segments. The SQG growth was primarily driven by Steri-Safe with over 80% of new Steri-Safe customers choosing select and preferred. Steri-Safe contributed approximately 67% 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 Q2 with over 430,000 accounts of which over 419,000 were small, and the remainder large. And now, I will turn it over to Mark.

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. In the second quarter, we completed five domestic and one additional international acquisition. The annualized revenue of these six acquisitions is over $14 million. Keep in mind our guidance does not include future acquisitions or divestitures and acquisition costs, which are now expensed for the new accounting rules. We believe that the analysts’ EPS estimates will be in the range of $2.03 to $2.06 per share, which we are comfortable with. We believe analysts’ revenue estimates will be in the range of $1.16 billion to $1.18 billion, depending on assumptions for growth and foreign exchange. We believe analysts will have estimates for net income between $176 million and $179 million, depending on their assumptions on margin improvement and interest expense and we believe analysts will have estimates for free cash flow of between $185 million and $195 million, with CapEx anticipated between $45 million and $50 million. In closing, we are very excited about the tremendous growth opportunities in 2009 and beyond. We thank you for the time and operator we'll now open it up for Q&A.

(Operator instructions) Your first question comes from Ryan Daniels with William Blair. Your line is open. Ryan Daniels – William Blair: Yes thanks and good evening guys. I had a quick question just to follow up on your guidance, I know it looks like you have narrowed the range upward a little bit and that $2.03 to $2.06 does that guidance include any FAS 141R meaning that you guys have had roughly $2 million year to date, should we be backing that out to get to your $2.03 to $2.06.

It just includes the year to date but not any future. Ryan Daniels – William Blair: Okay. So that $2.03 to $2.06 is based on the GAAP numbers that have been reported year to date.

That is it. For the first two quarters you should adjust for it. So this is adjusted already for the first two quarters, so you should take it out. Ryan Daniels – William Blair: Okay so we are using the $0.52 in Q2 to get to this guidance.

Yes. Ryan Daniels – William Blair: Okay perfect. And then a couple of quick housekeeping questions too on top of that, can you just give me the number of Steri-Safe customers and overall on premium and then the total LQ and Bio Systems adds for the quarter?

Yes. You are asking first for the total number of Steri-Safe customers? Ryan Daniels – William Blair: Yes, sure and then a percent of premium?

Yes, the total number is over $137,000 and the percent on premium is – or actually the total number on premium right now is over $43,000, so the LQ adds 57% med waste contracts and 71% Bio Systems. Ryan Daniels – William Blair: Okay, looks pretty consistent. Okay great. And then a couple of broader ones, I know you launched the equivalent of Steri-Safe in Canada I think the clinical services offering, I am curious if you could talk a little bit about how that has been received and maybe what we might see with expensing [ph] on the other geographic fronts maybe the UK later in the year, any thoughts there?

I think we continued to see good progress in the international markets adding on to our small quantity offering, still fairly early (inaudible) grow a lot of services but early adoption has been good in Canada and we will continue to look at programs in other markets as well as we move forward. Ryan Daniels – William Blair: Okay. And then the last two questions are just on the M&A front, Frank you have shared with us the pipeline size in the past and I am curious now that if we remove MedServe from the pipeline given that you have announced that deal how it looks today.

The pipeline is over $50 million and that excludes MedServe. Ryan Daniels – William Blair: And then last question will be any update on timing there is there likely to be a third quarter, fourth quarter close?

No, I think the HSR review process takes some time and right now both ourselves and MedServe are in the process of providing information to DOJ, through that process of course DOJ is getting up to speed on an industry that they really have not looked at for a number of years probably not in depth since we did the transaction with DFI in 1999. So once all this information is submitted, it typically takes DOJ about 30 or 60 days to review and respond and once the review is completed we can close obviously in a matter of days or weeks because we have the dollars with our new revolver borrowings. Ryan Daniels – William Blair: Okay great, thanks for the color. Thanks guys.

Your next question comes from the line of Scott Levine with JP Morgan. Your line is open. Scott Levine – JP Morgan: Good afternoon guys. Steri-Safe on the percentage of select preferred if I am looking at accurate history it looks like there was a step up in the percentage of new adopters taking the premium offerings, how is that kind of coming in relative to your expectations and do you see yourselves running into any issues in the current economic environment there it did not seem [ph] that you are seeing any issues there?

No I think you have kind of hit it right on, we are seeing a steady trend upward. Sales force is getting obviously more adept at presenting the value to the customers and I think the results kind of speak for themselves. Even in today’s environment it is a good value proposition and we are doing well. Scott Levine – JP Morgan: Okay and then turning to uses of cash flow, it sounds like the acquisition pipeline is still robust and the activity is still high, could you help us think about how you guys plan, will there by any changes in the activity levels remain high with regard to how you guys plan to use the buyback going forward and how would the closing MedServe potentially affect that?

Well again both domestic and internationally there are always many new companies entering into the business and so opportunities on acquisitions remains the number one investment opportunity for us. We obviously first would like to conclude the MedServe transaction and acquisitions both international and domestic are robust. We again do not include the international number outside of North America in the $50 million. So (inaudible) will continue to do opportunistic, we do that based on again IRR calculations and historically obviously it is now bought back in the range of 47 to low 50s in the past. Scott Levine – JP Morgan: Okay. One last one on cash, it looks like there was a negative working capital swing if I have been calculating correctly in the quarter, do you expect that to reverse down the coming quarters and is there anything noteworthy there?

No, the second quarter is always a quarter that is negative because it includes the tax payments for both Q1 and Q2 that you do not make in Q1 but it ends up to be made in April and in June. So second quarter will always be for us and for many companies be a lower cash from ops quarter. Scott Levine – JP Morgan: Got it, thanks.

Your next question comes from Scott Schneeberger with Oppenheimer & Co. Your line is open. Scott Schneeberger – Oppenheimer & Co.: Thanks good afternoon. Couple of questions on different topics, with regard to the new revolver, you used the proceeds of that to pay down existing revolver correct?

Yes the new one is in fact a term loan, it is a three-year term loan, it is not a revolver, it is fully drawn and those proceeds are used to pay down the revolver, so it in essence reloads the revolver for us. Scott Schneeberger – Oppenheimer & Co.: Alright. Any other anticipated changes to how you have the financial structure of the company going forward just considering the upcoming MedServe the pending acquisition?

No at this point obviously after the term loan is fully done it is $465 million in available and that is obviously at this point plus our free cash flow that we generate in a normal course of business that should be sufficient right now to keep us busy. Scott Schneeberger – Oppenheimer & Co.: Okay thanks. RMS had a very tough comp year-over-year in the second quarter, what are you looking for out of that for the full year with regard to revenue?

Our guidance that I gave you is a little conservative. We assumed about $80 million, if you will recall in prior calls we have talked about higher numbers if we give one or two big recalls and we still could exceed that but we did not have any big recall happen in Q2 so we are a little bit more cautious on how we built the guidance. I think the fundamentals we see are very strong, the regulatory framework, the penalties that are now being issued are increasing, so the awareness by companies of handling recalls properly is definitely up and we continue to expand the awareness of our business. We see our ability to capture new companies as customers experiencing our growth in that area has been good. And we think just given the current administrative environment in the area that we are in it should create greater opportunities. But it is a fundamental lumpy business and we try to be conservative on our forecasting for the remainder of the year for that business. Scott Schneeberger – Oppenheimer & Co.: Okay thanks and on the last sentence you mentioned there that really one or two big ones coming in at the back half of the year could pop you up to the high end of the guidance –

Yes. Scott Schneeberger – Oppenheimer & Co.: To add to this point, we have moved half the year and I got it. Also you mentioned five US tuck-ins and one international for $14 million annualized, Cliniserve you closed I believe in April, does that exclude, because you had mentioned that on the first quarter call, is that in there or out of there?

Cliniserve is not included in there; we did announce that one in the last conference call. Scott Schneeberger – Oppenheimer & Co.: Okay thanks. And I guess you could speak a little bit more in depth to the five US and the one international, is there one big one in there or is it fairly even in the SQ, LQ whatever thought you can add to it?

It is fairly spread out, the new one internationally is in Europe in Romania and the five domestically are fairly spread out and even. Scott Schneeberger – Oppenheimer & Co.: SQ or LQ in the domestic?

I mean it is fairly split. Scott Schneeberger – Oppenheimer & Co.: Okay. And then Romania geographically has been different from where you have been in the past, what is the strategy there you are going to build out around there?

Romanian opportunity was very interesting to us as we looked at the characteristics of the market. They have increasing implementation of regulations, tightening of regulations, very, very fragmented market and it reminded us quite a bit of our own experience in the United States in the early days of medical waste services in this country also a good basis for expansion across the Central Europe opportunity. The company that we did a transaction with is a leader in their space of a little over $4 million revenue stream and we will continue to apply the same basics of helping them try to grow, expand their business and provide some of the opportunities to let them take advantage of this program and services that the other countries have. Scott Schneeberger – Oppenheimer & Co.: Thanks sounds interesting, one more if I could sneak it in on another topic, you are pilot of the used pharma in hospitals, could you give us an update on how that is progressing?

Yes it has actually moved out of pilot phase and we are now rolling it out to the hospital space. It is actually being well received, it fulfills a need, it is a fairly simple program and we kind of look at it as another offering that is complementary to the RMW as the basic service and Bio Systems. It is still small, so as you have seen us do before, we pilot for a period of time and then we begin a very small kind of graduated roll out, so it is really not material to the numbers of the guidance right now but we are seeing a lot of customer interest. Scott Schneeberger – Oppenheimer & Co.: Excellent, thanks.

Your next question comes from Jonathan Ellis with Merrill Lynch. Your line is open. Jonathan Ellis – Merrill Lynch: Thanks, good afternoon guys, wanted to first ask with respect to these five acquisitions in the United States, were those all regulated medical waste companies or did some of them have other ancillary services?

All were regulated medical waste; one had more of a house tint [ph] to it. Jonathan Ellis – Merrill Lynch: Okay, great and then any new joint ventures or licensing agreements in new countries this quarter?

No. Jonathan Ellis – Merrill Lynch: Okay. Just in terms of the multiple state for the acquisitions this quarter, can you give us an average range?

We are marching in line again, slightly around the 6 multiple of EBITDA and that we would again do on a net present value basis, there was both cash issued you saw in the cash flow statement and notes issued. Jonathan Ellis – Merrill Lynch: Okay, great. And then just turning our attention to Medserve, if I understood you correctly you are still providing information to regulators that does mean that the clock has not started ticking yet on the 30 to 60-day period that they are required to come back to you with an opinion?

Yes. Jonathan Ellis – Merrill Lynch: Okay, so we are still waiting on that clock to start ticking. Could you maybe give us some sense or color why you elected to borrow additional funds against that term loan at the end of July, why at this point as opposed to perhaps closer to when the MedServe transaction may close?

Again it was a good opportunity for us, we are also looking for again differentiation in the balance sheet with different tools from a capital structure point of view. We continued to look both domestically and internationally for a robust acquisition environment and it is all those that we felt the availability will be good to put in place. Jonathan Ellis – Merrill Lynch: Okay great. And then just on Cliniserve, any update there in terms of the integration, I know usually you target at least the turn of EBITDA in the form of synergies, can you give us any more specifics though in terms of what your expectations are for cost savings related to that particular transaction?

It is probably a little too early, I think when we get closer I think that would be better but obviously there are synergies, transportation specifically. Jonathan Ellis – Merrill Lynch: Then just my final question, energy cost during the quarter, what were those as a percentage of revenue?

They were 4.6%. Jonathan Ellis – Merrill Lynch: 4.6% of revenue. Great, thanks guys.

Your final question comes from Dave Manthey with Robert W. Baird. Your line is open. Dave Manthey – Robert W. Baird: Hi, good afternoon. In terms of the gross margin, which came in much stronger, than we thought, is the higher contribution margin sustainable based on the cross-sell and up-sell activity and is there any other factors that went into the higher gross margin?

Yes we had one time favorable pick up from benefits on the domestic which was probably about 40 basis points, we did have favorable mix and operating efficiencies in the quarter and those were partially offset by kind of lower gross margins that we had and that are normal with acquisitions. But year over year like in the last call probably people had about 200 basis points year-over-year improvement in margins, now that maybe is about 210 for the year. Dave Manthey – Robert W. Baird: Okay and then back to the fuel just so we are clear on the impact there, when you look year to year was there a top line impact or margin impact due to fuel or transportation?

No. There always is obviously with fuel as we have said in the past it is probably about 200 basis points impact on revenues is what we have historically indicated. Dave Manthey – Robert W. Baird: Okay and then finally as it relates to the regulatory landscape, Mark I think you mentioned in relation to the returns management there was more regulation going on there but can you talk just in broad strokes about the EPA any more aggressive enforcement, etc?

Yes, the EPA obviously is still looking hazardous or quite not hazardous but medical waste incinerator regulations those have not been promulgated, they are still being reviewed, if those come about they tend to fall disproportionately I guess on the smaller incinerators, the ones that are still remaining out there at hospitals because they obviously have a harder time with the capital expenditures involved. And then EPA has been obviously beating the drum for several years now on waste pharmaceuticals and that is obviously spurring the pharmaceutical waste program that we are rolling out to our LQG customers. Dave Manthey – Robert W. Baird: Okay. I am sorry I just had one more out of related question, can you discuss how much of the $800,000 acquisition related costs are related to MedServe versus other acquisitions and then could you talk about where that number might go in subsequent quarters?

Again we cannot break it out, the question was also in the last call how much is that in the future, we do not include it in our guidance, it is difficult to forecast and do not really want to include it in our guidance right now. Dave Manthey – Robert W. Baird: Okay, thank you.

There are no further questions in queue at this time.

Again, we thank you everybody and we look forward to another great quarter in Q3 and beyond. All the best.

This concludes your conference call for today. You may now disconnect.