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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________
FORM 10-K
________________________________________________________________________
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
☐ 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
________________________________________________________________________
Stericycle, Inc.
(Exact name of registrant as specified in its charter)
________________________________________________________________________
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
Securities registered pursuant to Section 12(g) of the Act:     None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No x
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 definition of "large accelerated filer", "accelerated filer" "smaller reporting company", and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer
Non-accelerated filer
Smaller reporting company ☐
Emerging Growth Company ☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO x
The aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to the price at which common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2020): $5,120,550,890.
On February 22, 2021 there were 91,609,194 shares of the Registrant’s Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Information required by Items 10, 11, 12 and 13 of Part III of this Report is incorporated by reference from the Registrant’s definitive Proxy Statement for the 2021 Annual Meeting of Stockholders.


TABLE OF CONTENTS
SCL-20201231_G1.JPG
Table of Contents
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PART I
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 Annual Report on Form 10-K, most of which are explained or defined below:
Abbreviation Description
2005 Plan 2005 Incentive Stock Plan, which was approved by stockholders in April 2005
2008 Plan 2008 Incentive Stock Plan, which was approved by stockholders in May 2008
2011 Plan 2011 Incentive Stock Plan, which was approved by stockholders in May 2011
2014 Plan 2014 Incentive Stock Plan, which was approved by stockholders in May 2014
2017 Plan 2017 Incentive Stock Plan, which was approved by stockholders in May 2017
2020 Form 10-K Annual report on Form 10-K for the year ended December 31, 2020
Adjusted Income from Operations Income from Operations adjusted for certain items discussed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
ASC 606
Accounting Standards Codification Topic 606 "Revenue from Contracts with Customers"
ASC 740
Accounting Standards Codification Topic 740 "Income Taxes"
ASC 842
Accounting Standards Codification Topic 842 "Leases"
ASEA
Agencia de Seguridad, Energia y Ambiente
ASU Accounting Standards Update
Buyer Harsco Corporation and CEI Holding LLC, a Delaware limited liability company and subsidiary of Harsco Corporation
CAA 2021 Consolidated Appropriations Act, 2021
Canada ESPP Canadian Employee Stock Purchase Plan, which was approved by stockholders in May 2016
CARES Act U.S. Coronavirus Aid, Relief, and Economic Security Act enacted into law on March 27, 2020
CDC U.S. Center for Disease Control
CERCLA Comprehensive Environmental Response, Compensation and Liability Act of 1980
CFC Controlled foreign corporation
Clean Air Act The Clean Air Act of 1970
COR Cost of revenues
COSO Framework Internal Control Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
COVID-19 The global novel coronavirus disease 2019 outbreak, which the World Health Organization declared as to be a pandemic
Credit Agreement Credit Agreement dated November 17, 2017 by and among the Company and certain of its subsidiaries named therein, Bank of America, N.A., as administrative agent, and the other financial institutions party thereto
Credit Agreement Debt Leverage Ratio Credit Agreement Debt Leverage Ratio means, 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 for the period of four fiscal quarters most recently ended on or prior to such date, as defined in the Fifth Amendment.
CRS Communication and Related Services
DAQ Division of Air Quality
DCF Discounted cash flows
DEA U.S. Drug Enforcement Agency
Disposal Group The divestiture of Domestic Environmental Solutions
DOJ U.S. Department of Justice
Domestic Environmental Solutions Hazardous Waste Solutions and Manufacturing and Industrial Services
DOT U.S. Department of Transportation
DSO Days Sales Outstanding, defined as the average number of days that it takes a company to collect payment after a sale (revenue) has been made computed as the last twelve months of Revenues for the quarter and period ended DSO, respectively, divided by the Accounts Receivable balance.
DTSC Department of Toxic Substances Control
EBITDA Earnings before interest, tax, depreciation and amortization
EHS Environmental, Health and Safety
EPA U.S. Environmental Protection Agency
EPS Earnings (Loss) per share
ERISA U.S. Employee Retirement Income Security Act of 1974, as amended by the Multi-Employer Pension Amendments Act of 1980
ERP Enterprise Resource Planning
ESPP Employee Stock Purchase Plan, which was approved by stockholders in May 2001 (as amended and restated in May 2017
EU European Union
Exchange Act U.S. Securities Exchange Act of 1934
Expert Solutions Recall and return services
FACTA U.S. Fair and Accurate Credit Transaction Act
FASB Financial Accounting Standards Board
FCPA U.S. Foreign Corrupt Practices Act
2020 10-K Annual Report
Stericycle, Inc.  •  3

PART I
FMCSA U.S. Federal Motor Carrier Safety Administration
Fifth Amendment Fifth Amendment to the Credit Agreement, dated as of February 25, 2020
Fourth Amendment Fourth Amendment to the Credit Agreement, dated as of June 14, 2019
GDPR General Data Protection Rules
GILTI Global Intangible Low-Taxed Income
GPO Group Purchasing Organization
HIPAA U.S. Health Insurance Portability and Accountability Act
HMIW Hospital, Medical, and Infectious Waste
HSA Healthcare Services Agreement
IDN Integrated Delivery Network
Indenture Indenture, dated as of June 14, 2019 between the Company, the guarantors named therein and U.S. Bank National Association, as trustee
International Operating segment including Europe, Middle East, Asia Pacific and Latin America Business operations outside of North America
IRS U.S. Internal Revenue Service
ISO Incentive Stock Options
LATAM Latin America (including Mexico)
M&I Manufacturing and Industrial
MDL Action Small quantity medical waste customer contract class action
North America Operating segment including United States, Canada, and Puerto Rico
NOV Notice of Violation
NAID National Association for Information Destruction
NOL Net operating losses
NSO Non-statutory Stock Options
OSHA U.S. Occupational Safety and Health Act of 1970
Other Represents corporate enabling and shared services functions costs, annual incentive compensation and stock-based compensation
Pension Protection Act Pension Protection Act of 2006
PFA Pre-filing agreement with the IRS
PHMSA U.S. Pipeline Hazardous Materials Safety Administration
Plans 2017 Plan, 2014 Plan, 2011 Plan, 2008 Plan, and 2005 Plan
PSU Performance-based restricted stock unit
Purchase Agreement Stock Purchase Agreement, dated as of February 6, 2020, by and between Stericycle, Inc., and the Buyer
RCRA U.S. Resource Conservation and Recovery Act of 1976
Retained Business The Company's healthcare hazardous waste services and unused consumer pharmaceuticals take-back services
ROU Right-of-use, specific to operating leases
RSU Restricted stock unit
RWCS Regulated Waste and Compliance Services
S&P Standard & Poor's
SAB 118 Staff Accounting Bulletin No. 118
SEC U.S. Securities and Exchanges Commission
Senior Credit Facility The Company's $1.2 billion senior credit facility due in 2022 granted under the terms of the Credit Agreement
Senior Notes 5.375% ($600.0 million) Senior Notes due July 2024 and 3.875% ($500.0 million) Senior Notes due January 2029
Series A Series A Mandatory Convertible Preferred Stock, par value $0.01 per share
SG&A Selling, general and administrative expenses
SID Secure Information Destruction
SOP Sorted office paper
SQ Settlement Small quantity medical waste customers class action settlement of $295.0 million
TAS Telephone answering services
Tax Act U.S. Tax Cuts and Jobs Act of 2017
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
Transaction Purchase of the ESOL Disposal Group by Buyer subject to the terms and conditions of the Purchase Agreement
TSA Transition Services Agreement
U.K. United Kingdom
U.S. United States of America
USDA United States Department of Agriculture
U.S. GAAP U.S. Generally Accepted Accounting Principles
UPS United Parcel Service, Inc.
WOTC Work opportunity tax credit
2020 10-K Annual Report
Stericycle, Inc.  •  4

PART I
PART I
Disclosure Regarding Forward-Looking Statements
Unless the context requires otherwise, the “Company”, “Stericycle”, we", "us", or "our" refers to Stericycle, Inc., a Delaware corporation, and its subsidiaries on a consolidated basis.

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, developments in the COVID-19 pandemic and the resulting impact on the results of operations, long-term remote work arrangements, which may adversely affect our business, precautions we have taken to safeguard the health and safety of our team members which may make certain of our business processes less efficient, measures taken by governmental authorities to prevent the spread of the COVID-19 virus which could disrupt our supply chain, result in disruptions in transportation services and restrictions on the ability of our team members to travel, result in temporary closure of our facilities or the facilities of our customers and suppliers, affect the volume of paper processed by our secure information destruction business and the revenue generated from the sale of SOP, disruptions in our relationships with our team members as a result of certain cost-saving measures, an economic slowdown in the U.S. and other countries resulting from the outbreak of the COVID-19 virus, changing market conditions in the healthcare industry, competition and demand for services in the regulated waste and secure information destruction industries, SOP pricing volatility, 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, decreases in the volume of regulated wastes or personal and confidential information collected from customers, the ability to implement our new ERP system, disruptions in or attacks on information technology systems, charges related to portfolio optimization or the failure of 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, a downgrade in our credit rating resulting in an increase in interest expense, political, economic, inflationary and other risks related to our foreign operations, the outcome of pending or future litigation or investigations including with respect to the U.S. Foreign Corrupt Practices Act, 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, failure to maintain an effective system of internal control over financial reporting, delays or failures in implementing remediation efforts with respect to potential future material weaknesses, as well as other factors described in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K and subsequent Quarterly Reports on Forms 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.
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Item 1. Business

Overview
Company Overview
Incorporated in 1989, Stericycle is a U.S. based business-to-business services company and leading provider of compliance-based solutions that protects people, promotes health and safeguards the environment. Stericycle serves customers in the U.S. and 17 other countries worldwide with solutions for regulated waste and compliance services, secure information destruction and patient engagement. To our customers, team members and the communities we serve, Stericycle is a company that protects what matters.
Segments
Our operating segments as of December 31, 2020 are North America and International.
Financial and other information related to our reporting segments is included in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8. Financial Statements and Supplementary Data; Note 18 - Segment Reporting.
Services
Within our operating segments, our revenues are further broken down into these service categories:

Revenue Service Category Services Offered
Regulated Waste and
Compliance Services
• Medical waste management services (including reusable sharps container disposal management services)
• Pharmaceutical waste services, including controlled substances (CsRX, Kiosk, and Seal/Send)
• Compliance programs under the Steri-Safe®, Clinical Services and First Practice Management brand names
• Hazardous waste and compliance solutions
• Maritime waste services
Secure Information
Destruction Services
• Secure information destruction (including document and hard drive destruction services) under the Shred-it® brand name which includes regular scheduled services (onsite and offsite) and one-time services (select, priority and express)
Communication and
Related Services
• Appointment reminders, secure messaging, event registration and other communications specifically for hospitals and IDN’s
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Revenues by service category for each of the operating segments were as follows:
In millions
Year Ended December 31,
2020 2019
North America
Regulated Waste and Compliance Services $ 1,427.6  $ 1,762.8 
Secure Information Destruction Services 647.3  769.5 
Communication and Related Services 114.3  207.6 
Total North America Segment $ 2,189.2  $ 2,739.9 
International
Regulated Waste and Compliance Services $ 379.0  $ 425.0 
Secure Information Destruction Services 98.0  132.4 
Communication and Related Services 9.3  11.6 
Total International Segment $ 486.3  $ 569.0 
Total Revenues $ 2,675.5  $ 3,308.9 
See Part II, Item 7. Management’s Discussion and Analysis of Results of Operations for further information on changes in revenues.
Divestitures
During the year ended December 31, 2020, we divested businesses including our:
Domestic Environmental Solutions Business (Environmental Solutions)
Regulated Waste Operations in Argentina
Global Product Recall Business (Expert Solutions)

On April 6, 2020, the Company completed the sale of all of the outstanding equity interests of its Environmental Solutions business to the Buyer for approximately $462.5 million (subject to customary adjustments for working capital and other adjustments), pursuant to the Purchase Agreement, dated February 6, 2020. The Purchase Agreement provided for the divestiture of the Company’s Environmental Solutions business, reported in the North America segment, exclusive of the Company’s healthcare hazardous waste services and unused consumer pharmaceutical take-back services. The Environmental Solutions business generated revenue in 2019 of $559.6 million, including approximately $100.0 million related to the Retained Business, which is included in the RWCS revenue category within our North America segment. The Environmental Solutions business less the Retained Business included approximately 2,000 employees and 60 North America locations.

On August 3, 2020, we entered into an agreement and completed the sale of our operations in Argentina for proceeds of approximately $3.9 million. Revenue of our Argentina operations was approximately 1% of our consolidated annual revenues for 2019.

On December 1, 2020, we entered into an agreement and completed the sale of our global product recall business (Expert Solutions) for proceeds of approximately $78.0 million. Expert Solutions had revenues of approximately $75.4 million for the year ended December 31, 2019, principally reported in North America, as part of Communication and Related Services.
Customers
Our offering of services appeals to a wide range of business customers. The majority of our customers are healthcare businesses (hospitals, physician and dental practices, outpatient clinics, long-term care facilities, etc.). We also provide services to retailers, manufacturers, financial services providers, professional services providers, governmental entities and other businesses. While we manage large volumes of waste and other materials, the average volume per customer site is small.
No single customer accounted for more than 1.5% of our total revenues and our top ten customers collectively accounted for approximately 7.3% of total revenues.  We have developed a strong and loyal customer base, with an
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estimated revenue retention rate of approximately 90% (based on our internal customer attrition analysis) and have been able to leverage these customer relationships to provide additional services. We use different contracts across our services lines and terms vary depending upon the customer’s service requirements, types of services and geographies.
As of December 31, 2020, regulated waste and compliance services are provided to customers in the U.S., Brazil, Canada, Ireland, Japan, the Netherlands, Portugal, the Republic of Korea, Romania, Spain and the U.K.  Secure information destruction services under the Shred-it® brand are provided in the U.S., Australia, Austria, Belgium, Canada, France, Germany, Ireland, Luxembourg, the Netherlands, Portugal, Spain, Singapore and the U.K. Secure information destruction service are also provided in the United Arab Emirates through a joint venture. The vast majority of services for CRS are provided within the U.S. and Canada.
Facilities and Fleet
Our worldwide network includes a fleet of more than 7,800 trucks and properties both leased and owned as described below:
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145 North America
43 International
Transfer
Sites
151 North America
81 International
Processing
Facilities
3 North America
Communication
Centers

18 North America
23 International
Office
Locations
We are headquartered in Bannockburn, Illinois.
Our Key Business Priorities
Following its founding in 1989, Stericycle grew rapidly through inorganic acquisition as the regulated waste industry developed.  Growth from regulated waste acquisitions helped us achieve scale of infrastructure, route density and a leadership positions in the markets we serve.  We also leveraged acquisitions to enter new regional and international geographies and add additional services to our portfolio.  As we grew and evolved, we operated without centralization and the efficiencies that come from an integrated, modern corporate structure and associated information systems.
At the end of 2017, we began advancement of a transformation, including the development and implementation of an ERP system, focused on driving long-term growth, improving profitability and enhancing shareholder value.  During 2019, we refocused our transformation efforts and aligned around five key business priorities and our commitment to those continued through 2020.
Quality of revenue – The services we offer help our customers meet complex regulations. Our expertise, infrastructure and service levels provide a differentiated and premium brand value to the customers we serve. As such, we are focused on improving the quality of revenue we deliver.
Operational cost efficiencies – Our day-to-day operations are shifting toward a standardized operating model to optimize processes, drive efficiencies and improve both safety and service. Additionally, we are focused on driving cost efficiencies through work measurement, asset optimization, use of technology, and expanded strategic sourcing.
Portfolio rationalization – As we look to the future, we continue to pursue the divestiture of service lines or geographies that are not profitable, have limited growth potential, are not vertically integrated, are not essential to our regulated waste and compliance services and secure information destruction service categories, and/or present the opportunity to reduce debt.
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Debt reduction and leverage improvement – As a result of the debt accumulated from our historic acquisition strategy, debt structure and debt leverage improvement are a key focus.
ERP implementation – Over our 30-plus year history, Stericycle had acquired more than 500 companies without fully integrating certain acquisitions onto centralized information technology platforms. The disparate operating and information systems have resulted in significant operational inefficiencies and manual processes. With the implementation of an ERP, we expect to drive more revenues, continue to improve operating margins, improve daily decision making via real-time information insights, simplify and enhance forecast accuracy, provide transparency for greater accountability, aid in the development of strategic planning, streamline operational processes, and make it easier for our customers to do business with us.
For further details, refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8. Financial Statements and Supplementary Data; Note 4 – Restructuring, Divestitures, and Impairments, and Note 9 - Debt.
Regulated Waste and Compliance Services
Collection and Transportation
The collection process for regulated waste streams or secure information destruction begins at the customer location with segregation.  To assure regulatory compliance, we will not accept material from customers unless it complies with our waste acceptance protocols and is properly stored or packaged in containers that we have either supplied or approved.
Our team members then collect containers at the customer location via our fleet of vehicles.  The majority of collected waste or information for destruction is then transported directly to one of our processing facilities or to one of our transfer stations until it’s transported to a processing facility.  Our use of transfer stations in a "hub and spoke" configuration improves the efficiency of our collection and transportation operations by expanding the geographic area that a particular processing facility can serve, thereby increasing the utilization of the facility and the volume of waste that it processes.
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Processing and Disposal of Regulated Waste
Upon arrival at a processing facility, containers or boxes of regulated waste undergo a quality control process to verify that they do not contain any unacceptable substances. Any container or box that is discovered to contain unacceptable waste goes through a corrective action process which could include redirecting the waste, returning the waste to the customer and/or notifying the appropriate regulatory authorities. From there, regulated waste is processed using one of several treatments or processing technologies, predominantly at one of our wholly owned facilities:
Autoclaving:  Autoclaving is the primary method of regulated waste treatment.  This process relies on steam at high temperature and pressure to kill pathogens and render materials non-infectious.
Alternative Technologies:  We use several different non-incineration alternatives to autoclaves, predominantly outside of the U.S.  The processes used by these technologies are similar, as the regulated waste is heated to a specified temperature for a required time to kill the pathogens and render materials noninfectious.  This is not always under pressure.  Depending on local requirements, the waste may be shredded before or after treatment to render it unrecognizable.
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Incineration:  Incineration burns regulated waste at elevated temperatures and reduces it to ash. Incineration reduces the volume of waste and it is the recommended treatment and disposal option for some types of regulated waste such as anatomical waste, residues from chemotherapy procedures and non-hazardous pharmaceutical waste.  Air emissions from incinerators can contain certain byproducts that are subject to federal, state and in some cases, local regulation.  In some circumstances, the ash byproduct of incineration may be regulated.
Upon completion of the particular treatment process, the resulting waste or incinerator ash is transported for disposal in a landfill owned by unaffiliated third parties.  In some countries, where permitted by regulation, the treated waste is recovered, including recovery as fuel in waste-to-energy processes. Further supporting regulatory compliance, we provide chain-of-custody and Certificate of Destruction after each service.
Secure Information Destruction
We leverage a combination of off-site and on-site shredding methods.  Over 60% of collected documents for secure destruction in 2020 were sent off-site to geographic consolidating shredding facilities for secure destruction.  The remainder of collected documents are shredded on-site with shredding equipment in our vehicles.  For both methods, our service offerings leverage cross-cut shredding technology to enhance the security level of destruction and provide secure chain-of-custody and Certificate of Destruction after each service.
Shredded paper is then baled to be sold as SOP for recycling.  SOP consists of paper typically generated by offices that contains primarily white paper. It’s a higher value recyclable than mixed paper, old newspapers or magazines. Stericycle collected and delivered approximately 567,000 tons of SOP for recycling into paper products to be used in the hospitality industry including napkins, paper towels and bathroom tissue.  This represents an approximate year-over-year decrease in SOP tonnage of approximately 24.4%, primarily reflecting pandemic-related business disruption. During 2020, the average annual SOP price was $112 per ton, as reported by Fastmarkets RISI, a decline of 15.2% over 2019.
Communication and Related Services
Our Communication Solutions provides live voice and automated services to assist hospitals and IDNs in communications with their patients.  Our team serves as a client representative providing appointment scheduling, appointment reminders, event registration and other communications.  Providing this service requires information management systems to redirect calls, store and quickly retrieve live voice protocols or client data, send automated communications, or provide easily accessible reporting and activity details to our customers.  Beyond the information management system infrastructure, call center staffing and proper education levels are critical to our success.
Our Business Model and Key Business Attributes
Regulated Business-to-Business Operations
We focus on providing business-to-business services in areas of operations that are highly regulated.  By helping our customers maintain compliance with complex regulations, we protect people and brands, promote health and safeguard the environment.  Governmental legislation and regulation increasingly require the proper handling and disposal of items such as regulated waste and personal confidential information.  Regulated waste can be defined as any material subject to government-imposed guidelines for handling the material for transportation or disposal.
Regulated waste, such as needles, syringes, gloves, cultures, blood and blood products and material potentially contaminated by infectious agents, can potentially cause an infectious disease.
Pharmaceutical waste may be hazardous or nonhazardous and consists of expired, recalled, or otherwise unused pharmaceuticals.
Personal confidential information includes documents and e-media containing protected healthcare information, financial information, or other confidential information.
Growing Markets
The services we offer, especially our core services of regulated waste and compliance and secure information destruction, either are growing or have historically grown prior to the impact of COVID-19.  This growth is driven by multiple factors:
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Aging Population:  The average age of the population in the countries in which we operate is rising, driving increases in healthcare and the quantity of regulated wastes generated.
Enforcement of Waste Regulations:  Enforcement of regulations relating to the management of regulated waste is increasing.  Penalties for violations can be costly and high profile, thereby impacting a business’ overall reputation.  We believe that many businesses are unaware either of the need for proper training of employees or of applicable regulatory requirements and we seek to help businesses fill this gap.
Regulation of Privacy and Information Security and Concerns over Data Breaches:  The continued development and growth of the secure information destruction industry has been driven, in part, by the need for compliance with increasing government regulation with respect to privacy and information security, including the European Global Data Protection Regulation and the California Consumer Privacy Act.
Market Expansion Due to Increased Outsourcing:  With regard to secure information destruction services and communication services, we believe market growth will come from increased reliance on outsourcing services by those businesses within the marketplace that currently do not use an outside vendor.
Increased Business Focus on Sustainability:  Businesses continue to realize that a focus on sustainability is now essential to operating efficiently and meeting the increasing demands of customers for environmental responsibility. Such pressures are driving proper disposal of pharmaceuticals, recycling efforts, shred-all policies for paper and other initiatives supported by our services.
Stable and Recurring Customer Needs Supported by Long-term Contracts
The services we provide most often require service on a routine and scheduled basis.  Historically, our revenues have not been significantly affected by economic downturns.  The majority of our customer relationships include long-term contracts ranging from three to five years in length.  We have developed a strong and loyal customer base, with, we believe, a revenue retention rate of approximately 90% (based on our internal customer attrition analysis).
Established Network of Processing and Transportation Locations
We believe that our infrastructure network results in an expansive operational network with alternate transportation, treatment and destruction options for our customers.  The scale of our network also provides us the ability to be the single-source provider for customers with multiple locations across the country and gives us the flexibility to quickly redirect services or operations to another location if the need arises due to severe weather, power outages, or other disruptions.
Routing Logistics
While we manage large volumes of waste and secure information for destruction, the average volume per customer site is small and the resulting revenue per stop is low.  As such, route logistics and route efficiency are a core focus.  This vast transportation network provides us with an advantage compared to our competition in the markets we serve.  Additionally, we have continued to focus on route density and optimizing routing at both the individual truck and geographic market level.  Our routing improvement efforts implemented earlier this year are driving sustainable operational improvements and cost savings. We expect that the ERP implementation will provide greater visibility to data which will enable further routing efficiencies.
Industry Leadership and Expertise
Based on our infrastructure and revenues, we maintain a global leadership position across our various services lines, including regulated waste and secure information destruction.  We attract highly experienced team members who have a deep understanding of the industries they serve, the regulatory climate and the evolving needs of the customers we serve.  We collaborate regularly with a wide range of stakeholders and interest groups. In 2020, the Company took a leadership position related to COVID-19 to support our customers and provide industry expertise regarding the effective management of COVID-19 waste. We proactively work with organizations like the CDC, DEA, OSHA, EPA and many other government and regulatory bodies, including law enforcement.  Our experts are frequent speakers at hospital networks, industry trade associations and actively engage in numerous community meetings each year.

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Human Capital Management
Workforce Overview
As of December 31, 2020, we employed over 15,000 active team members with 96% full-time employees. Additionally, we have approximately 1,180 global contingent workers supplementing our staff to fill temporary positions or as a part of a temporary-to-permanent recruiting program. Our voluntary turnover rate for 2020, excluding turnover due to divestitures, averaged approximately 22%.
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We are a party to 11 collective bargaining agreements in the U.S. and Canada, covering approximately 750 employees, or approximately 6.5%, of our total U.S. and Canadian workforce. We have additional agreements and works councils covering approximately 1,500 employees outside of North America for a total of approximately 14% of our workforce in a collective bargaining organization. During 2020, we experienced no work stoppages.
Environmental, Health and Safety (EHS)
We protect people, promote health, and safeguard the environment. This is the foundation of our core purpose and the foundation of our EHS commitment to safe, environmentally responsible and sustainable operations. Over the past several years, we have made meaningful advancements in the development of our EHS organization. Our continued efforts during 2020 to enhance our safety-focused culture resulted in double-digit percentage improvements in our key safety performance metrics. This data has been normalized to exclude divestitures.

2020 2019 % Improved
Global Total Recordable Injury Rate (TRIR)1
4.98 6.33 21%
Global Lost Work Incident Rate (LWIR)2
1.93 2.57 25%
Vehicle Incidents3
1,314 1,950 33%

1 The number of workplace injuries that resulted in treatment beyond first aid (as defined by OSHA) per 100 employees. TRIR is calculated by multiplying the total number of recordable workplace injuries or illnesses by 200,000 and dividing by the total hours worked ((Injuries x 200,000) / Hours).
2 Lost Workday Incident Rate is the number of recordable workplace injuries (as defined by OSHA) that resulted in an employee being unable to return to work, per 100 employees. These injuries are a more severe subset of the total recordable injuries. LWIR is calculated by multiplying the total number of lost time recordable workplace injuries by 200,000 and dividing by the total hours worked ((Lost time injuries x 200,000) / Hours).
3 Data includes only the U.S. and Canada for full year 2019 and 2020. Data collection for U.K. and Ireland began September 2019, as such September through December is included in 2019 and 2020 metrics to allow for year over year comparison. Vehicle incidents includes any incident involving a vehicle owned, leased or operated by Stericycle, excluding vehicle fires.

Our safety improvement journey has included a comprehensive focus on centralized procedures, processes and monitoring as well as investing in new training programs to increase safety awareness. Our efforts and improvement initiatives tended to focus first on North America, which has the majority (71%) of our team members, and then extended to other countries. During 2020, our behavior-based safety program was expanded with the following initiatives:

Initial implementation of a new global driver safety training program called SWAT for Steer, Watch, Anticipate, and Take Action
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Centralization of standardized safety training for all international markets
Initiation of broad-based internal recognition of weekly, monthly and annual safety performance milestones by geographic regions

Diversity and Inclusion
Acknowledging that a diverse and inclusive workforce is a key element of long-term business sustainability, we continue to focus on diversity and inclusion with the goal of developing a workforce that represents the customers and communities that we serve. Our early efforts and initiatives span the areas of recruitment, retention, advancement and representation.
To publicly reinforce our commitment, our CEO, Cindy Miller, signed the CEO Action for Diversity & Inclusion Pledge at the end of 2020. This is the largest CEO-driven business commitment to advance diversity and inclusion in the workplace, with more than 1,500 CEOs across all industries and geographies participating. Each signatory realizes that fostering diversity and inclusion is a business imperative and a societal issue that senior leaders play a critical role in addressing.
During 2020, our Talent Acquisition team has built relationships with numerous organizations to support advancement of diversity and inclusion in communities we serve or to help us identify a wide range of diverse candidates for open positions that are filled with external candidates. We work with local, regional and national partners to target Veteran, disabled and racially or ethnically diverse job candidates. As a result of our recruiting efforts, more than 60% of all U.S.-based new hires in 2020 were racial or ethnically diverse. When promoting from within, approximately 52% of promotions during 2020 were filled by racially or ethnically diverse individuals.
We also encourage and support employee resource groups to help drive engagement and representation. We have five employee resource groups supporting women, black or African Americans, Latin Americans, Veterans, and the LGBTQ+ (lesbian, gay, bisexual, transgender and queer) community.
As we closed 2020, 23% of our global workforce was women with a slightly higher proportion of women holding senior management and middle management roles (29% and 30%, respectively). In the U.S., 53% of our team members are from federally designated racial or ethnic minority categories. We are reporting only on the U.S. racial and ethnic diversity as the U.S. is our largest country of operation and because of the complexity of global ethnic and racial diversity reporting given the variations in racial and ethnic designations by country.

Gender Diversity of Our Global Workforce

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Racial and Ethnic Diversity of Our U.S. Workforce*
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*Based primarily on self-identification at time the of joining Stericycle.

Work-from-Home and Protecting Our Team during the Pandemic
During March, we mobilized more than 7,000 team members to work from home due to the COVID-19 pandemic. This new environment led to the need to coach our managers and supervisors on new methods and techniques to support business productivity. Additionally, communication with our team members became more important than ever to keep our organization connected and focused on serving our customers. Our pandemic-related communication efforts included safety updates from our EHS team, a dedicated COVID-19 internal resource website for managers and team members, and routine return to work protocol updates. These pandemic-related communications supplemented our ongoing communications that included monthly global leadership conference calls to review performance and priorities, weekly video messages from the executive team members, monthly global manager meetings, and leadership development emails.
Additionally, our COVID-19 pandemic response included efforts to protect the health and well-being of our workforce. We worked proactively with the Centers for Disease, Control and Prevention, the Occupational Safety and Health Administration, the Department of Transportation and regulatory agencies around the world to ensure readiness for proper regulated waste management. We updated and implemented numerous protocols specifically to reduce risk among our front-line team members, and our strategic sourcing team worked diligently to take measures to provide our field operations employees with appropriate personal protective equipment. We staggered shift times and dedicated trucks to specific drivers to reduce exposure and potential of spreading of COVID-19. We also implemented more rigorous cleaning protocols for all our facilities.

Team Member Engagement and Feedback
During November 2020, we completed a global team member engagement and feedback survey to gauge the sentiment of our team members under the new executive leadership team. The survey included a wide range of topics including manager effectiveness, change management, involvement and belonging, ethics, and communication. Approximately 77% of our team company-wide participated in the survey, an increase from 69% compared to the engagement survey conducted in 2018. Results from the survey indicate an engagement improvement of approximately 10.5% compared to 2018. Additionally, we saw improvements in the areas of change management, job experience and satisfaction, involvement and belonging, manager effectiveness, communication, and quality of service. Through feedback from the survey, top-rated topics indicate that our team members believe we have strong people managers, prioritize safety, and have clear expectations for ethical behavior.
Implementation of a Global Human Capital Management System

We marked a significant milestone on January 1, 2020 when we successfully launched our new global human capital management system and processes as part of our overall ERP plan. The human capital management system now serves as our global employee master data platform and is enabling disciplined fiscal responsibility in our workforce planning. We now have automated, paperless workflows for employee data maintenance including hiring and terminations, recruiting, team member onboarding, annual performance management, and merit planning as well as streamlined interfaces to other applications such as information technology user access and payroll.
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Our Operating Environment
Competition
The industries and markets in which we operate are highly competitive on pricing and barriers to entry are low.  Our competitors consist of many different types of service providers, including national, regional and local companies. Some of these companies provide only a portion of the services of Stericycle for example, just collection and transportation, but not treatment of regulated waste or regulated waste compliance services, but not a sharps management program. In the regulated waste and secure information destruction industries, another source of competition is on-site management.
For regulated waste, some large-quantity waste generators, particularly hospitals, may choose an onsite autoclave or other treatment process.  For secure information destruction, many businesses may choose to use small, on-site shredders for their documents.  In both regulated waste and secure information destruction, there is no other competitor in North America with Stericycle’s overall scale, breadth of services, national transportation network and comprehensive treatment network.
Governmental Regulation
The regulated waste and secure information destruction services are subject to numerous regulations.  In many countries there are multiple regulatory agencies at the local and national level that oversee our customers or our services.  This regulatory framework imposes a variety of compliance requirements, including requirements to obtain and maintain government permits. We maintain numerous governmental permits, registrations and licenses to conduct our business in the jurisdictions in which we operate.  Our permits vary by jurisdiction based upon our activities within that jurisdiction and on the applicable laws and regulations of that jurisdiction.  These permits grant us the authority, among other things, to:
construct and operate collection, transfer and processing facilities;
transport regulated waste within and between relevant jurisdictions; and
handle particular regulated substances.
Our permits, registrations and licenses may be subject to modification or revocation by the issuing authority and, in some jurisdictions, are subject to periodic renewal.  Periodic renewals may be subject to public participation and can lead to additional regulatory oversight.  We are also subject to regulations that govern the definition, generation, segregation, handling, packaging, transportation, treatment, storage and disposal of regulated waste.  In addition, we are subject to extensive regulations to ensure public and employee health and safety at the federal, state and local levels.
We are subject to substantial regulations enacted and enforced by the U.S. government and by the governments of the foreign jurisdictions in which we conduct regulated waste and secure information destruction operations.  The regulatory requirements with which we must comply vary from jurisdiction to jurisdiction.  The laws governing our domestic and international operations generally consist of statutes, legislation and regulations concerning environmental protection, employee health and welfare, transportation, document management, ethical business conduct and proper handling and management of regulated waste streams and controlled substances.
Environmental Protection
Certain services within our business are subject to extensive and evolving environmental regulations in all the geographies in which we operate.  Generally, the environmental laws we are subject to regulate the handling, transporting and disposing of hazardous and non-hazardous waste, the release or potential release of hazardous substances into the environment, the discharge of pollutants into streams, rivers, groundwater and other surface waters and the emission of pollutants into the air.  The principal environmental laws that govern our operations in the U.S. are state environmental regulatory agencies as they provide the specific legislative and/or regulatory frameworks which require the management and treatment of regulated waste.  Additionally, the RCRA, the CERCLA and the Clean Air Act of 1970 are the federal regulations that affect management of certain aspects of regulated waste and all RCRA hazardous wastes.  CERCLA and state laws similar to it may impose strict, joint and several liabilities on the current and former owners and operators of facilities from which release of hazardous substances has occurred and on the generators and transporters of the hazardous substances that come to be located at these facilities.  The 10 HMIW incinerators, located at 7 sites, that we currently operate in the U.S. must comply with the emissions standards imposed by the applicable states permitting authorities pursuant to regulations promulgated under the Clean Air Act as well as state and/or municipal waste permit requirements.
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Examples of environmental laws applicable to our international operations include the Waste Framework Directive, Environmental Liabilities Directive, Industrial Emissions Directive and the Shipments of Waste Regulations in the EU, Lei 12.305/2010 (Lei Ordinária) Institui A Política Nacional De Resíduos Sólidos in Brazil and the Canadian Environmental Protection Act and related regulations in Canada.  Additional environmental laws at the federal and/or local levels apply to regulated waste management in other markets in which we conduct business.
Employee Health and Welfare
We are subject to numerous regulations promulgated to protect and promote employee health and welfare through the implementation and enforcement of standards designed to prevent illness, injury and death in the workplace.  The primary U.S. federal laws relating to employee health and welfare applicable to our business are overseen by OSHA, which establishes specific employer responsibilities including engineering controls, administrative controls, training, policies and programs complying with the regulations and recordkeeping and reporting, all in an effort to ensure a safe workplace.  Various OSHA standards apply to almost all aspects of our operations and govern such matters as exposure to blood-borne pathogens, hazard communication, and personal and protective equipment.
Examples of employee health and welfare laws applicable to our international operations include the European Framework Directive on Safety and Health at Work (Directive 89/391 EEC) and various provisions of the Canada Labour Code and related occupational safety and health regulations in the provinces and territories of Canada.
Transportation
Various laws regulating the transportation of waste and other potentially hazardous materials also apply to the services we provide.  In the U.S., the DOT has established regulations which deal with two different aspects of transportation: hazardous materials transport and safety in transportation.  These regulations are defined within the PHMSA and the FMCSA.  Due to our fleet size we are regularly subject to roadside inspections.  These inspections have a cumulative effect on our compliance history and require us to remain in good standing so as not to jeopardize our permits.
Examples of transportation laws applicable to our international operations include the Directive on the Inland Transportation of Dangerous Goods in the EU, and the Transport of Dangerous Goods Act, and related regulations in Canada, and globally the International Maritime Dangerous Goods Code, and the IATA Dangerous Goods Regulations.
Document Management
Numerous laws and regulations require proper protection of confidential customer information by business parties that have access to such information.  In the U.S., the most cited regulations include the FACTA Final Disposal Rule, the FACTA Red Flag Rule, HIPAA and the Gramm-Leach Bliley Act.  Furthermore, the GDPR provides the framework for data privacy and data protection for companies that conduct business in Europe.
For the transportation of secure information for destruction, we are regulated by the DOT as a commercial motor carrier.  The processes for the destruction of secure information destruction processes are not regulated by any government agency.  However, the NAID maintains a certification to ensure that destruction processes support the needs of organizations to meet laws and regulations relating to the protection of confidential information.  We currently hold the NAID AAA Certification for our operations in North America.  Further, the Payment Card Industry Security Standards Council has developed Data Security Standards which are imposed globally upon merchants utilizing credit cards and require destruction of documents and media in accordance with their standards.
Various international regulations governing ethical business practices apply to our business, including but not limited to, the FCPA, the U.K. Bribery Act and the Brazilian Clean Companies Act. These laws may apply to our business on both a global and local basis and ban unethical behavior such as the payment of bribes to government officials for the purpose of gaining an improper business advantage, improper maintenance of our books and records, as well as other financial transparency requirements.
Controlled Substances
Our service offerings for the recall or destruction of controlled substance pharmaceuticals are subject to numerous laws and regulations under various international federal agencies, such as the DEA in the U.S. and the Home Office Drugs and Firearm Licensing Unit in the U.K.  These regulations apply to both the closed loop management of controlled substances as well as the return of unused controlled substances from consumers.  These regulations typically require facilities to obtain a controlled substance registration in addition to other pharmaceutical licenses
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and meet certain criteria in order to collect, process and dispose of controlled substances.  These regulations have very strict requirements for the management of employees, the type of security within facilities, recordkeeping and the reporting of all controlled substances managed at the facility.  Much like our other permitting, the registration must be updated regularly and subjects us to inspection and enforcement.
U.S. and Foreign Local Regulation for Waste Management
We conduct business in all 50 U.S. States and Puerto Rico.  Because the EPA does not promulgate regulations for regulated waste at a national level, each state has its own regulations related to the handling, treatment and storage of regulated waste.  Many states have followed requirements similar to the Medical Waste Tracking Act of 1988 or have placed regulated waste regulations under solid waste regulations. Regulated garbage (sometimes referred to as “APHIS waste” taken from the Animal Plant and Health Inspection Service) is another area of regulatory requirements we are subject to pursuant to regulations promulgated by the USDA and Customers and Border Patrol.  The USDA typically inspects our facilities receiving such APHIS waste on a quarterly basis.
In each state where we operate a processing facility or a transfer station, we are required to comply with varying state and local laws and regulations which may also require a specific operating plan.  In addition, many local governments have ordinances and regulations, such as zoning or wastewater regulations that affect our operations.  Similarly, our international operations are subject to regulations enacted and enforced at the provincial, municipal, and local levels of government in addition to the national regulations with which we must comply.
Potential Liability and Insurance
The regulated waste industry involves potentially significant risks of statutory, contractual, tort and common law liability claims. Potential liability claims could involve, for example:
cleanup costs
personal injury
damage to the environment
employee matters
property damage or
alleged negligence or professional errors or omissions in the planning or performance of work
We also could be subject to fines or penalties in connection with violations of regulatory requirements.
We carry several insurance coverages including property, workers compensation, general liability, employer’s liability, pollution liability, privacy and security liability, event management, cyber-liability, directors and officers and miscellaneous professional services errors and omissions coverages.  We also carry umbrella policies that cover general liability, auto and employers liability.  We regularly evaluate other lines of coverage to respond to specific business needs but consider our current insurance coverage to be sufficient to meet regulatory as well as customer requirements and to protect our employees, assets and operations.
Patents, Trademarks and Proprietary Rights
Stericycle holds a number of patents or applications in the U.S., Canada, the U.K., Europe and Australia for technologies related to its business, including for the recovery of reusable medical devices in a sharps container, various waste container assemblies, a lockable mounting bracket for use with a waste container assembly, a three-stage shredder, and the processing and updating of event-related information using automated reminders.
We own federal registrations for a number of trademarks/service marks including Stericycle®, Shred-it®, We Protect What Matters®, Artech®, Community Shred-it®, Making Sure it’s Secure®, Virtual Compliance Partner®, DataDefender®, the Stericycle logo service mark consisting of a nine-circle design and the Shred-it logo. We also hold international registrations for Stericycle and the Stericycle and Shred-it logos, among others.
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PART I
Information about Our Executive Officers
The following table contains certain information regarding our nine current executive officers:
Name Position Age
Cindy J. Miller President and Chief Executive Officer 58
Janet H. Zelenka Executive Vice President, Chief Financial Officer and Chief Information Officer 62
S. Cory White Executive Vice President and Chief Commercial Officer 48
Joseph A. Reuter Executive Vice President and Chief People Officer 59
Dominic Culotta Executive Vice President and Chief Transformation Officer 57
Michael S. Weisman Executive Vice President and Chief Ethics and Compliance Officer 62
Richard M. Moore Executive Vice President of North American Operations 59
Daniel V. Ginnetti Executive Vice President International 52
Kurt M. Rogers Executive Vice President and General Counsel 49
Cindy Miller has served as a Director since February 2019 and became Stericycle's President and Chief Executive Officer on May 2, 2019 after serving as President and Chief Operating Officer since October 2018. Prior to Stericycle, Ms. Miller served as President, Global Freight Forwarding for United Parcel Service (UPS). Ms. Miller had a 30-year career with UPS starting as a driver and progressing to district manager for operating regions in the United States and then managing director for regions in Europe, the Middle East, and Africa before becoming President of the European region. Ms. Miller received a bachelor's degree from Pennsylvania State University and an executive MBA from the London Business School.
Janet Zelenka was named Executive Vice President and Chief Financial Officer on June 1, 2019. She assumed the additional duties and responsibilities of Chief Information Officer on June 28, 2020. Before joining Stericycle, she spent 15 years with Essendant Inc., most recently serving as Chief Financial Officer until the company’s acquisition by Sycamore Partners. While at Essendant, she also served in the roles of Chief Information Officer and Senior Vice President of Business Integration during a transformational period for the company, and held leadership positions in finance, analytics, audit, and pricing. Prior to Essendant, she spent 16 years at SBC/Ameritech (AT&T) in a range of IT, financial, and operational roles. Ms. Zelenka has a bachelor’s degree from Rockford University and a masters of business administration from Northern Illinois University.
S. Cory White was appointed Executive Vice President and Chief Commercial Officer in October 2019. He joined Stericycle in April 2019 as Executive Vice President of Communication and Related Services (CRS) and retains his current CRS responsibilities in his new role. Mr. White previously served as the Global Chief Commercial Officer for Startek, Inc. for nearly three years and as Vice President, Healthcare and Government Vertical Leader, with Convergys, Inc. for six years. Prior to those roles, he spent eleven years with ACS Healthcare, a Xerox Company, in a variety of sales and operational roles including Senior Vice President of ACS Healthcare Payment Integrity Solutions. Mr. White has a bachelor's degree from the University of Kentucky.
Joe Reuter joined Stericycle as Executive Vice President and Chief People Officer during January 2019. Mr. Reuter joins from United Parcel Service (UPS) where he served as President, International Human Resources since April 2016. Prior to that, he served as Vice President of the Europe Region human resources for three years and Vice President of human resources for the Global Freight Forwarding business for one year. He began his career as a parcel service provider and supervisor before moving into the human resources field and supporting UPS operating districts across the U.S. with increasingly larger areas of responsibility. Mr. Reuter received a bachelor’s degree from the University of South Dakota.
Dominic Culotta joined Stericycle as Executive Vice President and Chief Engineer during April 2019. He was named Chief Transformation Officer effective January 1, 2021. Prior to joining Stericycle, Mr. Culotta spent 35 years with United Parcel Services (UPS) most recently serving six years as Vice President of Engineering for Global Freight Forwarding and eight years as Vice President of Engineering and Operations for UPS' Europe, Middle East and Africa region. His early career included various operations and engineering assignments, working his way to multiple engineering division manager roles as well as a regional vice president of operations and engineering. Mr. Culotta has a bachelor’s degree from Loyola College in Baltimore.
Michael Weisman joined Stericycle as Executive Vice President and Chief Ethics and Compliance Officer in April 2018. Mr. Weisman previously served as Chief Ethics and Compliance Officer for The Kraft Heinz Company, a publicly-listed packaged foods company, which he joined through Kraft Foods in July of 2015. Prior to the merger with Heinz Foods he served as Chief Counsel, Compliance for Kraft Foods from July 2014; as Vice President, Ethics and Compliance for U.S. Foods from February 2013; and as Associate General Counsel, Compliance, at
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Career Education Corporation from 2010. He was also an associate and partner with the law firm Katten Muchin Rosenman, LLP for more than 10 years, serving as a member of the firm's White Collar Defense, Internal Investigations and Compliance Practice Group. Mr. Weisman received a bachelor’s degree from the University of Illinois and his juris doctor degree from Chicago-Kent College of Law.
Rich Moore joined Stericycle as Executive Vice President of North American Operations during January 2019. Prior to joining Stericycle, Mr. Moore spent 30 years with United Parcel Services (UPS) most recently as President of UPS' Illinois District since 2016. Previous experience includes three years as Vice President of European Operations, five years as President of the Northeast District, and three years District Manager for Utah, Idaho, and Southern Nevada plus previous other operations and transportation staff roles. Mr. Moore has a bachelor’s degree from Manhattan College and a master of business administration from National Louis University.
Daniel Ginnetti became Executive Vice President, International in June 2019 after serving as Stericycle’s Chief Financial Officer for over four years. Mr. Ginnetti joined Stericycle as Area Vice President of Finance in 2003. In 2004 he was promoted to Area Vice President for Stericycle’s Western, and later, Midwestern business units. Following that, he was promoted to Senior Vice President of Operations for the United States and Canada. He returned to financial management in 2013 becoming Vice President of Corporate Finance and then CFO in August 2014. Prior to joining Stericycle, Mr. Ginnetti held various finance and accounting positions with The Ralph M. Parsons Company, a worldwide engineering firm, and Ryan Herco Products Corp., a national industrial plastics distributor. Mr. Ginnetti has a bachelor’s degree from the University of California, Santa Barbara.
Kurt Rogers joined Stericycle as Executive Vice President and General Counsel in July 2017. Mr. Rogers previously served as Chief Legal Officer and Secretary of Vonage Holdings Corp., a publicly-listed software technology and communications company, for more than seven years. Earlier, Mr. Rogers was a partner with international law firms Bingham McCutchen LLP (now Morgan, Lewis & Bockius LLP) and Latham & Watkins LLP, and as an associate with Rogers & Wells LLP (now Clifford Chance LLP), where he represented clients in litigation, intellectual property and other matters. Mr. Rogers received his bachelor’s degree from Cornell University and his J.D. from Cornell Law School.
Available Information
We maintain an internet website, www.stericycle.com, which provides a variety of information about the Company and where the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports are available free of charge, as soon as reasonably practicable, following the time they are filed with or furnished to the SEC.  Reports and proxy and information statements that are filed electronically with the SEC are available on the SEC’s website, www.sec.gov.
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PART I
Item 1A. Risk Factors

Business, Strategy and Market Risks

Risk Factors
Our consolidated results of operations, financial position, cash flows and reputation can be adversely affected by various risks. These risks include the principal factors listed below and the other matters set forth in this Form 10-K. There may be additional risks of which we are not presently aware or that we currently believe are immaterial that could have an adverse impact on our business.

BUSINESS, STRATEGY AND MARKET RISKS

Our business is subject to risks arising from pandemic diseases, such as the recent outbreak of the COVID-19 pandemic.

The outbreak of the coronavirus disease, or COVID-19, spread across the globe and is impacting worldwide economic activity. A public health pandemic, including the COVID-19 pandemic, poses the risk that we or our team members, contractors, suppliers, and other partners are being or may be prevented from conducting our normal business activities for an indefinite period of time, including due to shutdowns that have been or may be requested or mandated by governmental authorities.

We are focused on ensuring the health and safety of our team members. Appropriate precautions we have taken to safeguard the health and safety of our team members and challenges we may face in obtaining sufficient supplies of COVID-19 vaccine and personal protective equipment have made or may make certain of our business processes less efficient. In addition, if a significant number of our team members were to contract the COVID-19 virus, our ability to service certain of our customers could be affected, which could have an adverse effect on our business.

Long-term remote work arrangements may adversely affect our business.

Many of our team members are currently working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cyber-security risks, impair the effectiveness of our internal controls over financial reporting and impact our ability to manage our business.

Measures taken to prevent the spread of COVID-19 virus may adversely affect our business.

The continued spread of the COVID-19 virus, an economic slowdown attributed to the COVID-19 pandemic, and the measures taken by the governments of countries affected could disrupt our supply chain, make us more reliant on third party providers, result in disruption in transportation services and restrictions on the ability of our team members to travel, result in temporary closures of our facilities or the facilities of our customers and suppliers, cause certain of our customers and suppliers to become insolvent or permanently cease operations affect the volume of paper which is processed by our secure information destruction business and the revenue generated from the sale of SOP, decrease the amount of paper collected per stop by our secure information destruction business, result in an increase in the volume of COVID-related waste and require increased use of third parties to handle such waste, and adversely impact our business, financial condition or results of operations. We may also be required to cover certain costs related to team members who are quarantining due to the COVID-19 pandemic. The COVID-19 pandemic has also disrupted or may disrupt implementation and timing of our ERP system and certain of our internal business plans and strategies.

Our relationships with our team members may be disrupted.

In response to the ongoing effects of the COVID-19 pandemic on our business, we may have to institute cost-saving measures, including furloughing team members and placing temporary holds on recruiting new hires and filling open employment positions. There can be no assurance that team members who are furloughed and potential team members that we are in the process of recruiting will continue to remain available for employment by us. In addition, such disruptions in our relationships with our team members could result in increased attempts to unionize portions of our workforce.

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Market conditions could adversely change and our earnings could decline as a result of the COVID-19 pandemic, which could result in charges to impair intangible assets, such as goodwill.

As a result of our various acquisitions, the Consolidated Balance Sheet at December 31, 2020 contains goodwill of $2.82 billion and other intangible assets, net of $1.09 billion. In accordance with Accounting Standards Codification Topic 350, Intangibles – Goodwill and Other, we evaluate on an ongoing basis whether facts and circumstances indicate any impairment to the value of indefinite-lived intangible assets such as goodwill. As circumstances after an acquisition can change, we may not realize the value of these intangible assets. We may be required to recognize impairments in certain of our reporting units due to a reduction of forecasted future cash flows associated with the effects of the COVID-19 pandemic on our business. The recognition of any potential future impairments could have a material adverse impact on our results of operations. For additional information, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates.

The COVID-19 pandemic could result in a prolonged economic slowdown in the U.S. and other countries.

Continuing concerns over economic and business prospects in the U.S. and other countries have contributed to increased volatility and diminished expectations for the global economy. These factors, coupled with the prospect of decreased business and consumer confidence and increased unemployment resulting from the outbreak of the COVID-19 virus, may precipitate a prolonged economic slowdown and recession. If the economic climate continues to deteriorate, our business, as well as the financial condition of our customers and suppliers and the ability of our customers to pay amounts owed to us or renew contracts with us at previous or increased rates, could be adversely affected, resulting in a negative impact on our business, financial condition, results of operations and cash flows.

Changing market conditions in the healthcare industry, healthcare consolidation and healthcare reform, could adversely affect our results of operations.

Within the U.S., the healthcare industry is evolving to meet competing demands for increased healthcare coverage of a growing and aging population and economic pressures to reduce healthcare costs. As a result of these dynamics, hospital networks are consolidating physician practices into their networks, independent practices are consolidating together, and healthcare providers are focused on cutting costs within their businesses. These changes exert downward pricing pressure, including the impact of GPO rebates and administrative fees, on services that we provide to healthcare customers which could adversely affect our results of operations. Commitments made in connection with the SQ Settlement may affect our ability to increase prices in the future and a deterioration in our customer relationships as a result of the MDL Action may affect our ability to sell additional services to our customers, both of which could adversely affect our results of operations.

Aggressive pricing by existing competitors and the entrance of new competitors could significantly and adversely affect our results of operations.

The industries in which we participate are highly competitive. This competition has required us in the past to reduce our prices to our customers, may require us to reduce our prices in the future or may affect our ability to increase prices in the future. Price reductions or our inability to increase prices could significantly and adversely affect our results of operations.

We face direct competition from a large number of small, local competitors. Because it requires very little financial investment to compete in the collection and transportation of regulated wastes or the secure destruction of personal and confidential information, there are many regional and local companies in these industries. We face competition from these businesses, and competition from them is likely to exist in new locations to which we may expand in the future. In addition, large national companies with substantial resources operate in the markets we serve. For example, in the U.S., Waste Management, Inc., Clean Harbors, Inc., and Iron Mountain Incorporated all offer competing services.

Fluctuations in the commodity market related to the demand and price for recycled paper may affect our business, financial condition and results of operations.

We sell nearly all of the shredded paper from our secure information destruction business to paper companies and recycled paper brokers. Sorted office paper is marketed as a commodity and is subject to significant demand and price fluctuations beyond our control. Historically, economic and market shifts, fluctuations in capacity and changes
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in foreign currency exchange rates have created cyclical changes in prices, volume, revenues, and margins for pulp and paper products. The length and magnitude of industry cycles have varied over time and by product, but generally reflect changes in macroeconomic conditions and levels of industry capacity. The overall levels of demand for the pulp and paper products reflect fluctuations in levels of end-user demand, which depend in part on general macroeconomic conditions in North America and worldwide. As a result, the market demand for recycled paper can be volatile due to factors beyond our control. Lack of demand for our shredded paper material could adversely affect our business, financial condition and results of operations.

Unfavorable market conditions, including those driven by economic or social trends, may impact the volume of regulated wastes or personal and confidential information we collect from customers.

The compliance-based services we provide rely on the generation of regulated wastes or personal and confidential information by our customers. The amount of material generated by our customers may be impacted by macro-economic trends associated with manufacturing and industrial markets, healthcare market dynamics, and trends associated with an increase in work-from-home arrangements and electronic and digital record keeping. Many of our services are provided on a subscription basis with a monthly fee to minimize short-term or cyclical variability associated with these factors. However, some of our services are provided on a transactional basis, and long-term trends resulting from these factors could reduce the demand for our services, whether we provide them on a subscription or transactional basis.

OPERATIONAL RISKS

We are subject to extensive governmental regulation, which is frequently difficult, expensive, and time-consuming with which to comply; noncompliance could adversely affect our operations and efforts to grow our business results.

The regulated waste management and secure information destruction industries are subject to extensive federal, state and local laws and regulations relating to the collection, transportation, packaging, labeling, handling, documentation, reporting, treatment and disposal of regulated waste and the proper handling and protection of personal and confidential information. Our business requires us to obtain many permits, authorizations, approvals, certificates, and other types of governmental permissions and to comply with various regulations in every jurisdiction in which we operate. Federal, state and local regulations change often, and new regulations are frequently adopted. Changes in the regulations could require us to obtain new permits or to change the way in which we operate our business. We might be unable to obtain the new permits that we require, and the cost of compliance with new or changed regulations could be significant.

Many of the permits that we require, especially those to build and operate processing plants and transfer facilities, are difficult and time-consuming to obtain. They may also contain conditions or restrictions that limit our ability to operate efficiently, and they may not be issued as quickly as we need them (or at all). If we cannot obtain the permits, or if they contain unfavorable conditions, it could substantially impair our operations and reduce our revenues and/or profitability.

If we encounter regulatory compliance issues in the course of operating our businesses, we may experience adverse publicity, which may intensify if such non-compliance results in civil or criminal liability. This adverse publicity may harm our reputation, and result in difficulties in attracting new customers, or retaining existing customers.

The level of governmental enforcement of environmental and other regulations has an uncertain effect on our business and could reduce the demand for our services.

We believe that strict enforcement of laws and regulations relating to regulated waste collection and treatment and the proper handling and protection of personal and confidential information can have a positive effect on our business, as these laws and regulations may increase the demand for our services. Relaxation of enforcement, government shutdowns, or other changes in governmental regulation of regulated waste and personal and confidential information could increase the number of competitors we face or reduce or delay the need for our services.

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Complications with the implementation of our new ERP system could adversely impact our business and operations.

We rely on information systems and technology to manage our business and summarize operating results. We are in the process of an implementation of an ERP system, which will replace most of our existing operating and financial systems. The ERP system is designed to accurately maintain the Company’s financial records, enhance operational functionality and provide timely information to the Company’s management team related to the operation of our business. The ERP system implementation process has required, and will continue to require, the investment of significant personnel and financial resources. We may not be able to successfully implement the ERP system without experiencing delays, increased costs and other difficulties. If we are unable to successfully implement our ERP system as planned, our business, results of operations, and financial condition could be negatively impacted. Additionally, if we do not effectively implement the ERP system as planned or the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess those controls adequately could be delayed.

Attacks on our information technology systems could damage our reputation, negatively impact our businesses and expose us to litigation risk.

We use computers in substantially all aspects of our business operations. We also use mobile devices, social networking and other online activities to connect with our team members and our customers. We rely heavily on various proprietary and third-party information systems. Our reputation for the secure handling of customer and other sensitive information is critical to the success of our business. Like other large, multi-national corporations, we are potentially subject to a range of cyber incidents, including but not limited to state-sponsored cyber-attacks, industrial espionage, insider threats, computer denial-of-service attacks, computer viruses, ransomware and other malware, data leakage and compromise, wire fraud, phishing incidents and other cyber incidents. In the spring of 2020, we began investigating potential phishing activity targeting certain Stericycle employee email accounts. We determined that some of these employee email accounts containing personal information appear to have been accessed by one or more unauthorized parties. We have no evidence that any personal information contained in these accounts was itself accessed by an unauthorized party. In an abundance of caution, we notified, and offered identity protection services, to relevant individuals. To date, we have suffered no loss of data, operational disruption, or reputational harm, and our non-material financial loss has been limited to incident response and remediation expenses. In any cyber incident that we experience, our incident response efforts, business continuity procedures and disaster recovery planning may not be entirely effective as our information technology and network infrastructure may still be vulnerable to attacks by hackers or breaches due to employee error, malfeasance, computer viruses, power outages, natural disasters, acts of terrorism, breaches with respect to third-party systems or other disruptions. A cybersecurity incident and breach of our information systems could lead to theft, destruction, misappropriation or release of sensitive and/or confidential information or intellectual property, which could result in business disruption, negative publicity, violation of privacy laws, loss of customers, brand damage, adverse financial and operational results, and potential litigation. Although we maintain insurance coverage for various cybersecurity risks, there is no guarantee that all costs or losses incurred will be fully insured.

Our management depends on relevant and reliable information for decision-making purposes, including key performance indicators and financial reporting. Any significant loss of data, failure to maintain reliable data, disruptions affecting our information systems, or delays or difficulties in transitioning to new systems could adversely affect our business, financial condition and results of operations. In addition, our ability to continue to operate our businesses without significant interruption in the event of a disaster or other disruption depends in part on the ability of our information systems to operate in accordance with our disaster recovery and business continuity plans. If our information systems fail and our redundant systems or disaster recovery plans are not adequate to address such failures, or if our business interruption insurance does not sufficiently compensate us for any losses that we may incur, our revenues and profits could be reduced and the reputation of our brands and our business could be adversely affected. In addition, remediation of such problems could result in significant, unplanned capital investments.

The handling of secure information for destruction exposes us to potential data security risks that could result in monetary damages against us and could otherwise damage our reputation, and adversely affect our business, financial condition, and results of operations.

The protection of customer, employee, and company data is critical to our business. The regulatory environment in the regions in which we operate surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and regularly changing requirements. Certain legislation, including the FACTA, the
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HIPAA, the Economic Espionage Act in the U.S., the Personal Information Protection and Electronic Documents Act in Canada and the GDPR in the U.K. and EU, require documents to be securely destroyed to avoid identity theft and inadvertent disclosure of confidential and sensitive information. A significant breach of customer, employee, or company data could attract a substantial amount of media attention, damage our customer relationships and reputation, and result in lost revenues, fines, or lawsuits. In addition, an increasing number of countries have introduced and/or increased enforcement of comprehensive privacy laws or are expected to do so. The continued emphasis on information security as well as increasing concerns about government surveillance may lead customers to request us to take additional measures to enhance security and/or assume higher liability under our contracts. As a result of legislative initiatives and customer demands, we may have to modify our operations to further improve data security. Any such modifications may result in increased expenses and operational complexity, and adversely affect our reputation, business, financial condition and results of operations.

Increases in transportation costs may adversely affect our business and reduce our earnings.

We maintain an extensive transportation network and fleet of vehicles. A significant increase in market prices for trucks or fuel could adversely affect our business through higher transportation costs and reduce our operating margins and reported earnings.

Risks from our international operations could adversely affect our business, financial condition and results of operations.

We have established operations in the U.S. and 17 other countries. Foreign operations carry specific risks including: (i) exchange rate and interest rate fluctuations; (ii) substantial inflation in certain markets; (iii) dependence in certain markets on government entities as customers; (iv) delays in the collection of accounts receivable related to certain government funding practices; (v) government controls; (vi) import and export license requirements; (vii) political or economic instability, social unrest, and public safety and security; (viii) changes in or compliance with U.S., local or other applicable laws and regulations, including laws and regulations concerning anti-corruption, anti-bribery (i.e. FCPA, UK Bribery Act and similar laws), global trade, trade sanctions, competition, privacy and data protection; (ix) our operations in the UK and EU may be adversely affected by the UK’s exit from the EU and the uncertainty associated therewith; (x) trade restrictions; (xi) changes in tariffs and taxes; (xii) tax and foreign investment policies; (xiii) industry or macro-economic trends; (xiv) permitting and regulatory standards; (xv) differences in local laws, regulations, practices, and business customs; (xvi) restrictions on repatriating foreign profits back to the U.S. or movement of funds to other countries; (xvii) difficulties in staffing and managing international operations; (xviii) increases and volatility in labor costs; and (xix) property ownership restrictions in certain countries. Any of the foregoing or other factors associated with doing business abroad could adversely affect our business, financial condition and results of operations.

LEGAL, REGULATORY, AND COMPLIANCE RISKS

We face continuing risks relating to compliance with the FCPA and other anti-corruption and anti-bribery laws.

On June 12, 2017, the SEC issued a subpoena to us, requesting documents and information relating to our compliance with the FCPA or other foreign or domestic anti-corruption laws with respect to certain of our operations in Latin America. In addition, the DOJ notified us that it is investigating this matter in parallel with the SEC. We are cooperating with these agencies and also conduct an internal investigation of these and other matters, including outside of Latin America, under the oversight of the Audit Committee of the Board of Directors and with the assistance of outside counsel, and this investigation has found evidence of improper conduct. These matters (and other matters which may arise or of which we become aware in the future) may be deemed to violate the FCPA and other anti-corruption and anti-bribery laws. Such determinations could subject us to, among other things, enforcement actions by the SEC or the DOJ or other regulatory bodies, fines, penalties, or litigation, which could adversely affect our business, financial condition and results of operations. In addition, any significant settlement amount may require us to incur additional indebtedness, adversely affect our liquidity and ability to service our indebtedness, or require us to restructure or amend the terms of our indebtedness. See Part II, Item 8. Financial Statements and Supplementary Data; Note 20 – Legal Proceedings in the Consolidated Financial Statements for more information regarding currently pending legal proceedings.

We are subject to a number of pending lawsuits.

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We are a defendant in a number of pending lawsuits and may be named as a defendant in future lawsuits. These current and future matters may result in significant liabilities and diversion of our management’s time, attention, and resources. Given the uncertain nature of litigation generally, we are not able in all cases to estimate the amount or range of loss that could result from an unfavorable outcome in these matters. In view of these uncertainties, the outcome of these matters may result in charges in excess of any established reserves and, to the extent available, liability insurance. Protracted litigation, including any adverse outcomes, may have an adverse impact on our reputation, business, financial condition or results of operations. In addition, any significant judgment or settlement amount may require us to incur additional indebtedness, adversely affect our liquidity and ability to service our indebtedness, or require us to restructure or amend the terms of our indebtedness. See Part II, Item 8. Financial Statements and Supplementary Data; Note 20 - Legal Proceedings in the Consolidated Financial Statements for more information regarding currently pending legal proceedings.

The handling of regulated waste exposes us to the risk of environmental liabilities.

As a company engaged in regulated waste management, we face risks of liability for environmental contamination. CERCLA and similar state laws impose strict liability on current or former owners and operators of facilities that release hazardous substances into the environment as well as on the businesses that generate those substances and the businesses that transport them to our facilities. Responsible parties may be liable for substantial investigation and clean-up costs even if they operated their businesses properly and complied with applicable federal and state laws and regulations. Liability under CERCLA may be joint and several, which means that if we were found to be a business with responsibility for a particular CERCLA site, we could be required to pay the entire cost of the investigation and clean-up even if we were not the party responsible for the release of the hazardous substance and other companies might also be liable.

Our pollution liability insurance excludes liabilities under CERCLA. Thus, if we were to incur liability under CERCLA and if we could not identify other parties responsible under the law whom we are able to compel to contribute to our expenses, the cost to us could be substantial and could impair our profitability and reduce our liquidity. Our customer service agreements make clear that the customer is responsible for making sure that only appropriate materials are disposed of. If there were a claim against us that a customer might be legally liable for, we might not be successful in recovering our damages from the customer, see Part II, Item 8. Financial Statements and Supplementary Data; Note 20 – Legal Proceedings.

Tax interpretations and changes in tax regulations and legislation could adversely affect us.

Tax interpretations, regulations and legislation in the various jurisdictions in which we operate are subject to measurement uncertainty and the interpretations can impact net income, income tax expense or recovery, and deferred income tax assets or liabilities. Tax rules and regulations, including those relating to foreign jurisdictions, are subject to interpretation and require judgment by us that may be challenged by the applicable taxation authorities upon audit. In addition, in response to significant market volatility and disruptions to business operations resulting from the global spread of the COVID-19 pandemic, legislatures and taxing authorities in various jurisdictions in which we operate may propose changes to their tax rules. These changes could include modifications that have temporary effect, and more permanent changes. The impact of these potential new rules on us, our long-term tax planning, and our effective tax rate could be significant. Although we believe our assumptions, judgments and estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of any tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act reduced the U.S. federal statutory tax rate, broadened the corporate tax base through the elimination or reduction of deductions, exclusions, and credits, limited the ability of U.S. corporations to deduct interest expense, and transitioned to a territorial tax system which allows for the repatriation of foreign earnings to the U.S. with a 100% federal dividends received deduction prospectively. In addition, the Tax Act required a one-time transitional tax on foreign cash equivalents and previously unremitted earnings. Several of the provisions enacted as part of the Tax Act require clarification and guidance from the IRS and Treasury Department. These or other changes in U.S. tax laws could impact our profits, effective tax rate, and cash flows.

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On March 27, 2020, the President signed into law the CARES Act, which is a substantial tax-and-spending package intended to provide additional economic stimulus to address the impact of the COVID-19 pandemic. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property, and the creation of certain refundable employee retention credits. The impact of the CARES Act in prospective periods may differ from our estimates due to changes in interpretations and assumptions, guidance that may be issued, and actions we may take in response to the CARES Act. The CARES Act is highly detailed, and we will continue to assess the impact that various provisions will have on our business.

Additionally, in further response to the COVID-19 pandemic, on December 27, 2020, the President signed the Consolidated Appropriations Act, 2021 (CAA 2021), which provides several business tax relief provisions, including (1) extension of the controlled foreign corporation (CFC) look-through rule through 2025, (2) a temporary 100% deduction for business meals paid or incurred in 2021 and 2022, and (3) extension of the work opportunity tax credit (WOTC) through 2025. We will continue to assess the CAA 2021 with respect to the provisions that have an impact on our business.

We have accumulated NOLs arising from our operations and foreign and domestic acquisitions of approximately $161.9 million as of December 31, 2020. We have recognized valuation allowances to reduce these amounts to our current estimate for NOLs that will be recoverable against future taxable income prior to their expiration in accordance with the appropriate tax regulations. If our estimates change or we do not generate sufficient taxable income prior to the expiration of these NOLs we may have to record additional valuation allowances resulting in higher income tax expense, see Part II, Item 8. Financial Statements and Supplementary Data; Note 10 – Income Taxes.

In addition, we may periodically restructure our legal entities and if taxing authorities were to disagree with our tax positions in connection with any such restructurings, our effective tax rate could be materially affected. In connection with such restructurings we could also incur additional charges associated with consulting fees and other charges.

Weather and environmental changes related to climate change, requirements of customers and investors for net carbon zero emissions strategies, and the introduction of regulations restricting emissions of “greenhouse gases” aimed to limit climate change, could negatively impact our costs to operate.

Climate change has brought with it numerous environmental changes that may pose risk to our operations. Increases in the frequency of severe storms, droughts, flooding, fire conditions, blackouts due to extreme heat or other weather events associated with climate change may disrupt our services and increase the cost of our operations. While we have protocols in place for operating regions frequently impacted by severe weather changes, continued climate change may require additional protocols, processes, physical equipment, and training to minimize risks to team members, physical property, and operations.

Following the 2015 Paris Agreement, which set the goal of holding global warming below 2˚C and pursuing efforts to limit the global average temperature rise to 1.5˚C, many of our customers have established goals for their organizations to be carbon neutral and have extended such goals to their key vendors and business partners. Additionally, many investors and financial institutions believe that climate change will significantly influence many companies’ long-term prospects and are requesting climate change disclosures and commitments from their investments. The increased focus on minimizing climate change may impact our revenues as well as our cost of operations in the future.

Emerging regulatory frameworks are beginning to establish bans on availability of new fossil fuel vehicles. Our services rely on a fleet of 7,800 vehicles. During 2020, the Prime Minister of the U.K. indicated diesel fuel will not be sold in the U.K. beginning in 2030 and the Governor of California signed an order to ban sales of new gasoline cars by 2035. The availability of reliable electric vehicles with the appropriate power station infrastructure requires significant advancement. The implementation of such bans without adequate infrastructure could impact our costs to maintain our fleet.

FINANCIAL AND CONTROL RISKS

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We may incur significant charges as a result of portfolio optimization; portfolio optimization may not achieve the desired results.

We continue to evaluate the performance of our portfolio of assets and businesses. Based on this evaluation, we may sell certain assets or businesses or exit particular markets. Any impairments and losses on divestiture resulting from this process may cause us to record significant charges, including those related to goodwill, other intangible assets, and accumulated currency translation adjustment losses. In addition, divestitures may not yield the targeted improvements in our business. Divestitures involve risks, including difficulties in the separation of operations, services, products and personnel, disruption in our operations or businesses, finding a suitable purchaser, the diversion of management’s attention from our other businesses, the potential loss of key team members, the erosion of employee morale or customer confidence, and the retention of contingent liabilities, including pursuant to indemnification provisions related to the divested business. Any charges, including those arising from indemnification provisions, that we are required to record or the failure to achieve the intended financial results associated with divestitures of businesses or assets could have a material adverse effect on our business, financial condition or results of operations. See Part II, Item 8. Financial Statements and Supplementary Data; Note 4 - Restructuring, Divestitures, and Impairments in the Consolidated Financial Statements

Restrictions in our Credit Agreement and our Senior Notes could adversely affect our business, financial condition, results of operations, ability to make distributions and the value of our securities.

Our Credit Agreement contains customary affirmative covenants, including, among others, covenants pertaining to the delivery of financial statements; certain financial covenants; notices of default and certain other material events; payment of obligations; preservation of corporate existence, rights, privileges, permits, licenses, franchises and intellectual property; maintenance of property and insurance and compliance with laws, as well as customary negative covenants, including, among others, limitations on the incurrence of liens, investments and indebtedness; mergers and certain other fundamental changes; dispositions of assets; restricted payments; changes in our line of business; transactions with affiliates and burdensome agreements. These covenants could affect our ability to operate our business, increase the amount of interest expense we ultimately pay pursuant to the Credit Agreement, and may limit our ability to take advantage of potential business opportunities as they arise. Our Senior Notes also contain certain covenants that could have a similar effect on our ability to operate our business. See Part II, Item 8. Financial Statements and Supplementary Data; Note 9 – Debt in the Consolidated Financial Statements.

Our ability to comply with the covenants and restrictions contained in our Credit Agreement, along with certain of the covenants and restrictions contained in our Senior Notes, may be affected by events beyond our control, including prevailing economic, financial, and industry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. A failure to comply with these provisions could result in a default or an event of default. Upon an event of default, unless waived, the lenders could elect to terminate their commitments, cease making further loans, require cash collateralization of letters of credit, cause their loans to become due and payable in full, foreclose against any assets securing the debt under our Credit Agreement and force us and our subsidiaries into bankruptcy or liquidation. If the payment of our debt is accelerated, our assets may be insufficient to repay such debt in full, and the holders of our stock could experience a partial or total loss of their investment. See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources.

Servicing debt and funding other obligations requires a significant amount of cash, and our ability to generate sufficient cash depends on many factors, some of which are beyond our control.

Our ability to make payments on and refinance our indebtedness and to fund our operations and capital expenditures depends on our ability to generate cash flow and secure financing in the future. Our ability to generate future cash flow depends, among other things, on future operating performance, general economic conditions, competition, and litigation, legislative and regulatory factors affecting our operations and business.

Some of these factors are beyond our control. There is no assurance that our business will generate cash flow from operations or that future debt or equity financings will be available to us to enable us to pay our indebtedness or to fund other needs. As a result, we may need to refinance all or a portion of our indebtedness on or before maturity. There is no assurance that we will be able to refinance any of our indebtedness on favorable terms, or at all. Any inability to generate sufficient cash flow or refinance our indebtedness on favorable terms could have an adverse effect on our financial condition.

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The amount of our indebtedness could adversely affect our business.

As of December 31, 2020, we had a total of $1.8 billion of outstanding indebtedness, including long-term debt and short-term debt and excluding unamortized debt issuance costs. We also have the ability to incur additional indebtedness subject to our financial covenants.

Our leverage could have adverse consequences on our business, including the following:
i.we may be required to dedicate a substantial portion of our available cash to payments of principal and interest on our indebtedness;
ii.our ability to access credit markets on terms we deem acceptable may be impaired; and
iii.we may be limited in our flexibility to adjust to changing market conditions.

If we fail to maintain an effective system of internal controls over financial reporting, including increased risk associated with a new ERP implementation, we may not be able to report our financial results timely and accurately or prevent fraud, which could adversely affect investor confidence in our company, our results of operations and our stock price.

Internal controls related to the operation of technology systems are critical to maintaining adequate internal control over financial reporting. We are implementing remedial measures and new systems and there can be no assurance that our efforts will be successful. These measures will result in additional technology and other expenses. If we are unable to remediate material weaknesses when they arise, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.

Market conditions could adversely change and our earnings could decline resulting in charges to impair intangible assets, such as goodwill.

As a result of our various acquisitions, the Consolidated Balance Sheet at December 31, 2020 contains goodwill of $2.82 billion and other intangible assets, net of $1.09 billion. We evaluate on an ongoing basis whether facts and circumstances indicate any impairment to the value of indefinite-lived intangible assets such as goodwill. As circumstances after an acquisition can change, we may not realize the value of these intangible assets. During 2020, 2019 and 2018, we recorded non-cash impairment charges of $11.1 million, $17.7 million and $16.0 million, respectively, of operating permits, tradenames, and customer relationships. Additionally, in 2019 and 2018 we recognized $228.3 million and $358.7 million in non-cash goodwill impairment charges related to our reporting units. We recognized these impairments due to a reduction of forecasted future cash flows in each reporting unit, as discussed in the Impairment section of Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8. Financial Statements and Supplementary Data; Note 7 – Goodwill and Other Intangible Assets. The recognition of any potential future impairments could have a material adverse impact on our results of operations.

Our participation in multi-employer pension plans may subject us to liabilities that could materially adversely affect our liquidity, cash flows and results of operations.

We participate in multi-employer pension plans administered by employer and union trustees. To the extent that those plans are underfunded, ERISA may subject us to substantial liabilities in the event we, whether partially or totally, cease to have obligations to contribute to the plans. Under current law regarding multi-employer defined benefit plans, circumstances such as a plan's termination, an employer's partial or complete withdrawal from, or the mass withdrawal of all contributing employers from, an underfunded multi-employer defined benefit plan can trigger our obligation to make payments to the plan for our proportionate share of the multi-employer plan's unfunded vested liabilities. Furthermore, the Pension Protection Act of 2006 added new funding rules generally applicable to plan years beginning after 2007 for multi-employer plans that are classified as "endangered", "seriously endangered", or "critical" status. If plans in which we participate are in critical status or underfunded, we could be required to make additional contributions.

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Based upon the information available to us from plan administrators as of March 30, 2020, one of the multi-employer pension plans in which we participate is underfunded. The Pension Protection Act requires that underfunded pension plans improve their funding ratios within prescribed intervals based on the level of their underfunding. We have been notified that one plan is in "critical" status and this plan may require additional contributions. The amount of additional funds we may be obligated to contribute in the future cannot be estimated, as such amounts will be based on future levels of employee work that require the specific use of the union team members covered by these plans, investment returns and the level of underfunding of such plans. Additional funding could adversely affect our liquidity, cash flows, and results of operations. For more information, see Part II, Item 8. Financial Statements and Supplementary Data; Note 13 – Retirement and Other Employee Benefit Programs in the Consolidated Financial Statements.

Some of our customers have suffered financial difficulties affecting their credit risk, which could negatively impact our operating results.

We provide service to a number of customers, including governmental entities and municipalities, some of which have suffered significant financial difficulties in recent years. Some of these entities could be unable to pay amounts owed to us, resulting in increased bad debt expense, or renew contracts with us at previous or increased rates. The inability of our customers to pay us in a timely manner or to pay increased prices could negatively affect our operating results.

RISKS RELATED TO HUMAN CAPITAL

A change or deterioration in our relations with our team members or an increase in labor and employment costs could have a materially adverse effect on our business, financial condition and results of operations.

Labor and employment is one of our highest costs and increases in employment costs could materially affect our cost structure and our profitability. We compete with other businesses in our markets for qualified team members and the labor supply is sometimes tight in our markets. A shortage of qualified team members or further unionization would require us to incur additional costs related to wages and benefits; inefficiencies in operations; unanticipated costs in sourcing temporary or third-party labor; legal fees and interference with customer relationships. Due primarily to increased demand for truck drivers and competition from other employers, we are experiencing difficulties hiring a sufficient number of qualified truck drivers. If this condition persists, it could affect our ability to service our retail customers and affect our results of operations.

We are a party to 11 collective bargaining agreements in the U.S. and Canada, covering approximately 750 team members, or approximately 6% of our total U.S. and Canadian workforce and further agreements and works councils covering approximately 1,500 team members in our other international locations. These agreements expire on a scheduled basis depending upon the negotiated length of the contract’s term. Collective bargaining agreement negotiations occur every year depending upon which agreements expire and whether one or both parties seek the modification of terms.

There can be no assurance that we will be able to negotiate the terms of future agreements with unions in a manner acceptable to us. There is also no guarantee that current non-union team members will not seek union representation resulting in additional collective bargaining agreements with associated increased costs to us. Potential work disruptions from labor disputes may disrupt our businesses and adversely affect our brand, customer relations, financial condition, and results of operations.

The handling, transportation, and treatment of regulated waste carries with it the risk of personal injury to team members and others.

Our business requires our team members to handle materials that may be infectious or hazardous to life and property in other ways. While we try to handle such materials with care and in accordance with accepted and safe methods, the possibility of accidents, leaks, spills, and natural disasters always exists.
Examples of incidents that may present possible exposure to contaminated or infectious waste or other hazardous materials include:

truck accidents;
damaged or leaking containers;
improper storage of regulated waste by customers;
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improper placement by customers of materials into the waste stream that we are not authorized or able to process, such as certain body parts and tissues; or
malfunctioning treatment plant equipment, such as power outages, or ineffective backup systems.

Human beings, or animals could be injured or sickened or property could be damaged by exposure to regulated waste. This in turn could result in lawsuits in which we are found liable for such injuries, and substantial damages could be awarded against us.

While we generally carry liability insurance intended to cover these contingencies, instances may occur that are not insured against or that are inadequately insured against. An uninsured or underinsured loss could be substantial and could impair our profitability and reduce our liquidity.

An inability to retain key personnel or difficulties in recruiting qualified personnel may adversely affect our business.

The labor market in the U.S. and globally is very competitive. We depend on the skills, working relationships, and continued services of key personnel, including our experienced management team. We must hire, train and develop effective team members. We compete with other companies both within and outside of our industry for talented personnel. In addition, employee turnover increases our cost of operations and makes it more difficult to operate our business. Difficulty in replacing or adding personnel could have an adverse effect on our business, results of operations and financial condition.

Our success depends on our executive officers and other key personnel. If we lose key personnel or are unable to hire additional qualified personnel, our business may be harmed.

Our future success depends to a significant degree on the skills, experience and efforts of our executive officers and key personnel. The unexpected loss of the services of any of our executive officers could have an adverse effect on our operations. There can be no assurance that our executive succession planning, retention, or hiring efforts will be successful. Competition for skilled and experienced management personnel is intense, and our future success will also depend on our ability to attract and retain qualified personnel, and a failure to attract and retain new qualified personnel could have an adverse effect on our operations.

GENERAL RISK FACTORS

Natural disasters or other catastrophic events could negatively affect our business, financial condition, and results of operations.

Natural disasters such as hurricanes, typhoons or earthquakes could negatively affect our operations and financial performance. Such events could result in physical damage to one or more of our facilities or equipment, the temporary lack of an adequate work force in a market, and the temporary disruption in transportation services which we rely on to deliver waste to our facilities. These events could prevent or delay shipments and reduce both volumes and revenue. Weather conditions and other event driven special projects may also cause variations in our results. We may be required to suspend operations in some of our locations, which could have a material adverse effect on our business, financial condition, and results of operations.

Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Information regarding our worldwide properties can be found under Part I, Item 1. Business and is incorporated herein by reference. We believe that these processing and other facilities are adequate for our present and currently anticipated future needs.
Item 3. Legal Proceedings
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PART I
Information regarding certain legal proceedings in which we are involved can be found in Part II, Item 8. Financial Statements and Supplementary Data; Note 20 - Legal Proceedings in the Consolidated Financial Statements and is incorporated herein by reference.
Item 4. Mine Safety Disclosures
Not Applicable.
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PART II
PART II
Item 5. Market Price for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is listed on the Nasdaq Global Select Market under the ticker symbol "SRCL."  There were 83 shareholders of record as of February 22, 2021.
We did not declare or pay any cash dividends on our common stock during 2020, 2019, or 2018.  We currently expect that we will retain future earnings for debt repayment and use in the operation and expansion of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Under resolutions that our Board of Directors adopted, we have been authorized to purchase a cumulative total of 24,621,640 shares of our common stock on the open market.  As of December 31, 2020, we had purchased a cumulative total of 22,219,146 shares.  No common stock purchases were made during 2020.  
Performance Graph
The following graph compares the cumulative total returns of Stericycle, the Nasdaq Global Select Market Composite Index, the S&P Mid Cap 400 Index and the Dow Jones U.S. Waste & Disposal Services Index for the five-year period ended December 31, 2020.

The graph assumes that the value for the investment in Stericycle and in each of the indices was $100 on December 31, 2015 and that all dividends were reinvested.
The stock price performance of our common stock reflected in the following graph is not necessarily indicative of future performance.
SCL-20201231_G13.JPG
Company/Index 2015 2016 2017 2018 2019 2020
Stericycle, Inc. $ 100.00  $ 63.88  $ 56.38  $ 30.42  $ 52.91  $ 57.49 
Nasdaq Global Select Market Composite Index $ 100.00  $ 107.59  $ 138.18  $ 133.10  $ 180.49  $ 258.17 
S&P Mid Cap 400 Index $ 100.00  $ 100.00  $ 135.89  $ 118.91  $ 147.51  $ 164.93 
Dow Jones U.S. Waste & Disposal Services Index $ 100.00  $ 118.62  $ 136.22  $ 133.82  $ 177.76  $ 186.32 

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PART II
Item 6. Selected Financial Data
In millions, except per share data
Year Ended December 31,
2020 2019 2018 2017 2016
Statements of Loss (Income) Data
Revenues $ 2,675.5  $ 3,308.9  $ 3,485.9  $ 3,580.7  $ 3,562.3 
Depreciation and amortization 233.5  272.8  255.9  249.5  252.5 
Goodwill impairment —  228.3  358.7  65.0  — 
Divestiture losses, net of gains 123.6  103.0  12.8  9.5  27.1 
Income (loss) from operations 31.9  (211.9) (161.1) (7.6) 433.8 
Mandatory convertible preferred stock dividend —  —  (25.5) (36.3) (39.4)
Gain on repurchase of preferred stock —  —  16.9  17.3  11.3 
Net (loss) income attributable to Stericycle, Inc. common shareholders (57.3) (346.8) (253.3) 23.4  178.2 
(Loss) earnings per common share attributable to Stericycle, Inc. common shareholders - diluted (1)
(0.63) (3.81) (2.91) 0.27  2.08 
Statements of Cash Flow Data
Net cash from:
Operating activities $ 530.2  $ 248.0  $ 165.7  $ 508.6  $ 560.8 
Investing activities 381.4  (104.0) (147.5) (193.0) (195.6)
Financing activities (892.5) (141.6) (25.7) (321.2) (376.8)
Balance Sheet Data
Cash and cash equivalents $ 53.3  $ 34.7  $ 34.3  $ 42.2  $ 44.2 
Total assets 5,581.9  6,437.0  6,455.5  6,988.3  6,980.1 
Long-term debt, net 1,689.1  2,559.3  2,663.9  2,615.3  2,877.3 
Stericycle, Inc. equity 2,430.1  2,330.9  2,587.4  2,896.6  2,805.8 
(1)See Part II, Item 8. Financial Statements and Supplementary Data; Note 16 – Loss per Common Share in the Consolidated Financial Statements for information concerning the computation of diluted EPS.
For more details on the items below, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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PART II
Net (loss) income attributable to Stericycle, Inc. common shareholders (including the total negative impact to (Loss) earnings per share attributable to Stericycle, Inc. common shareholders), included the following after-tax effects:
In millions, except per share data
Year Ended December 31,
2020 2019 2018 2017 2016
After-tax charges (income)
Business Transformation $ 37.8  $ 51.1  $ 61.2  $ 20.0  $ — 
Intangible Amortization 94.3  112.0  97.7  77.4  83.5 
Acquisition and Integration —  3.1  7.8  26.2  38.1 
Operational Optimization 2.5  11.9  22.9  46.8  40.4 
Divestitures (including Divestiture Losses, net of Gains) 138.0  90.0  16.0  7.1  23.2 
Litigation, Settlements and Regulatory Compliance 15.3  23.7  74.2  203.5  4.4 
Asset Impairments 11.8  21.5  21.8  —  1.4 
Goodwill Impairment —  221.4  292.7  67.2  — 
Other 7.9  33.4  25.6  15.3  4.1 
Debt Extinguishment —  19.8  —  —  — 
Preferred Stock Dividends —  —  27.5  36.3  39.4 
CARES Act and U.S. Tax Reform (44.4) —  8.8  (129.8) — 
Total after-tax impacts $ 263.2  $ 587.9  $ 656.2  $ 370.0  $ 234.5 
Negative impact to Net, (Loss) Earnings per share attributable to Stericycle, Inc. common shareholders - diluted (1)
$ 2.88  $ 6.46  $ 7.36  $ 4.07  $ 2.45 
(1)For the purpose of calculating the impact to (Loss) earnings per share attributable to Stericycle, Inc. common shareholders, of our mandatory convertible preferred stock in the years ended December 31, 2018, 2017, and 2016, we calculated the impact by excluding the mandatory convertible preferred stock dividend and using the “if-converted” method of share dilution, weighted in 2018 for the period prior to its conversion into common stock in September 2018 and weighted in 2015 for the period after issuance in September 2015.
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PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related notes in Part II, Item 8. Financial Statements and Supplementary Data of this 2020 Form 10-K. For further discussion regarding operating and financial data for the year ended December 31, 2019 as compared to the year ended December 31, 2018, refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
In 2020, we updated the presentation of the Company’s segment reporting see, Part II, Item 8. Financial Statements and Supplementary Data; Note 18 Segment Reporting in the Consolidated Financial Statements for further information. As a result of these changes in segment reporting, all applicable historical segment information has been recast to conform to the new presentation. We are also presenting amounts for the year ended December 31, 2018 in the Results of Operations Revenues and Segment Profitability tables below, but not the comparative discussion as mentioned above.

In addition, we updated service lines to reflect the remaining Hazardous Waste Solutions Services and Manufacturing and Industrial Services in RWCS. This reclassification is driven by the divestiture of the Environmental Solutions business, discussed in Part II, Item 8. Financial Statements and Supplementary Data; Note 4 Restructuring, Divestitures, and Impairments, and service line information has been recast to conform to the new presentation.
Overview
Incorporated in 1989, Stericycle is a U.S. based business-to-business services company and leading provider of compliance-based solutions that protects people, promotes health and safeguards the environment. Stericycle serves customers in the U.S. and 17 other countries worldwide with solutions for regulated waste and compliance services, secure information destruction and patient engagement. To our customers, team members and the communities we serve, Stericycle is a company that protects what matters.
Our offering of services appeals to a wide range of business customers.  The majority of our customers are healthcare businesses (hospitals, physician and dental practices, outpatient clinics, long-term care facilities, etc.).  We also provide services to retailers, manufacturers, financial services providers, professional services providers, governmental entities and other businesses.  While we manage large volumes of waste and other materials, the volume per customer site on average is small.
Highlights for the year ended December 31, 2020 compared to the prior year include:
Revenues for the year ended December 31, 2020 were $2.68 billion, compared to $3.31 billion in 2019.  Of the $633.4 million decline, the impact of divestitures was $483.7 million and lower SID revenues, excluding SOP pricing, was $157.1 million, primarily reflecting pandemic-related business disruption. This was partially offset by growth in Regulated Waste and Compliance Services of $36.5 million.
Income from operations for the year ended December 31, 2020 was $31.9 million, compared to a loss from operations of $211.9 million in 2019. The change was primarily due to no goodwill impairment in 2020 compared to goodwill impairment of $228.3 million in 2019, offset by net divestiture losses of $123.6 million in 2020 compared to net divestiture losses of $103.0 million in 2019 for a net divestiture difference of $20.6 million. In addition, we continue to see lower charges associated with our key priorities and other significant matters discussed below.
Net loss for the year ended December 31, 2020 was $57.3 million, or $0.63 diluted loss per share, compared with $346.8 million, or $3.81 diluted loss per share, in 2019. The difference was related to higher income from operations of $243.8 million, lower interest expense of $36.4 million and lower loss on early extinguishment of debt of $23.1 million, which were partially offset by a higher income tax expense of $16.7 million.
Cash flow from operations for the year ended December 31, 2020 was $530.2 million, compared to $248.0 million in 2019, representing a $282.2 million year-over-year improvement.
Cash paid for capital expenditures for the year ended December 31, 2020 was $119.5 million compared to $194.2 million for the year ended December 31, 2019, primarily driven by the timing of 2019 investments in the ERP and disciplined capital management throughout 2020.
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During 2020, we completed the following debt related transactions:
a)    On November 9, 2020, we issued $500.0 million at par of aggregate principal Senior Notes, due January 2029, which are unsecured and bear interest at 3.875% per annum, payable on January 15 and July 15 of each year.
b)    On February 25, 2020, we executed the Fifth Amendment which amended the Credit Agreement to, among other things:
increase the maximum allowable Consolidated Leverage Ratio to 5.00 to 1.00 until the end of the first quarter of 2022 and 4.50 to 1.00 thereafter.
upon the consummation of the divestiture of the ESOL Disposal Group, each of the foregoing maximum permitted Consolidated Leverage Ratio levels were stepped down to 4.75 to 1.00 and 4.25 to 1.00, respectively.
allow for continuation of the $200 million of cash add backs to EBITDA through December 31, 2020 and addbacks of $100 million until December 31, 2021, with no further addbacks thereafter.
increase the leverage ratio pricing tier of greater than 4.50 to 1.00 by 0.125%.
grant a first-priority security interest to the administrative agent for the benefit of the lenders in substantially all of the personal property of the Company and certain of its material domestic subsidiaries, including certain equity interests held by those entities.
For additional information, see Part II, Item 8, Financial Statements and Supplementary Data; Note 9 – Debt in the Consolidated Financial Statements.
Over the course of 2020, we divested our Environmental Solutions business, Expert Solutions business, both reported primarily in our North America reportable segment and operations in Argentina, in our International reportable segment.  Divestiture transactions combined generated $498.9 million in net proceeds during 2020 that was primarily used to repay debt. For additional information, see Part II, Item 8, Financial Statements and Supplementary Data; Note 4 – Restructuring, Divestitures, and Impairments in the Consolidated Financial Statements.
COVID-19 Pandemic
In March 2020, the World Health Organization declared the COVID-19 virus outbreak a pandemic. The COVID-19 pandemic has had a global economic impact, including temporary closure of non-essential businesses worldwide and postponement of elective surgeries and preventative care. The Company continues to maintain operations within all business service offerings, although our maritime waste service offering has been significantly and adversely impacted. We are monitoring future implications of the COVID-19 pandemic and continue to take actions to manage spending to align to operational requirements.

The Company’s COVID-19 pandemic response has included efforts to protect the health and well-being of our workforce and our customers. We worked proactively with the Centers for Disease, Control and Prevention, the Occupational Safety and Health Administration, the Department of Transportation and regulatory agencies around the world to ensure readiness for proper regulated waste management. We have updated and implemented numerous protocols specifically to reduce risk among our front-line team members, and our strategic sourcing team has worked diligently to take measures to provide our field operations employees with appropriate personal protective equipment. We’ve staggered shift times and dedicated trucks to specific drivers to reduce exposure. We’ve implemented more rigorous cleaning protocols for all our facilities. Since March of 2020, we had more than 7,000 team members around the globe sheltering in place, all to protect our staff and communities we serve. We will continue to monitor the safety of our team members as a result of the COVID-19 pandemic, but the long-term impact is not known at this point as the scale and severity of the outbreak and related behavioral changes is still uncertain. Additionally, we increased the frequency of our communications with our Board of Directors. At the height of the pandemic, we provided weekly updates to our Board. This communication kept the Board apprised of the evolving impacts of the pandemic to our organization and team members, as well as provided them an opportunity to understand and monitor our response to the pandemic while providing oversight and guidance.

The Company has taken a leadership position related to the COVID-19 pandemic to support our customers and provide industry expertise regarding the effective management of COVID-19 waste.
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The impact of the COVID-19 pandemic across our revenue service categories is as follows:
Revenue Service Category Services Offered COVID-19 Pandemic Impact
Regulated Waste and
Compliance Services
• Regulated waste management services (including reusable sharps container disposal management services)
• Pharmaceutical waste services, including controlled substances (CsRX, Kiosk, and Seal/Send)
• Compliance programs under the Steri-Safe®, Clinical Services and First Practice Management brand names
• Hazardous waste and compliance solutions
• Maritime waste services
RWCS’s transportation and treatment facilities have remained open to provide safe and compliant disposal of regulated waste. As a leader in this industry, we are helping our healthcare and retail customers manage multiple aspects of the vaccine rollout. This includes compliant waste collection, transportation, and waste treatment of expired vaccines, partially used vaccines, sharps, packaging, and expunged syringes with trace amounts of vaccines.
Revenues for RWCS showed growth over last year despite the impact on maritime waste services from the pandemic.
The COVID-19 pandemic has also created new needs for healthcare testing centers for the COVID-19 virus across America as well as the disposal of non-healthcare waste and vaccine related waste. We continue to provide services to testing centers and our expanding non-healthcare waste customer base and have begun servicing vaccine waste. In our international markets, we have more transactional-based agreements which has resulted in revenue growth as a result of returning elective surgeries combined with increased COVID-19 waste volumes.
Secure Information
Destruction Services
• Secure information destruction (including document and hard drive destruction services) under the Shred-it® brand name which includes regular scheduled services (and processing onsite and offsite) and one-time services (select, priority and express)
While still below pre-pandemic levels, Secure Information Destruction revenues continued to improve since the start of the pandemic in March and remained consistent sequentially with the third quarter despite continued economic pandemic impacts in the fourth quarter. The revenues and stops in the fourth quarter aligned with local, regional and country level lock-downs. While recent shutdowns in the late fourth quarter have impacted our stops serviced, we expect stops serviced to improve as economies re-open.
In North America, SID organic revenues were down 12.9 percent compared to 2019, which reflects a decrease in service stops. Additionally, Internationally, SID organic revenues were down 21.3 percent compared to 2019.
Communication and
Related Services
• Appointment reminders, secure messaging, event registration and other communications specifically for hospitals and IDN’s
At the end of the first quarter and through the year ended 2020, we observed lower demand for services due to the pandemic. When excluding the impact of divestitures and foreign exchange, revenues declined $14.4 million.
Key Business Priorities

Quality of revenue – We have been executing against our foundational initiatives we launched to drive revenue quality. These included a formal cross-functional deal review committee, realignment of sales incentive plans, re-organization of our commercial leadership team around our service lines, key customer channels, and implementation of global customer pipeline management processes for both Regulated Waste and Compliance Services and Secure Information Destruction. In combination with our quality of revenue initiatives, we continue to develop and deploy innovative solutions to meet unmet customer needs, strengthen customer engagement, and drive long-term organic growth. As an example, during 2020, Regulated Waste and Compliance Services innovated to meet customer needs during the pandemic by
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rapidly deploying solutions to support temporary COVID-19 testing centers and to introduce non-health care PPE disposal options. In Secure Information Destruction Services, we deployed express and priority offerings to address unmet customer needs around service speed and predictability during the pandemic.

Operational efficienciesAs we manage through volatile times, we remain focused on operational efficiencies, modernization and innovation to control variable and discretionary costs and improving performance and efficiencies in our field operations. Our Engineering and Operations teams have and will continue to implement operational process and performance improvements, which have significantly contributed to our gross profit margin expansion of 390 basis points for the year ended December 31, 2020. We are gaining traction on right sizing and balancing our fleet and equipment; driving efficiencies in route and long-haul planning; and optimizing our network and assets. Additionally, we have normalized our workforce following the furloughs experienced earlier this year.

Debt reduction and leverage improvement – We have reduced net debt by approximately $900.0 million during the year ended December 31, 2020. We applied $498.9 million in net proceeds from the divestiture of Expert Solutions, operations in Argentina and Environmental Solutions to the repayment of debt during December, August and April 2020, respectively. With the divestitures proceeds and our continued focus on operating margin expansion and free cash flow generation, we reduced our adjusted debt to EBITDA leverage ratio as defined by our Credit Agreement to 3.54 times as of December 31, 2020. We have $947.2 million as of December 31, 2020 available under our Senior Credit Facility, which matures in November 2022.

Portfolio rationalization – On December 2, 2020, Stericycle divested Expert Solutions for approximately $78.0 million in cash. On August 3, 2020, Stericycle divested all of our operations in Argentina for approximately $3.9 million in cash. On April 6, 2020, we also divested the Environmental Solutions business for $462.5 million in cash. We expect to continue to evaluate opportunities to further optimize our portfolio of businesses.

ERP implementation – We entered 2020 with a schedule to begin the staged deployment of the commercial, operational and financial systems in North America. Our first stage included the implementation of a human capital management system which was completed in January 2020. However, guided by our commitment to protect what matters, we concluded that the health and travel risks associated with a field deployment in the COVID-19 pandemic environment were substantial, and given our priorities to serve our customers and keep our team members safe, we made the decision to defer the ERP deployment to 2021. In the interim, we are making progress mining data from our legacy systems and tools to gain business insights, build scorecards and improve performance. Additionally, over the past several months, we accelerated the roll-out of certain technologies associated with our North American ERP system, including our new employee travel and expense system and a global tax management system.
Key Priorities and Other Significant matters
The following table identifies key priorities and other significant matters impacting our business (amounts are stated pre-tax except when noted):
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In millions
Year Ended December 31,
2020 2019
Pre-tax items:
Included in COR
Business Transformation $ —  $ 0.4 
Operational Optimization —  9.8 
Asset Impairments 6.8  5.2 
Total included in COR 6.8  15.4 
Included in SG&A
Business Transformation 50.8  67.3 
Intangible Amortization 124.9  145.2 
Acquisition and Integration —  3.5 
Operational Optimization 3.1  4.7 
Divestitures 9.4  11.7 
Litigation, Settlements and Regulatory Compliance 20.3  28.2 
Asset Impairments 8.7  16.9 
Other 9.1  39.7 
Total included in SG&A 226.3  317.2 
Divestiture losses, net of gains 123.6  103.0 
Goodwill impairment —  228.3 
Total included in Income (loss) from operations 356.7  663.9 
Included in Interest expense, net
Capital Allocation (debt related) —  3.6 
Loss on early extinguishment of debt —  23.1 
Included in Other expense, net
Other (including highly inflationary exchange loss) 1.2  3.3 
Total pre-tax $ 357.9  $ 693.9 
After tax items:
CARES Act $ (44.4) $ — 
Total after-tax $ (44.4) $ — 
The above priorities and other significant matters include the following types of activities:
Cash Charges
Closure and Exit Costs(1)
Internal (2)
Consulting and Professional Fees
Other (3)
Non-Cash Charges (4)
Business Transformation ü ü ü ü ü
Acquisition and Integration ü ü ü ü ü
Operational Optimization ü ü ü ü ü
Divestitures ü ü ü
Litigation, Settlements and Regulatory Compliance ü ü
Other ü
(1)Includes employee and contract termination, facility closure and clean-up costs.
(2)Includes dedicated resources, including project related incentive compensation and stock-based compensation.
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(3)Includes other costs related to each priority (e.g. software maintenance fees, changes in contingent consideration and environmental provisions).
(4)Includes impairments, accelerated depreciation and/or amortization, gain/loss on disposal and changes in deferred consideration.
Business Transformation

For the years presented and for the cumulative period since the inception of Business Transformation, we have recognized the following, principally reported in Other:
In millions
Year Ended December 31,
2020 2019 Cumulative Since Inception
ERP development and implementation
Consulting and professional fees $ 21.8  $ 27.2  $ 65.0 
Internal labor 13.1  9.3  31.2 
Software usage/maintenance fees 12.1  15.3  34.8 
Other related expenses 3.8  4.3  9.7 
Operating expenditures 50.8  56.1  140.7 
Capital expenditures 51.3  80.6  160.8 
Total ERP related 102.1  136.7  301.5 
Investment in cost savings and other related matters —  11.6  91.7 
Total charges and capital expenditures $ 102.1  $ 148.3  $ 393.2 
Non-cash charges $ 2.0  $ 1.8  $ 15.6 
Cash charges and stock based compensation 48.8  65.9 216.8
Total operating expenditures $ 50.8  $ 67.7  $ 232.4 

Through 2019, we had completed activities originally contemplated as part of Business Transformation in the areas of investment in cost savings and business capability and other related matters. We have shifted the planned deployment of the rest of our North American ERP system until 2021. In the interim, we accelerated the deployment of certain technologies associated with our North American ERP system, including our new employee travel and expense system and a new global tax management system.


Intangible Amortization
See table above of key priorities and other significant matters for intangible amortization expense from acquisitions for the years presented and how they are classified in the Consolidated Statements of Loss.

The decrease in amortization expense is a result of the reduction of intangible assets related to divestitures. See Part II, Item 8. Financial Statements and Supplementary Data; Note 7 – Goodwill and Other Intangible Assets in the Consolidated Financial Statements for further information.
For intangible amortization by segment see Part II, Item 8. Financial Statements and Supplementary Data; Note 18 – Segment Reporting in the Consolidated Financial Statements.
Acquisition and Integration

See table above of key priorities and other significant matters for acquisition and integration expense for the years presented, primarily in Other, and how they are classified in the Consolidated Statements of Loss.

Details of the acquisition completed in the year ended December 31, 2019 can be found in Part II, Item 8. Financial Statements and Supplementary Data; Note 3 – Acquisitions in the Consolidated Financial Statements.
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Operational Optimization

Our organization is focused on operation efficiency, modernization and innovation. The aim of our focus is to achieve a culture of continuous improvement that will enhance efficiency, effectiveness and competitiveness to improve our cost base and cash flow and we have taken a number of actions to reduce operating costs and optimize operations. For example, we believe plant throughput and route density are competitive strengths of Stericycle. We maintain such strengths by making adjustments to our network of transportation and treatment facilities, standardizing containers and right sizing fleet levels in an effort to optimize overall logistics and processing capabilities within a service category while reducing operational costs. As part of these efforts, we seek to reduce network redundancies by consolidating facilities, closing redundant facilities, optimizing containers and fleet levels and restructuring the local organization and operations for efficiency.

We recognized the following Operational Optimization expenses:
In millions
Year Ended December 31,
2020 2019
North America
Exit costs - employee termination $ —  $ 1.4 
Closure and exit costs - other —  — 
Non-cash charges —  2.4 
Other expenses —  — 
Total —  3.8 
International
Exit costs - employee termination —  0.9 
Closure and exit costs - other —  2.4 
Non-cash charges 2.8  4.9 
Other expenses 0.3  2.5 
Total 3.1  10.7 
Total Operational Optimization $ 3.1  $ 14.5 
As we continue to consider each Operational Optimization activity, the amount, 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, cash expenditures, accelerated depreciation and impairments than estimated and may not realize the expected improvement or cost savings on the planned time frame or at all. See Part II, Item 8. Financial Statements and Supplementary Data; Note 4 – Restructuring, Divestitures, and Impairments in the Consolidated Financial Statements.
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. Our decisions regarding divestitures are based upon the following criteria:
outlook for long-term market conditions;
potential impact to complementary services or customer relationships;
ability to leverage infrastructure and customer base for growth;
potential for margin improvement;
current divestiture value versus future divestiture value;
ongoing capital requirements of the business;
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return on invested capital;
impact on overall leverage, including impact on debt leverage ratio;
implications for our internal control remediation efforts; and
implications for our new ERP system implementation.

We recognized the following Divestitures (including Divestiture losses (gains), net) in the Consolidated Statements of Loss:
In millions
Year Ended December 31,
2020 2019
North America Segment
Domestic Environmental Solutions business $ 53.8  $ — 
CRS business (38.8) 45.5 
Total North America charges, net 15.0  45.5 
International Segment
CRS business (4.0) — 
Argentina operations 112.4  — 
Mexico operations (4.9) 43.2 
Chile operations 5.1  19.0 
U.K. businesses —  (4.7)
Total International charges, net 108.6  57.5 
Divestiture losses (gains), net 123.6  103.0 
Consulting, professional, and other fees (in SG&A) 9.4  11.7 
Total Divestitures (including Divestiture losses (gains), net) $ 133.0  $ 114.7 
For additional information regarding Divestiture losses (gains), including significant impacts of foreign currency translation adjustments, net, see Part II, Item 8. Financial Statements and Supplementary Data; Note 4 – Restructuring, Divestitures, and Impairments in the Consolidated Financial Statements.
We continue to evaluate the performance of our entire portfolio of assets and businesses. 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. In addition, divestitures we complete may not yield the targeted improvements in our business. Any charges that we are required to record or the failure to achieve the intended financial results associated with the portfolio rationalization evaluation could have a material adverse effect on our business, financial condition or results of operations (see Part II, Item 8. Financial Statements and Supplementary Data; Note 4 – Restructuring, Divestitures, and Impairments in the 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 are also involved in a variety of civil litigation from time to time including the items detailed in Part II, Item 8. Financial Statements and Supplementary Data; Note 20 – Legal Proceedings, in the Consolidated Financial Statements.

See table above of key priorities and other significant matters for litigation, settlement and regulatory compliance charges, primarily consulting and professional fees, contingent liability provisions and settlements, net of insurance recoveries, impacting our business for the years presented, primarily in Other, and how they are classified in the Consolidated Statements of Loss.
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Asset and Goodwill Impairments
Impairment charges comprise the following:
In millions
Year Ended December 31,
Asset impairments: 2020 2019
Property plant and equipment $ 6.8  $ 5.2 
Impairments included in COR 6.8  5.2 
Property plant and equipment 0.2  0.5 
Customer lists, permits and tradenames 8.5  16.4 
Impairments included in SG&A 8.7  16.9 
Total Asset impairments $ 15.5  $ 22.1 
Goodwill impairments:
Canada reporting unit $ —  $ 126.6 
Domestic Environmental Solutions reporting unit —  80.8 
Latin America reporting unit —  20.9 
Goodwill impairments $ —  $ 228.3 
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 on asset and goodwill impairments, see Part II, Item 8. Financial Statements and Supplementary Data; Note 4 - Restructuring, Divestitures, and Impairments and Note 7 – Goodwill and Other Intangible Assets in the Consolidated Financial Statements.
Other
See table above of key priorities and other significant matters for other charges, primarily consulting and professional fees related to internal control remediation activities as well as the implementation of new accounting standards, impacting our business, primarily in Other, for the years presented and how they are classified in the Consolidated Statements of Loss.

See table above of key priorities and other significant matters for the impact of foreign exchange re-measurement of net monetary assets held in Argentina as a result of its designation as a highly inflationary economy for the years presented and how they are classified in the Consolidated Statements of Loss. Argentina operations were divested in August 2020.
Capital Allocation
Stericycle aims to maintain a structured capital allocation strategy that balances investment in the business, debt reduction and returns to shareholders. Our current capital allocation strategy includes debt reduction and investments in our business.
For the year ended December 31, 2019, we incurred a pre-tax loss on early extinguishment of debt of $23.1 million, comprising a “make-whole” premium of $20.4 million, due under the terms of certain of the private placement notes and $2.7 million related to unamortized debt issuance costs, associated with repayments of our private placement notes.
We also incurred $0.2 million of debt modification charges associated with the execution of the Fourth Amendment, which are recorded in Interest expense, net and charges of $3.4 million related to the write-off of the unamortized portion of premiums associated with interest rate locks executed in connection with the issuance of certain of the private placement notes, which are recorded in Interest expense, net.
CARES Act and Tax Reform
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For further discussion, see Part II, Item 8. Financial Statements and Supplementary Data; Note 10 – Income Taxes in the Consolidated Financial Statements.
Results of Operations
Revenues (including Segment Revenue):
Our various regulated services share a common infrastructure and customer base.  We market our regulated and compliance services by offering various pricing options to meet our customers’ preferences and customers move between these different billing paradigms.  For example, our customers may contract with us for regulated waste disposal services that are billed based on the weight of waste collected, processed and disposed during a particular period and in a subsequent period, the same customer could move to our standard service, which packages the same regulated waste services with training and education services for a contracted subscription fee. Another example is a customer that purchases our regulated waste disposal and sharps disposal management services which provides the customer with the same regulated services under a different pricing and billing arrangement.
We do not track the movement of customers between the various types of regulated services we offer.  Although we can identify directional trends in our services, because the regulated services are similar in nature and there are inherent inaccuracies in disaggregation, we analyze revenues by revenue service category and operating segment. We analyze our revenue growth by identifying changes related to organic growth, acquisitions, divestitures and changes due to currency exchange fluctuations. Organic growth excludes the effect of foreign exchange and acquisitions and divestitures with less than a full year of revenues in the comparative period.
2020 compared to 2019
Year over year movements in Revenues by Service Category and Segment were as follows:
Year Ended December 31,
In millions Components of Change (%)
Organic
2020 2019 Change ($) Change (%)
Growth(1)
SOP Pricing Divestitures
Foreign Exchange (2)
Revenue by Service
Regulated Waste and Compliance Services $ 1,806.6  $ 2,187.8  $ (381.2) (17.4  %) 1.7  % —  % (18.4  %) (0.7  %)
Secure Information Destruction Services 745.3  901.9  (156.6) (17.4  %) (15.8  %) (1.6) % —  % 0.1  %
Communication and Related Services 123.6  219.2  (95.6) (43.6  %) (6.1  %) —  % (37.5  %) —  %
Total Revenues $ 2,675.5  $ 3,308.9  $ (633.4) (19.1  %) (3.6  %) (0.4) % (14.6  %) (0.5  %)
North America
Regulated Waste and Compliance Services $ 1,427.6  $ 1,762.8  $ (335.2) (19.0  %) 0.6  % —  % (19.5  %) —  %
Secure Information Destruction Services 647.3  769.5  (122.2) (15.9  %) (14.2  %) (1.6) % —  % (0.1  %)
Communication and Related Services 114.3  207.6  (93.3) (44.9  %) (6.9  %) —  % (38.0  %) —  %
Total North America Segment $ 2,189.2  $ 2,739.9  $ (550.7) (20.1  %) (4.2  %) (0.4) % (15.5  %) —  %
International
Regulated Waste and Compliance Services $ 379.0  $ 425.0  $ (46.0) (10.8  %) 6.2  % —  % (13.4  %) (3.6  %)
Secure Information Destruction Services 98.0  132.4  (34.4) (26.0  %) (24.9  %) (1.8) % —  % 0.8  %
Communication and Related Services 9.3  11.6  (2.3) (19.8  %) 8.6  % —  % (28.4  %) —  %
Total International Segment $ 486.3  $ 569.0  $ (82.7) (14.5  %) (1.0  %) (0.4) % (10.6  %) (2.5  %)
(1)Growth is a change in revenues excluding the impact of SOP pricing, divestitures and foreign exchange.
(2)The comparisons at constant currency rates (foreign exchange) reflect comparative local currency balances at prior period’s foreign exchange rates. Stericycle 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.
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For the year ended December 31, 2020 as compared to the prior year, organic SID and CRS revenues were lower, primarily reflecting COVID-19 pandemic-related business disruption. Organic RWCS revenue was slightly favorable in the current year in comparison to the prior year, primarily reflecting organic growth from our quality of revenue initiatives and sustainable value-added services we provide to customers. RWCS saw COVID-19 pandemic-related headwinds in the maritime waste services business, along with the continued trend of patients deferring elective surgeries. However, these negative trends were largely offset by increased COVID-19 waste and mail-back volume along with our new pop-up testing centers and non-health care PPE service.
North America revenues decreased $550.7 million, or 20.1%, for the year ended December 31, 2020 to $2,189.2 million from $2,739.9 million for the year ended December 31, 2019. Divestiture of the Environmental Solutions business in the second quarter 2020 and divestiture of components of the CRS business sold in the fourth quarter of 2019, reduced revenues by $423.4 million, or 15.5%. Organic RWCS revenue was slightly favorable, 0.6%, in the current year in comparison to the prior year, primarily reflecting organic growth from our quality of revenue initiatives and sustainable value-added services we provide to customers. RWCS saw COVID-19 pandemic-related headwinds in the maritime waste services business, along with the continued trend of patients deferring elective surgeries. However, these negative trends were largely offset by increased COVID-19 waste and mail-back volume along with our new pop-up testing centers and non-health care PPE service. SID organic revenue, excluding SOP pricing, decreased $109.4 million or 14.2%, which is reflective of a reduction in service stops. Additionally, there was a decrease in revenue due to the impact of SOP pricing of $12.3 million, or 1.6% as compared to the prior year.
International revenues decreased $82.7 million, or 14.5%, for the year ended December 31, 2020 to $486.3 million from $569.0 million for the year ended December 31, 2019. The decrease in International segment organic revenue, excluding SOP pricing, was $5.5 million, or 1.0%. Additionally, there was a decrease in revenue due to the impact of SOP pricing of $2.4 million, or 1.8% as compared to the prior year. International RWCS organic growth of 6.2% and CRS growth of 8.6% was more than offset by a decline in SID of 24.9%. The majority of International RWCS revenue growth is attributable to supporting our customers through the COVID-19 pandemic while we estimate the underlying business had slight growth being impacted by delayed elective surgeries. The decline in SID was due to closures of non-essential businesses that lasted longer in international locations than in the U.S. Divestiture components of the CRS business sold in the fourth quarter of 2020, divestiture of Argentina operations in the third quarter 2020, and the divestitures of the U.K. businesses, Chile and Mexico operations in fiscal 2019 reduced revenues by $60.3 million, or 10.6%. The effect of foreign exchange rates unfavorably impacted International revenues in 2020 by $14.5 million, or 2.5%, as foreign currencies, notably those in Latin America, declined against the U.S. dollar.
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2019 compared to 2018
Year Ended December 31,
In millions Components of Change (%)
Organic
2019 2018 Change ($) Change (%)
Growth(1)
SOP Pricing Divestitures, net of acquisitions
Foreign Exchange (2)
Revenue by Service
Regulated Waste and Compliance Services $ 2,187.8  $ 2,261.8  $ (74.0) (3.3  %) 0.3  % —  % (0.9  %) (2.7  %)
Secure Information Destruction Services 901.9  911.0  (9.1) (1.0  %) 3.6  % (4.6  %) 0.9  % (0.9  %)
Communication and Related Services 219.2  313.1  (93.9) (30.0  %) (16.6  %) —  % (13.0  %) (0.4  %)
Total Revenues $ 3,308.9  $ 3,485.9  $ (177.0) (5.1  %) (0.4  %) (1.2  %) (1.5  %) (2.0  %)
North America
Regulated Waste and Compliance Services $ 1,762.8  $ 1,778.5  $ (15.7) (0.9  %) (0.5  %) —  % (0.2  %) (0.2  %)
Secure Information Destruction Services 769.5  778.6  (9.1) (1.2  %) 2.5  % (4.5  %) 1.1  % (0.3  %)
Communication and Related Services 207.6  286.0  (78.4) (27.4  %) (18.0  %) —  % (9.2  %) (0.2  %)
Total North America Segment $ 2,739.9  $ 2,843.1  $ (103.2) (3.6  %) (1.5  %) (1.2  %) (0.8  %) (0.1  %)
International
Regulated Waste and Compliance Services $ 425.0  $ 483.3  $ (58.3) (12.1  %) 3.3  % —  % (3.7  %) (11.7  %)
Secure Information Destruction Services 132.4  132.4  —  —  % 10.1  % (5.1  %) —  % (5.0  %)
Communication and Related Services 11.6  27.1  (15.5) (57.2  %) (1.6  %) —  % (53.2  %) (2.4  %)
Total International Segment $ 569.0  $ 642.8  $ (73.8) (11.5  %) 4.5  % (1.0  %) (5.0  %) (10.0  %)
(1)Growth is a change in revenues excluding the impact of SOP pricing, divestitures and foreign exchange.
(2)The comparisons at constant currency rates (foreign exchange) reflect comparative local currency balances at prior period’s foreign exchange rates. Stericycle 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.
Gross Profit
In millions
Year Ended December 31, Change 2020 versus 2019
2020 2019
$ % of Revenue $ % of Revenue $ %
Gross profit 1,053.1  39.4  % 1,174.5  35.5  % (121.4) (10.3  %)
The decrease in Gross profit for the year ended December 31, 2020, as compared to 2019, was primarily due to the divestiture of the Environmental Solutions, Argentina, and Expert Solutions businesses in 2020 and divestitures that occurred during 2019, partially offset by quality of revenue initiatives. In addition, gross profit was lower associated with the COVID-19 pandemic resulting in decreased revenue discussed above specific to SID and CRS. These were partially offset by reductions in variable and discretionary costs, driven by operational efficiency improvements including in transportation and productivity gains. Gross profit as a percentage of revenues has improved as divested businesses historically produced lower margins as compared to core businesses and operational efficiencies noted above. In addition, we continue to see lower charges associated with our key priorities and other significant matters discussed above.
International Gross profit as a percentage of revenues is lower than domestic Gross profit as a percentage of Revenues because our international operations have fewer small account customers, which tend to generate higher Gross profit percentages. Our international operations generate most of their revenues from large account
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customers, such as hospitals, publicly funded healthcare organizations and government bodies. If our international revenues increase, consolidated Gross profit percentages may experience downward pressure due to this "business mix" shift, which may be offset by additional international small account market penetration, operational optimization and domestic business expansion.
SG&A
In millions
Year Ended December 31, Change 2020 versus 2019
2020 2019
$ % of Revenue $ % of Revenue $ %
SG&A 897.6  33.5  % 1,055.1  31.9  % (157.5) (14.9  %)
The decrease in SG&A for the year ended December 31, 2020, as compared to 2019, was primarily due to disciplined spending on operations and the 2020 divestitures of the Environmental Solutions business, Argentina operations, and components of the CRS business and other divestitures in 2019. Additionally, the Company had lower employee costs due to the impact of furloughed team members, lower commissions and reduced consulting and professional fees related to divestitures, compliance and material weakness remediation costs. The decreases referenced above were partially offset by higher incentive compensation. Further, there was a decrease in intangible asset amortization as assets became fully amortized. As a percentage of revenue, SG&A increased for the year ended December 31, 2020 primarily due to higher incentive and stock based compensation.
Divestitures losses (gains), net
In millions
Year Ended December 31, Change 2020 versus 2019
2020 2019
$ % of Revenue $ % of Revenue $ %
Divestitures loss (gains), net 123.6  4.6  % 103.0  3.1  % 20.6  20.0  %
For additional information regarding Divestiture losses (gains), net, including significant impacts of foreign currency translation adjustments, see Part II, Item 8. Financial Statements and Supplementary Data; Note 4 – Restructuring, Divestitures, and Impairments in the Consolidated Financial Statements.
Goodwill Impairment
In millions
Year Ended December 31, Change 2020 versus 2019
2020 2019
$ % of Revenue $ % of Revenue $ %
Goodwill impairment —  —  % 228.3  6.9  % (228.3) (100.0  %)
The Company performed its annual goodwill assessment as of October 1, 2020 and determined no reporting units' carrying values were in excess of their estimated fair value.
During 2019, as a result of our annual goodwill impairment and other periodic assessments, we recognized non-cash goodwill impairment charges for our Canada, Environmental Solutions, and Latin America reporting units of $126.6 million, $80.8 million, and $20.9 million, respectively.
Segment Profitability
Beginning in the first quarter of 2020, we have changed our measure of segment profitability to Adjusted Income from Operations – see Part II, Item 8. Financial Statements and Supplementary Data; Note 18 – Segment Reporting in the Consolidated Financial Statements for an explanation of this measure. Segment profitability and a reconciliation of the total for segment profitability to income (loss) from operations was as follows:
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In millions
Year Ended December 31, Change 2020 versus 2019 Change 2019 versus 2018
2020 2019 2018
$ % of Segment Revenues $ % of Segment Revenues $ % of Segment Revenues $ % $ %
Adjusted Income from Operations
North America 606.0  27.7  % 595.0  21.7  % 754.4  26.5  % 11.0  1.8  % (159.4) (21.1  %)
International 46.5  9.6  % 70.7  12.4  % 64.7  10.1  % (24.2) (34.2  %) 6.0  9.3  %
Other (263.9) nm (213.7) nm (200.1) nm (50.2) 23.5  % (13.6) 6.8  %
Total 388.6  14.5  % 452.0  13.7  % 619.0  17.8  % (63.4) (14.0  %) (167.0) (27.0  %)
Reconciliation to Income (loss) from operations:
Adjusted Income from Operations 388.6  452.0  619.0 
Adjusting Items Total(1)
(356.7) (663.9) (780.1)
Income (loss) from Operations 31.9  (211.9) (161.1)
nm - percentage change not meaningful
(1) See Part II, Item 8. Financial Statements and Supplementary Data; Note 18 - Segment Reporting
2020 compared to 2019
Adjusted Income from Operations for our North America segment increased $11.0 million, or 1.8%, for the year ended December 31, 2020 to $606.0 million from $595.0 million for the year ended December 31, 2019. As a percentage of North America revenues, Adjusted Income from Operations was 27.7% and 21.7%, for the years ended December 31, 2020 and 2019, respectively. Adjusted Income from Operations improved due to reductions in variable and discretionary costs, driven by operational efficiency improvements including compensation, transportation and disciplined spending in operations. The increase was partially offset by 2020 divestitures of the Environmental Solutions business, Argentina operations, and components of the CRS business and divestitures that occurred during 2019. Operating margin improved as certain divested businesses historically produced lower margins as compared to core businesses and operational efficiencies noted above.
Adjusted Income from Operations for our International segment decreased $24.2 million, or 34.2%, for the year ended December 31, 2020 to $46.5 million from $70.7 million for the year ended December 31, 2019. The decline was primarily a reduction in income from operations due to the COVID-19 pandemic and the related revenue decreases discussed above. As a percentage of International revenues, Adjusted Income from Operations was 9.6% and 12.4% for the years ended December 31, 2020 and 2019, respectively.
Adjusted Loss from Operations for Other increased in the year ended December 31, 2020 compared to the prior year as a result of higher incentive and stock-based compensation, information technology and corporate insurance, partially offset by lower worker’s compensation expense.
Interest Expense, Net
In millions
Year Ended December 31, Change 2020 versus 2019
2020 2019
$ % of Revenue $ % of Revenue $ %
Interest expense, net 81.9  3.1  % 118.3  3.6  % (36.4) (30.8  %)
The decrease in the year ended December 31, 2020 as compared to 2019 is a result of a lower weighted-average debt balance as well as lower interest rates. For further information see Part II, Item 8. Financial Statements and Supplementary Data; Note 9 – Debt.
Loss on Early Extinguishment of Debt
During 2019, we incurred a pre-tax loss on early extinguishment of debt of $23.1 million, relating to the repayment of our private placement notes, discussed in Capital Allocation above. We did not have any pre-tax loss on early
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extinguishment of debt in 2020. For further information see Part II, Item 8. Financial Statements and Supplementary Data; Note 9 – Debt.
Other Expense, Net
In millions
Year Ended December 31, Change 2020 versus 2019
2020 2019
$ % of Revenue $ % of Revenue $ %
Other expense, net 6.0  0.2  % 9.5  0.3  % (3.5) (36.8  %)
Other expense, net is primarily comprised of foreign exchange losses including the re-measurement of net monetary assets held in Argentina, prior to divestiture in August 2020, as a result of its designation as a highly inflationary economy.
Income Tax Benefit
In millions
Year Ended December 31, Change 2020 versus 2019
2020 2019
$ Effective rate $ Effective rate $ %
Income tax benefit 0.1  0.2  % 16.8  4.6  % (16.7) (99.4  %)
Income tax benefit was $0.1 million in 2020 compared to income tax benefit of $16.8 million in 2019. The effective tax rates for the years 2020 and 2019 were 0.2% and 4.6%, respectively. In 2020, our effective tax rate was negatively impacted by valuation allowances and divestitures which was partially offset by benefits from the CARES Act. In 2019, our effective tax rate was impacted by the non-deductibility of a portion of the goodwill impairments in certain jurisdictions, and valuation allowances recognized against net operating losses in several countries.
For further information, see Part II, Item 8. Financial Statements and Supplementary Data; Note 10 – Income Taxes in the Consolidated Financial Statements.

Liquidity and Capital Resources
Details of our outstanding debt obligations can be found in Part II,