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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[Mark One]

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-37556

________________________________________________________


Delaware			36-3640402
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)

2355 Waukegan Road

Bannockburn, Illinois 60015

(Address of principal executive offices, including zip code)

(847) 367-5910

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SRCL	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒

Smaller reporting company ☐

Accelerated filer ☐

Emerging growth company ☐

Non-accelerated filer ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

On ~~July 24,~~October 30, 2023, there were ~~92,521,649~~92,523,391 shares of the Registrant’s Common Stock outstanding.

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		Page No.
PART I. FINANCIAL INFORMATION

	Item 1. Financial Statements (Unaudited)	5

	Condensed Consolidated Statements of Income (Loss) ~~Income~~	5

	Condensed Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~	6

	Condensed Consolidated Balance Sheets	7

	Condensed Consolidated Statements of Cash Flows	8

	Condensed Consolidated Statements of Changes in Equity	9

	Notes to Condensed Consolidated Financial Statements	11

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920

	Item 3. Quantitative and Qualitative ~~Disclosure~~s Disclosures About Market Risk	2930

	Item 4. Controls and Procedures	2930

PART II. OTHER INFORMATION

	Item 1. Legal Proceedings	3031

	Item 1A. Risk Factors	3031

	Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	3031

	Item 5 . 5. Other Information	3031



	Item 6. Exhibits	3132

	SIGNATURES	3233


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Glossary of Defined Terms

Unless the context requires otherwise, the “Company”, “Stericycle”, “we”, “us”, or “our” refers to Stericycle, Inc. on a consolidated basis. The Company also uses several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below:


Abbreviation			Description
2022 Form 10-K			Annual report on Form 10-K for the year ended December 31, 2022
Adjusted Income from Operations			Income from Operations adjusted for certain items discussed in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
~~AICPA~~			~~American Institute of Certified Public Accountants~~






~~COVID-19~~			~~The global novel coronavirus disease 2019 outbreak, which the World Health Organization declared to be a pandemic~~
Credit Agreement			Credit Agreement dated September 30, 2021, First Amendment dated April 26, 2022, and Second Amendment dated June 15, 2023, among the Company and certain subsidiaries as borrowers. Bank of America, N.A., as administrative agent, swing line lender, a lender and a letter of credit issuer and the other lenders party thereto, as amended
Credit Agreement Defined Debt Leverage Ratio			As of any date of determination, the ratio of (a) (i) Consolidated Funded Indebtedness as of such date minus (ii) Unrestricted Cash as of such date to (b) Consolidated EBITDA ~~(as~~(each as defined in the Credit ~~agreement)~~Agreement) for the period of four fiscal quarters most recently ended on or prior to such date
Credit Facility			The Company's $1.2 billion credit facility due in September of 2026 granted under the terms of the Credit Agreement
CRS			Communication and Related Services (Divested December 2022)
DEA			U.S. Drug Enforcement Administration. The DEA is a division of the ~~U.S. Department of Justice.~~DOJ. It is the federal agency which regulates the manufacture, dispensing, storage, and shipment of controlled substances including medications with human abuse potential
DOJ			U.S. Department of Justice
Domestic Environmental Solutions			Hazardous Waste Solutions and Manufacturing and Industrial Services (Divested April 2020)

DSO			Days Sales Outstanding as reported, defined as the average number of days that it takes a company to collect payment after revenue has been recorded, computed as the trailing twelve months of Revenues for the period ended, ~~DSO,~~ divided by the Accounts Receivable balance at the end of the ~~period~~period. Days Sales Outstanding, net of Deferred Revenues is similarly computed except Accounts Receivable balance is netted with Deferred Revenues.
DTSC			U.S. Department of Toxic Substances Control
EBITDA			Earnings Before Interest, Taxes, Depreciation & Amortization. Another common financial term utilized by Stericycle to analyze the core profitability of the business before interest, tax, depreciation and amortization

Enviri			Enviri Corporation, a Delaware Corporation, formerly known as Harsco Corporation
ERP			Enterprise Resource Planning
Exchange Act			U.S. Securities Exchange Act of 1934
~~FASB~~			~~Financial Accounting Standards Board~~
FCPA			U.S. Foreign Corrupt Practices Act
FCPA Settlement			FCPA ~~Settlement~~settlement with the ~~Securities and Exchange Commission,~~SEC, the ~~Department of Justice~~DOJ and Brazil authorities of approximately $90 million and engagement of an independent compliance monitor for 2 years and self-reporting for additional year
International			Operating segment including Europe, Middle East, Asia Pacific (Divested our Korea operations in June 2023, which was our last remaining Asia Pacific business) and Latin America (Divested our Brazil operations in April 2023, which was our last remaining Latin America business) Business operations outside of North America
IRS			U.S. Internal Revenue Service
LIBOR			London Interbank Offered Rate - benchmark interest rate that was replaced by SOFR
Net Debt			As defined in the Credit Agreement, adding back unamortized debt issuance costs, less cash and cash equivalents
North America			Operating segment in North America, including U.S., Canada and Puerto Rico
NOV			Notice of Violation

Other Costs			Represents corporate enabling and shared services costs, annual incentive and stock-based compensation
Purchase Agreement			Stock Purchase Agreement, dated as of February 6, 2020, by and between Stericycle, Inc., and the Harsco Corporation (now known as Enviri Corporation) and CEI Holding LLC, a Delaware limited liability company and subsidiary of Harsco Corporation (now known as Enviri Corporation)
PSU			Performance-based Restricted Stock Unit
RSU			Restricted Stock Unit
RWCS			Regulated Waste and Compliance Services, a business unit that provides regulated medical waste services
SEC			U.S. Securities and ~~Exchanges~~Exchange Commission
Senior Notes			5.375% ($600.0 million) Senior Notes due July 2024 and 3.875% ($500.0 million) Senior Notes due January 2029
SG&A			Selling, general and administrative expenses
SID			Secure Information Destruction Services, a business unit that provides confidential customer material shredding services and recycling of shredded paper
SOFR			Secured Overnight Financing Rate - benchmark interest rate that replaced LIBOR
SOP			Sorted Office Paper
SQ Settlement			Small quantity medical waste customers class action settlement of $295.0 million
Term Facility			Aggregate amount of commitments made by any lender under the terms of the Credit Agreement
Term Loans			Advances made by any lender under the Term Facility
TSA			Transition Services Agreement
UAE			United Arab Emirates
U.S.			United States of America
U.S. GAAP			U.S. Generally Accepted Accounting Principles


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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) ~~INCOME~~

(Unaudited)


In millions, except per share data	In millions, except per share data									In millions, except per share data
		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Revenues	Revenues	$	669.5	$	679.8	$	1,353.8	$	1,344.0	Revenues	$	653.5	$	690.3	$	2,007.3	$	2,034.4
Cost of revenues	Cost of revenues	418.4		419.3		841.7		839.0		Cost of revenues	407.8		424.1		1,249.5		1,263.3
Gross profit	Gross profit	251.1		260.5		512.1		505.0		Gross profit	245.7		266.2		757.8		771.1
Selling, general and administrative expenses	Selling, general and administrative expenses	220.9		222.4		436.9		461.0		Selling, general and administrative expenses	217.3		215.6		654.2		676.5
Divestiture losses, net		54.2		—		59.2		—
Divestiture losses, net (Note 3)										Divestiture losses, net (Note 3)	4.2		—		63.4		—

(Loss) income from operations		(24.0)		38.1		16.0		44.0
Income from operations										Income from operations	24.2		50.6		40.2		94.6
Interest expense, net	Interest expense, net	(19.1)		(18.5)		(39.5)		(34.8)		Interest expense, net	(17.4)		(19.8)		(56.9)		(54.6)

Other expense, net		(0.6)		(0.7)		(0.4)		(1.5)
(Loss) income before income taxes		(43.7)		18.9		(23.9)		7.7
Other income (expense), net										Other income (expense), net	0.1		2.3		(0.3)		0.8
Income (loss) before income taxes										Income (loss) before income taxes	6.9		33.1		(17.0)		40.8
Income tax expense	Income tax expense	(5.8)		(8.4)		(14.3)		(11.3)		Income tax expense	(4.8)		(5.1)		(19.1)		(16.4)
Net (loss) income		(49.5)		10.5		(38.2)		(3.6)
Net (loss) income attributable to noncontrolling interests		—		—		(0.1)		(0.2)
Net (loss) income attributable to Stericycle, Inc. common shareholders		$	(49.5)	$	10.5	$	(38.3)	$	(3.8)
Net income (loss)										Net income (loss)	2.1		28.0		(36.1)		24.4
Net income attributable to noncontrolling interests										Net income attributable to noncontrolling interests	(0.1)		—		(0.2)		(0.2)
Net income (loss) attributable to Stericycle, Inc. common shareholders										Net income (loss) attributable to Stericycle, Inc. common shareholders	$	2.0	$	28.0	$	(36.3)	$	24.2

(Loss) income per common share attributable to Stericycle, Inc. common shareholders:
Income (loss) per common share attributable to Stericycle, Inc. common shareholders:										Income (loss) per common share attributable to Stericycle, Inc. common shareholders:
Basic	Basic	$	(0.54)	$	0.11	$	(0.41)	$	(0.04)	Basic	$	0.02	$	0.30	$	(0.39)	$	0.26
Diluted	Diluted	$	(0.54)	$	0.11	$	(0.41)	$	(0.04)	Diluted	$	0.02	$	0.30	$	(0.39)	$	0.26
Weighted average number of common shares outstanding:	Weighted average number of common shares outstanding:									Weighted average number of common shares outstanding:
Basic	Basic	92.5		92.1		92.3		92.0		Basic	92.5		92.2		92.4		92.1
Diluted	Diluted	92.5		92.2		92.3		92.0		Diluted	92.9		92.4		92.4		92.4

See accompanying Notes to Condensed Consolidated Financial Statements.


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STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

(Unaudited)

In millions
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Net (loss) income $ (49.5) $ 10.5 $ (38.2) $ (3.6)
Other comprehensive income (loss):
Currency translation adjustments 6.1 (46.0) 14.0 (54.9)
Cumulative currency translation gain realized through disposition of Republic of Korea operations (2.7) — (2.7) —
Cumulative currency translation loss realized through disposition of Australia and Singapore operations 2.2 — 2.2 —
Cumulative currency translation loss realized through disposition of Brazil operations 70.1 — 70.1 —
Total other comprehensive income (loss) 75.7 (46.0) 83.6 (54.9)
Comprehensive income (loss) 26.2 (35.5) 45.4 (58.5)
Less: comprehensive (loss) attributable to noncontrolling interests — (0.1) (2.2) (0.3)
Comprehensive income (loss) attributable to Stericycle, Inc. common shareholders $ 26.2 $ (35.4) $ 47.6 $ (58.2)


In millions
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income (loss)	$	2.1	$	28.0	$	(36.1)	$	24.4

Other comprehensive (loss) income:
Currency translation adjustments	(21.8)		(65.4)		(7.8)		(120.3)
Cumulative currency translation loss realized from divestitures	1.0		—		70.6		—




Total other comprehensive (loss) income	(20.8)		(65.4)		62.8		(120.3)

Comprehensive (loss) income	(18.7)		(37.4)		26.7		(95.9)
Less: comprehensive income (loss) attributable to noncontrolling interests	0.1		(0.3)		(2.1)		(0.6)
Comprehensive (loss) income attributable to Stericycle, Inc. common shareholders	$	(18.8)	$	(37.1)	$	28.8	$	(95.3)

See accompanying Notes to Condensed Consolidated Financial Statements.


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STERICYCLE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


In millions, except per share data	In millions, except per share data					In millions, except per share data
		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	30.7	$	56.0	Cash and cash equivalents	$	29.7	$	56.0
Accounts receivable, less allowance for doubtful accounts of $44.1 in 2023 and $53.3 in 2022		410.3		414.5
Accounts receivable, less allowance for doubtful accounts of $47.1 in 2023 and $53.3 in 2022						Accounts receivable, less allowance for doubtful accounts of $47.1 in 2023 and $53.3 in 2022	465.6		414.5
Prepaid expenses	Prepaid expenses	33.5		33.2		Prepaid expenses	39.9		33.2
Other current assets	Other current assets	52.7		55.0		Other current assets	52.0		55.0
Total Current Assets	Total Current Assets	527.2		558.7		Total Current Assets	587.2		558.7
Property, plant and equipment, less accumulated depreciation of $662.0 in 2023 and $657.7 in 2022		692.5		715.7
Property, plant and equipment, less accumulated depreciation of $665.3 in 2023 and $657.7 in 2022						Property, plant and equipment, less accumulated depreciation of $665.3 in 2023 and $657.7 in 2022	702.8		715.7
Operating lease right-of-use assets	Operating lease right-of-use assets	431.1		398.9		Operating lease right-of-use assets	442.7		398.9
Goodwill	Goodwill	2,751.9		2,784.9		Goodwill	2,738.5		2,784.9
Intangible assets, less accumulated amortization of $873.2 in 2023 and $823.3 in 2022		743.8		811.1
Intangible assets, less accumulated amortization of $889.2 in 2023 and $823.3 in 2022						Intangible assets, less accumulated amortization of $889.2 in 2023 and $823.3 in 2022	708.0		811.1
Other assets	Other assets	66.6		64.8		Other assets	66.9		64.8
Total Assets	Total Assets	$	5,213.1	$	5,334.1	Total Assets	$	5,246.1	$	5,334.1
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Current portion of long-term debt	Current portion of long-term debt	$	15.6	$	22.3	Current portion of long-term debt	$	15.8	$	22.3
Bank overdrafts	Bank overdrafts	—		2.9		Bank overdrafts	—		2.9
Accounts payable	Accounts payable	207.0		213.5		Accounts payable	202.5		213.5
Accrued liabilities	Accrued liabilities	243.2		244.1		Accrued liabilities	219.6		244.1
Operating lease liabilities	Operating lease liabilities	99.6		91.2		Operating lease liabilities	102.1		91.2
Deferred revenues						Deferred revenues	65.1		7.9
Other current liabilities	Other current liabilities	53.7		47.9		Other current liabilities	45.3		40.0
Total Current Liabilities	Total Current Liabilities	619.1		621.9		Total Current Liabilities	650.4		621.9
Long-term debt, net	Long-term debt, net	1,293.7		1,484.0		Long-term debt, net	1,297.0		1,484.0
Long-term operating lease liabilities	Long-term operating lease liabilities	352.4		329.0		Long-term operating lease liabilities	360.5		329.0
Deferred income taxes	Deferred income taxes	429.0		427.0		Deferred income taxes	426.1		427.0
Long-term income taxes payable	Long-term income taxes payable	9.3		11.8		Long-term income taxes payable	9.4		11.8
Other liabilities	Other liabilities	26.8		35.9		Other liabilities	26.4		35.9
Total Liabilities	Total Liabilities	2,730.3		2,909.6		Total Liabilities	2,769.8		2,909.6

Commitments and contingencies
Commitments and contingencies (Note 8 - Commitments and Contingencies)						Commitments and contingencies (Note 8 - Commitments and Contingencies)

EQUITY	EQUITY					EQUITY
Common stock (par value $0.01 per share, 120.0 shares authorized, 92.5 and 92.2 issued and outstanding in 2023 and 2022, respectively)	Common stock (par value $0.01 per share, 120.0 shares authorized, 92.5 and 92.2 issued and outstanding in 2023 and 2022, respectively)	0.9		0.9		Common stock (par value $0.01 per share, 120.0 shares authorized, 92.5 and 92.2 issued and outstanding in 2023 and 2022, respectively)	0.9		0.9
Additional paid-in capital	Additional paid-in capital	1,299.8		1,285.4		Additional paid-in capital	1,312.0		1,285.4
Retained earnings	Retained earnings	1,372.5		1,410.8		Retained earnings	1,374.5		1,410.8
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(191.0)		(276.9)		Accumulated other comprehensive loss	(211.8)		(276.9)
Total Stericycle, Inc.’s Equity	Total Stericycle, Inc.’s Equity	2,482.2		2,420.2		Total Stericycle, Inc.’s Equity	2,475.6		2,420.2
Noncontrolling interests	Noncontrolling interests	0.6		4.3		Noncontrolling interests	0.7		4.3
Total Equity	Total Equity	2,482.8		2,424.5		Total Equity	2,476.3		2,424.5
Total Liabilities and Equity	Total Liabilities and Equity	$	5,213.1	$	5,334.1	Total Liabilities and Equity	$	5,246.1	$	5,334.1

See accompanying Notes to Condensed Consolidated Financial Statements.


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STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


In millions	In millions					In millions
		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
OPERATING ACTIVITIES:	OPERATING ACTIVITIES:					OPERATING ACTIVITIES:
Net loss		$	(38.2)	$	(3.6)
Adjustments to reconcile net loss to net cash from operating activities:
Net (loss) income						Net (loss) income	$	(36.1)	$	24.4
Adjustments to reconcile net (loss) income to net cash from operating activities:						Adjustments to reconcile net (loss) income to net cash from operating activities:
Depreciation	Depreciation	52.6		54.3		Depreciation	78.7		81.5
Intangible amortization	Intangible amortization	56.3		63.2		Intangible amortization	84.2		94.7

Stock-based compensation expense	Stock-based compensation expense	17.8		12.6		Stock-based compensation expense	28.2		20.1
Deferred income taxes	Deferred income taxes	4.9		5.2		Deferred income taxes	2.6		12.0

Divestiture losses, net	Divestiture losses, net	59.2		—		Divestiture losses, net	63.4		—
Asset impairments, (gain) loss on disposal of property plant and equipment and other charges	Asset impairments, (gain) loss on disposal of property plant and equipment and other charges	3.1		0.3		Asset impairments, (gain) loss on disposal of property plant and equipment and other charges	6.2		2.2
Other, net	Other, net	1.2		1.6		Other, net	2.8		3.9
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(1.3)		(53.4)		Accounts receivable	(63.1)		(60.3)
Prepaid expenses	Prepaid expenses	(1.6)		10.0		Prepaid expenses	(8.3)		5.4
Accounts payable	Accounts payable	(1.5)		(12.5)		Accounts payable	(3.2)		(9.4)
Accrued liabilities	Accrued liabilities	8.4		(91.6)		Accrued liabilities	(11.6)		(101.5)
Deferred revenues						Deferred revenues	57.7		(0.1)
Other assets and liabilities	Other assets and liabilities	(6.0)		(4.5)		Other assets and liabilities	(8.2)		(29.8)
Net cash from operating activities	Net cash from operating activities	154.9		(18.4)		Net cash from operating activities	193.3		43.1
INVESTING ACTIVITIES:	INVESTING ACTIVITIES:					INVESTING ACTIVITIES:
Capital expenditures	Capital expenditures	(63.7)		(70.0)		Capital expenditures	(102.2)		(106.0)

Proceeds from divestiture of businesses, net	Proceeds from divestiture of businesses, net	88.9		1.6		Proceeds from divestiture of businesses, net	84.6		1.6
Other, net	Other, net	1.2		0.8		Other, net	2.1		0.9
Net cash from investing activities	Net cash from investing activities	26.4		(67.6)		Net cash from investing activities	(15.5)		(103.5)
FINANCING ACTIVITIES:	FINANCING ACTIVITIES:					FINANCING ACTIVITIES:
Repayments of long-term debt and other obligations	Repayments of long-term debt and other obligations	(10.0)		(8.4)		Repayments of long-term debt and other obligations	(11.3)		(9.8)
Proceeds from foreign bank debt	Proceeds from foreign bank debt	0.1		—		Proceeds from foreign bank debt	1.3		1.6
Repayments of foreign bank debt	Repayments of foreign bank debt	(0.3)		(0.1)		Repayments of foreign bank debt	(0.3)		(1.7)

Repayments of term loan	Repayments of term loan	(50.0)		—		Repayments of term loan	(75.0)		—

Proceeds from credit facility	Proceeds from credit facility	601.0		732.5		Proceeds from credit facility	862.7		1,018.8
Repayments of credit facility	Repayments of credit facility	(737.7)		(637.9)		Repayments of credit facility	(971.0)		(945.3)
Repayment of bank overdrafts		(2.9)		(0.6)
(Repayments) proceeds of bank overdrafts, net						(Repayments) proceeds of bank overdrafts, net	(2.9)		1.1
Payments of finance lease obligations	Payments of finance lease obligations	(1.4)		(1.3)		Payments of finance lease obligations	(2.0)		(2.4)

Payments of debt issuance costs						Payments of debt issuance costs	—		(0.4)
Proceeds from issuance of common stock, net of (payments of) taxes from withheld shares	Proceeds from issuance of common stock, net of (payments of) taxes from withheld shares	(5.2)		(5.2)		Proceeds from issuance of common stock, net of (payments of) taxes from withheld shares	(5.2)		(5.0)

Payments to noncontrolling interest	Payments to noncontrolling interest	(1.5)		—		Payments to noncontrolling interest	(1.5)		(0.2)
Net cash from financing activities	Net cash from financing activities	(207.9)		79.0		Net cash from financing activities	(205.2)		56.7
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	1.3		(2.7)		Effect of exchange rate changes on cash and cash equivalents	1.1		(7.9)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	(25.3)		(9.7)		Net change in cash and cash equivalents	(26.3)		(11.6)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	56.0		55.6		Cash and cash equivalents at beginning of period	56.0		55.6
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	30.7	$	45.9	Cash and cash equivalents at end of period	$	29.7	$	44.0

SUPPLEMENTAL CASH FLOW INFORMATION:	SUPPLEMENTAL CASH FLOW INFORMATION:					SUPPLEMENTAL CASH FLOW INFORMATION:

Interest paid, net of capitalized interest	Interest paid, net of capitalized interest	$	38.0	$	31.9	Interest paid, net of capitalized interest	$	67.1	$	64.3
Income taxes paid, net	Income taxes paid, net	$	13.7	$	4.0	Income taxes paid, net	$	18.4	$	3.0
Capital expenditures in Accounts payable	Capital expenditures in Accounts payable	$	21.9	$	30.8	Capital expenditures in Accounts payable	$	24.6	$	25.6

See accompanying Notes to Condensed Consolidated Financial Statements.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			8

Table of Contents

STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


In millions	In millions																							In millions
		Stericycle, Inc. Equity																								Stericycle, Inc. Equity
		Common Stock			Additional Paid-In Capital				Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests					Total Equity								Common Stock				Additional Paid-In Capital					Retained Earnings				Accumulated Other Comprehensive (Loss) Income				Noncontrolling Interests				Total Equity
		Shares	Amount												Shares								Amount
Balance as of April 1, 2023		92.4	$	0.9			$	1,289.2			$	1,422.0			$	(266.7)				$	0.6			$	2,446.0
Net loss		—	—		—				(49.5)		—		—					(49.5)
Balance as of July 1, 2023																								Balance as of July 1, 2023		92.5		$	0.9				$	1,299.8					$	1,372.5			$	(191.0)			$	0.6			$	2,482.8
Net income																								Net income		—		—		—					2.0				—				0.1				2.1
Currency translation adjustment	Currency translation adjustment	—	—		—				—		6.1		—					6.1						Currency translation adjustment		—		—		—					—				(21.8)				—				(21.8)
Cumulative currency translation gain realized through disposition of Republic of Korea operations		—	—		—				—		(2.7)		—					(2.7)
Cumulative currency translation loss realized through disposition of Australia and Singapore operations		—	—		—				—		2.2		—					2.2
Cumulative currency translation loss realized through disposition of Brazil operations		—	—		—				—		70.1		—					70.1
Cumulative currency translation loss realized from divestitures																								Cumulative currency translation loss realized from divestitures		—		—		—					—				1.0				—				1.0

Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	0.1	—		(0.3)				—		—		—					(0.3)						Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares		—		—		1.8					—				—				—				1.8
Stock-based compensation expense	Stock-based compensation expense	—	—		10.9				—		—		—					10.9						Stock-based compensation expense		—		—		10.4					—				—				—				10.4
Changes in noncontrolling interest	Changes in noncontrolling interest	—	—		—				—		—		—					—						Changes in noncontrolling interest		—		—		—					—				—				—				—
Balance as of June 30, 2023		92.5	$	0.9	$	1,299.8			$	1,372.5	$	(191.0)	$	0.6				$	2,482.8
Balance as of September 30, 2023																								Balance as of September 30, 2023		92.5		$	0.9	$	1,312.0				$	1,374.5			$	(211.8)			$	0.7			$	2,476.3

In millions	In millions																							In millions
		Stericycle, Inc. Equity																								Stericycle, Inc. Equity
		Common Stock			Additional Paid-In Capital				Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests					Total Equity								Common Stock				Additional Paid-In Capital					Retained Earnings				Accumulated Other Comprehensive (Loss) Income				Noncontrolling Interests				Total Equity
		Shares	Amount														Shares						Amount
Balance as of April 1, 2022		92.1	$	0.9			$	1,263.4			$	1,340.5			$	(227.3)						$	3.9			$	2,381.4
Balance as of July 1, 2022																								Balance as of July 1, 2022		92.1		$	0.9		$	1,271.2					$	1,351.0			$	(273.2)			$	3.8			$	2,353.7
Net income	Net income	—	—		—				10.5		—		—					10.5						Net income		—		—		—						28.0				—				—				28.0
Currency translation adjustment	Currency translation adjustment	—	—		—				—		(45.9)		(0.1)					(46.0)						Currency translation adjustment		—		—		—					—				(65.1)				(0.3)				(65.4)
Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	—	—		—				—		—		—					—						Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares		0.1		—		2.1					—				—				—				2.1
Stock-based compensation expense	Stock-based compensation expense	—	—		7.8				—		—		—					7.8						Stock-based compensation expense		—		—		7.5					—				—				—				7.5

Balance as of June 30, 2022		92.1	$	0.9	$	1,271.2			$	1,351.0	$	(273.2)	$	3.8				$	2,353.7
Changes in noncontrolling interest																								Changes in noncontrolling interest		—		—		—					—				—				(0.2)				(0.2)
Balance as of September 30, 2022																								Balance as of September 30, 2022		92.2		$	0.9	$	1,280.8				$	1,379.0			$	(338.3)			$	3.3			$	2,325.7

See accompanying Notes to Condensed Consolidated Financial Statements.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			9

Table of Contents

STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


In millions	In millions																				In millions
		Stericycle, Inc. Equity																				Stericycle, Inc. Equity
		Common Stock			Additional Paid-In Capital				Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interests				Total Equity				Common Stock						Additional Paid-In Capital					Retained Earnings					Accumulated Other Comprehensive (Loss) Income					Noncontrolling Interests					Total Equity
		Shares	Amount										Shares								Amount
Balance as of December 31, 2022	Balance as of December 31, 2022	92.2	$	0.9			$	1,285.4			$	1,410.8				$	(276.9)			$	4.3		$	2,424.5	Balance as of December 31, 2022		92.2				$	0.9				$	1,285.4				$	1,410.8				$	(276.9)				$	4.3	$	2,424.5
Net (loss) income	Net (loss) income	—	—		—				(38.3)		—			0.1				(38.2)			Net (loss) income	—			—					—					(36.3)					—					0.2					(36.1)
Currency translation adjustment	Currency translation adjustment	—	—		—				—		16.3			(2.3)				14.0			Currency translation adjustment	—			—			—					—					(5.5)					(2.3)					(7.8)
Cumulative currency translation gain realized through disposition of Republic of Korea operations		—	—		—				—		(2.7)			—				(2.7)
Cumulative currency translation loss realized through disposition of Australia and Singapore operations		—	—		—				—		2.2			—				2.2
Cumulative currency translation loss realized through disposition of Brazil operations		—	—		—				—		70.1			—				70.1
Cumulative currency translation loss realized from divestitures																					Cumulative currency translation loss realized from divestitures	—			—			—					—					70.6					—					70.6

Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	0.3	—		(3.4)				—		—			—				(3.4)			Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	0.3			—			(1.6)					—					—					—					(1.6)
Stock-based compensation expense	Stock-based compensation expense	—	—		17.8				—		—			—				17.8			Stock-based compensation expense	—			—			28.2					—					—					—					28.2
Changes in noncontrolling interest	Changes in noncontrolling interest	—	—		—				—		—			(1.5)				(1.5)			Changes in noncontrolling interest	—			—			—					—					—					(1.5)					(1.5)
Balance as of June 30, 2023		92.5	$	0.9	$	1,299.8			$	1,372.5	$	(191.0)		$	0.6			$	2,482.8
Balance as of September 30, 2023																					Balance as of September 30, 2023	92.5			$	0.9		$	1,312.0				$	1,374.5				$	(211.8)				$	0.7				$	2,476.3

In millions	In millions																				In millions
		Stericycle, Inc. Equity																				Stericycle, Inc. Equity
		Common Stock			Additional Paid-In Capital				Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interests				Total Equity				Common Stock						Additional Paid-In Capital					Retained Earnings					Accumulated Other Comprehensive Loss					Noncontrolling Interests					Total Equity
		Shares	Amount										Shares								Amount
Balance as of December 31, 2021	Balance as of December 31, 2021	91.9	$	0.9			$	1,261.8			$	1,354.8				$	(218.8)			$	4.1		$	2,402.8	Balance as of December 31, 2021		91.9				$	0.9				$	1,261.8				$	1,354.8				$	(218.8)				$	4.1	$	2,402.8
Net (loss) income		—	—		—				(3.8)		—			0.2				(3.6)
Net income																					Net income	—			—					—					24.2					—					0.2					24.4
Currency translation adjustment	Currency translation adjustment	—	—		—				—		(54.4)			(0.5)				(54.9)			Currency translation adjustment	—			—			—					—					(119.5)					(0.8)					(120.3)
Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	0.2	—		(3.2)				—		—			—				(3.2)			Issuance of common stock for incentive stock programs, net of (payments of) taxes from withheld shares	0.3			—			(1.1)					—					—					—					(1.1)
Stock-based compensation expense	Stock-based compensation expense	—	—		12.6				—		—			—				12.6			Stock-based compensation expense	—			—			20.1					—					—					—					20.1

Balance as of June 30, 2022		92.1	$	0.9	$	1,271.2			$	1,351.0	$	(273.2)		$	3.8			$	2,353.7
Changes in noncontrolling interest																					Changes in noncontrolling interest	—			—			—					—					—					(0.2)					(0.2)
Balance as of September 30, 2022																					Balance as of September 30, 2022	92.2			$	0.9		$	1,280.8				$	1,379.0				$	(338.3)				$	3.3				$	2,325.7

See accompanying Notes to Condensed Consolidated Financial Statements.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			10

Table of Contents

STERICYCLE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of Significant Accounting Policies

Basis of Presentation: The accompanying unaudited condensed consolidated financial statements include the accounts of Stericycle, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's condensed consolidated financial statements were prepared in accordance with U.S. GAAP and include the assets, liabilities, revenues, and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the Company exercises control. Outside stockholders' interests in subsidiaries are shown on the condensed consolidated financial statements as “Noncontrolling interests”.

The accompanying unaudited condensed consolidated financial statements as of ~~June~~September 30, 2023 and for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, have been prepared pursuant to the rules and regulations of the SEC for interim reporting and, therefore, do not include all information and footnote disclosures normally included in audited financial statements prepared in conformity with U.S. GAAP. In the opinion of management, however, all adjustments, consisting of normal recurring adjustments necessary to present fairly the results of operations, financial position and cash flows have been made. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2022 Form 10-K. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year or any other period.

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Some areas where the Company makes estimates include allowance for doubtful accounts, credit memo reserves, contingent liabilities, asset retirement obligations, stock compensation expense, income tax assets and liabilities, accrued employee health and welfare benefits, accrued auto and workers’ compensation self-insured claims, leases, goodwill and held for sale impairment valuations. Such estimates are based on historical trends and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

NOTE 2 — REVENUES FROM CONTRACTS WITH CUSTOMERS

The Company provides RWCS, which provide collection and processing of regulated and specialized waste, including medical, pharmaceutical and hazardous waste, for disposal and compliance programs and SID services, which provide for the collection of personal and confidential information for secure destruction and recycling of shredded paper.

The Company’s customers typically enter into a contract for the provision of services on a regular and scheduled basis, e.g., weekly, monthly or on an as needed basis over the contract term, e.g., one-time service. Under the contract terms, the Company receives fees based on a monthly, quarterly or annual rate and/or fees based on contractual rates depending upon measures including the volume, weight, and type of waste, number and size of containers collected, and weight and type of shredded paper.

Amounts are invoiced based on the terms of the underlying contract either on a regular basis, e.g., monthly or quarterly, or as services are performed and are generally due within a short period of time after invoicing based upon normal terms and conditions for our business type and the geography of the services performed.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			11

Table of Contents

Disaggregation of Revenue

The following table presents revenues disaggregated by service and reportable segments:


In millions	In millions									In millions
		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Revenue by Service	Revenue by Service									Revenue by Service
Regulated Waste and Compliance Services	Regulated Waste and Compliance Services	$	444.7	$	448.4	$	896.0	$	901.2	Regulated Waste and Compliance Services	$	439.9	$	447.8	$	1,335.9	$	1,348.9
Secure Information Destruction Services	Secure Information Destruction Services	224.8		231.4		457.8		442.8		Secure Information Destruction Services	213.6		242.5		671.4		685.5
Total Revenues	Total Revenues	$	669.5	$	679.8	$	1,353.8	$	1,344.0	Total Revenues	$	653.5	$	690.3	$	2,007.3	$	2,034.4
North America	North America									North America
Regulated Waste and Compliance Services	Regulated Waste and Compliance Services	$	366.4	$	365.6	$	735.1	$	727.8	Regulated Waste and Compliance Services	$	368.0	$	369.7	$	1,103.1	$	1,097.5
Secure Information Destruction Services	Secure Information Destruction Services	198.8		203.0		403.5		384.5		Secure Information Destruction Services	189.1		215.1		592.6		599.7
Total North America Segment	Total North America Segment	$	565.2	$	568.6	$	1,138.6	$	1,112.3	Total North America Segment	$	557.1	$	584.8	$	1,695.7	$	1,697.2
International	International									International
Regulated Waste and Compliance Services	Regulated Waste and Compliance Services	$	78.3	$	82.8	$	160.9	$	173.4	Regulated Waste and Compliance Services	$	71.9	$	78.1	$	232.8	$	251.4
Secure Information Destruction Services	Secure Information Destruction Services	26.0		28.4		54.3		58.3		Secure Information Destruction Services	24.5		27.4		78.8		85.8
Total International Segment	Total International Segment	$	104.3	$	111.2	$	215.2	$	231.7	Total International Segment	$	96.4	$	105.5	$	311.6	$	337.2

~~Contract Liabilities~~Deferred Revenues

~~Contract liabilities~~Deferred revenues are recognized when cash payments are received or when the Company bills for services in advance of performance. Deferred revenues as of ~~June~~September 30, 2023 and December 31, 2022, were ~~$8.2~~$65.1 million and $7.9 million, respectively. ~~Substantially all~~Beginning in the third quarter of 2023, the ~~contract~~Company advanced billings for certain Regulated Waste services. Deferred revenues are classified within current liabilities ~~as of June 30, 2023, are expected to be recognized in Revenues, as~~since the ~~amounts~~revenues are earned ~~which is anticipated over the next~~within 12 ~~months.~~months and there are no significant financing components.

Contract Acquisition Costs

The Company’s incremental direct costs of obtaining a contract, which consist primarily of sales incentives, are deferred and amortized to SG&A over a weighted average estimated period of benefit of 6.5 years.

During the three months ended ~~June~~September 30, 2023 and 2022, the Company amortized ~~$4.1~~$4.2 million and ~~$3.5~~$3.8 million, respectively, of deferred sales incentives to SG&A. During the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the Company amortized ~~$8.1~~$12.3 million and ~~$7.0~~$10.8 million, respectively, of deferred sales incentives to SG&A.

Total contract acquisition costs, net of accumulated amortization, were classified as follows:


In millions	In millions					In millions
		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Other current assets	Other current assets	$	15.4	$	14.2	Other current assets	$	15.7	$	14.2
Other assets	Other assets	44.7		40.5		Other assets	45.2		40.5
Total contract acquisition costs	Total contract acquisition costs	$	60.1	$	54.7	Total contract acquisition costs	$	60.9	$	54.7

Allowance for Doubtful Accounts

The Company estimates its allowance for doubtful accounts based on past collection history and specific risks identified among uncollected amounts, as well as management’s expectation of future economic conditions. If current or expected future economic trends, events, or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past-due receivable balances are written off when the Company’s collection efforts have been exhausted.


2023 Q3 10-Q Report			Stericycle, Inc. ●			12

Table of Contents

The changes in allowance for doubtful accounts were reported as follows:


In millions	In millions					In millions
		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
Beginning Balance	Beginning Balance	$	53.3	$	43.3	Beginning Balance	$	53.3	$	43.3
Bad debt expense, net of recoveries	Bad debt expense, net of recoveries	4.5		16.6		Bad debt expense, net of recoveries	10.1		25.4
Write-offs	Write-offs	(6.3)		(5.9)		Write-offs	(12.2)		(9.8)
Other changes(1)	Other changes(1)	(7.4)		0.4		Other changes(1)	(4.1)		(0.3)
Ending Balance	Ending Balance	$	44.1	$	54.4	Ending Balance	$	47.1	$	58.6

(1)Amounts consist primarily of 2023 divestitures of $6.4 million (principally Brazil) and currency translation adjustments.


~~2023 Q2 10-Q Report~~			~~Stericycle, Inc. ●~~			12

~~Table of Contents~~

NOTE 3 — RESTRUCTURING, DIVESTITURES, AND ASSET IMPAIRMENTS

Restructuring – Operational Optimization:

In October 2023, the Company recognized Operational Optimization charges of approximately $3.0 million, split between its North America and International segments, related to headcount reduction.

North America Divestiture

On December 1, 2022, the Company completed the sale of ~~our~~its Communication Solutions business for cash proceeds of approximately $45.0 million. The transaction resulted in a ~~divestiture~~pre-tax gain of $15.6 ~~million.~~million in the fourth quarter of 2022. In connection with the transaction, the Company entered into certain additional ancillary agreements including a TSA, for up to ~~twelve~~12 months. The Company allocated and deferred $1.4 million of the proceeds, which will be recognized over the duration of the TSA period offsetting the expenses incurred to deliver TSA services not reimbursed by the buyer.

International Divestitures

On October 6, 2023, the Company exited its operations in Romania for nominal consideration which resulted in a third-quarter assets-held-for-sale impairment charges of $4.2 million, of which $1.0 million relates to the reclassification of non-cash accumulated currency translation adjustments to earnings. The impairment charge is included in Divestiture losses, net in the Condensed Consolidated Statements of Income (Loss).

On July 25, 2023 and August 10, 2023, respectively, the Company exited its dental recycling business in the Netherlands and its SID joint venture in the UAE for nominal consideration which resulted in second quarter pre-tax charges of $1.5 million.

On June 1, 2023, the Company exited its operations in the Republic of Korea, for cash proceeds of approximately $109.3 million. The transaction resulted in a second quarter divestiture pre-tax gain of $50.8 million, of which $2.7 million of gain ~~relates~~related to the reclassification of non-cash accumulated currency translation adjustments to earnings.

On May 24, 2023, the Company exited its operations in Australia and Singapore, for cash proceeds of approximately $2.9 million. The transaction resulted in a second quarter divestiture pre-tax loss of $7.3 million, of which $2.2 million of loss ~~relates~~related to the reclassification of non-cash accumulated currency translation adjustments to earnings.

On April 20, 2023, the Company exited its operations in Brazil for cash consideration to the acquirer of approximately ~~$28.0~~$28 million. The transaction resulted in a second quarter divestiture pre-tax loss of $96.2 million, of which $70.1 million of loss ~~relates~~related to the reclassification of non-cash accumulated currency translation adjustments to earnings. In connection with the agreement, the Company entered into a TSA with the acquirer for a period of up to six months. The agreement provides for indemnifications to the acquirer against certain liabilities.

On January 19, 2023, the Company exited its International container manufacturing operations, for cash proceeds of approximately $2.2 million. The transaction resulted in a first quarter divestiture pre-tax loss of $5.0 million. In connection with the transaction, the Company entered into certain additional ancillary agreements, including an exclusive two-year supply agreement for containers.

~~In June 2023, the Company approved plans to divest its dental recycling business in the Netherlands and its SID joint venture in the UAE, resulting in second quarter pre-tax charges~~


2023 Q3 10-Q Report			Stericycle, Inc. ●			13

Table of ~~$1.5 million.~~Contents

~~In July 2023, the Company entered into a definitive agreement and completed the sale of the dental recycling business in Netherlands for nominal consideration.~~

Stericycle recognized the following International pre-tax Divestiture losses (gains), net in the Condensed Consolidated Statements of Income (Loss) ~~Income:~~:


In millions	In millions													In millions
		Three Months Ended June 30, 2023						Six Months Ended June 30, 2023							Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
		(Gain) Loss - pre-cumulative currency translation		Cumulative currency translation (gain) loss realized		Total (Gain) Loss		(Gain) Loss - pre-cumulative currency translation		Cumulative currency translation (gain) loss realized		Total (Gain) Loss			Loss - pre-cumulative currency translation		Cumulative currency translation loss realized		Total loss		Loss (gain) - pre-cumulative currency translation		Cumulative currency translation loss (gain) realized		Total loss (gain)
Divestitures	Divestitures													Divestitures

International Segment	International Segment													International Segment
Romania Operations														Romania Operations	$	3.2	$	1.0	$	4.2	$	3.2	$	1.0	$	4.2
UAE Joint Venture														UAE Joint Venture	—		—		—		0.5		—		0.5
Netherlands Dental Operations														Netherlands Dental Operations	—		—		—		1.0		—		1.0
Republic of Korea Operations	Republic of Korea Operations	$	(48.1)	$	(2.7)	$	(50.8)	$	(48.1)	$	(2.7)	$	(50.8)	Republic of Korea Operations	—		—		—		(48.1)		(2.7)		(50.8)
Australia and Singapore Operations	Australia and Singapore Operations	5.1		2.2		7.3		5.1		2.2		7.3		Australia and Singapore Operations	—		—		—		5.1		2.2		7.3
Brazil Operations	Brazil Operations	26.1		70.1		96.2		26.1		70.1		96.2		Brazil Operations	—		—		—		26.1		70.1		96.2
International Container Manufacturing Operations	International Container Manufacturing Operations	—		—		—		5.0		—		5.0		International Container Manufacturing Operations	—		—		—		5.0		—		5.0
Other Businesses		1.5		—		1.5		1.5		—		1.5

Divestiture losses (gains), net	Divestiture losses (gains), net	$	(15.4)	$	69.6	$	54.2	$	(10.4)	$	69.6	$	59.2	Divestiture losses (gains), net	$	3.2	$	1.0	$	4.2	$	(7.2)	$	70.6	$	63.4

Revenues of the completed divestiture transactions in 2023, each individually contributed less than 1% or in aggregate approximately ~~2.9%~~3.5% of consolidated revenues in the year ended December 31, 2022.

Asset Impairments

~~On June~~In the three and nine months ended September 30, 2023, the Company recognized an impairment in SG&A of $3.1 million in International associated with certain intangible assets in Spain.

In the nine months ended September 30, 2023, the Company recognized an impairment in COR of $3.4 million in International associated with certain long-lived assets, primarily property, plant and equipment in Romania.

In the three and nine months ended September 30, 2022, the Company recognized an impairment in SG&A of $2.0 million associated with exiting certain North American office facilities.


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NOTE 4 — DEBT

The Company’s long-term debt consisted of the following:


In millions	In millions					In millions
		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
$1.2 billion Credit Facility, due in 2026	$1.2 billion Credit Facility, due in 2026	$	17.4	$	154.1	$1.2 billion Credit Facility, due in 2026	$	45.2	$	154.1
$200 million Term Loan, due in 2026	$200 million Term Loan, due in 2026	150.0		200.0		$200 million Term Loan, due in 2026	125.0		200.0
$600 million Senior Notes, due in 2024	$600 million Senior Notes, due in 2024	600.0		600.0		$600 million Senior Notes, due in 2024	600.0		600.0
$500 million Senior Notes, due in 2029	$500 million Senior Notes, due in 2029	500.0		500.0		$500 million Senior Notes, due in 2029	500.0		500.0
Promissory notes and deferred consideration weighted average maturity of 3.1 years at 2023 and 3.4 years at 2022		34.6		44.7
Foreign bank debt weighted average maturity 4.5 years at 2023 and 5.0 years at 2022		0.2		0.4
Promissory notes and deferred consideration weighted average maturity of 2.9 years at 2023 and 3.4 years at 2022						Promissory notes and deferred consideration weighted average maturity of 2.9 years at 2023 and 3.4 years at 2022	33.3		44.7
Foreign bank debt weighted average maturity 0 years at 2023 and 5.0 years at 2022						Foreign bank debt weighted average maturity 0 years at 2023 and 5.0 years at 2022	1.0		0.4
Obligations under finance leases	Obligations under finance leases	16.6		18.2		Obligations under finance leases	16.9		18.2
Total debt	Total debt	1,318.8		1,517.4		Total debt	1,321.4		1,517.4
Less: current portion of total debt	Less: current portion of total debt	15.6		22.3		Less: current portion of total debt	15.8		22.3
Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	9.5		11.1		Less: unamortized debt issuance costs	8.6		11.1
Long-term portion of total debt	Long-term portion of total debt	$	1,293.7	$	1,484.0	Long-term portion of total debt	$	1,297.0	$	1,484.0

The estimated fair value of our debt approximated $1.2 billion and $1.4 billion as of ~~June~~September 30, 2023 and December 31, 2022, respectively. These fair value amounts were estimated using an income approach by applying market interest rates for comparable instruments and developed based on inputs classified as Level 2.


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The weighted average interest rates on long-term debt, excluding finance leases were as follows:


		Six Months Ended June 30, 2023		Year Ended December 31, 2022			Nine Months Ended September 30, 2023		Year Ended December 31, 2022
$1.2 billion Credit Facility, due in 2026 (variable rate)	$1.2 billion Credit Facility, due in 2026 (variable rate)	6.64	%	5.92	%	$1.2 billion Credit Facility, due in 2026 (variable rate)	6.82	%	5.92	%
$200 million Term Loan, due in 2026 (variable rate)	$200 million Term Loan, due in 2026 (variable rate)	6.50	%	5.88	%	$200 million Term Loan, due in 2026 (variable rate)	6.62	%	5.88	%
$600 million Senior Notes, due in 2024 (fixed rate)	$600 million Senior Notes, due in 2024 (fixed rate)	5.38	%	5.38	%	$600 million Senior Notes, due in 2024 (fixed rate)	5.38	%	5.38	%
$500 million Senior Notes, due in 2029 (fixed rate)	$500 million Senior Notes, due in 2029 (fixed rate)	3.88	%	3.88	%	$500 million Senior Notes, due in 2029 (fixed rate)	3.88	%	3.88	%
Promissory notes and deferred consideration (fixed rate)	Promissory notes and deferred consideration (fixed rate)	3.52	%	3.49	%	Promissory notes and deferred consideration (fixed rate)	4.81	%	3.49	%
Foreign bank debt (fixed rate)	Foreign bank debt (fixed rate)	9.80	%	9.80	%	Foreign bank debt (fixed rate)	N/A		9.80	%

The Credit Agreement contains, among other covenants, a financial covenant requiring maintenance of a maximum Credit Agreement ~~Defined~~defined Debt Leverage Ratio of 4.00 to 1.00 for any fiscal quarter ending on or after September 30, 2022, which includes, among other provisions, $50.0 million cash add backs to EBITDA with respect to any four fiscal quarter period ending on or before December 31, 2023. As of ~~June~~September 30, 2023, the Company was in compliance with its financial covenants. The Credit Agreement Defined Debt Leverage Ratio was ~~2.70~~2.84 to 1.00, which was below the allowed maximum ratio of 4.00 to 1.00 as set forth in the amended Credit Agreement. If the Company's 2024 Senior Notes are still outstanding 91 days prior to their respective maturity date (the “Springing Maturity Date”), then the Credit Agreement maturity date will be the Springing Maturity Date.

The ~~$600.0 million 2024 Senior Notes mature in July 2024. The~~ Company currently has the ability and intent to refinance the 2024 Senior Notes on a long-term basis through available capacity under its Revolving Credit Facility. Therefore, as of September 30, 2023, the 2024 Senior Notes remain classified as Long-Term Debt in the Condensed Consolidated Financial Statements.

Second Amendment

On June 15, 2023, we entered into a Second Amendment to the Credit Agreement. Among other provisions, the Second Amendment modifies the pricing reference from the Eurocurrency Rate Loans (LIBOR) to Term SOFR Loans as defined in the Credit Agreement and allows for higher capital leases now capped at $200 million in the aggregate.

Amounts committed to outstanding letters of credit and the unused portion of the Company's Senior Credit Facility were as follows:


In millions	In millions					In millions
		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Outstanding letters of credit under Credit Facility	Outstanding letters of credit under Credit Facility	$	59.1	$	60.1	Outstanding letters of credit under Credit Facility	$	59.0	$	60.1
Unused portion of the Credit Facility	Unused portion of the Credit Facility	1,123.5		985.7		Unused portion of the Credit Facility	1,095.8		985.7


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NOTE 5 — INCOME TAXES

The Company reported an income tax expense of ~~$5.8~~$4.8 million and ~~$8.4~~$5.1 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively. The effective tax rates for the three months ended ~~June~~September 30, 2023 and 2022 were ~~(13.3)%~~69.6% and ~~44.4%~~15.4%, respectively. The effective tax rate for the three months ended ~~June~~September 30, 2023 reflects (i) losses in jurisdictions that are not eligible for tax benefits on account of valuation allowances, (ii) the impact from net non-deductible losses from divestitures, and (iii) equity-based compensation awards expiring without a tax benefit, partially offset by (iv) the tax benefit associated with the U.S. federal research and development tax credit. The effective tax rate for the three months ended September 30, 2022, reflects (i) the tax benefit from the release of uncertain tax position reserves and (ii) the tax benefit associated with the U.S. federal research and development tax credit, partially offset by (iii) losses in jurisdictions that are not eligible for tax benefits on account of valuation allowances, and (iv) equity-based compensation awards expiring without a tax benefit.

The Company reported income tax expense of $19.1 million and $16.4 million for the nine months ended September 30, 2023 and 2022, respectively. The effective tax rates for the nine months ended September 30, 2023 and 2022 were (112.4)% and 40.2%, respectively. The effective tax rate for the nine months ended September 30, 2023 reflects a loss from operations before tax and additionally (i) the impact from net non-deductible losses from divestitures, (ii) losses in jurisdictions that are not eligible for tax benefits on account of valuation allowances, and (iii) equity-based compensation awards expiring without a tax benefit. The effective tax rate for the ~~three~~nine months ended ~~June~~September 30, 2022 reflects (i) losses in jurisdictions that are not eligible for tax benefits on account of valuation allowances, and (ii) equity-based compensation awards expiring without a tax ~~benefit.~~benefit, partially offset by (iii) the tax benefit from the release of uncertain tax position reserves.

~~The Company reported an income tax expense~~


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Table of $14.3 million and $11.3 million for the six months ended June 30, 2023 and 2022, respectively. The effective tax rates for the six months ended June 30, 2023 and 2022, were (59.8)% and 146.8%, respectively. The effective tax rate for the six months ended June 30, 2023, reflects (i) impact from net non-deductible losses from divestitures, (ii) losses in jurisdictions that are not eligible for tax benefits on account of valuation allowances, and (iii) equity-based compensation awards expiring without a tax benefit. The effective tax rate for the six months ended June 30, 2022, reflects (i) losses in jurisdictions that are not eligible for tax benefits on account of valuation allowances, and (ii) equity-based compensation awards expiring without a tax benefit.Contents

NOTE 6 — EARNINGS (LOSS) ~~EARNINGS~~ PER COMMON SHARE

Basic earnings (loss) ~~earnings~~ per share is computed by dividing Net income (loss) ~~income~~ by the number of weighted average common shares outstanding during the reporting period. Diluted earnings (loss) ~~earnings~~ per share is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period, only in the periods in which such effect is dilutive.

The following table shows the effect of stock-based awards on the weighted average number of shares outstanding used in calculating diluted earnings (loss) ~~earnings~~ per share:


In millions of shares	In millions of shares					In millions of shares
		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2023	2022	2023	2022		2023	2022	2023	2022
Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic	92.5	92.1	92.3	92.0	Weighted average common shares outstanding - basic	92.5	92.2	92.4	92.1
Incremental shares outstanding related to stock-based awards (1)	Incremental shares outstanding related to stock-based awards (1)	—	0.1	—	—	Incremental shares outstanding related to stock-based awards (1)	0.4	0.2	—	0.3
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted	92.5	92.2	92.3	92.0	Weighted average common shares outstanding - diluted	92.9	92.4	92.4	92.4

(1)In periods of net loss, stock-based awards are anti-dilutive and therefore excluded from the loss per share calculation.

Anti-dilutive stock-based awards excluded from the computation of diluted earnings (loss) ~~earnings~~ per share using the treasury stock method include the following:


In thousands of shares	In thousands of shares					In thousands of shares
		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2023	2022	2023	2022		2023	2022	2023	2022
Option awards	Option awards	770	1,233	816	1,395	Option awards	711	1,153	780	1,297
RSU awards	RSU awards	148	579	2	235	RSU awards	98	397	1	115

PSUs are offered to key employees and are subject to achievement of specified performance conditions. Contingently issuable shares are excluded from the computation of diluted earnings (loss) ~~earnings~~ per share based on current period results. The shares would not be issuable if the end of the quarter were the end of the contingency period. If such goals are not met, no compensation expense is recognized, and any previously recognized compensation expense is reversed.


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NOTE 7 — SEGMENT REPORTING

The Company evaluates, oversees, and manages the financial performance of two operating and reportable segments – North America and International.

The following tables show financial information for the Company's reportable segments (see Note 2 – Revenues from Contracts with Customers for segment revenues):


In millions	In millions									In millions
		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022

Adjusted Income from Operations	Adjusted Income from Operations									Adjusted Income from Operations
North America	North America	$	156.5	$	148.9	$	316.8	$	283.5	North America	$	143.5	$	160.4	$	460.3	$	443.9
International	International	8.4		8.4		18.7		19.8		International	8.9		7.4		27.6		27.2
Other Costs	Other Costs	(88.9)		(75.3)		(174.8)		(162.3)		Other Costs	(82.1)		(75.8)		(256.9)		(238.1)
Total Adjusted Income from Operations	Total Adjusted Income from Operations	$	76.0	$	82.0	$	160.7	$	141.0	Total Adjusted Income from Operations	$	70.3	$	92.0	$	231.0	$	233.0


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The following table reconciles the Company's primary measure of segment profitability, Adjusted Income from Operations, to ~~(Loss) income~~Income from operations:


In millions	In millions									In millions
		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Total Reportable Segment Adjusted Income from Operations	Total Reportable Segment Adjusted Income from Operations	$	76.0	$	82.0	$	160.7	$	141.0	Total Reportable Segment Adjusted Income from Operations	$	70.3	$	92.0	$	231.0	$	233.0
Adjusting Items:	Adjusting Items:									Adjusting Items:
ERP and System Modernization	ERP and System Modernization	(5.4)		(3.5)		(8.1)		(9.1)		ERP and System Modernization	(4.8)		(3.9)		(12.9)		(13.0)
Intangible Amortization	Intangible Amortization	(28.1)		(30.8)		(56.3)		(63.2)		Intangible Amortization	(27.9)		(31.5)		(84.2)		(94.7)

Portfolio Optimization	Portfolio Optimization	(54.2)		—		(59.8)		(1.3)		Portfolio Optimization	(5.0)		(1.4)		(64.8)		(2.7)

Litigation, Settlements and Regulatory Compliance	Litigation, Settlements and Regulatory Compliance	(8.9)		(9.6)		(17.1)		(23.4)		Litigation, Settlements and Regulatory Compliance	(5.3)		(2.6)		(22.4)		(26.0)

Asset Impairments	Asset Impairments	(3.4)		—		(3.4)		—		Asset Impairments	(3.1)		(2.0)		(6.5)		(2.0)

(Loss) income from operations		$	(24.0)	$	38.1	$	16.0	$	44.0
Income from operations										Income from operations	$	24.2	$	50.6	$	40.2	$	94.6

NOTE 8 — COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company operates in highly regulated industries and responds to regulatory inquiries or investigations from time to time that may be initiated for a variety of reasons. At any given time, the Company has matters at various stages of resolution with the applicable government authorities. The Company is also routinely involved in actual or threatened legal actions, including those involving alleged personal injuries and commercial, employment, environmental, tax, and other issues. The outcomes of these matters are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, claimants seek damages, as well as other relief, including injunctive relief, that could require significant expenditures or result in lost revenue.

In accordance with applicable accounting standards, the Company establishes an accrued liability for loss contingencies related to legal and regulatory matters when the loss is both probable and reasonably estimable. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is not probable or a probable loss is not reasonably estimable, no liability is recorded. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. These accruals represent management’s best estimate of probable losses and, in such cases, there may be an exposure to loss in excess of the amounts accrued. Estimates of probable losses resulting from litigation and regulatory proceedings are difficult to predict. Legal and regulatory matters inherently involve significant uncertainties based on, among other factors, the jurisdiction and stage of the proceedings, developments in the applicable facts or law, and the unpredictability of the ultimate determination of the merits of any claim, any defenses the Company may assert against that claim, and the amount of any damages that may be awarded. The Company’s accrued liabilities for loss contingencies related to legal and regulatory matters may change in the future as a result of new developments, including, but not limited to, the occurrence of new legal matters, changes in the law or regulatory environment, adverse or favorable rulings, newly discovered facts relevant to the matter, or changes in the strategy for the matter. Regardless of the outcome,


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litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

Contract Class Action and Opt Out Lawsuits. Beginning on March 12, 2013, the Company was served with several class action complaints filed in federal and state courts in several jurisdictions. These complaints asserted, among other things, that the Company had imposed unauthorized or excessive price increases and other charges on its customers in breach of its contracts and in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The complaints sought certification of the lawsuit as a class action and the award to class members of appropriate damages and injunctive relief. These related actions were ultimately transferred to the United States District Court for the Northern District of Illinois for centralized pretrial proceedings.

The parties reached a settlement agreement, as previously disclosed, which obtained court approval on March 8, 2018. Under the terms of the SQ Settlement, the Company admitted no fault or wrongdoing whatsoever, and it entered into the SQ Settlement to avoid the cost and uncertainty of litigation.

Certain class members who have opted out of the SQ Settlement have filed lawsuits against the Company, and the Company has reached a settlement in principle with the plaintiffs in the remaining opt out actions, subject to documentation. The Company has made an accrual in respect of these collective matters consistent with its accrual policies described above, which is not material.


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Government Investigations. As previously reported, the Company entered into a deferred prosecution agreement (“DPA”) with the DOJ in 2022 in connection with its resolution of investigations by the DOJ, SEC, and various authorities in Brazil relating to the Company’s compliance with the FCPA and other anti-corruption laws with respect to operations in Latin America. Under the DPA, the DOJ agreed to defer criminal prosecution of the Company for a period of three years for charges of conspiring to violate the anti-bribery and books and records provisions of the FCPA. If the Company remains in compliance with the DPA during its three-year term, the deferred charge against the Company will be dismissed with prejudice. Under the Company's settlement with the SEC, the Company entered into an administrative resolution with the SEC with respect to violations of the anti-bribery, books and records and internal controls provisions of the FCPA. The Company also agreed to pay fines, penalties and disgorgement to the DOJ, SEC and various Brazil authorities in a total amount of approximately $90 million. In April 2023, the last settlement with a foreign authority obtained final approval. In the second quarter of 2023, the Company substantially completed its payment obligations under the settlements. In addition, under the settlements with the DOJ and with the SEC, the Company has engaged an independent compliance monitor for two years and will undertake compliance with self-reporting obligations for an additional year.

The Company is cooperating with an investigation by the office of the United States Attorney for the Southern District of New York (“SDNY”) and the United States Environmental Protection Agency into the Company’s historical compliance with federal environmental statutes, including the Resource Conservation and Recovery Act, in connection with the collection, transportation and disposal of hazardous waste by the Company’s former Domestic Environmental Solutions business unit. The Company has made an accrual in respect of this matter consistent with its accrual policies described above, which is not material.

The Company understands that the SDNY investigation discussed above also concerned allegations of False Claims Act (“FCA”) violations made in a qui tam action filed under seal in the United States District Court for the Southern District of New York, purportedly on behalf of the United States, California and several other states. The Company understands that the United States, California, and the other states named in the qui tam action have completed their investigations into alleged FCA violations and have declined to participate in the qui tam action. The Company has not been served with the qui tam Complaint but intends to defend itself vigorously if the qui tam relator pursues its action. The Company has not accrued any amounts in respect of this action and cannot estimate the reasonably possible loss or any range of reasonably possible losses that the Company may incur. The Company is unable to make such an estimate because, based on what the Company knows now, in the Company’s judgment, the factual and legal issues presented in this matter are sufficiently unique that the Company is unable to identify other circumstances sufficiently comparable to provide guidance in making estimates.

Environmental, Regulatory and Indemnity Matters. The Company is subject to various federal, state and local laws and regulations. In the ordinary course of business, we are routinely involved in government enforcement proceedings, private lawsuits, and other matters alleging non-compliance by the Company with applicable law. The issues involved in these proceedings generally relate to alleged violations of existing permits or other requirements, or alleged liability due to our current operations, pre-existing conditions at the locations where we operate, and/or successor or predecessor liability associated with our portfolio optimization strategy. From time to time, the Company may be subject to fines or penalties in regulatory proceedings relating primarily to waste treatment, storage or disposal facilities.


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Enviri Indemnification. Effective April 6, 2020, the Company completed the divestiture of its Domestic Environmental Solutions business to Enviri Corporation. Pursuant to the Purchase Agreement, the Company may have liability under certain indemnification claims for matters relating to the Domestic Environmental Solutions business, including potentially with respect to the SDNY investigation described above, the DEA Investigation matter discussed below, and other matters. Consistent with its accrual policies described previously, the Company has made accruals on various of these matters, which are neither individually nor collectively material.

Rancho Cordova, California, NOVs. On June 25 and 26, 2018, the California DTSC conducted a Compliance Enforcement Inspection of the Company’s former Domestic Environmental Solutions facility in Rancho Cordova, California. On February 14, 2020, DTSC filed an action in the Superior Court for the State of California, Sacramento County Division, alleging violations of California’s Hazardous Waste Control Law and the facility’s hazardous waste permit arising from the inspection. ~~That action is ongoing.~~The Company has reached a settlement in principle with the DTSC, subject to final documentation, with respect to these claims and any potential claims stemming from the search warrant executed in conjunction with the DEA inspection of the Rancho Cordova facility described below. The Company has made an accrual in respect of ~~this matter~~the settlement consistent with its accrual policies described above, which is not material.

Rancho Cordova, California, Permit Revocation. Separately, on August 15, 2019, the Company received from DTSC a written Intent to Deny Hazardous Waste Facility Permit Application for the Rancho Cordova facility. Following legal


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challenges, that DTSC action became final as of April 8, 2022, triggering an obligation to execute the closure plan set forth in the facility's permit. Consistent with its accrual policies described previously, the Company has made an accrual in the amount of its estimate of closure costs reasonably likely to be incurred and indemnified to Enviri under the Purchase Agreement, which is not material.

DEA Investigation. On February 11, 2020, the Company received an administrative subpoena from the DEA, which executed a search warrant at the Company’s former Domestic Environmental Solutions facility at Rancho Cordova, California and an administrative inspection warrant at the Company’s former facility in Indianapolis, Indiana for materials related to the former Domestic Environmental Solutions business of collecting, transporting, and destroying controlled substances from retail customers (the “ESOL Retail Controlled Substances Business”). On that same day, agents from the DTSC executed a separate search warrant at the Rancho Cordova facility. Since that time, the U.S. Attorney’s Office for the Eastern District of California (“USAO EDCA”) has been overseeing criminal and civil investigations of the ESOL Retail Controlled Substances Business. The USAO EDCA has informed the company that the investigations relate to the Company’s operation and sale of its former ESOL Retail Controlled Substances Business, that the Company may have civil liability under the Controlled Substances Act related to that business, and that the USAO EDCA is continuing the criminal investigation of the Company for potential violations of the Controlled Substances Act and other federal criminal statutes. The Company is cooperating with the civil and criminal investigations, which are ongoing.

The Company has not accrued any amounts in respect of these investigations and cannot estimate the reasonably possible loss or any range of reasonably possible losses that the Company may incur. The Company is unable to make such an estimate because, based on what the Company knows now, in the Company’s judgment, the factual and legal issues presented in this matter are sufficiently unique that the Company is unable to identify other circumstances sufficiently comparable to provide guidance in making estimates.

European Retrovirus Investigations. In conjunction with Europol, governmental authorities of Spain ~~Portugal,~~ and ~~Romania~~Portugal have conducted coordinated inspections of a large number of medical waste management facilities, including Stericycle facilities, relating to the transportation, management and disposal of waste that may be infected with the COVID-19 virus, and related matters. The inspections have resulted in proceedings in Spain, in which the Company is vigorously defending itself.

The Company has not accrued any amounts in respect of these investigations, as it cannot estimate the reasonably possible loss or any range of reasonably possible losses that the Company may incur. The Company is unable to make such an estimate because, based on what the Company knows now, in the Company’s judgment, the factual and legal issues presented in this matter are sufficiently unique that the Company is unable to identify other circumstances sufficiently comparable to provide guidance in making estimates.


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Safe Harbor Statement

This document may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. 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, which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Factors that could cause such differences include, among others, ~~inflationary cost pressure~~SOP pricing volatility or pricing volatility in ~~labor, supply chain, energy, and~~ other ~~expenses,~~commodities, decreases in the volume of regulated ~~wastes~~waste or personal and confidential information collected from customers, the ability to ~~implement the remaining phases of~~complete our ~~ERP~~ system modernization efforts, and disruptions resulting from deployment of our ERP system, disruptions in our supply chain, disruptions in or attacks on information technology systems, labor shortages, a recession or economic disruption in the U.S. and other countries, ~~SOP pricing volatility or pricing volatility~~inflationary cost pressure in labor, supply chain, energy, and other ~~commodities,~~expenses, rising interest rates or a downgrade in our credit rating resulting in an increase in interest expense, changing market conditions in the healthcare industry, competition and demand for services in the regulated waste and secure information destruction industries, foreign exchange rate volatility in the jurisdictions in which we operate, changes in governmental regulation of the collection, transportation, treatment and disposal of regulated waste or the proper handling and protection of personal and confidential information, the level of government enforcement of regulations governing regulated waste collection and treatment or the proper handling and protection of personal and confidential information, reliance on third parties to provide a variety of services, our ability to realize expected financial benefits from our continuous improvement efforts, charges related to portfolio optimization or the failure of acquisitions or divestitures to achieve the desired results, failure to consummate transactions with respect to non-core businesses, the obligations to service substantial indebtedness and comply with the covenants and restrictions contained in our credit agreements and notes, political, economic, and other risks related to our foreign operations, pandemics and the resulting impact on the results of operations, long-term remote work arrangements which may adversely affect our business, supply chain disruptions, disruptions in transportation services, restrictions on the ability of our team members to travel, closures of our facilities or the facilities of our customers and suppliers, changes in the volume of paper processed by our secure information destruction business and the revenue generated from the sale of SOP, weather and environmental changes related to climate change, requirements of customers and investors for net carbon zero emissions strategies, and the introduction of regulations for greenhouse gases, which could negatively affect our costs to operate, the outcome of pending, future or settled litigation or investigations, including the investigation by the DEA discussed in ~~Note 8~~our SEC reports and litigation or investigations with respect to the U.S. Foreign Corrupt Practices Act and foreign anti-corruption laws, failure to maintain an effective system of internal control over financial reporting, as well as other factors described in our filings with the SEC, including our ~~Annual Report on~~2022 Form 10-K and subsequent Quarterly Reports on Form 10-Q. As a result, past financial performance should not be considered a reliable indicator of future performance, and investors should not use historical trends to anticipate future results or trends. We disclaim any obligation to update or revise any forward-looking or other statements contained herein other than in accordance with legal and regulatory obligations.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			1920

Table of Contents

Overview

Stericycle, Inc., is a ~~global~~ U.S. based business-to-business services ~~company. We provide an array~~company and leading provider of ~~highly specialized~~ compliance-based solutions that protect people and brands, promote health and well-being and safeguard the environment. ~~Since our founding~~Stericycle serves customers in ~~1989, we have grown from a small start-up in medical~~North America and Europe with solutions for regulated waste ~~management into a leader across a range of increasingly complex~~ and ~~highly regulated arenas, serving healthcare organizations~~compliance services and ~~commercial businesses of every size through RWCS and SID.~~secure information destruction.

Key business highlights include:

•~~Revenues decreased by 1.5%~~Successfully deployed the ERP in the ~~second~~U.S. Regulated Waste and Compliance Services business in the third quarter of ~~2023, primarily due to divestitures. Grew organic revenues(1)~~ ~~by 2.3% compared to the second quarter of 2022 with an increase in RWCS organic revenues of 4.7%.~~

•~~Reduced our Credit Agreement defined debt leverage ratio to 2.70X.~~2023.

•Improved cash flow from operations by ~~$173.3~~$150.2 million for the ~~six~~nine months ended ~~June~~September 30, 2023, compared to ~~the first half of~~ 2022.

•Divested our ~~Brazil, Republic of Korea, Australia,~~dental recycling business in the Netherlands and ~~Singapore businesses for net proceeds of approximately $84 million.~~UAE SID joint venture in the third quarter and our Romania regulated waste business in October 2023.

~~(1)See Results of Operations, Revenues for a reconciliation between total U.S. GAAP Revenues and Organic Revenues.~~

Other Developments

~~During~~Continuing through the ~~first half~~third quarter of 2023, we ~~continued to experience~~have experienced inflationary cost increases in our underlying expenses, including fleet and facilities. Our quality of revenue initiative has continued to work to create a more flexible pricing model with necessary levers to adjust for inflationary cost challenges. We have the following pricing levers: (i) standardization of contractual language to build in pricing flexibility, affording us the opportunity to adjust pricing at contract anniversary and renewal, (ii) ability to adjust our rates at point of contracting for all new customers and purchasers of our one-time services, and (iii) ability to adjust surcharges and fees providing inflationary cost protection for commodity and other price volatility (e.g., fuel, SOP, environmental surcharges and service cost recovery fee).

~~As our customers return to office,~~Within RWCS, we are ~~monitoring~~seeing evolving dynamics among our national accounts, which includes customers like retail pharmacies and nationwide healthcare service providers. Our national account customer base generally remained consistent, despite the economic headwinds they're facing. As some of these customers reduce their footprint, our service stops in this segment have also contracted. Similar to RWCS, our national SID customers are experiencing a reset in their post-COVID pandemic office footprint. Across the SID business, we believe we remain an essential service and are retaining these customer relationships, but have seen service ~~frequency, number of locations serviced,~~stops decline, mainly driven by customer site closures and resulting paper tonnage. Recycled paper tonnage for the first half of 2023 was approximately 245,000 tons compared to the first half of 2022 of approximately 267,000 tons. Divested businesses contributed approximately 11,000 tons through the first six months of 2022 and approximately 9,000 tons through their divestitures date in May 2023. The decline in SOP, excluding divestitures, was approximately 20,000 tons or 8%.reduced service frequencies.

Key Business Priorities

In 2023, our five key business priorities remain the following:

•Quality of revenue – We have been executing against our foundational initiatives we launched to drive revenue quality and are executing against our next phase: (i) expanding service penetration, (ii) improving customer implementation velocity, and (iii) deepening customer partnerships by developing enhanced solutions.

•Operational efficiency, modernization, and innovation – We have been executing on our foundational initiatives we launched to drive operational efficiency, modernization and innovation and are executing on our next phase: (i) infrastructure and system modernization, (ii) fleet replacement and route and long-haul network improvements and (iii) SafeShield container rationalization and modernization.

•ERP implementation – W~~In advance of our anticipated third quarter U.S. RWCS ERP launch, we~~e successfully ~~moved~~deployed the ~~technical code functionality for U.S. RWCS into our~~ North America ERP ~~production environment in July 2023. Stericycle is currently immersed in testing and readiness preparation and we anticipate deployment in~~to the U.S. RWCS business in the third quarter of 2023. ~~This disciplined deployment approach~~Almost all of our U.S. team members are now leveraging the new technology. We continue to ~~testing~~observe improvement in our team members' performance as they leveraged the technology and ~~readiness preparation allows us to mitigate risk and test~~ data ~~and functionality before deploying the ERP.~~flow. We commenced activities for the international system modernization in the second half of 2022.

•Portfolio optimization – We expect to continue evaluating opportunities to further optimize our portfolio through a combination of asset rationalizations and strategic accretive tuck-in acquisitions, which ~~streamlines~~streamline our portfolio of businesses and ~~allows~~allow us to focus more deeply on our core businesses. ~~In the second quarter of~~Throughout 2023, we divested eight businesses, demonstrating significant progress in executing our portfolio optimization priority. These divestitures primarily included Brazil, Republic of Korea, Australia, Singapore, and ~~Singapore~~Romania operations for net proceeds of approximately ~~$84~~$85 million.


~~2023 Q2 10-Q Report~~			~~Stericycle, Inc. ●~~			20

~~Table of Contents~~

•Debt reduction and leverage improvement – We have reduced total net debt ~~as defined in the Credit Agreement (total debt, adding back unamortized debt issuance costs, less cash and cash equivalents),~~ to $1.28 billion as of ~~June~~September 30, 2023. As of ~~June~~September 30, 2023, we have maintained our amended Credit ~~Facility~~Agreement defined Debt Leverage Ratio ~~was~~ ~~2.70X compared to~~ ~~3.28X~~ ~~as of~~ ~~December 31, 2022, achieving our debt leverage ratio~~ target of below 3.00X.


2023 Q3 10-Q Report			Stericycle, Inc. ●			21

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Certain Key Priorities and Other Significant Matters

The following table identifies certain key priorities and other significant matters impacting our business and how they are classified in the Condensed Consolidated Statements of Income (Loss) ~~Income:~~:


In millions	In millions									In millions
		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Pre-tax items:	Pre-tax items:									Pre-tax items:
Included in COR	Included in COR									Included in COR

Asset Impairments	Asset Impairments	$	3.4	$	—	$	3.4	$	—	Asset Impairments	$	—	$	—	$	3.4	$	—
Total included in COR	Total included in COR	3.4		—		3.4		—		Total included in COR	—		—		3.4		—

Included in SG&A	Included in SG&A									Included in SG&A
ERP and System Modernization	ERP and System Modernization	5.4		3.5		8.1		9.1		ERP and System Modernization	4.8		3.9		12.9		13.0
Intangible Amortization	Intangible Amortization	28.1		30.8		56.3		63.2		Intangible Amortization	27.9		31.5		84.2		94.7

Portfolio Optimization	Portfolio Optimization	—		—		0.6		1.3		Portfolio Optimization	0.8		1.4		1.4		2.7
Litigation, Settlements and Regulatory Compliance	Litigation, Settlements and Regulatory Compliance	8.9		9.6		17.1		23.4		Litigation, Settlements and Regulatory Compliance	5.3		2.6		22.4		26.0

Asset Impairments										Asset Impairments	3.1		2.0		3.1		2.0

Total included in SG&A	Total included in SG&A	42.4		43.9		82.1		97.0		Total included in SG&A	41.9		41.4		124.0		138.4

Divestiture losses, net	Divestiture losses, net	54.2		—		59.2		—		Divestiture losses, net	4.2		—		63.4		—

Total included in (Loss) income from operations		$	100.0	$	43.9	$	144.7	$	97.0
Total included in Income from operations										Total included in Income from operations	$	46.1	$	41.4	$	190.8	$	138.4

ERP and System Modernization

For the periods presented of the ERP and System Modernization, we have recognized the following, reported in Other Costs:


In millions	In millions									In millions
		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
North America	North America									North America
Operating expenditures	Operating expenditures	$	5.1	$	3.5	$	7.7	$	9.1	Operating expenditures	$	3.6	$	3.9	$	11.3	$	13.0
Capital expenditures	Capital expenditures	5.8		3.5		8.7		4.1		Capital expenditures	5.6		5.0		14.3		9.1
Total North America	Total North America	$	10.9	$	7.0	$	16.4	$	13.2	Total North America	$	9.2	$	8.9	$	25.6	$	22.1

International	International									International
Operating expenditures	Operating expenditures	$	0.3	$	—	$	0.4	$	—	Operating expenditures	$	1.2	$	—	$	1.6	$	—
Capital expenditures	Capital expenditures	—		—		—		—		Capital expenditures	—		—		—		—
Total International	Total International	$	0.3	$	—	$	0.4	$	—	Total International	$	1.2	$	—	$	1.6	$	—

Total operating expenditures	Total operating expenditures	$	5.4	$	3.5	$	8.1	$	9.1	Total operating expenditures	$	4.8	$	3.9	$	12.9	$	13.0

Total capital expenditures	Total capital expenditures	5.8		3.5		8.7		4.1		Total capital expenditures	5.6		5.0		14.3		9.1

Total ERP and System Modernization	Total ERP and System Modernization	$	11.2	$	7.0	$	16.8	$	13.2	Total ERP and System Modernization	$	10.4	$	8.9	$	27.2	$	22.1

~~As we continue to implement and deploy~~Upon the ~~North America~~deployment of the ERP in our U.S. RWCS business ~~we will incur~~in the third quarter of 2023, certain costs ~~to develop~~became incremental information technology ongoing costs for running the new system, including maintenance, licensing, and ~~deploy the system, which includes additional capital expenditures as well as operating expenditures.~~depreciation expenses. Our international ERP system modernization commenced in 2022, which ~~include~~includes enhancements and upgrades associated with European based RWCS and SID operations. We will continue to incur the current level of costs to maintain the legacy suite of applications also used by our ~~international~~European businesses during the system modernization.

Intangible Amortization

See table above of certain key priorities and other significant matters for intangible amortization expenses from acquisitions for the periods presented and how they are classified in the Condensed Consolidated Statements of Income (Loss) ~~Income~~. The decrease in amortization expense is a result of divestitures and certain intangible assets that have reached the end of their useful lives.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			2122

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Operational Optimization

In October 2023, the Company recognized Operational Optimization charges of approximately $3.0 million, split between our North America and International segments, related to headcount reduction which is expected to provide annual savings of approximately $8.0 million. As we execute our operational efficiency priorities, system modernization, and portfolio optimization, we will continue to evaluate our operating needs and prospectively adjust our work force to align. As we continue to consider each Operational Optimization activity, the amount, the timing and recognition of charges will be affected by the occurrence of commitments and triggering events as defined under U.S. GAAP, among other factors. We may incur more charges and cash expenditures than estimated and may not realize the expected improvement or cost savings on its planned time frame or at all. For additional information, see Part I, Item I. Financial Statements; Note 3 — Restructuring, Divestitures, and Asset Impairments in the Condensed Consolidated Financial Statements.

Portfolio Optimization

See table above of certain key priorities and other significant matters for portfolio optimization (including Divestiture losses, net) for the periods presented, and how they are classified in the Condensed Consolidated Statements of Income (Loss) ~~Income.~~. Consulting and professional fees are reported in Other Costs, while Divestiture losses, net are included in their respective segment.

Divestitures

We evaluate our portfolio of services on an ongoing basis with a country-by-country and service line-by-service line approach to assess long-term potential and identify potential business candidates for divestiture. Divestitures resulting from this evaluation may cause us to record significant charges, including those related to goodwill, other intangible assets, long-lived assets, and cumulative translation adjustments. For additional information, see Part I, Item I. Financial Statements; Note 3 — Restructuring, Divestitures, and Asset Impairments in the Condensed Consolidated Financial Statements.

Litigation, Settlements and Regulatory Compliance

We operate in highly regulated industries and must address regulatory inquiries or respond to investigations from time to time. We have also been involved in a variety of civil litigation from time to time. Certain of these matters are detailed in Part I, Item I. Financial Statements; Note 8 — Commitments and Contingencies in the Condensed Consolidated Financial Statements. Our financial results may also include considerations of non-recurring matters including settlements, environmental remediation, and legal related consulting and professional fees.

See table above of certain key priorities and other significant matters for litigation, settlements and regulatory compliance charges. Among other things, the table reflects consulting and professional fees (including FCPA monitoring fees which commenced in 2023), contingent liability provisions and settlements, net of insurance recoveries, impacting our business for the periods presented, primarily in Other Costs. The three months ended ~~June~~September 30, 2023 includes ~~a settlement charge associated with a vendor dispute~~professional fees and certain contingent liability provisions of ~~$4.0 million, other settlement charges of $0.6 million, and a FCPA settlement release of $0.9~~$5.3 million. The ~~six~~nine months ended ~~June~~September 30, 2023 includes professional fees and certain contingent liability provisions of $17.7 million, a value-added tax reclaim credit of $6.0 million, a settlement charge associated with a vendor dispute of $6.0 million, and other settlement charges of $5.6 million, of which $11.6 million ~~is expected to be~~was paid in the third quarter of 2023. In the ~~first half of~~nine months ended September 30, 2022, we accrued an additional $9.6 million for the FCPA Settlement, bringing the total cumulative charge to approximately $90 million. In ~~the second and third quarters of~~nine months ended September 30, 2022, the Company ~~had~~ paid a total of $81.0 million due to the DOJ, the SEC, and Brazil authorities in accordance with the FCPA Settlement. In the second quarter of 2023, the Company paid substantially all of the remaining settlement amounts due to the DOJ and Brazil authorities. See Part I, Item I. Financial Statements; Note 8 — Commitments and Contingencies in the Condensed Consolidated Financial Statements for additional details.

Asset Impairments

See table above of certain key priorities and other significant matters for asset impairments for the periods presented and how they are classified in the Condensed Consolidated Statements of Income (Loss) ~~Income.~~.

Impairment charges may be recognized in future periods to the extent changes in factors or circumstances occur, including deterioration in the macroeconomic environment or in the equity markets, including the market value of our common shares, deterioration in our performance or our future projections, or changes in our plans for one or more reporting units or specified long-lived assets, among other factors. For additional information, see Part I, Item I.Financial Statements;Note 3 —Restructuring, Divestitures, and Asset Impairments in the Condensed Consolidated Financial Statements.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			2223

Table of Contents

Results of Operations

Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 Compared to Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022:

Revenues (including Segment Revenues)

We analyze revenues by revenue service category and reportable segment which were as follows:


		Three Months Ended June 30,												Three Months Ended September 30,
		In millions								Components of Change (%)(1)				In millions										Components of Change (%)(1)
		2023		2022		Change ($)		Change (%)		Organic Growth(2)		Divestitures			Foreign Exchange(3)			2023		2022		Change ($)		Change (%)		Organic Growth(2)		Divestitures		Foreign Exchange(3)
Revenue by Service	Revenue by Service																Revenue by Service
Regulated Waste and Compliance Services	Regulated Waste and Compliance Services	$	444.7	$	448.4	$	(3.7)	(0.8)	%	4.7	%	(5.1)	%		(0.1)	%	Regulated Waste and Compliance Services	$	439.9	$	447.8	$	(7.9)	(1.8)	%	4.1	%	(6.7)	%	1.1	%
Secure Information Destruction Services	Secure Information Destruction Services	224.8		231.4		(6.6)		(2.9)	%	(2.1)	%	(0.4)	%		(0.4)	%	Secure Information Destruction Services	213.6		242.5		(28.9)		(11.9)	%	(11.6)	%	(1.0)	%	0.5	%
Total Revenues	Total Revenues	$	669.5	$	679.8	$	(10.3)	(1.5)	%	2.3	%	(3.5)	%		(0.2)	%	Total Revenues	$	653.5	$	690.3	$	(36.8)	(5.3)	%	(1.6)	%	(4.7)	%	0.9	%
North America	North America																North America
Regulated Waste and Compliance Services	Regulated Waste and Compliance Services	$	366.4	$	365.6	$	0.8	0.2	%	4.8	%	(4.2)	%		(0.2)	%	Regulated Waste and Compliance Services	$	368.0	$	369.7	$	(1.7)	(0.5)	%	3.9	%	(4.1)	%	(0.1)	%
Secure Information Destruction Services	Secure Information Destruction Services	198.8		203.0		(4.2)		(2.1)	%	(1.6)	%	—	%		(0.4)	%	Secure Information Destruction Services	189.1		215.1		(26.0)		(12.1)	%	(11.9)	%	—	%	(0.2)	%
Total North America Segment	Total North America Segment	$	565.2	$	568.6	$	(3.4)	(0.6)	%	2.4	%	(2.7)	%		(0.3)	%	Total North America Segment	$	557.1	$	584.8	$	(27.7)	(4.7)	%	(2.1)	%	(2.6)	%	(0.1)	%
International	International																International
Regulated Waste and Compliance Services	Regulated Waste and Compliance Services	$	78.3	$	82.8	$	(4.5)	(5.4)	%	3.9	%	(9.4)	%		0.5	%	Regulated Waste and Compliance Services	$	71.9	$	78.1	$	(6.2)	(7.9)	%	5.4	%	(18.9)	%	6.6	%
Secure Information Destruction Services	Secure Information Destruction Services	26.0		28.4		(2.4)		(8.5)	%	(5.4)	%	(3.3)	%		0.1	%	Secure Information Destruction Services	24.5		27.4		(2.9)		(10.6)	%	(9.2)	%	(8.7)	%	6.4	%
Total International Segment	Total International Segment	$	104.3	$	111.2	$	(6.9)	(6.2)	%	1.4	%	(7.9)	%		0.4	%	Total International Segment	$	96.4	$	105.5	$	(9.1)	(8.6)	%	1.3	%	(16.2)	%	6.6	%

		Six Months Ended June 30,												Nine Months Ended September 30,
		In millions								Components of Change (%)(1)				In millions										Components of Change (%)(1)
		2023		2022		Change ($)		Change (%)		Organic Growth(2)		Divestitures			Foreign Exchange(3)			2023		2022		Change ($)		Change (%)		Organic Growth(2)		Divestitures		Foreign Exchange(3)
Revenue by Service	Revenue by Service																Revenue by Service
Regulated Waste and Compliance Services	Regulated Waste and Compliance Services	$	896.0	$	901.2	$	(5.2)	(0.6)	%	4.6	%	(4.4)	%		(0.8)	%	Regulated Waste and Compliance Services	$	1,335.9	$	1,348.9	$	(13.0)	(1.0)	%	4.6	%	(5.2)	%	(0.2)	%
Secure Information Destruction Services	Secure Information Destruction Services	457.8		442.8		15.0		3.4	%	4.6	%	(0.2)	%		(1.0)	%	Secure Information Destruction Services	671.4		685.5		(14.1)		(2.1)	%	(1.1)	%	(0.5)	%	(0.5)	%
Total Revenues	Total Revenues	$	1,353.8	$	1,344.0	$	9.8	0.7	%	4.6	%	(3.0)	%		(0.8)	%	Total Revenues	$	2,007.3	$	2,034.4	$	(27.1)	(1.3)	%	2.6	%	(3.6)	%	(0.3)	%
North America	North America																North America
Regulated Waste and Compliance Services	Regulated Waste and Compliance Services	$	735.1	$	727.8	$	7.3	1.0	%	5.4	%	(4.1)	%		(0.2)	%	Regulated Waste and Compliance Services	$	1,103.1	$	1,097.5	$	5.6	0.5	%	5.0	%	(4.1)	%	(0.2)	%
Secure Information Destruction Services	Secure Information Destruction Services	403.5		384.5		19.0		4.9	%	5.5	%	—	%		(0.6)	%	Secure Information Destruction Services	592.6		599.7		(7.1)		(1.2)	%	(0.7)	%	—	%	(0.4)	%
Total North America Segment	Total North America Segment	$	1,138.6	$	1,112.3	$	26.3	2.4	%	5.4	%	(2.7)	%		(0.3)	%	Total North America Segment	$	1,695.7	$	1,697.2	$	(1.5)	(0.1)	%	2.9	%	(2.7)	%	(0.3)	%
International	International																International
Regulated Waste and Compliance Services	Regulated Waste and Compliance Services	$	160.9	$	173.4	$	(12.5)	(7.2)	%	1.3	%	(5.5)	%		(3.0)	%	Regulated Waste and Compliance Services	$	232.8	$	251.4	$	(18.6)	(7.4)	%	2.5	%	(9.7)	%	—	%
Secure Information Destruction Services	Secure Information Destruction Services	54.3		58.3		(4.0)		(6.9)	%	(1.4)	%	(1.6)	%		(3.9)	%	Secure Information Destruction Services	78.8		85.8		(7.0)		(8.2)	%	(3.8)	%	(3.9)	%	(0.6)	%
Total International Segment	Total International Segment	$	215.2	$	231.7	$	(16.5)	(7.1)	%	0.6	%	(4.5)	%		(3.2)	%	Total International Segment	$	311.6	$	337.2	$	(25.6)	(7.6)	%	0.8	%	(8.2)	%	(0.2)	%

(1)Components of Change % in summation may not crossfoot to the total Change % due to rounding.

(2)Organic growth is change in Revenues which includes SOP pricing and volume and excludes the impact of divestitures and foreign exchange.

(3)The comparisons at constant currency rates (foreign exchange) reflect comparative local currency balances at prior period’s foreign exchange rates. We calculated these percentages by taking current period reported Revenues less the respective prior period reported Revenues, divided by the prior period reported Revenues, all at the respective prior period’s foreign exchange rates. This measure provides information on the change in Revenues assuming that foreign currency exchange rates have not changed between the prior and the current period. Management believes the use of this measure aids in the understanding of changes in Revenues without the impact of foreign currency.

Revenues for the ~~second~~third quarter of 2023 were ~~$669.5~~$653.5 million, a decrease of ~~$10.3~~$36.8 million, or ~~1.5%~~5.3%, compared to ~~$679.8~~$690.3 million for the ~~second~~third quarter of 2022. The decrease was primarily due to impacts of divestitures of ~~$24.0~~$32.4 million or ~~3.5%~~4.7%, which includes the divestiture of CRS in the fourth quarter of 2022 and International businesses in 2023, ~~and unfavorable~~partially offset by favorable foreign exchange rates of ~~$1.2~~$6.1 million or ~~0.2%~~0.9%. Organic revenues ~~grew~~decreased $~~14.9~~10.5 million, or ~~2.3%~~1.6%. RWCS organic revenues grew ~~$19.7~~$17.4 million, or ~~4.7%~~4.1%, mainly driven by our ~~three~~ pricing ~~levers,~~actions, which include pricing in existing contracts, new customer pricing, surcharges and fees. SID organic revenues declined ~~$4.8~~$27.9 million, or ~~2.1%~~11.6%, which was primarily due to lower commodity indexed revenues, including lower sorted office paper and lower SID fuel and environmental ~~surcharges, and recycled paper revenues.~~

~~Revenues for the six months ended June 30, 2023, were $1,353.8 million, an increase of $9.8 million, or 0.7%, compared to $1,344.0 million for the second quarter of 2022. Organic revenues grew~~ ~~$61.7 million, or 4.6%~~.R~~WCS organic revenues growth was~~ ~~$41.3 million, or 4.6%, mainly~~ ~~driven by our three pricing levers.~~ ~~SID organic revenue growth was~~ ~~$20.4 million, or 4.6%, which was~~ ~~mainly due to pricing and higher service revenues.~~ T~~he impact of~~surcharges.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			2324

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~~divestitures was $40.6~~Revenues for the nine months ended September 30, 2023, were $2,007.3 million, a decrease of $27.1 million, or ~~3.0%~~1.3%, compared to $2,034.4 million for the nine months ended September 30, 2022. The decrease was primarily due to impacts of divestitures of $73.0 million, or 3.6%, which includes the divestiture of CRS in the fourth quarter of 2022 and certain International operations in 2023, and unfavorable foreign exchange rates ~~were $11.3~~of $5.2 million, or ~~0.8%~~0.3%. Organic revenues increased $51.1 million, or 2.6%.RWCS organic revenues grew $58.7 million, or 4.6%, mainly driven by our pricing actions. SID organic revenue declined $7.7 million, or 1.1%, which was mainly due to lower commodity indexed revenues, including lower sorted office paper and lower SID fuel and environmental surcharges.

North America revenues decreased ~~$3.4~~$27.7 million, or ~~0.6%~~4.7%, in the ~~second~~third quarter of 2023, to ~~$565.2~~$557.1 million from ~~$568.6~~$584.8 million in the ~~second~~third quarter of 2022. The decrease was primarily due to the impacts of ~~divestitures of $15.2 million, or 2.7% which includes~~ the CRS divestiture ~~of CRS~~ in the fourth quarter of 2022 of $15.3 million, or 2.6% and unfavorable foreign exchange rates of ~~$1.7~~$0.8 million, or ~~0.3%~~0.1%. Organic revenues ~~increased $13.5~~decreased $11.6 million, or ~~2.4%~~2.1%, primarily due to lower commodity indexed revenues, including lower sorted office paper and lower SID fuel an environmental surcharges. These decreases were partially offset by higher RWCS organic revenues which were mainly driven by our ~~three~~ pricing ~~levers. SID organic revenues decreased due to lower indexed fuel and environmental surcharges, and recycled paper revenues.~~actions.

North America revenues ~~increased $26.3~~decreased $1.5 million, or ~~2.4%~~0.1%, for the ~~six~~nine months ended ~~June~~September 30, 2023, to ~~$1,138.6~~$1,695.7 million from ~~$1,112.3~~$1,697.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022. Organic revenues increased ~~$60.2~~$48.6 million, or ~~5.4%~~2.9%, primarily due to RWCS organic revenue increases which were mainly driven by our ~~three~~ pricing ~~levers.~~actions. SID organic revenues ~~increased~~decreased due to ~~our pricing levers, which includes recycling recovery~~lower sorted office paper and lower SID fuel and environmental surcharges. Additionally, the impact of the CRS divestiture was ~~$30.1~~$45.4 million, or 2.7%, and unfavorable foreign exchange rates were ~~$3.8~~$4.6 million, or 0.3%.

International revenues decreased ~~$6.9~~$9.1 million, or ~~6.2%~~8.6%, in the ~~second~~third quarter of 2023, to ~~$104.3~~$96.4 million from ~~$111.2~~$105.5 million in the ~~second~~third quarter of 2022. The decrease was primarily due to the impact of divestitures of ~~$8.7~~$17.1 million, or ~~7.9%~~16.2%, and decreased organic SID revenues due to lower recycled paper rates and volume. These decreases were partially offset by higher organic RWCS revenues due to pricing levers offset by lower waste ~~volumes and~~volumes. Additionally, favorable foreign exchange rates ~~of $0.4~~increased revenues by $7.0 million, or ~~0.4%~~6.6%.

International revenues decreased ~~$16.5~~$25.6 million, or ~~7.1%~~7.6%, for the ~~six~~nine months ended ~~June~~September 30, 2023, to ~~$215.2~~$311.6 million from ~~$231.7~~$337.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The decrease was primarily due to the impact of divestitures of ~~$10.5~~$27.6 million, or ~~4.5%, unfavorable foreign exchange rates of $7.4 million, or 3.2%~~8.2%, and decreased organic SID revenues due to lower recycled paper rates and volume. These decreases were partially offset by higher organic RWCS revenues due to pricing levers.

Gross profit:


In millions	In millions										In millions
		Three Months Ended June 30,										Three Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	% Revenues		$	% Revenues		$	%			$	% Revenues		$	% Revenues		$	%
Gross profit	Gross profit	251.1	37.5	%	260.5	38.3	%	(9.4)	(3.6)	%	Gross profit	245.7	37.6	%	266.2	38.6	%	(20.5)	(7.7)	%

In millions	In millions										In millions
		Six Months Ended June 30,										Nine Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	% Revenues		$	% Revenues		$	%			$	% Revenues		$	% Revenues		$	%
Gross profit	Gross profit	512.1	37.8	%	505.0	37.6	%	7.1	1.4	%	Gross profit	757.8	37.8	%	771.1	37.9	%	(13.3)	(1.7)	%

For the three months ended ~~June~~September 30, 2023, compared to the 2022 comparable period, the decrease in gross profit was primarily due to ~~higher fleet costs, asset impairments,~~lower commodity indexed revenues and the ~~impacts of divestitures,~~corresponding margin flow through impact and a self-insurance settlement, partially offset by our pricing ~~levers.~~levers and lower labor costs.

For the ~~six~~nine months ended ~~June~~September 30, 2023, compared to the 2022 comparable period, the ~~increase~~decrease in gross profit was primarily due to ~~our pricing levers, which was partially offset by~~lower commodity indexed revenues and the corresponding margin flow through impact, higher fleet costs, ~~asset impairments, and~~ the impacts of divestitures and foreign exchange ~~rates.~~

rates, partially offset by our pricing levers and lower labor costs.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			2425

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SG&A:


In millions	In millions										In millions
		Three Months Ended June 30,										Three Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	% Revenues		$	% Revenues		$	%			$	% Revenues		$	% Revenues		$	%
SG&A	SG&A	220.9	33.0	%	222.4	32.7	%	(1.5)	(0.7)	%	SG&A	217.3	33.3	%	215.6	31.2	%	1.7	0.8	%

In millions	In millions										In millions
		Six Months Ended June 30,										Nine Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	% Revenues		$	% Revenues		$	%			$	% Revenues		$	% Revenues		$	%
SG&A	SG&A	436.9	32.3	%	461.0	34.3	%	(24.1)	(5.2)	%	SG&A	654.2	32.6	%	676.5	33.3	%	(22.3)	(3.3)	%

For the three months ended ~~June~~September 30, 2023, compared to the 2022 comparable period, SG&A ~~decreased,~~increased, primarily due to ~~the impacts of divestitures and lower bad debt expense; partially offset by~~ higher annual incentive and stock based compensation expense, partially offset by the impacts of divestitures, cost savings, and lower bad debt expense.

For the ~~six~~nine months ended ~~June~~September 30, 2023, compared to the 2022 comparable period, we incurred lower SG&A charges associated with certain key priorities and other significant matters discussed ~~above, primarily due to Litigation, Settlement and Regulatory Compliance matters.~~above. Additionally, the remaining change in SG&A was due to the impacts of divestitures and lower bad debt ~~expense, and the impact of foreign exchange rates.~~expense. These decreases were partially offset by increased annual incentive and stock based compensation expense.

Divestiture losses, net:


In millions	In millions									In millions
		Three Months Ended June 30,									Three Months Ended September 30,
		2023			2022			Change			2023			2022			Change
		$	% Revenues		$	% Revenues		$	%		$	% Revenues		$	% Revenues		$	%
Divestiture losses, net	Divestiture losses, net	54.2	8.1	%	—	—	%	54.2	nm	Divestiture losses, net	4.2	0.6	%	—	—	%	4.2	nm

In millions	In millions									In millions
		Six Months Ended June 30,									Nine Months Ended September 30,
		2023			2022			Change			2023			2022			Change
		$	% Revenues		$	% Revenues		$	%		$	% Revenues		$	% Revenues		$	%
Divestiture losses, net	Divestiture losses, net	59.2	4.4	%	—	—	%	59.2	nm	Divestiture losses, net	63.4	3.2	%	—	—	%	63.4	nm

nm - percentage change not meaningful for comparison

For additional information, see Part I, Item I. Financial Statements; Note 3 — Restructuring, Divestitures, and Asset Impairments in the Condensed Consolidated Financial Statements.


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Segment Profitability:

Segment profitability and a reconciliation of the total for segment profitability to ~~(Loss) income~~Income from operations was as follows:


In millions	In millions																	In millions
		Three Months Ended June 30,									Six Months Ended June 30,												Three Months Ended September 30,											Nine Months Ended September 30,
		2023			2022			Change 2023 versus 2022			2023			2022			Change 2023 versus 2022						2023				2022			Change 2023 versus 2022				2023				2022			Change 2023 versus 2022
		$	% Segment Revenues		$	% Segment Revenues		$	%		$	% Segment Revenues		$	% Segment Revenues		$			%			$		% Segment Revenues		$	% Segment Revenues		$		%		$		% Segment Revenues		$	% Segment Revenues		$	%
Adjusted Income from Operations	Adjusted Income from Operations																					Adjusted Income from Operations
North America	North America	156.5	27.7	%	148.9	26.2	%	7.6	5.1	%	316.8	27.8	%	283.5	25.5	%	33.3			11.7	%	North America	143.5		25.8	%	160.4	27.4	%	(16.9)		(10.5)	%	460.3		27.1	%	443.9	26.2	%	16.4	3.7	%
International	International	8.4	8.1	%	8.4	7.6	%	—	—	%	18.7	8.7	%	19.8	8.5	%	(1.1)			(5.6)	%	International	8.9		9.2	%	7.4	7.0	%	1.5		20.3	%	27.6		8.9	%	27.2	8.1	%	0.4	1.5	%
Other Costs	Other Costs	(88.9)	nm		(75.3)	nm		(13.6)	(18.1)	%	(174.8)	nm		(162.3)	nm		(12.5)			(7.7)	%	Other Costs	(82.1)		nm		(75.8)	nm		(6.3)		(8.3)	%	(256.9)		nm		(238.1)	nm		(18.8)	(7.9)	%
Total	Total	76.0	11.4	%	82.0	12.1	%	(6.0)	(7.3)	%	160.7	11.9	%	141.0	10.5	%	19.7			14.0	%	Total	70.3		10.8	%	92.0	13.3	%	(21.7)		(23.6)	%	231.0		11.5	%	233.0	11.5	%	(2.0)	(0.9)	%

Reconciliation to (Loss) income from operations
Reconciliation to Income from operations																		Reconciliation to Income from operations
Adjusted Income from Operations	Adjusted Income from Operations	76.0			82.0						160.7			141.0								Adjusted Income from Operations	70.3				92.0							231.0				233.0
Adjusting Items Total (1)	Adjusting Items Total (1)	(100.0)			(43.9)						(144.7)			(97.0)								Adjusting Items Total (1)	(46.1)				(41.4)							(190.8)				(138.4)
(Loss) income from operations		(24.0)			38.1						16.0			44.0
Income from operations																		Income from operations	24.2					50.6							40.2				94.6

nm - percentage change not meaningful for comparison

(1)See Part I, Item I. Financial Statements; Note 7 — Segment Reporting in the Condensed Consolidated Financial Statements for more detail.

Adjusted Income from Operations for North America ~~increased~~decreased for the three months ended ~~June~~September 30, 2023, compared to the 2022 comparable period, primarily due to ~~gross profit improvement primarily~~ lower RISI rates impacting sorted office paper and fuel and environmental surcharges and their corresponding margin flow through and a self insurance settlement. These decreases were partially offset by cost savings~~driven by pricing levers~~ and lower bad debt expense. ~~These increases were partially offset by~~ ~~higher fleet costs and the impact of the CRS divestiture.~~

Adjusted Income from Operations for North America increased for the ~~six~~nine months ended ~~June~~September 30, 2023, compared to the 2022 comparable period, primarily due to ~~gross profit improvement primarily driven by~~our pricing levers, ~~and~~ lower bad debt ~~expense.~~expense and cost savings. These increases were partially offset by lower commodity indexed revenues and the corresponding margin flow through impact, and higher fleet costs and the impact of the CRS ~~divestiture and higher fleet costs.~~divestiture.

Adjusted Income from Operations for International ~~remained flat~~increased for the three and nine months ended ~~June~~September 30, 2023, compared to the respective 2022 comparable ~~period. Favorable~~periods. These increases were primarily due to favorable RWCS pricing levers and foreign exchange rates, which were partially offset by lower SID revenues due to lower recycled paper rates and volume, and higher supply chain and other inflationary ~~costs, and unfavorable foreign exchange rates.~~

Adjusted Income from Operations for International decreased for the six months ended June 30, 2023, compared to the 2022 comparable period. The decrease was primarily driven by lower SID revenues, higher supply chain and other inflationary costs, and unfavorable foreign exchange rates. These decreases were offset by favorable RWCS pricing levers.costs.

Adjusted Loss from Operations for Other Costs increased for the three and ~~six~~nine months ended ~~June~~September 30, 2023, compared to the respective 2022 comparable periods. These increases were primarily driven by higher incentive and ~~stock based~~stock-based compensation expense.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			2627

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Interest expense, net:


In millions	In millions										In millions
		Three Months Ended June 30,										Three Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	% Revenues		$	% Revenues		$	%			$	% Revenues		$	% Revenues		$	%
Interest expense, net	Interest expense, net	19.1	2.9	%	18.5	2.7	%	0.6	3.2	%	Interest expense, net	17.4	2.7	%	19.8	2.9	%	(2.4)	(12.1)	%

In millions	In millions										In millions
		Six Months Ended June 30,										Nine Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	% Revenues		$	% Revenues		$	%			$	% Revenues		$	% Revenues		$	%
Interest expense, net	Interest expense, net	39.5	2.9	%	34.8	2.6	%	4.7	13.5	%	Interest expense, net	56.9	2.8	%	54.6	2.7	%	2.3	4.2	%

~~The increase~~Interest expense, net decreased for the three ~~and six~~ months ended ~~June~~September 30, 2023, as compared to 2022, ~~was~~primarily due to the decrease in our net debt.

Interest expense, net increased for the nine months ended September 30, 2023, as compared to 2022, primarily due to higher weighted-average interest rates on the variable portion of our ~~debt,~~debt; partially offset by the decrease in our net debt. The ~~six~~nine months ended ~~June~~September 30, 2022 also ~~includes $0.7~~included $1.1 million in interest income associated with ~~an IRS refund.~~income tax refunds. For further information, see Part I, Item I. Financial Statements; Note 4 — Debt in the Condensed Consolidated Financial Statements.

Other ~~expense,~~income (expense), net:


In millions	In millions										In millions
		Three Months Ended June 30,										Three Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	% Revenues		$	% Revenues		$	%			$	% Revenues		$	% Revenues		$	%
Other expense, net		0.6	0.1	%	0.7	0.1	%	(0.1)	(14.3)	%
Other income (expense), net											Other income (expense), net	0.1	—	%	2.3	0.3	%	(2.2)	(95.7)	%

In millions	In millions										In millions
		Six Months Ended June 30,										Nine Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	% Revenues		$	% Revenues		$	%			$	% Revenues		$	% Revenues		$	%
Other expense, net		0.4	—	%	1.5	0.1	%	(1.1)	(73.3)	%
Other income (expense), net											Other income (expense), net	(0.3)	—	%	0.8	—	%	(1.1)	(137.5)	%

Other ~~expense,~~income (expense), net is primarily comprised of foreign exchange (gains) losses.

Income tax expense:


In millions	In millions										In millions
		Three Months Ended June 30,										Three Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	Effective Rate		$	Effective Rate		$	%			$	Effective Rate		$	Effective Rate		$	%
Income tax expense	Income tax expense	5.8	(13.3)	%	8.4	44.4	%	(2.6)	(31.0)	%	Income tax expense	4.8	69.6	%	5.1	15.4	%	(0.3)	(5.9)	%

In millions	In millions										In millions
		Six Months Ended June 30,										Nine Months Ended September 30,
		2023			2022			Change				2023			2022			Change
		$	Effective Rate		$	Effective Rate		$	%			$	Effective Rate		$	Effective Rate		$	%
Income tax expense	Income tax expense	14.3	(59.8)	%	11.3	146.8	%	3.0	26.5	%	Income tax expense	19.1	(112.4)	%	16.4	40.2	%	2.7	16.5	%

For further information, see Part I, Item I. Financial Statements; Note 5 — Income Taxes in the Condensed Consolidated Financial Statements.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			2728

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Liquidity and Capital Resources

The Company believes that it has sufficient liquidity to support its ongoing operations and to invest in future growth to create value for its shareholders. Operating cash flows and the Company’s $1.2 billion Credit Facility are the Company’s primary sources of liquidity and are expected to be used for, among other things, payment of interest and principal on the Company’s long-term debt obligations, and capital expenditures necessary to support growth and productivity improvements. As of ~~June~~September 30, 2023, we had approximately $1.1 billion of available capacity in the $1.2 billion Credit Facility. If the Company's 2024 Senior Notes are still outstanding 91 days prior to their respective maturity date (the “Springing Maturity Date”), then the Credit Agreement maturity date will be the Springing Maturity Date. The ~~$600.0 million 2024 Senior Notes mature in July 2024. The~~ Company currently has the ability and intent to refinance the 2024 Senior Notes on a long-term basis through available capacity under its Revolving Credit Facility. Therefore, as of September 30, 2023, the 2024 Senior Notes remain classified as Long-Term Debt in the Condensed Consolidated Financial Statements. In the ~~second and third quarters of~~nine months ended September 30, 2022, the Company ~~had~~ paid a total of $81.0 million ~~of the planned approximately $90 million~~ due to the DOJ, the SEC, and Brazil authorities in accordance with the FCPA Settlement. ~~In the second quarter of 2023, the~~The Company has paid substantially all of the ~~remaining~~ settlement amounts due to the DOJ and Brazil authorities. For further details concerning these matters, see Part I, Item I. Financial Statements; Note 4 — Debt and Note 8 — Commitments and Contingencies in the Condensed Consolidated Financial Statements.

Cash Flow Summary:

The following table shows cash flow information for the Company by activity:


In millions	In millions					In millions
		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
Net cash from operating activities	Net cash from operating activities	$	154.9	$	(18.4)	Net cash from operating activities	$	193.3	$	43.1
Net cash from investing activities	Net cash from investing activities	26.4		(67.6)		Net cash from investing activities	(15.5)		(103.5)
Net cash from financing activities	Net cash from financing activities	(207.9)		79.0		Net cash from financing activities	(205.2)		56.7
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	1.3		(2.7)		Effect of exchange rate changes on cash and cash equivalents	1.1		(7.9)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	(25.3)	$	(9.7)	Net change in cash and cash equivalents	$	(26.3)	$	(11.6)

Operating Cash Flows: Net cash provided from operating activities increased ~~$173.3~~$150.2 million in the first ~~six~~nine months of 2023, to ~~an inflow of $154.9~~$193.3 million from ~~an outflow of $18.4~~$43.1 million in the ~~six~~nine months ended ~~June~~September 30, 2022. The year-over-year increase of ~~$173.3~~$150.2 million was primarily driven by lower FCPA settlement payments of ~~$67.6~~$72.8 million; improved accounts ~~receivable improvements~~receivables collections, net of ~~$52.1 million, primarily due to an improvement in DSO; higher cash generated from operating income~~deferred revenues of ~~$23.3~~$55.0 million; and lower annual incentive compensation payments of $22.3 ~~million; and other working capital improvements of $8.0~~ million.

DSO as ~~of June~~reported for September 30, 2023 was 63 days or 55 days, net of deferred revenues. During the third quarter of 2023, Stericycle advanced billing for certain RWCS subscription services, which contributed to the higher as reported DSO for September 30, 2023. DSO as reported for September 30, 2022 was 5563 days or 62 days, net of deferred revenues. The September 30, 2023 DSO, net of deferred revenues, was lower as compared to ~~64 days as of June 30, 2022. The difference was~~the same period in 2022, mainly driven by the improved timing of ~~North America Secure Information Destruction~~SID customer billing and ~~collections in the prior year.~~collections.

Investing Cash Flows: Net cash ~~provided~~ from investing activities increased ~~$94.0~~$88.0 million in the first ~~six~~nine months of 2023, to an ~~inflow~~outflow of ~~$26.4~~$15.5 million from ~~an outflow $67.6~~$103.5 million in the ~~six~~nine months ended ~~June~~September 30, 2022, primarily driven by cash proceeds from divestitures of ~~$88.9 million.~~$84.6 million in 2023. Cash paid for capital expenditures decreased by ~~$6.3~~$3.8 million to ~~$63.7~~$102.2 million from ~~$70.0~~$106.0 million in the ~~six~~nine months ended ~~June~~September 30, 2022.

Financing Cash Flows: Net cash from financing activities decreased ~~$286.9~~$261.9 million in the first ~~six~~nine months of 2023, to an outflow of ~~$207.9~~$205.2 million from an inflow of ~~$79.0~~$56.7 million in the ~~six~~nine months ended ~~June~~September 30, 2022. ~~Our net~~Net repayments on our Credit Facility and Term Loan were ~~$186.7~~$183.3 million in the ~~six~~nine months ended ~~June~~September 30, 2023, compared to net borrowings of ~~$94.6~~$73.5 million in the ~~six~~nine months ended ~~June~~September 30, 2022.

Critical Accounting Policies and Estimates

As discussed in our 2022 Form 10-K, the preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent liabilities at the date of the Condensed Consolidated Financial Statements and revenues and expenses during the periods reported. There were no material changes from the information provided therein.


2023 Q2Q3 10-Q Report			Stericycle, Inc. ●			2829

Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to market risks, including changes in interest rates, certain commodity prices, including SOP, diesel fuel, utilities and foreign currency rates. We do not specifically hedge our exposure to these risks.

We are subject to market risks arising from changes in interest rates which relate primarily to our financing activities. We performed a sensitivity analysis to determine how market rate changes might affect the fair value of our market risk-sensitive debt instruments (variable rate debt), which in aggregate as of ~~June~~September 30, 2023 were ~~12.8%~~13.0% of total aggregate debt. Our potential additional interest expense over one year that would result from a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate on all of our variable rate debt would be approximately $1.7 million on a pre-tax basis.

We are subject to market risks arising from changes in the prices for commodities such as SOP, diesel fuel, and utilities. For example, historically diesel fuel has been approximately five percent of our Cost of Revenues. As the market prices for these commodities increase or decrease, our revenues, operating costs and margins may also increase or decrease. Variability in commodity prices can also impact the margins of our business as certain components of our revenue are structured as a pass through of costs, including fuel surcharges as changes in diesel costs ~~are generally~~may offset in Revenues through our indexed fuel ~~surcharges.~~surcharges at certain levels of pricing.

There were no other material changes from the information provided in our 2022 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange ~~Act, as amended (the Exchange~~ Act)) are effective as of ~~June~~September 30, 2023, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Exchange Act.

Changes in Internal Control Over Financial Reporting

~~During~~In the third quarter ~~ended~~of ~~June 30,~~ 2023, we completed deployment of our ERP system for our U.S. RWCS business. As a result of the ERP system implementation, in the third quarter of 2023 certain internal controls over financial reporting have been automated, modified, or implemented to address the new control environment associated with the ERP system. Additionally, the Company completed pre-implementation and post-implementation internal control monitoring associated with the launch. While Stericycle believes that this new system will enhance its internal control over financial reporting, there ~~were~~are inherent risks in implementing any new system, and we will continue to evaluate these control changes as part of our assessment of the control design and effectiveness throughout 2023.

There have been no other changes in our internal control over financial reporting that ~~have~~occurred during the third quarter of 2023 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.


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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Further information pertaining to legal proceedings can be found in Part I, Item I. Financial Statements; Note 8 — Commitments and Contingencies in the Condensed Consolidated Financial Statements and is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information included in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in the 2022 Form 10-K and subsequent Quarterly Reports on Form 10-Q and the factors identified under “Safe Harbor Statement” at the beginning of Part I, Item 2 of this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition, cash flows, or results of operations. The risks described in the 2022 Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently considers immaterial also may materially adversely affect its business, financial condition, and/or operating results. There have been no material changes to the risk factors included in the 2022 Form ~~10-K.~~10-K, other than as described below.

We may not realize the expected financial benefits within the anticipated timeline from our continuous improvement efforts including operational efficiency, modernization and innovation actions, among others.

We remain focused on continuous improvements including HCoperational efficiency, modernization, and innovation to control costs and improve performance and efficiencies. We analyze opportunities in areas such as facility footprint, processing capabilities, equipment needs, team member requirements, fleet replacement and route and long-haul network improvements, managed service opportunities, and container rationalization and modernization. We may incur more charges and cash expenditures than estimated and may not realize the expected improvements or cost savings in the planned timeframe or at all. The amount, timing and recognition of charges, if any, would be affected by the occurrence of commitments and triggering events as defined under U.S. GAAP, among other factors.

We depend on third parties to provide a variety of services.

We depend on third parties to provide a variety of services including information technology, finance and accounting and processing a portion of the regulated waste we collect from our customers, among others. We may continue to increase our dependence on third-party providers for other services. The failure of these service providers to meet their obligations or the development of significant disagreements or other factors may disrupt our ongoing relationship with these providers or the services they provide, which could adversely affect our business, financial condition or results of operations. In addition, failure by waste disposal vendors to properly handle or dispose of the regulated waste we collect from customers could expose us to liability, increase our costs, damage our reputation and generally have an adverse effect on our business, financial condition or results of operations.

Geopolitical tensions and military conflict and the global community’s response may create substantial political and economic disruption, uncertainty and risk.

U.S. and global markets may experience volatility and disruption following the escalation of geopolitical tensions and military conflicts, such as those between Russia and Ukraine and in the Middle East. Although the length and impact of ongoing military conflicts is highly unpredictable, such conflicts could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions, increased cyber-attacks and social unrest in certain regions in which we operate. We are continuing to monitor existing geopolitical tensions and military conflicts and are assessing their potential impact on our business.

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

There were no sales of unregistered equity securities during the three months ended ~~June~~September 30, 2023.

Item 5. Other Information


~~Item 5. Other Information~~

During the three months ended ~~June~~September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in the SEC’s rules).


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Item 6. Exhibits

The following exhibits are filed or furnished as part of this report:

Exhibit Index


Exhibit Index						Description

3.1						Amended and restated certificate of incorporation (incorporated by reference to Exhibit 3.1 to our registration statement on Form S-1/A declared effective on August 22, 1996)
3.2						First certificate of amendment to amended and restated certificate of incorporation (incorporated by reference to Exhibit 3.1 to our current report on Form 8-K filed November 29, 1999)
3.3						Second certificate of amendment to amended and restated certificate of incorporation (incorporated by reference to Exhibit 3.4 to our annual report on Form 10-K for 2002)
3.4						Third certificate of amendment to amended and restated certificate of incorporation (incorporated by reference to Exhibit 3.4 to our registration statement on Form S-4 declared effective on October 10, 2007)
3.5						Fourth certificate of amendment to amended and restated certificate of incorporation (incorporated by reference to Exhibit 3(i).1 to our quarterly report on Form 10-Q filed August 7, 2014)
3.6						Certificate of Designation setting forth the specific rights, preferences, limitations, restrictions and other terms and conditions of the Series A Convertible Preferred Stock, par value $0.01 per share (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed November 29, 1999)
3.7						Certificate of Elimination of the Certificate of Designations relating to Series A Convertible Preferred Stock, par value 0.01 per share (incorporated by reference to Exhibit 3.1 and 4.1 to our current report on Form 8-K filed September 15, 2015)
3.8						Certificate of Designations setting forth the specific rights, preferences, limitations, restrictions and other terms and conditions of the Mandatory Convertible Preferred Stock (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form 8-A filed September 15, 2015)
3.9						Certificate of Elimination of the Certificate of Designations relating to 5.25% Series A Mandatory Convertible Preferred Stock (incorporated by reference to Exhibit 3.9 to our Quarterly Report on Form 10-Q filed November 11, 2018)
3.10						Amended and restated bylaws (incorporated by reference to Exhibit 3.2 to our current report on Form 8-K filed December 15, ~~2022~~2022)



10.1						~~Second amendment to the Credit Agreement, dated as of June 15, 2023, among~~ Stericycle, Inc. ~~and certain subsidiaries~~Annual Incentive Plan, as ~~borrowers, Bank of America, N.A., as administrative agent, swing line lender, a lender and a letter of credit issuer, and the other lenders party thereto~~amended, effective January 1, 2024
31.1						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32						Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101						The following information from our Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Income (Loss) ~~Income;~~; (ii) Condensed Consolidated Statements of Comprehensive ~~Income~~ (Loss); Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Changes in ~~Equity and~~Equity; (vi) Notes to Condensed Consolidated Financial Statements, and (vii) the information under Part II, Item 5, “Other Information”
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: ~~July 27,~~November 2, 2023


STERICYCLE, INC.
(Registrant)
By: /s/ JANET H. ZELENKA
Janet H. Zelenka
Executive Vice President, Chief Financial Officer & Chief Information Officer


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