Jennifer Koenig - Stericycle, Inc. Charles A. Alutto - Stericycle, Inc. Brent Arnold - Stericycle, Inc. Daniel V. Ginnetti - Stericycle, Inc.

Sean Dodge - Jefferies LLC Michael E. Hoffman - Stifel, Nicolaus & Co., Inc. Scott Schneeberger - Oppenheimer & Co., Inc. Hamzah Mazari - Macquarie Capital (USA), Inc. Kevin Mark Steinke - Barrington Research Associates, Inc. Isaac Ro - Goldman Sachs & Co. LLC

Good day. My name is Brandon, and I will be your conference operator today. At this time, I would like to welcome everyone to Stericycle's Second Quarter 2018 Earnings Conference Call. Now, at this time, I would like to turn the conference over to Ms. Jennifer Koenig, Vice President of Corporate Communications and Investor Relations. Ma'am, you may begin your conference. Jennifer Koenig - Stericycle, Inc.: Hello, and thank you for joining Stericycle's Second Quarter 2018 Earnings Call. Joining on the call today are Charlie Alutto, Chief Executive Officer; Dan Ginnetti, Chief Financial Officer; and Brent Arnold, Chief Operating Officer. The discussion today includes forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those described in such forward-looking statements. Factors that could cause the actual results to differ are discussed in the Safe Harbor statement in our earnings press release and in greater detail within the Risk Factors in Stericycle's filings with the U.S. Securities and Exchange Commission. Past performance should not be considered a reliable indicator of future performance and investors should not use historical trends to anticipate future results or trends. To the extent permitted under applicable law, we make no commitment to disclose any subsequent revision to forward-looking statements. On the call, we will discuss non-GAAP financial measures. For additional information and reconciliation to the most comparable GAAP measures, please refer to the footnotes and schedules in our earnings press release, which could be found on Stericycle's Investor Relations website. Finally, the prepared comments for today's call correspond to our second quarter earnings presentation, which is also available on our Investor Relations website. Throughout the call, we will be referencing specific slides from the presentation. I'll now turn the call over to Charlie Alutto. Charles A. Alutto - Stericycle, Inc.: Thank you, Jennifer. Welcome, everyone, to our second quarter 2018 earnings conference call. Our second quarter results demonstrate the underlying strength of our core businesses and reflect the early benefits of our business transformation and its overall value to the company. Our core Regulated Waste and Compliance Services and Information Destruction businesses performed in line with expectations. We delivered within expected ranges for adjusted EBITDA and adjusted EPS despite weaker-than-anticipated revenue due to the impact of foreign exchange and softness in our Communication and Related Services. We also completed a number of operational improvements and strategic sourcing initiatives as part of our business transformation and achieved the milestones and objectives that we set for the quarter. Before Brent and Dan review the results in more detail, I'd like to highlight a few accomplishments from the second quarter starting with business transformation. As reflected on slide 8, we delivered an additional $7.9 million in adjusted EBITDA benefits during the second quarter from the implementation of operational improvements, strategic sourcing initiatives and improved source-to-pay processes. In the first half of the year, we delivered $23.9 million in adjusted EBITDA benefits from Transformation initiatives. Our progress year-to-date is expected to yield a benefit of $50 million toward our goal of $60 million to $65 million for 2018. We also made significant progress on a detailed design of the ERP system, including mapping our end-to-end future-state work flows within our mega processes. Operational expenses for the business transformation were $21.8 million in the second quarter and totaled $43.9 million for the year. Capital expenditures for business transformation were $3.3 million in the quarter and $3.7 million for the year. We are within budget and on track to achieve our internal milestones for business transformation. We remain confident in our ability to deliver the $60 million to $65 million in adjusted EBITDA benefits expected for 2018. One of the key elements of our business transformation is Portfolio Rationalization. As you can see on slide 9, we continue to follow through on our commitment to simplify the portfolio to engage greater focus on our core businesses that provide long-term value for shareholders through predictable and profitable growth. During the quarter, we divested the remaining hazardous waste service line in the United Kingdom. We also signed an agreement to divest a non-core U.S.-based clean-room service, and that transaction closed August 1. In addition, we announced today that we are pursuing strategic alternatives for Communication and Related Services including a divestiture demonstrating our commitment to rationalize the portfolio. We're conducting this process with the assistance of financial and legal advisors and are considering a range of potential alternatives for the business. Our focus will be on pursuing the outcome that will drive the most value for Stericycle shareholders. There can be no assurances as to the form or timing of any transaction or if a transaction will be consummated. Before I turn it over to Brent, I'd like to highlight two more points. First, the SQ class action settlement went into effect, and as a result, we funded the settlement on July 6. Finally, as part of our continued board evolution, we appointed two new board members, Ronee Hagen and Kay Priestly. Ronee and Kay both bring business transformation experience and strong leadership in the management of multi-national public companies. We look forward to their contributions to Stericycle. I will now turn the call over to Brent to review our performance for the quarter. Brent Arnold - Stericycle, Inc.: Thanks, Charlie. As reflected on slide 11, total revenues for the second quarter were $883.3 million, a decrease of 3.7% from Q2 2017. This was due to divestitures, the expected decline in the small quantity medical waste business combined with softness in CRS and was partially offset by growth in Secure Information Destruction and other core service offerings. When adjusted for Manufacturing and Industrial Services, revenues were $795.1 million, down 3.9%. As compared to the same quarter last year, acquisitions contributed $8.1 million to revenues and divestitures reduced revenues by $13.4 million. Revenues for each of the service lines in the second quarter were as follows. Regulated Waste and Compliance Services, $483.8 million; Secure Information Destruction Services, $230 million; Communication and Related Services, $81.3 million; and Manufacturing and Industrial Services, $88.2 million. This quarter, we closed six tuck-in acquisitions. All six were U.S. Secure Information Destruction businesses. These acquisitions contributed revenues of approximately $0.8 million in the quarter with projected annualized revenues of $7.2 million. We also completed the divestiture of a hazardous waste business in the United Kingdom. This divestiture reduced revenues in the quarter by $2.6 million with a projected 2018 impact of $18 million. Regulated Waste and Compliance Service revenues were in line and our small quantity business continued to perform as expected. We saw solid performance in our hospital sharps management and pharmaceutical compliance services. Our new medication disposal services for both hospitals and retail locations continue to show strong growth as our customers work to confront the U.S. opioid epidemic. Secure Information Destruction Services also came in as expected. Organic revenue growth in the quarter was 4.8% or 3.2% when adjusted for recycled paper pricing. SOP prices remain above the 10-year average, driven by increased worldwide demand for high-quality recycled paper. Communication and Related Services revenues declined due to smaller recall events and lower than expected call volumes in Communication Solutions. Manufacturing and Industrial Services revenues were down 2.2% over the same quarter last year. Excluding divestitures and foreign exchange, M&I organic revenues were up 3.8%. I will now hand it over to Dan who will discuss our financial performance for the second quarter in greater detail. Daniel V. Ginnetti - Stericycle, Inc.: Thank you, Brent. Looking at slide 13, the results for the second quarter were as follows. Quarterly revenues were $883.3 million, down 3.7% compared to the second quarter 2017. Adjusted EBITDA was $190.9 million. Our core business performance and higher paper prices enabled us to deliver adjusted EBITDA in line with our expectations on lower than anticipated revenue in C&RS and due to unfavorable impact of foreign exchange. GAAP EPS was $0.31 due to certain non-reoccurring adjusting items. Adjusted EPS was $1.17 versus the prior midpoint guidance of EPS of $1.13. As you will see on slide 14, the difference was based on the following. The performance of our core business exceeded by $0.02; strong SOP paper prices contributed $0.03; lower depreciation expense, combined with lower interest in other contributed $0.03; and accelerating the repurchase strategy of the mandatory preferred convertible contributed $0.03. These were only partially offset by $0.01 of foreign exchange and $0.06 in C&RS. Cash flow from operations was $120.6 million in the quarter and reflects the benefit from the business transformation working capital initiative. Our debt to adjusted EBITDA ratio under the amended debt agreement was 3.27 at the end of the quarter. This does not reflect the $295 million SQ settlement payment made in Q3. The unused portion of the revolver was $663.8 million at the end of the quarter. In the quarter, we repurchased 150,000 shares of the mandatory preferred convertible for $7.4 million. As a reminder, the mandatory preferred convertible stock will convert on September 14. Upon conversion, there will be no impact to the reported adjusted EPS as we have been using the if-converted method. At the end of the quarter, we have authorization to purchase an additional 2.4 million shares. CapEx was $35.5 million or 4% of revenues. And our DSO was 65 days. I will now turn the call back to Charlie who will provide an update on Stericycle's 2018 full year guidance. Charles A. Alutto - Stericycle, Inc.: Thanks, Dan. Now for updated guidance for 2018, which is included on slide 17. Please keep in mind that these are forward-looking statements. Our guidance is based on currently known items and does not include future items such as acquisitions, divestitures, or non-reoccurring litigation matters. Following the close of the second quarter, we believe annual revenue for 2018 will be in the range of $3.45 billion to $3.54 billion using foreign exchange rates at the end of the quarter. The majority of adjustments to revenue guidance are as follows. $40 million from unfavorable foreign exchange rates, $30 million from softness in CRS, and $23 million from the two divestitures that were announced today. The worldwide revenue guidance for each of our service lines is Regulated Waste and Compliance Services is expected to be in the range of $1.91 billion to $1.935 billion. Secure Information Destruction Services is expected to be in the range of $890 million to $915 million. Communication and Related Services is expected to be in the range of $330 million to $345 million depending on recall revenues. Manufacturing and Industrial Services is expected to be in the range of $320 million to $345 million. We believe adjusted EBITDA will be in the range of $750 million to $775 million. We expect adjusted EPS will be in the range of $4.35 to $4.55 using a share count of 90.5 million shares. This reflects an adjusted tax rate of approximately 25.5% to 26%. As you can see from the adjusted EPS bridge on slide 19, the strength of our core businesses, including paper pricing favorability plus tuck-in acquisitions is driving an adjusted EPS increase of $0.06. This is offset by $0.02 from the newly completed divestitures of non-core businesses, $0.03 from the increase in interest expense related to the SQ settlement, $0.05 from foreign exchange headwinds and $0.16 from softness in CRS. We believe cash from operations will be in the range of $185 million to $225 million, which includes the payment for the SQ settlement. We expect CapEx to be between $155 million to $170 million and free cash flow will be between $15 million to $70 million. We will continue to maintain a disciplined approach to our capital allocation strategy as outlined on slide 20. This updated guidance reflects the recent funding of the SQ class action settlement. Our team remains focused on the commitments for 2018, including the successful execution of our business transformation. We have made significant progress on business transformation year-to-date, including the completion of several divestitures and the execution of our savings plan. We remain confident in the long-term success of Stericycle and believe that our leadership in growing markets for Compliance Services and the expected benefits from the business transformation will provide the potential for significant improvements in both operational and financial performance. I want to thank each and every member of our worldwide team for their commitment to our customers, our core values and our business transformation. We'll now answer any questions. Brandon, can you please open the line for Q&A?

And your first question is from Sean Dodge from Jefferies. Sean Dodge - Jefferies LLC: Good afternoon. Thanks. Maybe starting with regulated medical wastes, there was a fairly sizable deterioration in organic growth there. Can you give us a little more insight into that? Is there a particular geography or client group that's struggling within SQ or has the pricing headwind ticked up a bit? Just a little surprised because you guys were beginning to lap some easier comps. We would expect a little bit better results there. Charles A. Alutto - Stericycle, Inc.: Actually, I think what you're referring to is the Regulated Waste and Compliance revenues, Sean. I think, compared to our guidance, if you remember correctly, we did have some PTS divestitures in that number. We had contract to Avis. It actually came in line from what we were guiding. From a year-to-date perspective, it's down about 4.1%. If you look at our most recent guidance, it's $1.935 billion to $1.975 billion before we revised it for the foreign exchange impact. So it actually came in as expected for the quarter. Sean Dodge - Jefferies LLC: Okay. And then, I guess, for Brent, you're a couple of quarters into the transitions you've made within that sales force, the SQ sales force. Now, you've ramped up your ad spending. You're more strongly promoting the Stericycle brand. Of course, you've made all the investments that we talked about in data and pricing analytics. Are we at a point now where you're starting to earn a return on those investments or is there still some – going to be some, I don't know, fine-tuning that need to happen to kind of get all of that to really jell together and start to kind of make a difference, I guess? Brent Arnold - Stericycle, Inc.: Hey, Sean. Probably best just to remind everybody the investments we've made. As you recall, at the beginning of the year, we rolled out three main initiatives that was really focused on, first off, taking a strategic approach to our pricing where we, in some cases, would reduce or limit our annual price increases, to reduce churn and future discounts. We would also expand the number of accounts covered by account managers. And then the third thing you mentioned in your comments was incremental investment in our marketing. I would say, year-to-date, we're really pleased with these – of the progress of these initiatives. I believe that we have a strong correlation between our strategic pricing approach, the things we're learning in data analytics and the fact that we are on track year-to-date with discounting in our customer retention numbers. So we view that all as positive. Obviously, it takes a while for our account managers to build those relationships. But if they do build those relationships and become good working relationships with our customers, we think that will also have a benefit with regards to retention. And the final thing is we're really trying to put a lot more out there in the media and communications around Stericycle's leadership, our compliance thought leadership in the market, and the insight we can provide customers to really make sure their businesses stay compliant and stay ahead of the curve. Obviously, there are some changes coming out with e-Manifest and different things affecting or customers. And our goal is to make sure they recognize the benefit of being with the market leader and how that really protects their business in doing that. So overall, I would tell you we're really pleased with the investments. It's a long term. We call it the SQ long-term strategy. It's a long-term play, but I think we're off to a really good start. Sean Dodge - Jefferies LLC: Okay. That's good to hear. Thank you. Charles A. Alutto - Stericycle, Inc.: Thanks, Sean.

And your next question comes from Ryan Daniels from William Blair.

Hi. This is Nick Speakout (19:33) in for Ryan Daniels. The first one I'm going to ask is if you could walk through a bridge on the EPS guidance for Q3? Daniel V. Ginnetti - Stericycle, Inc.: Yeah, certainly. I will try to do that. Thanks, Nick. In addition to the graph that you saw on there, keep in mind, I think what we shared is that there's about $0.02 of favorability that comes from the solid results and the outlook for the core businesses. You had $0.03 from interest. There's a $0.03 increase in interest expense related to the SQ settlement. And then we have $0.05 from foreign exchange, where again we saw about $40 million of increase year-over-year for foreign exchange just in the back half of the year. And then lastly $0.16 from C&RS as we really don't have line of sight to any large recall events. We're still doing the same number, in fact, increased number of recall events. But we don't have a line of sight to those blockbuster events that really help you get to the top end of the range. So when you go down that, that should put you at about a $4.35 to $4.55 range. I gave you the midpoints on that. And then going into Q3, there are certain benefits that we saw in Q1, mandatory preferred is an example of that acceleration. We think the best spot for you to be is in a range of $0.95 to $1.05. And then you've got Bradley (21:06) for the Q4 from there.

Great. Thanks. And then how about for the free cash flow guidance change? Daniel V. Ginnetti - Stericycle, Inc.: Well, the free cash flow guidance change is going to contemplate the payment that we did make on July 6 for the settlement of $295 million. There's also about a $3 million to $5 million increase that's going to come from additional interest now that we have actually made that payment. With the adjustment that we did primarily in C&RS, there'll be less EBITDA than originally planned. That's in the range of anywhere from $12 million to $20 million, depending on the high and the low there. We reduced the amount of CapEx that we think that we would need to spend, and that's favorable $5 million to $10 million. And then lastly, we saw some increased legal fees on our adjusting items, but as you know, that we report a as-reported free cash flow, so when you add that up, you would get into about a $15 million to $70 million range for free cash flow for the year.

Great. Thanks. I'll hop back in the queue. Thanks for taking my questions. Daniel V. Ginnetti - Stericycle, Inc.: Thanks, Nick. Charles A. Alutto - Stericycle, Inc.: Thanks, Nick.

And your next question comes from Michael Hoffman from Stifel Baltimore. Charles A. Alutto - Stericycle, Inc.: Hey, Michael. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Hi, guys. Thanks for taking the questions. What I'm trying to reconcile is you've got, at the midpoint of revenues, you're down $75 million, and the midpoint of EBITDA, we're down $22.5 million, and if I've done this math right, most of that $22.5 million is CRS. It's like $19 million, offset by a favorable, almost $5 million, from documentation destruction. And that leaves a few million split between medical waste and M&I. Is that the right way to think about the hit to EBITDA that anybody who's fretting it, oh, my gosh, something's unwinding at medical, you're wrong? Charles A. Alutto - Stericycle, Inc.: Yeah, no. You got it right, Michael. I mean, the take-down from the midpoint is mostly driven by CRS. And I think we show that on the slide bridging the midpoint guidance. I mean, foreign exchange certainly had an impact as well of about $0.05, but the majority is C&RS. The rest of the business performed in line or did slightly better. Paper actually helped. Daniel V. Ginnetti - Stericycle, Inc.: Michael, I think if you – that's a great point that you put. If you looked at the graph on there and you really looked at the things that are within our core operations, the core businesses, SOP pricing, and the acquisitions, we would have been raising the midpoint of the guidance. Unfortunately, foreign exchange, we had a very brief period where the dollar was weakening, and now it's turned back, and that's a pretty significant change. We did do the interest settlement or the interest on the settlement. We didn't anticipate that or guide to that in the year. And then the real issue is within C&RS which is episodic in nature. So all-in-all, I think the core business would have shown an increase. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: So I was wondering, I mean, I'm going to adjust the $10 million to, whatever it is, $70 million, $15 million to $70 million for the $295 million. So that really is, the original was $330 million to $400 million, now we're at $310 million to $365 million. That's a number I'm surprised is down as much. I would have thought you would have been able to minimize the proportional line there. Charles A. Alutto - Stericycle, Inc.: Are you talking about the free cash flow number? Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Cash, yeah, I mean, you're not – I mean, the $295 million, one-time event. So you're really running the company at $310 million to $365 million is the new guidance on operations, which at the midpoint is $337.5 million versus the old midpoint was $365 million. So that's up for sales. Charles A. Alutto - Stericycle, Inc.: Actually, I think it's $210 million. You're saying $310 million, it would be $510 million minus $295 million. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Yeah, $210 million, $210 million, sorry, $210 million, yeah. I'm just trying to understand how much pressure. Daniel V. Ginnetti - Stericycle, Inc.: The one thing you're not picking up in there is the cash tax benefit that we will also see as a result of now funding the settlement that we will now have some cash tax benefit as a result of that in the back half of the year. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Yeah, it's a really healthy – it's an $80 million swing in the midpoint to midpoint. You were $365 million and now you're going to $280 million-something. That seems like a really big swing in the free cash flow at the midpoint. Daniel V. Ginnetti - Stericycle, Inc.: Right. Again, I think if we go down, Michael, everything on there that we've shared are things that we have seen the business transformation is on plans. There's been no change for that. Legal expenses are higher, there's about a $15 million adjustment there. And then the change in EBITDA along with the settlement and the interest associated with that. So I think if you bridge from the $330 million to $400 million, that would take you right down to the $15 million to $70 million. And again, contemplated in that, there are things that we have the ability to do as far as improving our DSO from 65 where we're at today. We think there's benefit outside that we could do there, continuing to work on our working capital initiative which is aligning or reaching out to our vendors and aligning payment terms to more coincide with our DSO. So I do think there's opportunity within that. And then, from there, you just have to contemplate what other investments we would make on continued acquisitions. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: And – okay. I guess, I'll have to follow up. It just seems too big of a – if I adjust for the – I know I'm repeating myself, but if you adjust for the $295 million, you add the $295 million to both the $15 million and the $70 million, that's $310 million to $365 million, midpoint $337 million. The old midpoint was $365 million. That $30 million just seems too big relative to $22 million of EBITDA. That's the part I'm struggling with is why is there a bigger hit to the free cash than there is to the EBITDA. Daniel V. Ginnetti - Stericycle, Inc.: Michael, I think the reason for that is, remember, we're doing an as-reported, and so we are seeing some increased expenses on our adjusting items such as legal that would not get picked up in the EBITDA adjustment, the adjusted EBITDA adjustment that we're giving you. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Okay. I think there'd be some value in helping to bridge that then because... Daniel V. Ginnetti - Stericycle, Inc.: Okay. Certainly. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Yeah. The power of this story was how good this cash has been despite all of the other issues your – and now your cash looks like it weakened more than the rest of the revised guidance. Charles A. Alutto - Stericycle, Inc.: Yeah. I think let's just take it from a cash flow from operations, it was $510 million to $560 million. You have $295 million in the settlement. You have $3 million to $5 million on the high and the low on the interest. You have an adjustment to EBITDA, which we make, that's the one thing that's outside of the settlement of $12 million to $20 million. And then you got the $15 million which gets you to the $185 million to $225 million. Because you keep saying $310 million, I think it's more like $210 million plus the $15 million for legal. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: It's $15 million plus $295 million is $310 million. And $15 million plus $3 million – $70 million is $365 million. I mean, all else being equal, that $295 million is not an operating issue. The operation should be doing $310 million to $365 million, right? Daniel V. Ginnetti - Stericycle, Inc.: Yeah, Michael, we'll bridge that for you, but the adjustments have been – you just take them one by one and add it down, and then again it goes up slightly with the adjustment to CapEx. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Okay. I'll look forward to the follow-up. Thanks. Charles A. Alutto - Stericycle, Inc.: Yes. Thanks, Michael.

And your next question comes from Scott Schneeberger from Oppenheimer. Charles A. Alutto - Stericycle, Inc.: Hey, Scott. Scott Schneeberger - Oppenheimer & Co., Inc.: Hey, guys. Can we just touch a moment following up on that line of conversation? On legal, what is in there? What's that associated with? How is that going to look going forward multiple quarters if you can address it, because that sounds like that was a change there? And then a follow-up, if I could. Charles A. Alutto - Stericycle, Inc.: Yeah, absolutely. So let me take the legal expenses. The legal fees are predominantly related to the previously announced FCPA investigation. Obviously, these investigations by nature are expensive as they require a collection of a large volume of data with multiple interviews with employees and in multiple languages. And as we've said all along, we're fully cooperating with the authorities in conducting a very thorough investigation. We did have significant legal expenses in Q1 and Q2, but we don't think those legal expenses in the second half of the year are going to be as high as they were in the first half of the year. Scott Schneeberger - Oppenheimer & Co., Inc.: All right. Thanks. And I know you don't want to provide 2019 guidance, but is that something that ends or, for the most part, ends in 2018? Might there be a trickle beyond? Charles A. Alutto - Stericycle, Inc.: I think it's hard to tell. These investigations do take time, so I would anticipate that this will not be completed by 2019, but I think it's too early to tell and obviously we're not going to give any guidance to 2019 today. Scott Schneeberger - Oppenheimer & Co., Inc.: All right. Thanks a lot, Charlie. And then it sounds like you said no great line of sight for recalls. That was a stickler in the quarter and for the forward guidance. But I'm guessing there's a little bit more in CRS as well. Could you just talk about what some of the difficulties are there? And in the strategic alternatives, would it be recall alone, the whole segment, as a package or is that a TBD? Thanks. Charles A. Alutto - Stericycle, Inc.: Yeah, thanks. So I think you had two questions there. Let me – I will take both of them. First of all, on the recall, you're right on that. We actually – I think Dan had spoken to it earlier. If you look at Q2 2017 versus Q2 2018, we actually did more events in 2018, but these events were significantly less revenue compared to 2017, or saying another way, we didn't really have any larger blockbuster recalls in the latest quarter. And in our visibility of the business, we really – and we know it's an unpredictable business. The visibility, though, that we have right now is we don't see anymore – we don't have visibility in the large recalls for the remainder of the year, but I'll caution everybody. It does change. We've sat in certain quarters where it's been looking slow and then, all of a sudden, you get a very large recall. I want to remind everybody, we get a 98% retention rate with that business. Meaning that recurring, where if somebody does business with us on a recall, if they have another recall, they come back to us. Again, we can't predict how big that recall will be when they come back to us. Right now, we're trending towards the lower recall. So we know it's unpredictable, but it's a great business and we certainly have great relationships with really blue chip companies around the globe in that. You're right, though. There is another factor with respect to our Communications business. And really what we saw in the Communications side is we did see our live voice call volumes, especially in the SMB business decrease. So it has resulted in fewer recalls and reduced revenues. We have growth in our enterprise and our automated solutions but it only partially made up that difference. So that's really what's going on in the CRS business. You had a question about what we sell, recall without comps on. So, I mean, we're looking at several strategic alternatives. Our main focus will be on maximizing our shareholder value in any alternative strategic transaction we make. Scott Schneeberger - Oppenheimer & Co., Inc.: All right. Thanks. Appreciate it. Charles A. Alutto - Stericycle, Inc.: Thanks, Scott.

And your next question comes from Hamzah Mazari from Macquarie Capital. Charles A. Alutto - Stericycle, Inc.: Hey, Hamzah. Hamzah Mazari - Macquarie Capital (USA), Inc.: Yeah. Thank you. Hey. Hi. How are you? Charles A. Alutto - Stericycle, Inc.: Good. Hamzah Mazari - Macquarie Capital (USA), Inc.: Just had a question on CRS as well. Was there any distraction in that business because you're selling that business or seeking strategic alternatives? Just curious on that. And then I thought you – do you guide recalls or do you not guide recalls? I know that that policy had changed over the years and so I'm just curious on the $0.16 headwind in terms of the annual bridge of EPS. How much of that is just there's distraction within that segment? And then I thought you did not forecast recalls. Charles A. Alutto - Stericycle, Inc.: Yeah. So let me take that one first because we've always forecasted recalls ever since we acquired that business over 10 years ago. It's been in our guidance. We don't forecast blockbuster recalls. We also don't forecast when we think things are going to be slower. We try to be right down the middle with respect to our guidance and figure out where we think we'll end up on an average quarter. So it's always been in our guidance, Hamzah. You've seen us exceed that guidance in many quarters. And you – for those that have followed the company for a long period of time, there have been quarters where, like this quarter, we had an absence of any large recall. So it's always been in the guidance and it's had an impact usually on results. As far as your question around distraction, I think that's a really good question. I mean, we've talked about it internally here as well. Obviously, we're in an ongoing process, so that means the process had started. That leadership team obviously is on the front lines in looking at the strategic alternatives and talking to our legal advisors and our financial advisors. So I think we'd be foolish to say that the results weren't – there wasn't an implication of a distraction in the business. I think it's really hard for us to quantify what that would be or what it was, but we do have a really solid and great leadership team there. We'll focus on the business to make sure that we continue to run the business while we seek strategic alternatives. But I think it's fair to say that there was certainly a lot going on in that business in the last quarter. Hamzah Mazari - Macquarie Capital (USA), Inc.: Okay and just a follow-up question. You mentioned in your deck board evolution. Maybe if you could talk about how is this board looking at the business differently? Is there more pressure to execute? Just any sense of how is the board evolution impacting your execution and the business? And so any color there, we'd appreciate. Charles A. Alutto - Stericycle, Inc.: Sure, Hamzah. It's Charlie. I guess I'll take that one as well. I mean, I think evolution is good. Getting new board members with fresh perspectives I think is always helpful. I think the pressure to execute has always been there. And so to say that the former board members didn't want us to execute or weren't as on us for execution wouldn't be accurate. I think certainly the new members bring a vast experience, especially in business transformation. So I think that will help us. And certainly, when we looked at adding both Ronee and Kay, that was certainly one thing that we were looking for, folks that have been in public companies that have gone through transformations. So I think we've got a good mix now of some longer-tenured board members with new members, new leadership in Bob Murley who's been fantastic. So I think the pressure's there. To go back to your original question, I think the pressure's always been there. But certainly, we're looking at the business with a fresh set of eyes and newer perspectives with the new members that have joined not just in the last year, but if you think about it over the last three or four years, about 70% or 60% of the board is new. So I think we've made some really good progress there. Hamzah Mazari - Macquarie Capital (USA), Inc.: Great. Thank you.

And your next question comes from Kevin Steinke from Barrington Research. Kevin Mark Steinke - Barrington Research Associates, Inc.: Hi, just wanted to go through a few of the other pieces of the guidance here. In terms of Secure Information Destruction, that came up on the low end by $15 million. Is that from paper pricing? Charles A. Alutto - Stericycle, Inc.: Yeah, Dan, you want to take it? Daniel V. Ginnetti - Stericycle, Inc.: Yeah, I think that's exactly what it is. The fundamentals of the business or the core of the business is operating as we expect. We're seeing the benefit of paper prices. We took the opportunity to look at kind of the historical trends, and we've seen this index go up and down. We certainly believe it's going to stay above our guidance range for the year. We also are cautious about expecting it to stay at the level that it's at today. So the revised range that we're operating under right now is making paper prices would be in the range of $175 to $185. And so with that, the bottom end of the range did come up as well. Charles A. Alutto - Stericycle, Inc.: Yeah, I think two other points there. I think it's important to note that obviously we did acquisitions. That's going to bring up the guidance. But at the same time, this is an international business for us, Kevin, so foreign exchange did have a negative impact. That's why you probably didn't see the top end come up as much. Daniel V. Ginnetti - Stericycle, Inc.: Yeah, there was about a $6 million of the $40 million FX impact is in Secure Information Destruction. Kevin Mark Steinke - Barrington Research Associates, Inc.: Okay. And then on Regulated Waste and Compliance Services, the change in guidance there, that's currency plus the divestitures? Daniel V. Ginnetti - Stericycle, Inc.: Yeah, there's a number of things in that number. The foreign exchange will impact Regulated Waste and Compliance Services $27 million of that $40 million. We did about $5 million in divestitures that we announced today that will impact. And then we took the opportunity to really trim the bottom half and the top end of guidance just by about $6 million on the bottom, about $9 million on the top. So most of the change is FX and then divestitures. Kevin Mark Steinke - Barrington Research Associates, Inc.: Okay. And then I guess, lastly, the Manufacturing and Industrial came down again. I guess, what are the factors driving that? Daniel V. Ginnetti - Stericycle, Inc.: Well, the majority of that adjustment is, in fact, divestitures, $18 million is the divestiture that we did in the UK was the hazardous waste company. There was about $7 million impact in that and largely that has to do with the portion of M&I that we have in Latin America. And then we took the opportunity in revising those guidance and, in fact, we came up on both the bottom and the top end because we are continuing to hit our numbers. Charles A. Alutto - Stericycle, Inc.: Yeah. And I think another point on the M&I, just for everybody's reference, year-to-date organic growth for M&I is actually a 3%, so it's trending towards the top end of the range from the most recent guidance. So if you strip out the foreign exchange impact, if you strip out what Dan just talked about on divestiture, we have growth in M&I. Kevin Mark Steinke - Barrington Research Associates, Inc.: Okay. Great thanks for taking the questions. Charles A. Alutto - Stericycle, Inc.: Thanks, Kevin. Daniel V. Ginnetti - Stericycle, Inc.: Thanks, Kevin.

And your next question comes from Isaac Ro from Goldman Sachs. Charles A. Alutto - Stericycle, Inc.: Hi, Isaac. Isaac Ro - Goldman Sachs & Co. LLC: Good morning, guys. Thank you. Hi. First question from me was on just SQ pricing. I know that you guys are working through the process here to settle here, and I think in the last a couple of quarters it didn't sound like there was much movement in terms of the pricing conversation. But I wanted to check in just to see if that was still the case. Charles A. Alutto - Stericycle, Inc.: Yeah, SQ pricing came in, in Q2 as expected, so we're on track for the $120 million to $130 million that we talked about at the second half of 2016. Isaac Ro - Goldman Sachs & Co. LLC: Okay. Got it. And then just on the ERP plan, I know you guys said that it's on track and within budget, maybe – but if you could update us on kind of next key steps here between now and the end of the year as you start to prepare for that to go live, it would be helpful to kind of understand your process and put that in context with some of the things you're talking about on Portfolio Rationalization and just the general – how you're putting all that together. Thank you. Daniel V. Ginnetti - Stericycle, Inc.: Sure. I think the teams are very focused on the work streams around our, what we call, pay-to-weigh, and that's the $60 million to $65 million. And as you can see, the great progress in the first half of the year feel very confident that we are going to hit the $60 million to $65 million deliverable what we have. I'll let Charlie talk about Portfolio Rationalization. But I want to touch on is really early work being done now that will ultimately yield benefit in 2020, and that's really the work that they're doing on the ERP. Our team members are incredibly engaged right now. They're getting excited about seeing technology and how it's going to able to work for them. They've completed the blueprint design of our target operating model and are now down into what we call mega processes, and those are those end-to-end processes and things that really help you drive shared services. That's account to report; that's purchase to pay. All of those initiatives that they're working on are blueprinting. There's about seven or eight of them and we go through and call them sprint team comes together cross-functional group. They're working collaboratively, and I'm really seeing enthusiasm build around it as they see the future of Stericycle under a single operating system with really world-class controls and capabilities. Charlie, do you want to touch on this? Charles A. Alutto - Stericycle, Inc.: I think we talked about portfolio rationalization. The only thing I'd add to what Dan said is, certainly, the design work will take us through the end of the year, and then 2019 is the year where we start to build the system. And obviously, to remind everybody, so our – the milestone that we have for go live is to go live in the U.S. in all of our businesses in 2020 and to go live internationally in 2021. Isaac Ro - Goldman Sachs & Co. LLC: Thanks so much, guys. Charles A. Alutto - Stericycle, Inc.: Thanks, Isaac.

And your next question comes from Michael Hoffman from Stifel Baltimore. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Thanks for taking the follow-up. Charles A. Alutto - Stericycle, Inc.: No problem. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: In document destruction, the 3.2% net of paper seems a little bit lower than what your trend has been since you bought it. You've been actually enjoying more of a 4% to 6%. So if I think of the mix in the 3.2% of purge, price and new customer, what was going on there? Brent Arnold - Stericycle, Inc.: Hey, Michael. It's Brent. I'll cover that one for you. The good news is, is we're right in the middle of our range year-to-date. So, our range is net of paper, organic growth targets of 3% to 5%. We're right in the middle at 4%. So year-to-date, we're doing well. Auto and reoccurring is doing well and is on track, so that's good news. The one area that we did have an impact in the quarter was purge revenue. In the quarter, we moved one of our regional inside sales offices into our centralized sales center and we did have a challenge ramping up to the necessary head count by the timeline. And that was the impact in the quarter with regard to purge. The teams jumped on that situation. We're focused on bridging that gap, but that was the impact you probably saw on the numbers. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Okay. If I could circle back to at the midpoint of the change of revenue, $75 million. When you think about the mix, there's, again, midpoint is $32.5 million from medical waste. You said $23 million of that is divestitures. What's the $9 million? How much of that's 4x versus how much of it is something going on? Daniel V. Ginnetti - Stericycle, Inc.: You're talking in its entirety, Michael, or are you talking about one of the revenue streams? Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: But I'm trying to reconcile what the sources of why the revs were coming down. So, in medical waste, you're down at the midpoint, $32.5 million, but $23 million is for divesting businesses, right? Daniel V. Ginnetti - Stericycle, Inc.: Yeah, let me just give you the high point and the revenue end total. We came down $40 million due to foreign change. The dollar strengthened virtually against almost every currency that we operate under. We came down $23 million due to the divestitures that we announced, the new divestitures. The old ones were already built in. Another $30 million in C&RS as we don't have line of sight to larger recall events, and Charlie talked about the transition from live voice to automation, and we'll catch up to that. Acquisitions contributed $4 million. And then, on top of that, you see a positive $15 million in revenue to the midpoint. And that has to do with, in part, due to paper, as well as in part as we mentioned due to M&I and trimming some of the other ranges to tighten them up. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Okay. So 2019. Okay. All right. Thanks. Charles A. Alutto - Stericycle, Inc.: Thanks, Michael.

And we have no more questions in queue. Charles A. Alutto - Stericycle, Inc.: Thanks, Brandon. Before closing today's call, I'd like to make a moment to recognize our former Board Member, John Patience. John served as the strong and influential voice on the Board of Directors for many years. Throughout, John played an important role in driving the growth and evolution of the company. His strategic thinking and business expertise had a significant impact. On behalf of the entire Stericycle family, I'd like to sincerely thank John for his many years of service and valuable contributions to the company. Thanks, everybody, for joining us on today's call, and have a great evening. Take care.

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