Stericycle Inc (SRCL) 2017 Q1 法說會逐字稿

Good afternoon. My name is Kelly, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Stericycle First Quarter Earnings Conference Call. (Operator Instructions)

Sean McMillan, Vice President of Corporate Finance, you may begin your conference.

Welcome to Stericycle's Fourth Quarter 2016 Conference Call -- 2017. I will now read the safe harbor statement.

This conference call may contain forward-looking statements that involve risks and uncertainties, some of which are beyond our control. For example, general economic and market conditions. Our actual results could differ significantly from the results described in the forward-looking statements. Factors that could cause such differences include: 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; increases in transportation and other operating costs; the level of governmental enforcement of regulations governing regulated waste, collection and treatment or the proper handling and protection of personal and confidential information; our obligation to service our substantial indebtedness and to comply with the covenants and restrictions contained in our private placement notes, term loan credit facility and revolving credit facility; our ability to execute our acquisition strategy and to integrate acquired businesses; competition and demand for services in the regulated waste and secure information destruction industries; political, economic and currency risks related to our foreign operations; impairments of goodwill or other indefinite-lived intangibles; variability in the demand for services we provide on a project or nonrecurring basis; exposure to environmental liabilities; fluctuations in the price we received for the sale of paper; the outcome of pending or future litigation; disruptions in or attacks on our information technology systems; compliance with the existing and future legal and regulatory requirements; as well as other factors described in our filings with the U.S. Securities and Exchange Commission, including our most recently filed annual report on form 10-K.

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 make no commitment to disclose any subsequent revisions to forward-looking statements.

I'll now turn it over to Charlie Alutto, CEO.

Thank you, Sean. Hello, everybody. Thank you for joining us on today's call.

Overall, we're very pleased with our first quarter performance. Highlights for the quarter included a great start to the year from our Secure Information Destruction Service, another strong quarter from our Communication and Related Service business, and our Regulated Waste and Compliance Services came in as expected.

Joining me on today's call to discuss these highlights and other items from the quarter will be Dan Ginnetti, CFO; and Brent Arnold, COO.

I will now turn it over to Dan.

Thanks, Charlie.

The results for the first quarter are as follows. Global revenues were $892.4 million, up 2.1% from $874.2 million in Q1 2016. And internal growth, excluding the impact of foreign exchange, acquisitions, divestitures and Manufacturing and Industrial Services, was 3.6%. Domestic and Canada revenues were $710.8 million. Internal growth, excluding the impact of acquisitions and foreign exchange, was 2.2%. International revenues were $181.6 million. Internal growth, when adjusted for foreign exchange, acquisitions and divestitures, was 1.8%. As anticipated, internal growth rates were impacted by the exiting of certain patient transportation contracts, manufacturing -- and Manufacturing and Industrial Services.

Acquisitions contributed $10 million to growth in the quarter, and divestitures reduced revenues by $0.7 million.

Gross profit was $368.7 million or 41.3% of revenues. Gross profit was reduced by approximately 40 basis points in the quarter due to a reclassification of certain expenses from SG&A to cost of revenues. This reclassification impacts historic and future reporting.

SG&A, excluding amortization, was $198.3 million or 22.2% of revenues.

Adjusted income from operations, or EBITA, was $170.4 million or 19.1% of revenues.

Net interest expense was $23.3 million.

The as-reported tax rate for the quarter was 34.7%.

Net income attributable to Stericycle was $53.4 million or $0.62 per share on an as-reported basis and $1.09 when adjusted for acquisition-related expenses and other adjustments.

Now for the balance sheet. Our covenant debt-to-EBITDA ratio was 3.38X at the end of the quarter. The unused portion of the revolver was approximately $715 million.

In the quarter, we repurchased 145,700 shares of the mandatory preferred convertible on the open market in the amount of $9.6 million. At the end of the quarter, we have authorization to purchase 2.9 million shares.

Our CapEx was $33.1 million or 3.7% of revenues. Our DSO was 62 days. Year-to-date, as-reported cash from operations was $175.3 million. And when adjusted for recall, reimbursements and other items, cash from operations was $197.7 million.

I will now turn it over to Brent.

Thanks, Dan.

This quarter, we closed 13 tuck-in acquisitions. The 13 acquisitions include 9 in the U.S. and Canada and 4 international.

Revenues in the quarter were approximately $2 million and annualized were approximately $13.7 million.

Our worldwide acquisition pool remains robust with well over $100 million of annualized revenues in multiple geographies and lines of business.

In the quarter, we saw strong sales and operational performance from our Secure Information Destruction team, another solid quarter from our Communication and Related Services team and good progress on our SQ strategic investments.

Secure Information Destruction revenue was strong for both ongoing and onetime services. This sales activity, combined with higher recycling revenue, generated organic growth of 8%. The success factors contributing to our sales performance include the investments we made in our Sales team, the impact of our cross-selling initiatives and the team's ability to convert the unvended market. We are pleased with the progress the team has made in the past year.

The integration of our Shred-it and subsequent tuck-in acquisitions remain on track. The investments we made in call center automation, intelligent work distribution systems and standardized best practices across our branches are making us more efficient in improving our overall service.

The Communication and Related Services team also delivered a very strong first quarter. Our market-leading position and unique capabilities have enabled us to serve new brands across many industries. For the first time as a combined business, we leveraged our call center agents and operational infrastructure to meet the needs of several large recall customers.

Within the SQ business, we continued to invest in our data analytic capabilities to pinpoint areas of opportunity and improve our performance. We remain excited about these new tools and how they will help us drive future growth and reduce the impact of pricing pressures.

In closing, I would like to thank all of our worldwide team members for their continued commitment to our customers, our shareholders and our core values.

I will now turn it over to Charlie.

Thanks, Brent.

I would now like to provide insight on our current guidance for 2017. Please keep in mind that these are forward-looking statements and our guidance does not include future acquisitions, divestitures, integration- and acquisition-related expenses and other adjusted items.

For 2017, we believe EPS estimates will be in the range of $4.55 to $4.75 using a share count of approximately 91 million. This includes the impact from foreign exchange and acquisitions.

We believe revenues for 2017 will be in the range of $3.53 billion to $3.66 billion depending on assumptions of foreign exchange and internal growth rates.

The worldwide revenue guidance for each of our service lines is: Regulated Waste and Compliance Services will be in the range of $2.01 billion to $2.06 billion; Secure Information Destruction Services will be in the range of $795 million to $825 million; Communication and Related Services will be in the range of $345 million to $375 million, depending on recall revenues; Manufacturing and Industrial Services will be in the range of $375 million to $395 million. This includes the full-year impact of the U.K. divested M&I asset.

We have estimates for adjusted free cash flow in 2017 of between $450 million to $470 million. 2017 CapEx is anticipated to be between $125 million to $150 million. We expect the 2017 full-year adjusted tax rate to be approximately 36.5%.

We are very pleased with the start of 2017, and we are confident in the long-term outlook for our business.

Thank you for your time today. We'll now answer any questions. Please keep in mind that we have many analysts who follow Stericycle. (Operator Instructions)

Kelly, you can now open the Q&A line.

(Operator Instructions) Our first question comes from Sean Dodge from Jefferies.

Maybe starting with SQ pricing. You guys had built $40 million of pressure into '17. What was the experience during the first quarter? And maybe can you talk about how comfortable you still are with the $40 million target for the year?

Yes, thanks, Sean. With respect to Q1, Q1 SQ pricing pressure came in generally as we expected. So there's no change to the assumptions for SQ pricing pressure that we discussed at our Investment Day this past November.

Okay. And then the M&I guidance, it looks like you took that up for the full year despite what was a -- what kind of looked like a tough start to the year. Can you talk about what happened there and maybe your level of comfort that we'll see an acceleration as the quarters roll on?

Yes, actually, Sean, the M&I revenue guidance for the full year is unchanged. It's still $375 million to $395 million. As far as the M&I growth rate in Q1, it generally came in as expected. The results were negatively impacted by an unfavorable Q1 '16 comp, FX, U.K. divestiture. But with respect to our guidance, it's unchanged. So we think it will come in line for the remainder of the year.

Your next question comes from Ryan Daniels from William Blair.

I wanted to start with a question on some of the investments you're making in the core regulated medical waste on the sales and marketing front. It sounded like in your prepared comments, you're already seeing some benefits there. So can you maybe go through a little bit what you're seeing and what specific areas have driven the most return on investment for the organization?

Ryan, this is Brent. I'll take that one. Let's start with the data analytics piece because that's where we made a lot of good progress. So far, the team has put the tools in place. We've hired some key folks with the technical expertise to help us kind of pull all this together. We're currently using big data and predictive analytics to guide our efforts in a number of areas. I would say one is our lead loads for our sales teams. Another is creating more effective sales offers for our customers. Both of those initiatives, we're seeing improved sales effectiveness for our team. So those are early payoffs that we are recognizing from these investments. We're also trying to recognize when customers may be at risk and putting together different offers that are catered specifically for those customers. So again, those are the ways we're using big data. From a marketing perspective, as we mentioned a couple of quarters ago, we've added an outbound sales team as well as face-to-face sales reps. We've cross-trained some sales reps from Shred-it and the field organization to sell both RMW and Shred-it. And we've had some really nice wins -- some large wins from those folks as well. So overall, I would say the investments are on track. It's early innings, but we're pleased with how they started.

Okay, that's helpful. And then as my follow-up, the strength you saw in document destruction, can you talk a little bit more about what we should be considering for in organic growth rate going forward, I guess, meaning how much of this was kind of onetime purge-related activity that benefited the quarter versus the true recurring sales?

Sure. Overall, we're really pleased with our 8% organic growth. About half of that growth is driven by really solid performance by the team. So that's a combination of our field sales executives that are closing the unvended customers or customers that currently don't do service with any provider. The investments we've made in our inside sales team produced really solid onetime or purge revenue, as well as our national regional accounts are having a great deal of success. So all of that related to our overall organic performance. The other part of that was driven by increases in recycling. So overall, I would say our growth goals organically, net of paper, is anywhere from about 3% to 5%. And we're well within that range.

Our next question comes from Michael Hoffman from Stifel.

Just to make sure I understood what you asked there and not use up a question. So 4% of the growth is the year-over-year difference in paper in total, right, as opposed to versus your guidance. Because your guidance is $155 in there and paper was like $175. So I just want to understand the delta there or how much was more than your guidance versus...

Yes. So Michael, if you look at it this way, obviously, when we did guidance at the beginning of the -- at the end of last year, we used $147 to $167. So it's slightly higher today. So you wouldn't attribute all 4% to the high price today. We ended the quarter, I think, at $175. I'd say 1% -- 1% to 2% is probably because of the higher paper prices because right now, we are slightly outside of our upper end of the range when we gave guidance at the beginning of the year.

Okay. And then can we talk about some margins and sort of thinking about what's going on in margin overall and the puts and takes in it? So I shouldn't -- I don't think anybody should be alarmed if your margins are down given some of the issues. But can we talk about why they're down? What's the contributions? Like how much of it is M&I having a tough comp? Maybe it was profitable a year ago. Maybe it's not this year. The pricing issue versus offsets. Like I'm assuming you closed some call centers in the patient communications side. That helps margins there. But -- and then like where's recalls and returns? Were those revenues down? Are they up year-over-year? What are the puts and takes around the margin?

Yes, Michael, there's a lot of questions in there on that. And we'll talk about EBITDA margins specifically because we could go on all of them. I think first of all, I'd like to just share that for the quarter to our guidance, we were slightly ahead of margins. I think our guidance was 19%. We came in at 19.1%. So we're very pleased. It came within guidance. I think what you're looking at, though, when you're comparing guidance is -- or comparing margins is probably year-over-year. And certainly, you'd have to factor in things that we continue to see pricing pressure that didn't exist a quarter -- or a year ago at this time. We guided down throughout the course of the year for M&I. Those would have been some of the things that are pushing margins down. Further to that, Michael, you'll know on the Investor Day, we spoke specifically about making investments in the business, knowing full well that, that would bring up our SG&A for a future benefit to be able to make investments in sales resources in Brent's area or make investments in our accounting and shared services and systems in order to drive benefits in the future.

Okay. And if I were to kind of think about how that's split, is it evenly between the operational ones versus the investment ones? Is it 2/3, 1/3? How do I think about the weight?

I would think I would split it -- are you talking between SG&A or gross margin? Or are you just talking in general over the ...

So I mean, if RMW and M&I are an operating reason why margins is down and then G&A is an investment reason, what's the split between those 2 categories, operating and the investment side, for the pressure? Is it split evenly? Is it 60-40?

Yes, I would put it -- without having the specific calculations on them, Michael, I think it's about split evenly. Some are the year-over-year comparatives. The other is the investments that we're making in the future growth and stability in the shared service area.

All right. So last one, following up on that last comment. Where do you stand on making a decision about a standard -- one single ERP, picking whatever it's going to be and then starting down the path of that investment?

Yes. And so -- as we talked about in the past, one of the first steps we did is we brought in some new talent, a new CIO who came in, in September of last year. Really his charter early on was to evaluate our systems, to do an analysis of our business and see what systems would fit in. From there, we're really in that design and evaluation phase. I think we will continue to explore that. And then from there, we would make a decision on a go or no-go and what system would be there. I think that's going to take really throughout the balance of the year for us to be able to fully and adequately analyze what single system would fit Stericycle's environment.

So from our standpoint modeling cost-wise and/or capital spending related to that, that would be an '18 event then?

Yes, at this point in time, no change to the guidance. That time line is unknown. If there were any changes in the latter half of the year, we certainly would communicate it at that point. But this is not a simple solution. This is one that would take multiple years to implement at Stericycle.

Okay. And then what was the recall revenue in the quarter?

Yes, the recall revenue in the quarter, Michael -- when we gave the Communication and Related Services outlook, the global recall number we used there is $125 million to $150 million globally. We came in slightly better from a global standpoint than Q1 of '16. I don't have the numbers because we don't break it out anymore. But with respect to global recalls, we're still in that range for the year of about $125 million to $150 million.

Our next question comes from Scott Schneeberger from Oppenheimer.

Could you all provide an update with regard to some of the issues you've had down in Latin America with regard to international business? Just a progress report there, please?

Yes, from an international perspective, more specifically with Latin America, we did see price pressure come in as expected, Scott, in Q1. We are starting to exit some contracts where we just can't make the margin that we expect in that business. So part of the bridge to the previous guidance on revenue and the new guidance, we did take down some revenue with respect to Latin America. But from a pricing pressure, it came in as expected. Overall, though, I'm happy to report that from a margin perspective year-over-year, we had a slight improvement in EBITA margins. And we continue to focus on integration, route density and introducing additional services to help drive growth and profit in the international business.

Yes. And international was a little bit stronger than I would have anticipated. Could you -- I guess maybe you kicked off a few things. Anything else worth going into there? And I have a follow-up, but you've covered it already.

No, I think when you look at the headline number, for international growth, it was 2% approximately. But I think when you take out the negative impacts, which is the patient transport contract exits in M&I, it comes in to about 5.4%. So I'd say that's a normal. As you know, I mean, you follow the company for long time. That's about a normal growth rate. We continue to add additional services, like I said, shredding in the international markets outside of Canada and the U.S. That falls into the international growth number. They're doing really well in the markets where we have Secure Information Destruction. So that's one of the things that I think is driving some good growth in the international market.

Yes, I think another thing that we talked about, especially on the Q4 call, was some of the challenges that we were having from a collection standpoint that has -- readjusted some of the reserves we had down there. We just recently added an additional resource down there, a credit and collection manager responsible for all of Latin America to really drive discipline down there. Too early to have any results, but really, that's going to have our focus and hopefully be able to return to driving some cash flow inbound in that area as well.

And just a quick follow-up. Because I heard 4 international acquisitions in the quarter. Could you just elaborate on those specifically, please?

Sure. The 4 international were 1 Secure Information Destruction and 3 Regulated Waste. They were in -- 2 in the Netherlands, 1 in Spain and 1 in Portugal.

Your next question comes from Kevin Steinke from Barrington Research.

So I just wanted to clarify on the guidance for Secure Information Destruction. It appears that it did go up by $10 million. So what drove that? Was it acquisitions? Better organic growth? Paper prices? What were the factors driving that higher guidance?

Yes, Kevin, it was mostly acquisitions and some favorability on FX going forward.

Okay. And then just the -- it looks like total revenue guidance went up by $20 million. What -- can you just provide the bridge versus prior guidance on that?

Yes, it's slightly less than that. We raised it about $12 million for the acquisitions in the 2017 effect of those. And then we had a combination in our international business of raising foreign exchange by about $14 million, offset by about $10 million reduction largely due to what Charlie shared, which is exiting certain contracts in Latin America, which just aren't meeting our profitability levels, and as well as exiting one more patient transportation contract.

(Operator Instructions) Your next question comes from Gary Bisbee from RBC Capital Markets.

I guess the first question, in the U.S. medical waste business, if we pull out hazardous from it, can you give us a sense? Is your customer count growing in that business? Has it been growing? Or has that been declining?

Gary, this is Brent. I would say it's been modestly growing over the last several years.

Okay. And that hasn't really changed in the last year or so as the pricing pressure and all that has been going on?

No, I think the pricing pressure, obviously, is having an effect on revenue in SQ as we're renewing contracts at discounted rates. But it's not reducing the number of new sites we're bringing on through inbound and outbound selling efforts.

Yes. And part of the investment we talked about, Gary, was the investment in being proactive and more offensive in going after new med waste contracts, which really most of our SG&A historically has been on upselling. So we are gaining share with respect to sites on SQ. And every year, we pick up more sites, more volume and more customers for our med waste operations in the U.S. That trend hasn't changed.

Okay. And have you seen a return on those investments? Or should we think that's more later this year or into next year that you start to see that, the new sales efforts, et cetera, actually driving more clients?

Yes, as we came out with -- when we made the investments, we really thought that it would take a while for those to get established and we would start to see returns in the latter half of '17 and into '18. And I would say that's still the case.

And then just any commentary or color on the second quarter outlook, what we should expect? If you provided it, maybe I missed it.

Yes, so I think some of the things that you might want to look at here is we've held to our guidance at least for the -- raised slightly for the year, EPS, I think. Q2 EPS range, I think it's appropriate to be at about $1.10 to $1.16. I think when you look at the end-quarter EPS result, you saw that we've got about a $0.03 benefit from tax. What's important to realize is that was expected. That was built into our tax rate for the year. It got pulled slightly forward to where we experienced the majority of it in Q1. So the caution there is to make sure that we don't just raise from there. We'll take about $0.01 out of each of the future quarters that got pulled forward. So $1.10 to $1.16 is a good range to be in from an EPS standpoint going into Q2.

And then just one more, if I could. Any kind -- I've got a lot of questions about the legal liability from this class action suits, and I'm sure you can't comment on ongoing litigation. But if one were to look at the settlement you made a couple of years ago with what was, as I understand it, a much smaller segment of your customer base, is it reasonable to think that the liability to the current ongoing could be potentially significantly more than that one? Or is there just nothing you can say at this point?

Yes, I really can't say anything. I think it's -- you can't draw any conclusions from the past settlements to future settlements.

Your next question comes from Joel Kaufman from Goldman Sachs.

Just any update on the competitive landscape in some of the national or larger regional accounts? I know at the Analyst Meeting the team felt fairly comfortable that these pockets were well protected from the pricing pressure or competitive pressure. I was wondering if you could provide a status update there.

Joel, I'll take that one. This is Brent. I would tell you that from a national account perspective, there's always pricing pressure, right, because a lot of our large national customers are in very competitive markets. But I would say that what we do really well is given the fact that we have multiple services, whether it's in retail, and the fact that we can provide medical waste for their on-site clinics or the hazardous retail waste or shredding, we really are able to offer a lot of our national accounts more than one service and have a very good reputation of doing so. So I would say overall, it's a competitive industry. Renewals can be challenging sometimes, but we offset that with growth of new customers or additional services within existing customers.

And then just a follow-up on that front. I know we haven't focused much on the LQ side of business. But I would assume that your larger customers are aware of some of the pricing dynamics that are happening on the SQ side of the business. Wondering if this has translated to any incremental pressure in the LQ segment and maybe what steps you're taking internally to prevent any of those headwinds from manifesting.

Yes. If anything, our LQ business is growing nicely. I mean, we've added additional services. We continue to add new reasonable sharps or Sharps Management program. Our pharmaceutical waste, every quarter, we add new accounts and do new installs there. To Brent's point, we really differentiate the offering. We think we've got a great offering with our Secure Information Destruction Service, which virtually every LQ account and health care has a requirement for. And they are competitively priced. I mean historically, this had lower margins there and GPOs have a place in that process. So we haven't seen anything with respect to pricing pressures. To Brent's point, there's always pricing pressure on the LQ side of the business, but that hasn't changed with any of the recent developments that we've seen on the SQ side.

Just one more, if I can flip it in. A fairly mild winter we had. Just wondering if there was any impact from weather that you could quantify.

No, (inaudible) these the last few winters. I mean, I think there's a little bit more weather probably in Q1 of '16. But even that was a mild winter. And no, there's nothing to call out here with respect to weather in the U.S. operations.

I think you can see that, Joel, in the great performance. If you look at just net of tax, the EPS coming in at $1.06, slightly above the midpoint of the range, I think we're very pleased with the results for Q1.

Your next question comes from Jason Rodgers from Great Lakes Review.

Just wanted to see if you are reaffirming your targets for Shred-it as far as the $20 million in synergies for the year.

Yes, Jason, it's Brent. Based on the good activity with regard to rolling out standard work, based on the investments we've made in customer service and the inside sales, we're also having continued success in converting from on-site to off-site. Overall, the team has done a really nice job and we are on track to achieve the $20 million in savings in 2017.

And then as far as your debt levels, is there a target leverage ratio you have for the end of 2017?

As we talked about, I mean, we've done a great job of generating cash. If you looked at Q1, it was an incredible cash quarter. Just to caution you for Q2, obviously, we make 2 tax payments in Q2. So to tepid your expectations just for Q2. But we're able to take that cash, continue to pay down debt. I think over the course of the year, we paid about close to $250 million of debt down. We still anticipate that through normal operations, that we can be approaching or maybe even slightly below 3x debt-to-EBITDA by the end of the year.

And then finally, just wondered what would be a good number as far as interest expense to use for 2017.

For interest expense, our guidance has been in the range of $100 million to $104 million. And I -- we -- that includes certain expectations for a couple of rate hikes within the year. So I think that's a good range to be.

And your next question comes from Larry Keusch from Raymond James.

Could you guys talk a little bit about where you're tracking to the targeted investment amount that you laid out in your guidance for 2017? Is that sort of progressing as you had anticipated through the first quarter?

Yes, I think what you're talking about is our -- maybe our capital allocation strategy that we provided at the Investor Day. I think one of those was about $40 million of investments towards the mandatory preferred repo. And I'd say we're on track with that. We got $0.05 in the quarter. Our goal was about $0.17. So $0.05 is exactly where we would expect us to be. So I think we're on track there. We add anywhere from, I think, $100 million to $110 million roughly or $120 million for acquisitions. I think if you looked at where we're at now, we might be spending slightly below that. But still getting great tuck-in acquisitions from a quantity standpoint and the quality of those, we're very excited about those. So I think we're definitely going to be at or maybe below the range. We'll see how the rest of the year shakes out. And the rest of that is really going towards debt and the cash that we're generating. I'd say that we're putting at or slightly more debt -- paying down debt than in the expectations. So from a capital allocation strategy, we're very pleased with our progress.

Okay. And what about the incremental investments that you're making to fuel the cross-selling activities and such?

Yes, Larry, this is Brent. We've made those investments. They're in our current run rate. As we've talked about earlier, these were kind of strategic investments we planned on making, and we will see payoffs more in the latter part of the year. So we are kind of metering these in, measuring our progress and seeing which ones are worth reinvesting in and which ones we'll stop investing in.

Okay. And lastly, I don't know if I missed this or not. I know you indicated the complexion of the acquisitions overseas. But what about the domestic acquisitions? What were those?

Sure. Well, now it's domestic in Canada. So there were 9 total. There were 8 shredding, Secure Information Destruction acquisitions and 1 ComSol. And the split, Larry, to the overall bucket of acquisitions, about 88% falls in the U.S. and Canada and about 12% falls international.

Your next question comes from Michael Hoffman from Stifel.

If I looked at the $511 million in RMW, one '17 versus the $507 million in '16, what is the breakout as far as the trend, U.S., rest of the world, in those 2 numbers? What was going on? Is the rest of the world up in '17 but U.S. is down? How do I think about that mix?

Yes, because there are -- Regulated Waste and Compliance and the international line for revenues are a little bit different. I would tell you that certainly, we're probably up slightly in the U.S. because what falls into that bucket are things like retail, health care, hazard waste, compliance solutions, which obviously, Michael, is hampered by the pricing. And we've got growth in the international markets. As I said earlier, obviously they're negatively impacted by PTS and M&I. But I think if you had a look at the growth and you have it allocated between international and domestic Canada, it will be 50-50.

Okay. So just so I understand, was international up more than U.S.?

No, I think it's 50-50. There's puts and takes to both. International was hampered by the patient transport exit. The U.S. was hampered by the SQ pricing. So I think at the end of the day, it's about split evenly, 50-50 between the U.S. and international.

Rest of the world. Okay, that helps tremendously.

There are no further questions at this time. I will now turn the call over to Mr. Charlie Alutto for closing remarks.

Thanks, Kelly. Thank you for joining us today. I'm excited to announce that Stericycle recently released its 2017 sustainability update and a new video that highlights how our services positively impact the environment. To access these, please visit our sustainability page on stericycle.com. Thanks again for joining us, and have a great evening. Take care.

This concludes today's conference call. You may now disconnect.