Earnings Transcript for SRCL - Q4 Fiscal Year 2023

Operator: Good day, and thank you for standing by. Welcome to the Fourth Quarter 2023 Stericycle Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Andrew Ellis, Senior Vice President of Finance. Please go ahead.

Andrew Ellis: Good morning, and thank you for joining Stericycle's 2023 fourth quarter earnings call. On the call today will be Cindy Miller, our Chief Executive Officer; Janet Zelenka, our Chief Financial Officer and Chief Information Officer; and Cory White, our Chief Commercial Officer. The discussion today includes forward-looking statements that involve risks and uncertainties when we use words such as believes, expects, anticipates, estimates, may, plan, will, goal or similar expressions, we are making forward-looking statements. Forward-looking statements are prospective in nature and are not based on historical facts but rather on current expectations and projections of our management about future events and are therefore, subject to risks and uncertainties. Our actual results could differ significantly from those described in such forward-looking statements. Factors that could cause our 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 our filings with the U.S. Securities and Exchange Commission. Our past financial performance should not be considered a reliable indicator of our future performance, and investors should not use historical results to anticipate future results or trends. We disclaim any obligation to update or revise any forward-looking statement other than in accordance with legal and regulatory obligations. On the call, we will discuss non-GAAP financial measures. For additional information and reconciliation to the most comparable U.S. GAAP measures, please refer to the schedules in our earnings press release, which can be found on Stericycle's Investor Relations website at investors.stericycle.com. The prepared comments for today's call corresponds to an investor presentation, which is also available at Stericycle's Investor Relations website. Throughout the call, we may reference specific slides from the presentation. This call is being recorded, and a replay will be available approximately one hour after the end of the conference call today until March 28, 2024. Replay information is available in the Events section on Stericycle's Investor Relations website. Time-sensitive information provided during today's call, which is occurring on February 28, 2024 may no longer be accurate at the time of a replay. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Stericycle is prohibited. I'll now turn the call over to Cindy.

Cindy Miller: Thank you, Andrew, and welcome to our fourth quarter earnings call. I'd like to start off today's discussion by thanking all of our team members for their dedication to our customers and their great work throughout the year. Their commitment has been instrumental in our successful performance across all of our key business priorities. Over the last five years, this dedication has allowed us to make tremendous progress, as illustrated on Slide 11. On today's call, in addition to unpacking the results for the quarter and this year, we will also unveil our next generation of key business priorities which are focused on the next phase of growth for the company, building on the foundation we have established. I am pleased to share that our fourth quarter results were generally in line with our expectations. Our quarterly results included

Cory White: Thank you, Cindy. Our commercial and service excellence key business priority is focused on driving profitable revenue growth delivering a differentiated value proposition and creating a seamless customer experience. This includes enhancing sales, service and product excellence to win, retain and grow strong customer relationships. Through our sales excellence initiatives, we continue to focus on our market-to-quote capabilities, including quality of revenue, digital marketing, e-commerce and contract management. Utilizing the ERP, we expect to further enhance sales excellence by gaining greater insights into sales opportunities, driving pricing intelligence, expanding market presence and enhancing sales productivity. Service excellence is focused on delivering a seamless service experience through all phases of our customer life cycle which includes

Cindy Miller: Thank you, Cory. Turning to operational excellence. This second key business priority is focused on driving margin expansion and cash flow improvement by leveraging the following

Janet Zelenka: Thank you, Cindy. I will start by summarizing our fourth quarter results. As noted on Slide 5, revenues in the fourth quarter were $652 million compared to $670.4 million in the fourth quarter of 2022. Excluding the impact of divestitures of $28.6 million and favorable foreign exchange rates of $5 million, organic revenues increased $5.2 million. Organic revenues in Regulated Waste and Compliance Services grew $13.2 million while Secure Information Destruction organic revenues declined $8 million. Secure Information Destruction was impacted by lower commodity index revenues due to lower recycling revenues and lower fuel and environmental surcharges of $18 million, partially offset by higher service revenues of $10 million. As noted on Slide 6, Regulated Waste and Compliance Services revenues were $439.9 million compared to $449.3 million in the fourth quarter of 2022. Excluding the impact of foreign exchange rates and divestitures, organic revenues for Regulated Waste and Compliance Services increased 3.1%. North America Regulated Waste and Compliance Services organic revenues grew $10.1 million or 2.8%, mainly driven by our three pricing levers which include pricing in existing contracts, new customer pricing and surcharges and fees. International Regulated Waste and Compliance Services organic revenues grew $3.1 million or 5.1% in the fourth quarter, mainly driven by pricing. Secure Information Destruction revenues were $212.1 million compared to $221.1 million in the fourth quarter of 2022. Excluding the impact of divestitures and foreign exchange rates, Organic revenues for Secure Information Destruction declined 3.6%, mainly due to lower commodity index revenues reflecting more than a $100 reduction in sorted office paper pricing per ton year-over-year and lower fuel and environmental surcharges. In North America, Secure Information Destruction organic revenues decreased $5.9 million or 3% compared to the fourth quarter of 2022. Recycling paper revenues in the fourth quarter of 2023 contributed approximately 5.9% of the decline or $11.5 million due to lower sorted office paper pricing and lower tonnage. Service revenues contributed approximately 2.9% of growth or $5.6 million due to pricing, partially offset by lower fuel and environmental surcharges. Approximately 50% of the lower sorted office paper recycling revenue was offset by a recycling recovery surcharge, which is reflected in service revenue. As a reminder, on the third quarter call, we discussed that some national customers were reducing their store footprint, which led to a contraction in their related service steps. This contraction continued at a slower pace in the fourth quarter. In International, Secure Information Destruction organic revenues decreased $2.1 million or 8.4% compared to the fourth quarter of 2022, mainly due to lower recycling revenues and fuel and environmental surcharges. Income from operations in the fourth quarter was $37.1 million compared to $59.1 million in the fourth quarter of last year. The $22 million decrease was mainly due to the following

Cindy Miller: Thank you, Janet. Our focus on ESG and sustainability is an ongoing pursuit, which we actively incorporate into our everyday practices and into our strategic business plans. In early February, we received our grade from CDP, and I'm excited to share that we achieved a B score, our highest rating since we began filing with the CDP three years ago. This follows on the heels of four recent awards on diversity and sustainability that recognize the continued maturation of our organization. With that, I'd like to thank our customers, team members, the communities we serve and our shareholders for their continued trust in having Stericycle protect what matters. Operator, please open the line for Q&A.

Operator: Thank you. [Operator Instructions]. Our first question will come from the line of Sean Dodge from RBC Capital Markets. Your line is open.

Sean Dodge: Yes, thanks. Congratulations on the strong finish to the year. On the guidance and specifically on the bridge, I think super helpful that you all provided this, so thank you for that. On the cost of revenue efficiencies, it looks like half of that driven by workforce reductions and half from operational strategic initiatives. Cindy, you mentioned a lot of things in your prepared remarks. Can you give us a couple of examples of what the operational strategic initiatives are, what's new for 2024 and what are those expected to contribute?

Cindy Miller: Yes. I think -- Sean, thanks for the question. And we did try to be quite thorough with the bridges. We know there's always a lot of moving parts and wanted to make sure that we make it as easy as we can. Yes, you're right. As we're moving into 2024, we're now driving into the efficiencies. We're pivoting from the transformation phase and I think really moving into now delivering on plans, executing to plans, doing the things we need to do. If you'll recall, now Shred had been on from an operational perspective. They've been on the ERP platform for quite some time. And right now, we really are gaining efficiencies there. We've got a workforce that's familiar with the handhelds. We've got dispatchers that are very familiar with dispatching, routing and really making some gains. And what we're going to lean into for 2024 is, you'll recall, we just put the regulated side of the business on the ERP in Q4 of last year. And they're starting to develop a similar rhythm, not quite as advanced, but certainly we're still working through some things. But you did catch on that whole rift piece. We took a reduction in force this quarter. And we are going to lean into some of those efficiencies that I just talked about in the second half. The other thing, Sean, is when you talk about the amount of facilities and upgrades and equipment and modernization that we've done just in the work environments in which our people work, as you lean into those things, whether it's conveyance, whether it's resetting a building in terms of making workflow better. When you do those things, along with standardizing some of the containers and a lot of the things that we do, those are the productivity initiatives that we're leaning into. So some are new, some are a continuation. And I think just that, along with the improved routing capabilities and some of the things we have, those are the things that are really driving our ability to improve margins. Thanks for that question.

Sean Dodge: Okay. Great. And then just quickly on SID. Janet, you said that the service stop rationalization had slowed in the fourth quarter. Are you seeing any evidence as it continued into this year? Has it stabilized? Is it continuing to taper? And it's still only the national accounts where you're seeing that? Or have you seen that in other parts of your base as well.

Cindy Miller: Yes. Sean, I'll start. Thanks for that question. If, Janet, there's else you'd like to add. I think we're very proud of our shred side of the business. To have faced the level, the headwind of a difference of $100 a ton pretty much for the year, certainly for the second half of the year, to have faced that and still continued to have the opportunity, to service our customers, there still is demand for the service. I think what speaks volumes for us is, we like to talk about the fact that if you look at the actual growth of the business, over the last two years, so for -- since 2021 and '22 in comparison with '23, we've seen a 6.6% year-over-year over that two-year comparison growth. And for me, that speaks that there's still demand for the business. And you are correct, we are seeing -- it is the national footprint. It is that retail space. Any time you take those big customers and they reduce, I'll just throw out an average number, this isn't a specific. But if you go from having 8,000 stores that get serviced either every week or every other week and now you reduce them to 6,000 and you take a few of those types of retail spaces that see that contraction. We feel that. We've not lost customers. As a matter of fact, we continue to grow with customers. But we feel it in terms of both the stop, the service fee as well as the paper that wasn't generated. So we're still very, very positive about the shred side of the business, especially with their efficiencies, how they're getting better, how they're adapting and learning from data. So they play a very integral role in our continued growth. Thanks for that question.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Dave Manthey for Baird. Your line is open.

David Manthey: Thank you. Good morning everyone. My first question is regarding the next generation key business priorities as you outlined them. Cindy, they seem to all pretty much be centered around technology tools. Are there additional investments required for plug-ins to your ERP? Or does that functionality already exist within your instance of 4HANA?

Cindy Miller: Yes. No, that's a great question, Dave. We're very excited about those. I think many of them do. It's now time to lean into the effort and energy and the money, quite frankly, that we invested in with our current ERP platform. So for us, I think if you were, as we look further into the digital implementation for us. Right now, I think commercial and service excellence and then the operational excellence, that's us taking us, diving into what we have and getting better at what we do. When you look at the digital implementation, and we talk about where else can we deploy more digital kind of streamlined engagement potentially with customers or some of these other things or we look at AI, those are the things that we're developing and looking at. But to your point, we don't see major technology investment required for harnessing any of that.

David Manthey: That's great to hear. Second, on the paper side, could you give us a figure for the tonnage in 2023 and what is your expectation for '24? And as we're thinking about the typical formula there which is -- I think it used to be you experienced about 40% of the downside below $192 per ton. Is that the same? Or have you moved the needle on that formula?

Cindy Miller: Yes. I'll start with that one. The table is pretty much the same. Right now, the good news is right now, we're seeing paper in its 15-year average. It's anywhere from 140 to 160. It bounces in between there. As you know, you follow, I think, probably as closely, if not more so, than most, Dave, you and your team. So yes, it's now rationalized and I think gotten far more stable in terms of predictability. So we are looking at that as kind of being a non-entity. But that -- the sliding scale that we do have, that is the protection for it. And yes, you are correct. The scale has stayed the same with $192 being the top. And around that, I think the bottom the floor goes to about $85, somewhere around in there. I'm not quite sure I'd have to check on that on the floor for you. And then Janet, I think, has got the stats for the tons of paper year-over-year.

Janet Zelenka: Yes. And we also have that in the 10-K, Dave, and thanks for being on the call today. After divestitures normalized, the tons were 453,000 versus 500,000 the year before or 9% for tons of sorted office paper. So we did see some decline non unanticipated, given the contraction of stops, which reflects the paper that we talked about in the nationals and some -- and that -- I also wanted to point out in our guidance range for SOP a pipe, we assume between $125 to $140 a ton. That seems to be a good run rate for what the business is doing today. And it's in the sweet spot of that recycling recovery surcharge range where it recovers about two-thirds of any fluctuation that we see. And the bottom end of the range of the index is around $77.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Michael E. Hoffman from Stifel. Your line is open.

Michael Hoffman: Good morning. And thanks for taking the question. So on the opportunity to drive operating leverage at the gross margin line. You've talked a lot about this convergence of manual processes as a result of ERP. So what you have shared with us, this initial $40 million to $45 million, what percentage of that opportunity are we capturing?

Janet Zelenka: So of the $40 million to $45 million, that is the increase remain over $20 million of that is due to the targeted workforce reduction. So I would say about 50% of it is on things that we've already taken in action. The rest of the margin improvement that we're referring to there is on efficiencies, route optimizations, so all kinds of things we can leverage on a modernized fleet, modernized facilities and modernized system.

Michael Hoffman: So I did a bad job of asking the question. There's a certain amount of headcount that's been tied to doing manual processes. Are you done with this risk? Or is there more to come? That's what I was trying to get at. What percent of...

Cindy Miller: Sorry, Michael. Yes, we had -- if you recall, we had a smaller risk in October of last year, and then we are in the process of executing one right now in first quarter of this year. It will be -- it will end up being about a 6% year-over-year reduction in headcount, and that's where we believe right now, we are positioned to be able to drive growth and really focus on top line and equally, if not more important, really driving bottom line opportunities. So that's -- I don't -- we don't foresee anything else.

Janet Zelenka: Yes. And we also leveraged attrition and careful hiring, and we'll continue to do that through the year. But in terms of an action, as Cindy said, we don't anticipate any more this year.

Michael Hoffman: Right. Okay. And then -- if I take the outlook, the combination of the long-term outlook, the three to five on the top-line, 13% to 17% in EBITDA and the 50% or better in free cash. So how do I sort of put together this year's guidance into a couple of things? One, is the top-line mostly about price? Or are we starting to get new customer adds, stop adds? Is the operating leverage that you're talking about, is it -- how much can we expect incrementally from here from asset utilization, that sort of -- that was talked about under the digital and the revised plan. And then the cash conversion is coming under the plan. So what has to happen to adjust the cash conversion? Trying to pack four questions into one, so I do two.

Janet Zelenka: Yes. No, that's fine, Michael. So I'm going to ask for those. Listen, I'm going to go to Slide 18, 19 and 20 on this. So the 3% to 5% is balanced. We expect volume and price to be part of our -- and that's an organic revenue growth only. So it does not include the opportunity for tuck-in acquisitions nor the tuck-in acquisition we mentioned on the call. So that's pure organic. In terms of the -- so where we're getting the drivers of the about 14% adjusted EBITDA growth rate that underlines our adjusted EPS range, it is what we talked about, largely within our control with a significant amount already executed as we drive efficiencies, leveraging all the things I mentioned. The free cash flow, if you go to the Slide 20 and you look at that, our adjusted free cash flow range is around 40% to 50% on a pure basis. However, when we were looking at the long-term range we had not contemplated the severance payments, and I wouldn't normally do that. And we also have a shift in our interest rate payments due to the maturation of the bond and going to 12-month payments in the year versus the normal payments of the bonds. That is a onetime effect. So we thought we'd mention that as well. And then when you take those out, you're in about the 50% range on your free cash flow when you're looking at the normal operations of the business for 2024. I think I answered all your questions, Michael. If I didn't, go ahead and say one more thing and then we'll go to the next person.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Scott Schneeberger from Oppenheimer. Your line is open.

Scott Schneeberger: Thanks very much. Good morning. I'd like to start just following-up on pricing. It sounds like, Janet, it's kind of the long-term guidance for revenue organically is half price, half volume. How is the pricing environment particularly in the regulated waste segment? Are you -- because you have longer-term contracts, they roll off. You've been through an inflationary environment, I would -- and still kind of on the tail end, it seems how is your ability to be getting pricing now? I guess, this is kind of for both of you. Thanks.

Cindy Miller: Yes. I think, Scott, great question. Good to hear from you. We have our ability to take price in the market according to market conditions. I think we've been doing a great job with that. We have been -- I think some of the commodity headwinds and a few other things may mask some of the gains that we've been making. But I think we're well positioned in the market. And right now feedback from customers, let's say, on the regulated side, with the new portal, with the changes and the abilities and kind of the visibility we've given them, there is an even greater level of, if you will, stickiness to some of the opportunities and the things that we can now do based on the fact that we're on a platform. So I think all of those things lend themselves to our ability to continue to lead in the marketplace to bring value to our customers and to continue to come up with solutions that they need, if you will.

Scott Schneeberger: And just a quick follow-up on that and then one more. But on the pricing, on the -- with customers, how would you frame the competitive environment? Going back eight, 10 years ago, there was a bit of a shift where Stericycle was adversely impacted by some enhanced competitive dynamics. How would you kind of categorize the industry now? You just mentioned in that last response you're a leader, as we would expect. But just curious how it looks competitively out there? Thanks.

Cindy Miller: Yes. I think the one thing that stayed the same in both of our businesses is that the competition is still regional. So we've got some regional players that are a little stronger than others on both the shred and the regulated waste side. And I think there are some where we've got -- some regions where we've got a stronger presence, a bigger footprint, where we can leverage ourselves a little better than others. And I think all of those things now in our understanding of that are really -- it's really leading us now towards this potential tuck-in acquisition opportunity, where we can see more in depth in the areas where competition may or may not be there to whatever level and what's our ability to grow and to serve. So I think it's probably the same in terms of overall it's still a regional competition and it is different in every region. But I think we're well positioned to take advantage and to drive further growth, both organically as well as with some very laser, very, very specific, very deliberate tuck-in opportunities.

Scott Schneeberger: And that's a great segue for my final question. It sounds like you have a propensity to start doing tuck-ins a little bit more actively. I kind of want you to compare and contrast that by what remains with regard to divestitures, which presumably what remains would still be international. And obviously, you have the ERP implementation internationally this year. So tying that all together to make the question, would we see net acquisition or divestiture contribution or headwind in the guide this year? And how much is there left there on the divestiture and on international? Thanks.

Cindy Miller: Yes, Scott, I think the good news there is just in 2022 alone, we divested of -- we had eight divestitures and got out of six countries. So I would probably describe the ability of folks to continue to follow the story with the puts and takes, I can tell you, it won't be anything like that. We don't have eight countries left to divest of. So I think overall, what we're looking at, we still have portfolio optimization as a priority. We're looking to be opportunistic and see -- we've got great insights into the markets in which we operate. The divestitures we've made, quite frankly, 19 in the last four, five years have allowed us to really focus on driving operational and financial performance in the core markets and in our core businesses. So I think I can guarantee it certainly isn't anything like the bouncing ball you've seen over the last few years as right now we're really -- we have the ability to buckle down, get very focused and execute to the plans that we have. But it still remains a priority simply because where we constantly look to be opportunistic.

Operator: Thank you. One moment for our next question. Our next question will come from line Tobey Sommer from Truist Securities. Your line is open.

Tobey Sommer: Thanks. A follow-up on a similar theme here. How do you view the new systems change your view of acquisitions? And how do you view the market opportunity for Stericycle to sort of be a consolidator again? And maybe in the context of that, if you could share key parameters you look for in acquisitions, including valuation?

Cindy Miller: Yes. I think a couple of those. Anytime you have a modern technology platform like we have, that is a game changer in terms of our ability to integrate, integrate quicker, our ability to engage with the customer base -- the new customer base that would be brought on in a seamless manner. Technology is really the key is whether you're talking about top line opportunity or bottom line as you have greater visibilities and insights into all the productivity key elements. So for us, our ability to get that platform in has really -- it's a catalyst for us to be able to do more things. But you have to combine that, Tobey. The other thing that afforded us this opportunity is the discipline that we've had financially and really just being very focused on being able to, number one, improve the balance sheet; but then number two, continue to operate in a manner that generates cash so that we do have an opportunity to take advantage of whatever the market presents. So I think for us, what are we looking for? Well, as I mentioned in one of the prior answers, we've got -- we're going to be very strategic. We -- over the course of the last few years, as we've put in much more structure and discipline and standardization, we're very focused. We've got a strong playbook in terms of what are the market conditions that would make us be opportunistic, what does that do to our overall network, what's the culture of the company, a myriad of things that we look at that right now make us have the ability to do tuck-ins. However, we would not be anything like the tuck-in engagement that maybe some folks might be familiar with Stericycle from years past.

Tobey Sommer: Thank you. How should we think about CapEx and free cash conversion over sort of more medium to long term relative to your '24 guidance? And I'm not asking for long-term guidance, but to the extent there are knowable puts and takes in the future that you could shine a light on, that would be helpful.

Janet Zelenka: Yes. So we do actually have long-term outlook of our free cash flow conversion rates. We use the 50% to 60% that we still have out there. And in terms of the capital needs of the business, this is a business that needs to be maintained, and we see opportunity to invest in ourselves to grow. So I don't anticipate a much different profile of capital in the ranges that we've given in the past in the future. We will not get to that free cash flow conversion rate by reducing capital.

Operator: Thank you. One moment for our next question. Our next question comes from the line of John Mazzoni from Wells Fargo. Your line is open.

John Mazzoni: Hi, good morning. Thanks for taking my question. Maybe a quick one on Nevada and McCarran. It's been very helpful for that color in terms of the kind of completion of construction in the first half of the year and then regulatory review and testing with the ramp of full production in mid-'25. Could you just give us a sense of kind of some of the puts and takes there, especially around the kind of milestones and what we should be looking for? And maybe once it's fully ramped, should we expect that you would use the full permit? Or any other commentary around the volumes once ramped would be helpful. Thanks.

Cindy Miller: Yes. I think more to come, I think we will -- as we move through this, we said the whole project was going to be in four phases. So we've talked about the construction, which we're in. We've got testing. We've got kind of ramping up and then full production. So for us, we see it as a steady journey. The good news for us at this point, John, is the fact that in spite of maybe potential supply chain issues or any types of problems with materials, we remain on track getting both of those boilers -- or getting the incinerator stacks and the boilers in, in terms of their positions. We're getting close to being able to start the testing part of it. For us, that's a big deal. That's a milestone. We've been on budget and we're very pleased with the effort that's going on there. So in terms of -- as we move March throughout these quarters and we hit these different things, whether it's testing or it's testing and ramping up and passing regulations and those types of things, I think we'll give a regular cadence in terms of where we are so that folks can get a better understanding, including us, as to when we'd be running some volume through there. So I think more to come there in terms of that. Right now, I think we've given pretty much what we can to this point.

John Mazzoni: Great color. Thank you. And then maybe just a quick follow-up on cross-sell, it was helpful in terms of the acceleration of the velocity to close. But has there been any other initial proof points you can share? And maybe just how are the conversations going with customers? Thanks.

Cindy Miller: Yes. No, I think the velocity cross-selling and the engagement with customers has been great. I've got -- I'll let Cory White, our Chief Commercial Officer, jump in on that as I don't know anybody who's been more engaged with customers this past year than Cory. So any updates, Cory, in terms of where the customers are?

Cory White: Yes, great question. Very early days. I think at this point, more to come on this as I think you're aware that the new ERP system has provided us the opportunity for the first time to actually see the full spectrum of customers that are utilizing our service on both sides of the house and the overlap. So very early days in our evaluation and our opportunity to drive growth in that area. But we're excited about what the data is providing from a go-to-market perspective. So more to come on that. But a lot of lessons learned, very early days in our utilization of the ERP system. So just one added tool in our quiver.

Operator: Thank you. One moment for our next question. And our next question will come from the line of Kevin Steinke from Barrington Research Associates. Your line is open.

Kevin Steinke: Good morning. So I apologize if I missed this, but you gave the impact of commodities on the adjusted EBITDA growth in 2024. What are you assuming for the commodity impact on organic revenue growth in 2024? And is that baked into the 3% to 5% organic revenue growth target?

Janet Zelenka: Yes. So it's baked into the 3% to 5% organic revenue. That's basically a flow-through from the top line down to the commodity impact, driven mostly by the fuel surcharges and the sorted office paper price.

Cindy Miller: Yes. And one thing I think that is important for -- we talked last quarter about when -- are we still facing headwinds in terms of that comparative with the RISI rate. And just to let everybody know, Q1 of 2023 from a RISI perspective, paper was still up over $200. It was about $225. Q2 of 2023, paper was around $186. So with it right now being around $140, $145. Q1 is where we see a good bit of comparison headwind. But certainly, we see an opportunity to continue to grow and as customers still show demand. And then Q2 is, let's say, a $30 to $40 headwind, a little different. But we're confident that when we get to the second half of the year where, if you remember, Q3 of '23, paper was averaged around $146, Q4 is around $139 or $140, much more normal averages for the past 15 years. That's where we believe we're head-to-head pretty much even in terms of where paper is. So we see the commodity more as a first half, if you will, Q1 a little bit more than Q2 type of situation.

Kevin Steinke: Okay. Thanks. I mean, the reason I asked that is that presumably, if we put commodities on an apples-to-apples basis year-over-year, then you'd be targeting organic revenue growth faster than 3% to 5%. So I was just trying to get a sense of the magnitude?

Cindy Miller: Absolutely. You bring up a great point. We're very proud of the efforts from top line and bottom line that people fought through to really try to mitigate as much as they can, something that was as much a headwind that we faced as we did. And I think it just shows the resilience and the dedication of the team here at Stericycle and I think the continued commitment with the relationship with the customers that we have as they continue to depend on us. So very, very pleased with that in spite of the fact that numbers didn't necessarily look fantastic. in terms of that top line. But facing that $50 million, that was a big deal for the group.

Kevin Steinke: Okay. Thank you all. I will turn it back.

Cindy Miller: Thanks, Kevin.

Operator: Thank you. I'm not showing any further questions at this time. I would now like to turn it back to Cindy for any closing remarks.

Cindy Miller: Thank you, Victor. So to everyone listening on this call, we appreciate your interest in Stericycle and your shared excitement for our future. Thank you all very much.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.