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

Ryan Daniels – William Blair & Company Jonathan Ellis – Banc of America Al Kaschalk – Wedbush Securities Scott Levine – JP Morgan Scott Schneeberger – Oppenheimer Richard Skidmore – Goldman Sachs David Manthey – Robert W. Baird Jason Rodgers – Great Lakes Review

Good afternoon. My name is Kim and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth 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) Thank you. I would like to turn the call over to the CFO, Frank ten Brink. You may begin your conference.

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, into the results. The results for the fourth quarter are as follows: Revenues grew $39.5 million to $313.5 million, up 14.4% from $274 million in Q4 of 2008. Revenues grew 13.5% when adjusted for the favorable foreign exchange impact of $2.6 million. Domestic internal growth, excluding returns management, was up approximately 6% and international internal growth adjusted for foreign exchange was up over 5%. Domestic internal growth consisted of SQ up 8% and LQ up 3%. The regulated recalls and returns management services revenues were $16.1 million. Gross profit was $147.1 million or 46.9% of revenues. Excluding the restructuring costs, the gross margin would have been 47.2%. SG&A expense was $61.8 million or 19.7% of revenues. Net interest expense was $8.8 million, and net income attributable to Stericycle was $44.6 million or $0.52 per share on an as-reported basis and $0.55 adjusted for transactional expenses related to acquisitions and restructuring costs. At the end of the quarter, the revolver borrowings were approximately $382 million. Currently, $100 million of our revolver is hedged, at an average fixed 2.83% LIBOR rate plus 75 basis points. The remaining $282 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 $244 million. We repurchased 93,670 shares of common stock on the open market in an amount of $4.5 million in the quarter. Cumulatively, we have purchased approximately 13.2 million shares. We still have authorization to purchase an additional 3.0 million shares. Our CapEx was 10.3 million, and our DSO at the end of the quarter was 52 days. The cash provided from operations in the quarter was $63.3 million and $277.2 million for the year. And now, 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. In the quarter, we enjoyed strong sales growth in all of our business segments. SQ growth was primarily driven by Steri-Safe, with 80% of new Steri-Safe customers choosing Select or Preferred programs. LQ sales growth was driven by the continued adoption of our Bio Systems offering and new service agreements. In summary, we ended Q4 with over 459,000 accounts, of which approximately 447,900 were small, and the remainder large. I will turn it over to Mark.

Thanks, Rich. I would now like to provide insight on our current outlook for 2010. Please keep in mind that these are forward-looking statements. During the fourth quarter, we completed six acquisitions, two domestic and four international. The incremental revenue impact in the fourth quarter of this year was approximately $6.3 million. The annualized revenues of these acquisitions is approximately $59.9 million. Now please keep in mind that our guidance does not include future acquisitions, divestitures and the related transactional expenses, but our guidance does include these items for the MedServe transaction completed at the end of Q4. We believe analyst EPS estimates will be in the range of $2.34 to $2.40, which we are comfortable with. Please note that this guidance includes approximately $0.04 negative impact per share of acquisition integration expenses. We believe analyst revenue estimates for 2010 will be in the range of $1.32 billion to $1.35 billion, depending on assumptions for growth and foreign exchange. We believe analysts will have estimates for net income between $202 million and $208 million depending upon assumptions for margin improvement and interest expense. We believe analysts will have estimates for free cash flow of $245 million to $255 million, with CapEx anticipated between $45 million and $50 million. In closing, we are very excited about the tremendous growth opportunities this year and beyond. We thank you for your time; and operator, we will now switch to the Q&A session.

(Operator instructions) Your first question comes from the line of Ryan Daniels from William Blair & Company. Your line is now open. Ryan Daniels – William Blair & Company: Yes, good evening. Thanks for taking my question. Maybe, if I could just start on the M&A front, Mark, could you talk a little bit more about the deals you did? Obviously, this is a great quarter and I know a lot of the revenue there is MedServe, but maybe the other incremental deals and in a focus on international, where those acquisitions were?

Yes, let me take that. This is Frank. So we did six acquisitions. Four were international. There was one in Portugal, one in Romania, one in Canada, and one in Chile. There were two in the US, one of which was MedServe and another was a transaction on the East Coast. Ryan Daniels – William Blair & Company: Okay, and were all of those were kind of traditional med waste acquisitions?

Yes, they were. Ryan Daniels – William Blair & Company: Okay, great. And then, maybe Frank, another quick one for you; I know at the start of the year last year, you guys were looking for free cash flow of kind of $175 million to $185 million. If I am doing my math right, looks like you ended up closer to $240 million. Was there anything during the year that surprised you, that drove that to become so strong and well above your initial guidance?

No, I think the team has done extremely well when it comes to the receivable collections. Obviously, that contributed substantially to this year. The DSO was reduced from 57 to 52 days, so that obviously even in this market environment, they did an excellent, excellent job. And that I think is a major to – CapEx was maybe a little lower than we started from a guidance point of view in the year, so that I would say is the second contributor and the further increase in earnings during the year. Ryan Daniels – William Blair & Company: Sure, okay. And then, can you provide a little more color on the restructuring? I think you are moving some of the facilities. Is it just related to that for the returns business?

Yes, in the returns business, we had a site consolidation that is still in the process. It is in Conyers, Georgia and Boynton Beach, Florida that are getting consolidated into Indianapolis. Ryan Daniels – William Blair & Company: Yes, okay. And then, maybe a couple more that I ask every quarter for our model. Do you actually have the number of new LQ clients and Bio System clients? And then, the second part would be Steri-Safe total customers and percent on Premium and Select?

Yes. The new LQ adds were 58, Bio Systems were 72. Total Steri-Safe accounts now are in excess or over 141,000. And the percent that are on the higher Premium programs is 32.8%. Ryan Daniels – William Blair & Company: Okay. And then I guess the last question and I will hop off. I think in your prepared comments you also said that of the new Steri-Safe, you are seeing 80% gravitate toward the Premium and Select offerings. I think that is a lot higher than what we have seen in the past and I am curious if you have changed the sales incentives or kind of the marketing approach or is just the market gravitating more and more towards that or does that have to do with international, kind of any color of why that was so strong.

You know, what we have said over time is that one, the sales team would get better at selling this product offering, explain the value. I think number two is that the market is realizing that there is good value here. And so the product is one that sort of sells itself. And then, these are people who are calling in, they are listening to the whole menu and that sort of thing that we want this Select or Preferred program because frankly, it helps us reduce our overall cost, it is a good value for our customer. Ryan Daniels – William Blair & Company: Okay, great. Thanks again, guys.

Your next question comes from the line of Jonathan Ellis from the Banc of America. Your line is now open. Jonathan Ellis – Banc of America: Thanks. Maybe we could just start with the MedServe transaction. First off, I know previously you had guided to $0.02 of earnings accretion. Is that still what is baked into your guidance for 2010 or has that increased based on what you have been able to accomplish over the last month or so?

No that still includes. So the $0.02 is still coming from MedServe. And then, in fact from last guidance, we are up about $0.03. The other $0.01 is other acquisitions, really offset with foreign exchange, which is a little bit dropping revenues down slightly. But again, as Mark indicated, in the guidance of $2.34 to $2.40 is the integration expense, which is about $0.04 per share. Jonathan Ellis – Banc of America: Right. And the $0.02 EPS accretion comes in there with that including integration costs or is that –

That did include the integration costs, correct. So without the integration costs, it would have been $0.06. Jonathan Ellis – Banc of America: $0.06? Okay, great. All right, that is helpful. In terms of the consolidation of the recall facilities, what is the estimated annualized cost savings from that?

Again, we are not going into full detail, but obviously, we are doing it to gain the efficiencies. We have gotten everyone onto a common system, and again, it will have some more slight expenses in the year of 2010, about $1 million in one-time expenses. And obviously, that investment that we are making has a great IRR. Jonathan Ellis – Banc of America: Okay. In terms of the revenue outlook, I know previously the guidance for returns management had been $70 million or $90 million for 2010. Any update to that?

That is the same. Jonathan Ellis – Banc of America: Okay. And then, in terms of the free cash flow outlook for the year vis-à-vis the net income increase and even accounting for the $0.04 of charges that I know are baked into your guidance, it seems like there is much more of a pickup in the free cash relative to the increase in your net income outlook. Can you just talk through what factors are driving the free cash benefit?

So you get obviously from the last guidance the flow through that we are getting from the acquisitions. And then again, I mean when we give guidance the first time, we are nominally a little bit more conservative, we are trying to see what our tax advantages are during the year, same thing with receivables, although we are kind of holding that fairly flat. So, I mean, it is multiple factors, but we feel comfortable with the guidance we are giving here. Jonathan Ellis – Banc of America: Okay, great. And then, just in terms of the acquisitions you made abroad and the one specifically in Europe, how do you think of that in terms of being able to expand within the continent of Europe? Do you need to have asset bases within each country or can you use some of these initial acquisitions you made as a platform to serve other countries but perhaps not have as much as a heavy model in each country within continental Europe?

I think, take an example, obviously we entered Europe now indirectly a little bit in Romania. Portugal is the true first continental Europe. It is a leader that we bought there, a great team came with that, very solid platform, has three plants in country; that obviously now is a strong beach head to look for other opportunities. We continue to work on growth initiatives in Europe and we will take it country by country and we will see. It may move across borders; that is not as easy, but I think is helping over the time to have that infrastructure throughout Europe. Jonathan Ellis – Banc of America: Okay, great. And then just final question related to energy. What was that as a percentage of revenue this quarter?

It was 5.1%. Jonathan Ellis – Banc of America: Okay. And did you – was there any benefit from incremental fuel surcharges, either in SQ or LQ this quarter?

No, I think revenues obviously like last quarter were impacted slightly on a downside year over year comparisons, and so it is really in line with what it was in Q3 to 8% to 3% for SQ and LQ. Jonathan Ellis – Banc of America: Okay, thanks, guys.

Your next question comes from the line of Al Kaschalk from Wedbush Securities. Your line is now open. Al Kaschalk – Wedbush Securities: Good afternoon, guys. Frank, I was wondering, can you remind us what the split of revenue on MedServe is between international and domestic?

It is roughly, it is in essence still a little bit too early, since the integration is ongoing. But it is slightly more on the SQ than it is on the LQ as we see right now. It is not specific yet, but I mean that is a rough. Al Kaschalk – Wedbush Securities: Right. And then just a little bit broader picture, maybe directed towards Mark. You know, with the perception that there was more regulation involvement in this transaction, have you learned anything or taken into consideration information that may evolve your M&A acquisitions strategy? And this is more served from a positive side standpoint than a negative comment, please.

Well, I will start and then Rich may want to add color. But this is a process we have gone through now a couple of times. It is very deliberate and analytical. The outcome didn't surprise us as we went through the process and we have gone through this in other countries. So I don't think there is anything that is a huge change on how we would proceed forward on transactions. Rich, I don't know if there is anything else?

There is a process, I think some of you may be familiar with it, or may not, but we have been through these multiple times. The Department of Justice does a very in-depth review of the entire market. All the participants are very, very detailed. That is why it actually took a number of months to get through this. And so, by looking at the whole market, they kind of – in the end, form a conclusion about it and as their conclusion sort of matched up with what we thought, and so I think in the end, we don’t really see much change and we don't see anything dramatically different that resulted from the outcome; and obviously, we are moving forward. Al Kaschalk – Wedbush Securities: Okay, and just as a follow up question on some of those Premium/Select, is there room for pricing power, given some of the receptivity you are getting from your customer base? Maybe you don't want to comment on that on the call here, but –

No, I think it is a little different. You need to understand that a customer that takes Select or Preferred is still many times comparing it to costs that they have right now. So if someone is doing the training, if they have material safety data sheets, if they are complying with OSHA, most likely the alternative, which is having people come to their offices, have different vendors, it is going to be more costly than our Select and Preferred is. So that part is really under the under the pressure in the economy, continues to give us a good opportunity to sell to customers, because it is a cost-savings. Al Kaschalk – Wedbush Securities: Thank you. I will hop back in the queue.

Your next question comes from the line of Scott Levine from JP Morgan. Your line is now open. Scott Levine – JP Morgan: Good afternoon, guys. Did you give your leverage calculation through covenant?

No, we did not. It was 2.51. 2.51 as debt to EBITDA. Scott Levine – JP Morgan: Okay, got it. And so, it sounds like you are well within your comfort zone there. If you could comment with regard to – it sounded like on the last call you had suggested that the accretion from MedServe was kind of more back-end loaded. Does the integration process or anything else really kind of cause you to take your foot off the gas when it comes to acquisitions or is it kind of business as usual here?

No, I think it is business as usual and it is correct. The $0.02 is definitely backend loaded into the last two quarters. Scott Levine – JP Morgan: Okay, and if you could comment, I think you recently completed a pilot phase on your Pharmaceutical Waste program. Could you comment regarding the commercial potential for that, perhaps, or is it still too early to quantify?

Well, you know, we actually are starting a phased rollout, which I think we talked about in the last call and the nice thing about this program is again, it meets the customer need, it is driven by the focus that the EPA and the safety regulators have on pharmaceuticals in the environment. You know, it is too early I think to sort of predict where this will go, but the receptivity from the customer has been good in every market we see interest. You know, the sales force is very excited about it. And we think that it has applications here and globally, because this is the sort of issue that really touches all countries. Scott Levine – JP Morgan: Understood. One last one and maybe – are actually two really quickly. Did you give the SQ, LQ breakout specifically in the UK market?

It is in the high-20s is the SQ in the UK. That is the percentage of revenues for SQ. Scott Levine – JP Morgan: Got it, okay. And then, one last one on the returns business; I know you don’t break out the recall side from the return side, but is it right to think that you know, there just really hasn’t been a lot of large project activity on the recall side and maybe if you could characterize your growth expectations for the business on a longer-term basis, consistent with what you guys are expecting one or two years ago?

Yes. So the awareness campaign continues to work. We continue to see strong customer growth and quantity of customers that we service, the outsourcing is more efficient for them. And so at the end it remains a hard-to-predict kind of sector for us, the recalls. But the scope of recalls can really vary along with the revenues for each event, depending on what we do for those customers. Scott Levine – JP Morgan: Okay, thank you.

Your next question comes from the line of Scott Schneeberger from Oppenheimer. Your line is now open. Scott Schneeberger – Oppenheimer: Thanks, good evening. Just kind of following up on that last one and tying it back to SG&A, Frank, you mentioned spending and recalled returns is one of the areas where that is happening. Any change to the SG&A outlook as we look out to 2010?

No, I think if look at the Q4 2009, obviously acquisitions raised the percentage to revenue to the high 19s and in 2010, you know, we expect to kind of incur (inaudible) depending on how you model it maybe to 5.4 in integration, some of you don’t. But the trends will be down during the year, as integration progresses; and so for the full year, we should be kind of in the mid-19s, slight tack above the mid-19s. Scott Schneeberger – Oppenheimer: Okay, thanks. And then with regard to acquisitions in the quarter, this was asked earlier, primarily on MedServe, so I assume that rings true across each of the acquisitions as a whole since that is a big piece, when it was answered, more SQ than LQ, but you know, just kind of for those of us who model the acquisition, is that a 60/40, 70/30 anything, any further color, and not specifically asking on MedServe but all the six in the quarter?

I think if you have MedServe, you know, starting at a 50-50, the others are really far more on the international side. It is really more in LQ than SQ. So I mean if they are not far off first is the rest of the world, so that definitely is more LQ than SQ. Scott Schneeberger – Oppenheimer: Okay, thanks. That is helpful. And then finally, with the hospital pharma waste, can you give us – I am going to ask a few questions and hopefully you will answer to some extent, but what do you see as the market potential there? How far have you rolled it out with regard to geography or I don't know, any other metric you care to give? Just to give us a little bit of help of how far along it is right now.

Yes. I mean we have moved out of pilot phase, we have begun to offer it in most geographies, but not all. I think the market potential really is all LQ and I say that because every hospital dispenses pharmaceuticals, every hospital is going to be subject to these regulations and so you know, in terms of potential, this is probably the same or larger than Bio Systems was, which is again is the product that every hospital can probably use. I mean, I guess you are trying to ballpark it. I would say it is a couple of million similar to Bio Systems. Scott Schneeberger – Oppenheimer: Okay. And with where you are now and, you know, not making you put something out there that we would hold you to, but you know, you said you were in a lot of regions, not all, and thank you for citing what you think it can become. What type of time frame to the extent you can answer it. Thanks.

Well, I think the timeframe to move it out will be similar to what you saw us do with Bio Systems. But to give you an example, I am kind of like stuffing up the reply, I am the first batter in the first inning, it is tough. That is where I am at in terms of moving this thing along. So there is quite a bit of runway left and you know, we are in the early stages. Scott Schneeberger – Oppenheimer: Thanks very much.

Your next question comes from the line of Richard Skidmore from Goldman Sachs. Your line is now open. Richard Skidmore – Goldman Sachs: Thank you, good afternoon. Just a couple of questions; first, on the MedServe acquisition. I believe that there were some divestitures or some assets that were supposed to be done. Are those complete, and if not, are they in your guidance and how much would you expect that that would impact the free cash flow in 2010?

Okay. The transaction just closed at the beginning of December. We are now in the process of working the divestiture, which as you recall is one plant, some transfer stations and some LQG accounts. I really don’t want to comment much more on the timing or anything, because we have multiple buyers involved and anyway, it is not appropriate obviously to discuss it in detail on this call. The guidance that we have given includes the effect of these divestitures, both in terms of revenue and cash flow. So post-divestiture, the guidance we have given you is the guidance for the year. Richard Skidmore – Goldman Sachs: Okay. And then just separately, on use of free cash flow, as you think about the guidance that you provided with regards to free cash flow, how would you think that that gets deployed in 2010 in terms of buckets with regards to M&A, share repurchase, et cetera?

I think the two most important remain investment in the business, expanding the existing services, launching new programs and then acquisitions. Those are the two top ones and then repo, we continue to do opportunistically. Richard Skidmore – Goldman Sachs: Okay. And then, shifting just quickly to the small customers, in terms of the retention rate, can you quantify how the retention rate has been in the SQ business and then on those customers that are on the standard model, what is the conversion rate of those customers to the premium and select?

From a revenue retention, we remain strong at 95%. We don't go into the details of how converge. We do give obviously that the quantity of customers that have selected Steri-Safe of those in the quarter, 80%, select to put higher programs. Richard Skidmore – Goldman Sachs: Okay, thank you.

Your next question comes from the line of David Manthey from Robert W. Baird. Your line is now open. David Manthey – Robert W. Baird: Thank you. So the guidance you have given includes MedServe revenues and EPS accretion. Did you say it does or does not include MedServe acquisition related expenses?

It does include $0.04 of those integration expenses and net of those $0.04, it is accretive by $0.02. David Manthey – Robert W. Baird: Okay. And so when you made the overall statement that the new guidance includes $0.04 of acquisition expenses, that is from MedServe and your old guidance didn’t include any of those expenses, is that correct?

It is, pretty much. 90% of it is related to MedServe. David Manthey – Robert W. Baird: Okay. And of the 19,000 new customers that you added, how many of those were from MedServe or other acquisitions versus organic new customers?

Again, we don't break the total out but I made obviously get additional customers from MedServe and from the international so they both contributed. What we did say that we had 58 new LQs and that we were able to 72 customers on Bio, although some of those are existing customers. David Manthey – Robert W. Baird: Okay, and then I think in the past you have told us what percent Steri-Safe represented of total SQ revenues. I am not sure you gave it to us this time. Do you have that?

Steri-Safe, as a percent is about 69% domestic revenue. David Manthey – Robert W. Baird: And then on the P&L, the $905,000 for restructuring costs, can you divide those between the two, so we know where the restructuring at the cost.

You broke up on that question. Could you say that again? David Manthey – Robert W. Baird: Sure. I'm trying to figure out on the $905,000, how much is restructuring versus how much is impairment costs?

It is really most of it is the restructuring. There is barely any impairment in it. I mean, it is really part of the restructuring, it is fixed assets and things like that. It is the cost of the restructuring, and really the impact of the impairment as you can see from the table is almost negligible. David Manthey – Robert W. Baird: All right. And then finally, what percentage of 4Q revenues comes from Bio Systems today?

Right now, Bio Systems, hang on, I need to quickly look that up, about 23% to 24%. David Manthey – Robert W. Baird: Thanks very much, guys.

(Operator instructions) Your next question comes from the line of Jason Rodgers from Great Lakes Review. Your line is now open. Jason Rodgers – Great Lakes Review: Looking at the returns program, the returns in recall, I wondered if you had a number for the quarter (inaudible) revenues, what the total was 2009 and if you have a goal for 2010?

The total for 2009 for the whole returns group was $70 million and for 2010, the guidance is $70 million to $90 million. Jason Rodgers – Great Lakes Review: Okay. And you have a goal for new accounts for Bio Systems for 2010?

Over 200. Again, similar to last year’s goal. Jason Rodgers – Great Lakes Review: :

That program has just kind of run out or started out. And we are seeing pretty good adoption. I would kind of compare it to the first or second year when we started Steri-Safe here in the States. So we still have quite a bit more runway and we need to get it moved across all the provinces. Jason Rodgers – Great Lakes Review: Thank you.

There are no further questions at this time. I would like to turn the call back to the presenters.

So we thank everyone for your time and attention and we look forward to speaking to you on the next call. Thanks so much.

This concludes today's conference call and you may now disconnect.