ANNUAL REPORT2021 1
2
Dear Fellow Stockholders:In 2021, we continued to execute on our five key business priorities while driving year-over-year organic revenue growth of 5.4%. We completed two additional international divestitures and our first North American Regulated Waste and Compliance Services (“RWCS”) acquisition in over three years. We also deployed a significant portion of our North America ERP system. Additionally, we made progress in our Environmental, Social and Governance (“ESG”) journey, measurably improving our safety metrics and achieving a B- rating in our first CDP Climate Survey Change submission. I’d like to thank all of our team members and especially our front-line workers for protecting what matters. Like many organizations in 2021, we were faced with the impact of COVID-19 related illnesses tied to the Delta and Omicron variants, supply chain disruptions, inflationary cost pressures, and labor shortages. However, through these extraordinary times, our team members came together to support our customers, helping to keep the health care network running. EXECUTING ON KEY BUSINESS PRIORITIESDuring 2021, we achieved important benefits through our five key business priorities, including: • Quality of revenue: Generated organic revenue growth of 5.4%1, including RWCS organic revenue growth of 5.6%1 and Secure Information Destruction (“SID”) organic revenue growth of 5.0%1.• Operational efficiency, modernization and innovation: Completed a comprehensive, long-term facility planning process to enable us to optimize our facilities with a strategic and standardized operating model. We are analyzing processing capabilities, plant and transportation equipment needs, team member requirements, and potential customer implications or benefits. As part of this initiative, in 2021, we opened three new regulated waste operating facilities, upgraded five autoclave facilities, and completed 13 non-autoclave facility modernization projects.• ERP implementation: Completed deployment of the North America ERP system for the SID business, finance and procurement processes.• Debt reduction and leverage improvement: Reduced net debt by $173.8 million to $1.57 billion and renewed our Credit Agreement. • Portfolio optimization: Executed two divestitures, including the divestiture of our Japan business for $11.3 million and our Canadian Environmental Solutions business for $24.4 million. We have now completed 10 divestitures since January 2019. We also completed our first acquisition of a regulated waste business in over three years for $43.4 million.ENVIRONMENTAL, SOCIAL AND GOVERNANCEIn 2021, we issued our latest Corporate Social Responsibility Report and submitted our first CDP Climate Change Survey, achieving a B- rating. Additional 2021 ESG advancements included: A Message from Cindy J. Miller 4
2Net debt is calculated as total debt less cash and cash
q
q.
equivalents
• Continued to focus on improving safety across our business with Company-wide initiatives. Focused on gender, racial and ethnic diversity, equity and inclusion with approximately 23% of our global team members self-identifying as women and approximately 54% of our U.S. employees self-identifying as being from a racial or ethnic minority category. • Entered into a 5-year partnership with the National Park Foundation to support wetland restoration.• Through our environmental impact initiatives, we help keep communities safer, make our oceans and waterways cleaner, reduce demand for landfill space, guard against identity theft, and reduce the need to harvest trees for virgin pulp. In 2021, we - Treated 1.5 billion pounds of medical waste,- Diverted 104 million pounds of plastic from landfills,- Disposed of 40 million pounds of unused pharmaceuticals, and- Recycled 1.1 billion pounds of paper.LOOKING AHEADWe have another ambitious year ahead, as we continue executing on our five key business priorities. This includes driving organic revenue growth, further modernizing our operations infrastructure, beginning to deploy the ERP to North America RWCS, reducing debt and improving leverage, and remaining committed to portfolio optimization. Looking ahead, I am excited about our leadership position in the markets we serve, the strength and resiliency of our global workforce and our ability to execute across our five key business priorities as we continue to transform Stericycle.Thank you for your interest and continued support of Stericycle.Sincerely,Cindy J. MillerPresident and Chief Executive Officer2021 Financial Highlights($ millions except for EPS)Revenue:$2,646.9Income from Operations:$72.3Adjusted Income from Operations3:$352.4Diluted EPS:$(0.30)Adjusted Diluted EPS3:$2.19Cash Flow from Operations:$303.1Free Cash Flow:$186.2ANNUAL REPORT 20211 For a description of the relationship of Organic Revenue to Revenue, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein.3Reconciliation of U.S. GAAP to Non-GAAP measures can be found in our February 24, 2022, Form 8-K. 4Free Cash Flow is calculated as Net cash from operating activities less Capital expenditures. BOARD OF DIRECTORSRobert S. Murley ChairmanCindy J. MillerPresident and Chief Executive Officer Member – Operations, Safety and Environmental CommitteeBrian P. Anderson Chair – Audit CommitteeLynn D. Bleil Chair – Nominating and Governance CommitteeMember – Compensation and Human Capital Committee Thomas F. Chen Member – Compensation and Human Capital Committee Member – Nominating and Governance CommitteeJ.Joel Hackney, Jr.Member – Nominating and Governance CommitteeVeronica M. Hagen Member – Audit Committee Member – Operations, Safety and Environmental CommitteeStephen C. Hooley Chair – Compensation and Human Capital Committee Member – Audit Committee Member – Operations, Safety and Environmental CommitteeJames J. MartellMember – Compensation and Human Capital Committee Member – Operations, Safety and Environmental CommitteeKay G. Priestly Member – Audit CommitteeJames L. Welch Chair – Operations, Safety and Environmental Committee Member – Audit CommitteeMike S. Zafirovski Member – Compensation and Human Capital CommitteeMember – Nominating and Governance CommitteeDirectors and Executive ManagementEXECUTIVE OFFICERSCindy J. MillerPresident and Chief Executive OfficerJanet H. ZelenkaExecutive Vice President, Chief Financial Officer and Chief Information OfficerS.Cory WhiteExecutive Vice President and Chief Commercial OfficerJoseph A. ReuterExecutive Vice President and Chief People OfficerDominic CulottaExecutive Vice President and Chief Transformation OfficerMichael S. Weisman Executive Vice President and Chief Ethics and Compliance OfficerRichard M. MooreExecutive Vice President of North American OperationsDaniel V. GinnettiExecutive Vice President, InternationalKurt M. RogersExecutive Vice President, General Counsel and Corporate Secretary ANNUAL REPORT 2021 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, 2021
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)
________________________________________________________________________
36-3640402
(IRS Employer Identification Number)
Delaware
(State or other jurisdiction of incorporation
or organization)
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)
Common Stock, par value $0.01 per
share
SRCL
Name of each exchange on which
registered
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 ☒
Smaller reporting company ☐
Accelerated filer ☐
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, 2021): $6,569,387,076.
On February 22, 2022 there were 91,913,507 shares of the Registrant’s Common Stock outstanding.
Non-accelerated filer ☐
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 2022 Annual Meeting of Stockholders.
Table of Contents
PART I.
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II.
Item 5. Market Price for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchase of Equity Securities
Item 6. [Reserved]
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
PART IV.
Item 15. Exhibits
Item 16. Form 10-K Summary
SIGNATURES
Page No.
6
20
31
31
31
31
32
32
33
48
49
88
88
90
90
91
91
91
92
92
93
96
97
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:
Description
Abbreviation
2021 Form 10-K
Annual report on Form 10-K for the year ended December 31, 2021
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
APHIS
ARP Act
ASU
Buyer
CAA 2021
Canada ESPP
CARES Act
CDC
CFC
Clean Air Act
COR
Animal and Plant Health Inspection Service
American Rescue Plan Act of 2021
Accounting Standards Update
Harsco Corporation and CEI Holding LLC, a Delaware limited liability company and subsidiary of Harsco Corporation
Consolidated Appropriations Act, 2021
Canadian Employee Stock Purchase Plan, which was approved by stockholders in May 2016
U.S. Coronavirus Aid, Relief, and Economic Security Act enacted into law on March 27, 2020
U.S. Center for Disease Control
Controlled Foreign Corporation
The Clean Air Act of 1970
Cost of Revenues
COSO Framework
Internal Control Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
COVID-19
Credit Agreement
The global novel coronavirus disease 2019 outbreak, which the World Health Organization declared as to be a pandemic
Credit Agreement dated September 30, 2021 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 Defined
Debt Leverage Ratio
As of any date of determination, the ratio of (a) (i) Consolidated Funded Indebtedness as of such date minus (ii) Unrestricted Cash
as of such date to (b) Consolidated EBITDA for the period of four fiscal quarters most recently ended on or prior to such date.
Credit Facility
The Company's $1.2 billion credit facility due in September of 2026 granted under the terms of the Credit Agreement
CRS
DCF
DEA
Communication and Related Services
Discounted Cash Flows
Drug Enforcement Administration. The Drug Enforcement Administration (DEA) is a division of the US Department of Justice. It is
the federal agency which regulates the manufacture, dispensing, storage, and shipment of controlled substances including
medications with human abuse potential.
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
DOT Recordable Accident
DSO
DTSC
EBITDA
EHS
EPA
EPS
ERISA
ERP
ESPP
EU
A DOT Recordable Accident is defined as any accident involving a commercial motor vehicle in which there was a fatality involved;
there was a bodily injury in which a person received emergency medical attention away from the scene of the accident; or one or
more vehicles involved in the accident had to be towed away from the scene. The accident rate is calculated by multiplying DOT
Recordable Accidents by 1,000,000 and dividing by total miles driven ((DOT Accidents x 1,000,000)/miles).
Days Sales Outstanding, defined as the average number of days that it takes a company to collect payment after revenue has been
recorded, computed as the trailing twelve months of Revenues for the period ended DSO, divided by the Accounts Receivable
balance at the end of the period.
Department of Toxic Substances Control
Earnings Before Interest, Taxes, Depreciation & Amortization. Another common financial term utilized by Stericycle to analyze the
core profitability of the business before interest, tax, depreciation and amortization.
Environmental, Health and Safety
U.S. Environmental Protection Agency
Earnings (Loss) per share
U.S. Employee Retirement Income Security Act of 1974, as amended by the Multi-Employer Pension Amendments Act of 1980
Enterprise Resource Planning
Employee Stock Purchase Plan, which was approved by stockholders in May 2001 (as amended and restated in May 2017)
European Union
Exchange Act
Expert Solutions
U.S. Securities Exchange Act of 1934
Recall and Return Services
FACTA
FASB
FCPA
FMCSA
GDPR
GILTI
GPO
HIPAA
U.S. Fair and Accurate Credit Transaction Act
Financial Accounting Standards Board
U.S. Foreign Corrupt Practices Act
U.S. Federal Motor Carrier Safety Administration
Global Data Protection Regulation
Global Intangible Low-Taxed Income
Group Purchasing Organization
Health Insurance Portability and Accountability Act
2021 10-K Annual Report
Stericycle, Inc. • 3
PART I
HSA
IATA
IDN
Indenture
International
IRS
ISO
LATAM
LWIR
Healthcare Service Agreement with Buyer
International Air Transport Association
Integrated Delivery Network
Indenture, dated as of June 14, 2019 between the Company, the guarantors named therein and U.S. Bank National Association, as
trustee
Operating segment including Europe, Middle East, Asia Pacific and Latin America Business operations outside of North America
U.S. Internal Revenue Service
Incentive Stock Options
Latin America (including Mexico)
Lost Workday Incident Rate ("LWIR") is the number of recordable workplace injuries (as defined by OSHA, excluding COVID-19
cases) 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).
M&I
Manufacturing and Industrial
North America
Operating segment in North America, including Puerto Rico
NAID
NOL
NSO
OSHA
National Association for Information Destruction
Net Operating Losses
Non-statutory Stock Options
U.S. Occupational Safety and Health Act of 1970
Other Costs
Represents corporate enabling and shared services functions costs, annual incentive and stock-based compensation
Pension Protection Act
Pension Protection Act of 2006
PFA
PHMSA
Plans
PPE
PSU
Pre-filing agreement with the IRS
U.S. Pipeline Hazardous Materials Safety Administration
2021, 2017, 2014, 2011, 2008, and 2005 Incentive Stock Plans
Property, Plant & Equipment
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
RSU
RWCS
S&P
SEC
Right-of-Use
Restricted Stock Unit
Regulated Waste and Compliance Services
Standard & Poor's
U.S. Securities and Exchanges Commission
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
SG&A
SID
SOP
Series A Mandatory Convertible Preferred Stock, par value $0.01 per share
Selling, general and administrative expenses
Secure Information Destruction
Sorted Office Paper
SQ Settlement
Small quantity medical waste customers class action settlement of $295.0 million
TAS
Tax Act
Term Facility
Term Loans
Transaction
TRIR
TSA
U.K.
U.S.
USDA
U.S. GAAP
UPS
WOTC
Telephone Answering Services
U.S. Tax Cuts and Jobs Act of 2017
Aggregate amount of commitments made by any lender under the terms of the Credit Agreement
Advances made by any lender under the Term Facility
Purchase of the ESOL Disposal Group by Buyer subject to the terms and conditions of the Purchase Agreement
The number of workplace injuries that resulted in treatment beyond first aid (as defined by OSHA, excluding COVID-19 cases) per
100 employees. Total Recordable Injury Rate (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).
Transition Services Agreement
United Kingdom
United States of America
United States Department of Agriculture
U.S. Generally Accepted Accounting Principles
United Parcel Service, Inc.
Work Opportunity Tax Credit
2021 10-K Annual Report
Stericycle, Inc. • 4
PART I
PART I
Disclosure Regarding Forward-Looking Statements
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, inflation, labor shortages, disruptions in our relationships with our team members
as a result of certain cost-saving measures, an economic disruption 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, and disruptions resulting from deployment of our ERP system, disruptions
in our supply chain, 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 FCPA, 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, as well as other
factors described in our filings with the SEC, including this 2021 Form 10-K and subsequent Quarterly Reports on
Form 10-Q. As a result, past financial performance should not be considered a reliable indicator of future
performance, and investors should not use historical trends to anticipate future results or trends. We disclaim any
obligation to update or revise any forward-looking or other statements contained herein other than in accordance
with legal and regulatory obligations.
2021 10-K Annual Report
Stericycle, Inc. • 5
PART I
Item 1. Business
Overview
Company Overview
Stericycle is a global business-to-business services company. We provide an array of highly specialized solutions
that protect the health and well-being of the people and places around us in a safe, responsible, and sustainable
way. Since our founding in 1989, we have grown from a small start-up in medical waste management into a leader
across a range of increasingly complex and highly regulated arenas, serving healthcare organizations and
commercial businesses of every size through Regulated Waste and Compliance Services and Secure Information
Destruction Services.
Through our family of brands, Stericycle serves customers in the U.S. and 16 other countries worldwide with
solutions for Regulated Waste and Compliance Services and Secure Information Destruction Services. To our
customers, team members and the communities we serve, Stericycle is a company that protects what matters.
Our service offerings appeal 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.
Segments
Our operating segments as of December 31, 2021 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 17 - 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
• Regulated waste management services (including Sharps
Disposable and Management Solutions)
• Compliance programs (including Steri-Safe Compliance Solutions)
• Pharmaceutical waste services, including controlled substances
(including CsRX Controlled Substance, MedDrop Medication
Collection Kiosk, and Seal&Send)
• Hazardous waste and compliance solutions
• Communication Solutions (including appointment reminders, secure
messaging, event registration, and other communications specifically
for hospitals and integrated delivery networks)
• Maritime waste services (including seaport and airport waste)
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 (including select, priority and express)
2021 10-K Annual Report
Stericycle, Inc. • 6
Revenues by service category for each of the operating segments were as follows:
PART I
In millions
North America
Regulated Waste and Compliance Services
Secure Information Destruction Services
Total North America Segment
International
Regulated Waste and Compliance Services
Secure Information Destruction Services
Total International Segment
Total Revenues
Year Ended December 31,
2020
2021
$
1,457.5 $
679.0
2,136.5
396.5
113.9
510.4
1,541.9
647.3
2,189.2
388.3
98.0
486.3
$
2,646.9 $
2,675.5
See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for
further information on changes in revenues.
Portfolio Optimization
On September 1, 2021, we entered into an agreement and completed the sale of our RWCS operations in Japan for
proceeds of $11.3 million. Revenues of operations in Japan were approximately 1% of our consolidated annual
revenues for 2020, which are reported in International in the RWCS revenue service category.
On December 6, 2021, we entered into an agreement and completed the sale of our Environmental Solutions
operations in Canada for proceeds of $24.4 million. Revenues of our Canada Environmental Solutions operations
were approximately 1% of our consolidated annual revenues for 2020, which are reported in North America in the
RWCS revenue service category.
On December 31, 2021, we acquired a Midwest-based regulated waste business for total purchase consideration of
$43.4 million. This acquisition strengthens our independent customer base in North America, allowing us to leverage
a strong portfolio of customers to increase overall route density in the Midwest region. The acquired business is
anticipated to contribute less than 1% to the RWCS revenue service category for 2022.
Customers
Our service offerings appeal 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. Additionally, we expanded into temporary COVID-19 testing and
vaccination centers and with our non-health care PPE disposal services into distribution centers and grocery stores.
While we manage large volumes of waste and other materials, the average volume per customer site is relatively
small.
No single customer accounted for more than 1.5% of our total revenues and our top ten customers collectively
accounted for approximately 8.5% of total revenues. No single customer accounted for more than 2.9% of our total
accounts receivable and our top ten outstanding customer balances accounted for approximately 10.6% of total
accounts receivable. We have developed a strong and loyal customer base, with an 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.
As of December 31, 2021, Regulated Waste and Compliance Services are provided to customers in the U.S., Brazil,
Canada, Ireland, 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, Belgium, Canada,
France, Germany, Ireland, Luxembourg, the Netherlands, Portugal, Spain, Singapore and the U.K. Secure
Information Destruction Services are also provided in the United Arab Emirates through a joint venture.
In the U.S. and elsewhere, 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, while other customers are leveraging GPOs to reduce healthcare costs.
2021 10-K Annual Report
Stericycle, Inc. • 7
PART I
Our international RWCS operations generate most of their revenues from large account customers, such as
hospitals, publicly funded healthcare organizations and National Trusts versus smaller customers which tend to be
more profitable.
Facilities and Fleet
Our worldwide network includes a global fleet of approximately 5,900 route trucks, tractors, collection vans, and
small duty vehicles. We operate out of approximately 457 facilities worldwide with properties both leased and owned
as described below:
North America
International
Total
Autoclave or
Alternative Medical
Waste Treatment
Medical Waste
Incinerator
Facilities
Secure Information
Destruction
Processing
Transfer Stations
(RWCS and/or SID)
Other Locations
and/or Administrative
Facilities
50
32
82
9
16
25
94
25
119
135
56
191
15
25
40
We are headquartered in Bannockburn, Illinois.
Our Key Business Priorities
Following its founding in 1989, Stericycle grew rapidly through acquisitions as the regulated waste industry
developed. Growth from regulated waste acquisitions helped us achieve scale of infrastructure, route density and a
leadership position in many of the markets we serve. We also leveraged acquisitions to enter new regional and
international geographies and added 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 until we shifted our focus to our five key business priorities in 2019.
We have since advanced our transformation focusing our efforts on the following five key business priorities.
• 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 through customer focus,
pricing for value we provide, and standardizing contracts.
• Operational efficiency, modernization, and innovation – Our day-to-day operations are shifting toward a
standardized and centralized operating model to optimize processes, drive efficiencies and improve both
safety and service. Additionally, our Engineering team is focused on driving cost efficiencies through work
measurement, asset optimization, use of technology, enhanced operational and capital planning, and
expanded strategic sourcing.
•
ERP implementation – Stericycle acquired more than 500 companies without fully integrating certain
acquisitions onto centralized information technology platforms. The resulting disparate operating and
information systems created significant operational inefficiencies and manual processes. We expect the
implementation of the ERP will make it easier for our customers to do business with us, drive improved
operating margins through daily decisions using real-time information insights, simplify and enhance
financial and operational transparency for greater accountability, aid in strategic planning, and streamline
operational processes.
• 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 as we aim to increase
the strength of our balance sheet, continue to invest in our business, and develop a more comprehensive
capital allocation strategy.
•
Portfolio optimization – We continue to focus on where our core businesses can be successful
geographically. To achieve this, we remain committed to pursuing the divestitures of service lines and
geographies that are not as profitable, have limited growth potential, are not vertically integrated, are not
essential to our RWCS and SID Revenue categories, and/or present the opportunity to reduce debt.
Additionally, we will continue to evaluate growth opportunities for our core business through smaller
accretive tuck-in acquisitions.
2021 10-K Annual Report
Stericycle, Inc. • 8
PART I
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 3 - Acquisitions, 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 begins at the customer location with waste segregation. To
assure regulatory compliance, we educate our customers and 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 and is appropriately labeled.
Our team members then collect containers at the customer location via our fleet of vehicles. The majority of
collected waste 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.
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 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.
Incineration: While Stericycle strives to use alternative, non-incineration methods for treating medical
waste, incineration remains a regulatory requirement and/or a best practice in certain geographies or for
certain types of medical waste that need to be chemically destroyed. 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.
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Stericycle, Inc. • 9
PART I
In several of our incineration facilities, we use different types of waste-to-energy solutions as part of our processes.
Stericycle has four incinerators with steam turbines that are able to generate electricity and reduce the amount of
power required from utilities at each site. In the U.K., several of our incinerators export steam to hospitals, where
they are co-located, to be used for facility or hot water heating, steam sterilization, and/or laundry services. Similar
to exported steam, two of our U.K. incinerators export hot water to nearby hospitals. In the U.K. and Ireland, after
medical waste has gone through the alternative treatment process, it is sent for beneficial reuse. This treated waste
is sent to cement producers and used as an alternative fuel for cement kilns.
Communication Solutions
Our Communication Solutions provides live voice, online and automated services to assist hospitals and IDNs in
scheduling and communicating with their patients. Our platform offers online self-scheduling opportunities for both
appointments and classes and events to patients as well as access to live voice agents to assist in the same
capacities. Additionally, we offer live voice support for post discharge services, physician referrals, and marketing
campaigns. Our automated patient engagement allows for tailored communication to patients over Short Message
Service (SMS), email and outbound Interactive Voice Response (IVR) in support of appointment reminders,
preparation instructions, office closures, and health and wellness campaigns.
Providing this service requires information management systems to route 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, all while integrating with our clients' Electronic Health Record (EHRs) and Customer Relationship
Management systems.
Secure Information Destruction
We leverage a combination of off-site and on-site document destruction methods for one-time or recurring paper
shredding, x-ray and hard drive destruction. Approximately 70% of collected documents for secure destruction in
2021 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 can provide
secure chain-of-custody and Proof of 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.
In 2021, Stericycle collected and delivered approximately 529,000 tons of SOP for recycling into paper
products. The volume of recycled paper in 2021 is lower year-over-year primarily because of pandemic related
impacts. During 2021, the average annual SOP price was $140 per ton, as reported by Fastmarkets RISI, an
increase of 25.1% over 2020.
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 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 Medical Waste: Regulated medical waste generated from procedures including any items
saturated with blood or other potentially infectious materials (OPIM), such as bandages, gauze, or PPE,
are considered regulated medical waste or red bag waste.
Trace Chemotherapy Waste: Chemotherapy waste includes empty chemo drug vials, syringes and
needles, spill kits, IV tubing and bags, contaminated gloves and gowns, materials from spill cleanups, or
bodily fluids/waste.
Pathological Waste: Pathological waste such as human or animal body parts, organs, tissues, and
surgical specimens (decanted of formaldehyde, formalin, or other preservatives) are packaged separately.
Sharps Waste: Sharps waste such as needles, scalpels, blades, and pipettes that have come in contact
with blood, body fluids, or microorganisms.
2021 10-K Annual Report
Stericycle, Inc. • 10
PART I
•
•
•
•
•
•
Pharmaceutical Waste: Pharmaceutical waste may be hazardous or nonhazardous and consists of
expired, recalled, or otherwise unused pharmaceuticals.
Controlled Substances Waste: Safely disposing of controlled substances waste immediately after
patient administration to mitigate diversion and protect the environment.
Healthcare Hazardous Waste: Healthcare hazardous waste includes prevalent and well-known waste
streams and other wastes generated in smaller quantities that require proper attention, such as
flammable liquids, xylene, formalin, aerosols, and universal waste.
Maritime Waste: Maritime waste include airport and seaport generated waste including gray water, black
water, bilge water, sludge, solid waste, recyclable solid waste, RCRA hazardous waste, APHIS waste,
and universal waste.
COVID-19 Waste Disposal: Medical waste and PPE waste generated through the COVID-19 pandemic
in healthcare and non-healthcare facilities, including vaccine disposal, testing and temporary healthcare
sites, and non-healthcare PPE disposal.
Personal Confidential Information: 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, are growing or have historically grown prior to the impact of the COVID-19 pandemic. This growth is
driven by multiple factors:
•
•
•
•
•
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: We operate in a highly regulated business where 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 secure
information destruction total addressable market has been driven, in part, by the need for compliance with
increasing government regulation and increasing general concern with privacy and information security.
Recent regulatory changes reflecting this increased regulatory focus include the European GDPR;
California, Colorado, and Virginia’s comprehensive consumer privacy legislation; Canada Personal
Information Protection and Electronic Documents Act; moreover, the majority of states are working on
comprehensive consumer privacy legislation.
Market Expansion Due to Increased Outsourcing: With regard to Communication Solutions, 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 for patient engagement.
Increased Business Focus on Sustainability: Businesses continue to realize that a focus on
sustainability is increasingly essential to operating efficiently and meeting the increasing demands and
expectations of customers and stakeholders 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. 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 a revenue retention rate of approximately 90% (based on our internal customer
attrition analysis) in 2021.
Established Network of Processing and Transportation Locations
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
2021 10-K Annual Report
Stericycle, Inc. • 11
PART I
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.
In 2021, our Engineering team completed a long-term plan focused on our global facility network. Our goal is to
optimize our facilities with a strategic and standardized operating model. We are analyzing processing capabilities,
plant and transportation equipment needs, team member requirements, and potential customer implications or
benefits. This planning process also provided opportunities to focus on reducing our environmental impact by
optimizing our transportation network to reduce miles driven and overall greenhouse gas impact. We anticipate
modernizing our plant equipment with new efficient technology that will also lessen our overall energy consumption
per operating cycle. In 2021, we opened three new facilities (California, Ireland, and United Kingdom) and
completed five autoclave upgrades, representing the initial steps in modernizing our global facility network which we
plan to expand in future periods.
Routing Logistics
While we manage large volumes of waste and secure information for destruction, the average volume per customer
site is relatively small and the resulting revenue per stop is low. As such, route logistics and route efficiency are a
core focus. Our transportation network provides us with an advantage compared to our competition in many of 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. We expect that the ERP implementation will provide greater visibility
to data which will enable routing efficiencies.
Industry Leadership and Expertise
Based on our infrastructure and revenues, we maintain a global leadership position across many of our services
lines, including regulated waste and secure information destruction. We have 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 2014, we
were tasked by the Department of Transportation (DOT) and Centers for Disease Control (CDC) to dispose of waste
from the Ebola outbreak. Stericycle also provided essential regulated medical waste disposal during the 2003 SARs
outbreak and the 2009 H1N1 outbreak. Starting in 2020 and continuing throughout 2021, the Company took a
leadership position related to the management of pandemic waste, supporting our customers and providing 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 and industry trade associations and actively engage in
numerous community meetings each year.
Human Capital Management
Workforce Overview
As of December 31, 2021, we employed over 15,000 active team members, 97% of which were full-time
employees. The efforts and dedication of our team members around the globe enable us to protect what matters
each day. Additionally, we have approximately 1,380 global contingent workers supplementing our staff to fill
temporary positions or as a part of a temporary-to-permanent recruiting program.
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PART I
Our voluntary turnover rate for 2021, excluding turnover due to divestitures, averaged approximately 26%,
compared to approximately 22% during 2020, directionally consistent with resignation rates in the United States. To
ensure best success for recruitment and hiring in North America during 2021, we ended our reliance on third-party
recruiting agencies and built an internal strategy and team of experienced talent acquisition professionals.
Additionally, we increased advertising investment, which included leveraging new social media campaigns to reach
a wider applicant pool, and implemented market-based wage adjustments to bolster recruiting and retention.
At the close of 2021, 12.7% of our total global workforce was covered by a collective bargaining agreement. We are
a party to 13 collective bargaining agreements in the U.S. and Canada, covering approximately 500 employees, or
approximately 4.6% of our total U.S. and Canadian workforce. We have additional agreements and works councils
covering approximately 1,500 employees outside of North America. During 2021, we experienced four work
stoppages for a combined total of 83 idle days during which we continued to provide services.
At Stericycle, “We Commit to Safety Always” is one of our core values and a foundational element supporting how
we operate as a company. We have developed and continue to focus on improving a comprehensive safety
program to protect our team and drive our safety performance.
We have made meaningful advancements in the development and performance of our EHS organization. During
2021, we demonstrated year-over-year improvement in all of our key safety metrics. We remain committed to safety
performance improvement and kicked off a multi-faceted Safety Task Force during December 2021 to pursue key
safety improvements more aggressively across the organization.
Global Total Recordable Injury Rate (TRIR)
Global Lost Work Incident Rate (LWIR)
Vehicle Incidents1
DOT Recordable Accident Rate in the United States
2021
4.80
1.78
1,750
0.75
2020
5.00 2
1.92 2
1,763
0.89
% Change
4.0% Improvement
7.3% Improvement
0.7% Improvement
15.7% Improvement
1 Vehicle Incidents includes any incident, regardless of severity involving a vehicle owned, leased or operated by Stericycle,
excluding vehicle fires. Data reported for 2020 is different from that presented in Stericycle’s 2020 Form 10-K primarily due to the
inclusion of additional countries in which we operate. Stericycle is now able to report vehicle incidents for all but four countries in
which we operate.
2 TRIR and LWIR reported for 2020 is different from that presented in Stericycle’s 2020 Form 10-K as the data was normalized
for divestitures that occurred in 2021.
Our safety improvement journey includes a comprehensive focus on centralized procedures, processes and
monitoring as well as investment in new training programs to increase safety awareness. During 2021, our safety
program expansion included the following:
• We continued the global expansion of our award-winning SWAT (Steer, Watch, Anticipate and Take Action)
defensive driving training;
2021 10-K Annual Report
Stericycle, Inc. • 13
PART I
• We
launched a new, centrally coordinated Global EHS Audit Program
focused on conducting
comprehensive, unscheduled audits of facility operations.
• We completed initial Corporate Facility Risk Assessments at all of our operational facilities. This
assessment process was developed to analyze ten risk categories to proactively identify and address
potential areas of safety and compliance risk.
Diversity and Inclusion
We are committed to driving engagement and inclusivity to bring out the best in our team and our company.
In 2021, 23% of our global workforce were women with a slightly higher proportion of women holding senior
management and middle management roles (31% and 32%, respectively, compared to 29% and 30%, respectively,
during 2020). In the U.S., 54% of our team members were from federally designated racial or ethnic minority
categories at the close of 2021, compared to 53% in 2020. We are reporting only on 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.
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PART I
During 2021, approximately 64% of all U.S.-based new hires in 2021 were racial or ethnically diverse, compared to
approximately 61% during 2020. When promoting from within, approximately 49% of promotions during 2021 were
filled by racially or ethnically diverse individuals, compared to 52% in 2020. Additionally, we hired just over 200 team
members during 2021 who identified as U.S. Veterans.
We also encourage and support employee resource groups (ERG) 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. We routinely leverage our ERGs to
address important social topics with our team members through “Let’s Talk About It” video discussion. Additionally,
during 2021, our ERGs provided educational communications to our team members; hosted speaker events; led
company celebrations for Black History Month, Hispanic Heritage Month, Pride Month, Asian American and Pacific
Islander Month, Veterans Day, and other days of diversity awareness or celebration; and provided mentoring
programs for women and veterans.
During 2021, we expanded our on-going market-based compensation analyses to include assessing pay equity
factors. We are committed to the ongoing and routine assessment of the competitiveness and equity of our team
members’ compensation.
Work-from-Home and Protecting Our Team as the Pandemic Continued
As the COVID-19 pandemic continued in 2021, we continued to monitor best practices as presented by the CDC,
OSHA, the DOT, and regulatory agencies around the world for both proper regulated waste management and team
member health and safety. We maintained the many numerous protocols introduced during 2020 specifically to
reduce the exposure and the potential for spreading of COVID-19 among our front-line, operations team members,
including rigorous facility cleaning protocols, use of proper protective equipment, staggered shift times, and
dedicated trucks to specific drivers. Most of our administrative and office-based team members continued working
from home for all of 2021. Our increased pandemic-related communication efforts designed to keep team members
connected became standard operating practice. In addition to COVID-19 safety updates and vaccine information
from our EHS team, our ongoing communications 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 training programs and resources.
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
Stericycle’s RWCS and SID services are subject to numerous regulations, which are regularly evolving. We are
subject to substantial regulations enacted and enforced by governments within the U.S. and the international
jurisdictions in which we conduct operations. In many countries there are multiple regulatory agencies at the local
and national level that oversee our customers and/or our services. 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 and public
health and safety; transportation; document destruction and management; data privacy; ethical business conduct;
and the management of regulated waste streams, including regulations that govern the definition, generation,
segregation, handling, packaging, transportation, treatment, storage and disposal of regulated waste.
2021 10-K Annual Report
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PART I
This regulatory framework imposes a variety of compliance requirements, including requirements to obtain and
maintain government permits or other authorizations. We maintain governmental permits, registrations and licenses
to conduct our business throughout 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 to, among other things, construct and operate 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. Permit issuance or renewal may also be subject to public
participation.
Various international laws and regulations related to data privacy and the protection of confidential information also
apply to Stericycle’s RWCS and SID services, including HIPAA and the CCPA in the U.S. and the GDPR in Europe.
In addition, 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.
Environmental Protection
Our business is subject to extensive and evolving environmental regulations in the geographies in which we
operate. Generally, the environmental laws that we are subject to regulate the handling, transportation, treatment
and disposal of waste, the release or potential release of hazardous substances into the environment, the discharge
of pollutants into waterways and the emission of pollutants into the air. The principal environmental laws that
govern our operations in the U.S. are the federal Clean Air Act and Clean Water Act, in addition to state laws and
regulations governing regulated waste. 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.
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
including engineering controls,
overseen by OSHA, which establishes specific employer responsibilities
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. 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.
2021 10-K Annual Report
Stericycle, Inc. • 16
Controlled Substances
PART I
Our service offerings for the treatment and disposal of controlled substance pharmaceutical waste, from both the
healthcare industry and individual consumers, are subject to numerous laws and regulations governed by various
regulatory agencies, including the U.S. Drug Enforcement Administration (DEA). These regulations typically require
facilities to obtain licenses or registrations, and meet other certain obligations for approval to collect, transport, treat
and dispose of pharmaceutical waste containing controlled substances. These regulations can have very
prescriptive
regulatory schemes,
registrations/licenses must be kept current, and facilities may be subject to inspection or enforcement.
reporting. Like other
recordkeeping and
for security,
requirements
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 U.S. Custom
and Border Protection. 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.
Insurance and Self-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, automobile 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.
2021 10-K Annual Report
Stericycle, Inc. • 17
PART I
Information about Our Executive Officers
The following table contains certain information regarding our nine current executive officers:
Name
Cindy J. Miller
Janet H. Zelenka
S. Cory White
Joe A. Reuter
Dominic Culotta
Position
President and Chief Executive Officer
Executive Vice President, Chief Financial Officer and Chief Information Officer
Executive Vice President and Chief Commercial Officer
Executive Vice President and Chief People Officer
Executive Vice President and Chief Transformation Officer
Michael S. Weisman
Executive Vice President and Chief Ethics and Compliance Officer
Rich M. Moore
Daniel V. Ginnetti
Kurt M. Rogers
Executive Vice President of North American Operations
Executive Vice President, International
Executive Vice President and General Counsel
Age
59
63
49
60
58
63
60
53
50
Cindy J. Miller has served as a Director since February 2019 and became Stericycle's President and Chief
Executive Officer in May 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
completed the Senior Executive Leadership Programme from the London School of Business.
Janet H. Zelenka was named Executive Vice President and Chief Financial Officer in June 2019. She assumed the
additional duties and responsibilities of Chief Information Officer in June 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 master 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). In this role Mr.
White has oversight of all global commercial activity including sales, account management, sales operations,
customer experience, marketing, product innovation and strategy while retaining his leadership responsibility for the
Stericycle Communications Solutions. 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 11 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 A. Reuter joined Stericycle as Executive Vice President and Chief People Officer in January 2019. Mr. Reuter
previously served as President, International Human Resources at UPS 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 in April 2019. He was named
Chief Transformation Officer in January 2021. Prior to joining Stericycle, Mr. Culotta spent 35 years with 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 while living in Brussels,
Belgium. In addition to his typical responsibilities in Europe, he spent extensive time integrating major acquisitions
into the core business. Prior to his international roles, he had completed various assignments in operations and
engineering while relocating multiple times throughout the United States. Mr. Culotta earned a bachelor’s degree in
engineering sciences from Loyola College in Baltimore.
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Michael S. 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,
apublicly-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 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 M. Moore joined Stericycle as Executive Vice President of North American Operations in January 2019. Prior
to joining Stericycle, Mr. Moore spent 33 years with 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 as President 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 V. Ginnetti became Executive Vice President, International in June 2018 after serving as Stericycle’s Chief
Financial Officer for five years. Mr. Ginnetti joined Stericycle as Area Vice President of Finance in 2003. In 2004 he
was promoted to Area Vice President of Operations 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 Senior Vice President of Corporate Finance and then
named Executive Vice President, Chief Financial Officer in June 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
in business economics from the University of California, Santa Barbara.
Kurt M. 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
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 juris doctor degree from Cornell Law School.
Available Information
We maintain an internet website, 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, Proxy Statements, 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, sec.gov.
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Item 1A. Risk Factors
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 outbreak of the COVID-19
pandemic.
A significant outbreak, epidemic or pandemic of contagious diseases in any geographic area in which we operate
could result in a health crisis adversely affecting the economies, financial markets and overall demand for our
services in such areas. In addition, any preventative or protective actions that governments implement or that we
take in response to a health crisis, such as travel restrictions, quarantines, or facility closures, may interfere with the
ability of our employees and vendors to perform their responsibilities. Such results could have a material adverse
effect on our results of operations.
The continued global COVID-19 pandemic has created significant volatility, uncertainty and economic disruption.
The extent to which the COVID-19 pandemic continues to impact our business, operations and financial results will
depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and
scope of the pandemic; governmental, business and individuals’ actions, including vaccination requirements, that
have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity
and actions taken in response; the effect on our customers’ demand for our services; our ability to provide our
services; the ability of our customers to pay for our services; any closures of our and our customers’ facilities; and
the need for enhanced health and hygiene requirements or other measures taken in an attempt to counteract future
outbreaks in our or our customers’ facilities. In addition, while governments around the world have enacted
emergency relief programs designed to combat the economic impact of the pandemic, the long-term effect of such
spending is uncertain and could result in future budgetary restrictions for our government clients. Any of these
events could adversely affect our business, financial condition and results of operations. During 2021, we
experienced higher than normal driver absences due to the effects of COVID-19.
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.
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.
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We evaluate on an ongoing basis whether facts and circumstances indicate any impairment to the value of
indefinite-lived and definite-lived intangible assets such as customer relationships and 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. Further, we could experience higher customer attrition
as certain customers cease or reduce operations. The recognition of any potential future impairments could have a
material adverse impact on our results of operations.
Changing market conditions in the healthcare industry, healthcare consolidation and healthcare reform,
could adversely affect our results of operations.
Within the U.S. and elsewhere, 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.
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. We may elect to exit or not participate in low margin customer relationships. 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. We may also face competition from competitors employing new or alternative technologies. In addition,
large national companies with substantial resources and companies funded by private equity firms operate in the
markets we serve.
Fluctuations in the commodity market related to the demand and price for recycled paper affects 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
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. We have experienced a decline in paper
tonnage collected over the past two years which we believe is a reduction in the consumption of paper due to
pandemic related impacts, such as a shift to remote work and virtual learning, and it remains unclear what the future
long-term impact will be on the paper volume we collect. 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 volume of material collected from 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
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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 laws and regulations change often, and new requirements
are frequently adopted. Changes in applicable laws and 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 or maintain the permits that we require, and/or 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
waste processing plants and transfer facilities, are difficult and time-consuming to obtain and they may not be
issued as quickly as we need them or be issued at all. They may also contain conditions or restrictions that limit our
ability to operate efficiently. 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. The Company is party to legal or
administrative proceedings regarding obtaining and maintaining permits, or alleged violations of existing permit
terms and related requirements. For additional information, please see Part II, Item 8, Financial Statements and
Supplementary Data --Note 19 – Legal Proceedings in the Consolidated Financial Statements.
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 regulated waste and certain 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, treatment and
disposal and the 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.
Complications with the implementation of our 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 ERP system implementation, 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 increased costs and other difficulties and our planned timeline to implement the
remaining phases of our ERP system may be delayed. If we are unable to successfully implement our ERP system
as planned, our business, results of operations, and financial condition could be negatively impacted. The SID
North America ERP deployment impacted revenue in the third quarter of 2021. This decline was due to typical ERP
start-up challenges, which included team members learning new processes and technology across every aspect of
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the business and onboarding and tuning the flow of data elements through the system. 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 adequately
assess those controls 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. We previously
experienced an incident of phishing activity targeting certain Stericycle employee email accounts and determined
that some of these employee email accounts containing personal information appear to have been accessed by one
or more unauthorized parties. We found 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. 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 regarding information security and privacy is increasingly demanding, with the
frequent imposition of new and regularly changing requirements. Certain legislation, including FACTA, 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
other 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 and states
in the U.S. 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.
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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. Parts shortages due to a reduction in the availability of raw materials, supply chain
challenges, and manufacturing delays are expected to continue to drive higher prices for parts and supplies. In
addition, any increases in the prices of fossil fuels are expected to put pressure on our fuel expense, as well as
parts and supplies derived from fossil fuels, such as engine oil, diesel exhaust fluid, tires and other rubber and
plastic parts.
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 16 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)
trade restrictions; (x) changes in tariffs and taxes; (xi) tax and foreign investment policies; (xii) industry or macro-
economic trends; (xiii) permitting and regulatory standards; (xiv) differences in local laws, regulations, practices, and
business customs; (xv) restrictions on repatriating foreign profits back to the U.S. or movement of funds to other
countries; (xvi) difficulties in staffing and managing international operations; (xvii) increases and volatility in labor
costs; (xviii) property ownership restrictions in certain countries; and (xix) emerging trends or regulations related to
reducing the impact of climate change. 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 certain foreign authorities, and also have conducted 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. We have entered into settlement discussions with the SEC, DOJ, and Brazilian authorities with respect to
the foregoing matters, and although we have reached agreements in principle with the DOJ and with the SEC,
those agreements remain to be finalized and approved. The settlement discussions with the Brazilian authorities
are ongoing and there is no certainty that we will be able to reach a settlement. As a result of the foregoing, we
recorded an aggregate accrued liability for these matters of $80.7 million as of December 31, 2021. 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, including in the pending resolutions with the DOJ and SEC. Such
determinations could subject us to, among other things, enforcement actions by the SEC or the DOJ or other
regulatory bodies, fines, penalties, oversight by an independent compliance monitor and/or self-reporting
obligations, litigation, or orders of suspension or debarment, which could adversely affect our business, financial
condition and results of operations. See Part II, Item 8 Financial Statements and Supplementary Data Note 12 –
Commitments and Contingencies and Note 19 – Legal Proceedings in the Consolidated Financial Statements for
more information regarding currently pending legal proceedings.
We are subject to a number of pending lawsuits.
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
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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 19 - Legal Proceedings in the Consolidated Financial Statements for
more information regarding currently pending legal proceedings.
We are subject to extensive government imposed requirements; noncompliance could result in significant
liabilities.
Our operations are subject to extensive federal, state and local laws and regulations. The consequences of failure
to comply with government-imposed regulations and other requirements can impact our ability to service our
customers, and thus our operational results. Compliance with government regulations can also be costly, which
impacts our overall financial condition.
In the ordinary course of business we are routinely involved in various government enforcement proceedings,
private lawsuits and other disputes alleging non-compliance with applicable regulation. Such matters can result in
permit revocations or denials, civil penalties or other obligations that may require significant expenditures.
Due to the nature of regulated waste services, we face risk associated with potential regulation of emerging
contaminants that may have been present in materials historically collected for treatment and disposal. Further,
there is risk of incurring significant environmental cleanup liabilities that arise due to our current operations, pre-
existing conditions at the locations where we operate, and/or successor or predecessor liability associated with our
portfolio optimization strategy.
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. Furthermore, as a result of portfolio optimization efforts through which we may acquire new
assets or businesses, sell existing assets or businesses, or exit particular markets, there may exist tax rules,
regulations, or other matters that may be the focus of examination and challenge by applicable taxation authorities.
Similarly, 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 portfolio optimization, we could also incur additional charges associated with consulting fees
and other charges.
In response to significant market volatility and disruptions to business operations resulting from the global spread of
the COVID-19 pandemic and corresponding government relief efforts, 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 March 27, 2020, the President signed into law the CARES Act. 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 CARES Act is highly detailed, and we will continue to assess the impact
that various provisions will have on our business.
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On December 27, 2020, the President signed the CAA 2021, which provides several business tax relief provisions,
including (i) extension of the CFC look-through rule through 2025, (ii) a temporary 100% deduction for business
meals paid or incurred in 2021 and 2022, and (iii) extension of the WOTC through 2025. We will continue to assess
the CAA 2021 with respect to the provisions that have an impact on our business.
Further, on March 11, 2021, the President signed into law the ARP Act, a legislative package which is generally not
significant to the Company’s current tax footprint. We will continue to assess the ARP Act on an ongoing basis.
We have accumulated NOLs arising from our operations and foreign and domestic acquisitions of $281.6 million as
of December 31, 2021. 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. For additional information, please see Part II, Item 8. Financial Statements and Supplementary Data; Note
10 – Income Taxes.
Requirements of governments, 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.
The United Nations Climate Change Conference in Glasgow (COP26), which reaffirmed the Paris Agreement goal
of limiting the increase in the global average temperature to well below 2°C above pre-industrial levels, has
increased focus on sustainability matters. Even prior to COP26, many of our customers have established goals for
their organizations to be carbon neutral or reduce waste levels, especially wastes that go to landfills, and have
extended such goals to their key vendors and business partners. For example, the National Health System (NHS)
in the U.K. established a goal for its suppliers to be net zero by 2045, and, in September 2021, the NHS announced
that all suppliers of goods and services with NHS contracts commencing April 2024 will be required to publish a
carbon reduction plan for their direct emissions. 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.
Around the world, there are also a wide range of legislative and regulatory efforts at the state, provincial, regional
and federal levels focused on reducing greenhouse gas emission and minimizing the impact of climate change.
These emerging legislative and regulatory efforts include, among other things, initiatives to reduce the use of fossil
fuels, single use plastics, and waste volumes sent to landfills. In California, several county and municipal
governments have introduced zero waste to landfill goals; at least one customer has not renewed RWCS service in
order to pursue options that avoid landfills. We actively monitor the regulatory landscape and the potential impacts
to our operations of such efforts. These evolving regulations and expectations could also affect certain management
estimates, including long-lived asset useful lives and asset retirement obligations, which could adversely impact
results of operations.
The increased focus on minimizing climate change from customers, investors, and regulatory bodies may impact
our revenues as well as our cost of operations in the future.
FINANCIAL AND CONTROL RISKS
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 acquire new assets or businesses and may sell certain existing assets or businesses or exit particular markets.
Acquisitions and 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. 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. See Part II, Item 8. Financial Statements and
2021 10-K Annual Report
Stericycle, Inc. • 26
PART I
Supplementary Data; Note 4 - Restructuring, Divestitures, and Impairments in the Consolidated Financial
Statements. Acquisitions also involve certain risks, including our ability to realize operating efficiencies, synergies
and other benefits expected from an acquisition, diversion of management’s time and attention from other business
concerns, difficulties in retaining key employees, customers and suppliers of the acquired business, difficulties in
maintaining uniform standards, controls, policies and procedures throughout acquired companies, and adverse
effects on existing business relationships with customers and suppliers. We may also face liability with respect to
acquired businesses for violations of environmental laws occurring prior to the date of acquisition, and some or all of
these liabilities may not be covered by environmental insurance secured to mitigate the risk or by indemnification
from the sellers from which we acquired these businesses. See Part II, Item 8. Financial Statements and
Supplementary Data; Note 3 - Acquisitions 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.
Potential for rising interest rates.
The financial markets may experience an increase in interest rates as the Federal Reserve raises interest rates in
an effort to curb inflation. Although most of our outstanding debt is at fixed interest rates, an increase in rates would
2021 10-K Annual Report
Stericycle, Inc. • 27
PART I
impact our variable rate debt. Rising interest rates may also lead to higher rates in the event we refinance our
outstanding fixed rate debt thereby resulting in an overall increase in interest expense.
The amount of our indebtedness could adversely affect our business.
As of December 31, 2021, we had a total of $1.6 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 our 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 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, 2021 contains goodwill of
$2.8 billion and other intangible assets, net of $964.5 million. We evaluate on an ongoing basis whether facts and
circumstances indicate any impairment to the carrying 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
2021, 2020, and 2019, we recognized non-cash impairment charges of $6.7 million, $11.1 million, and $17.7 million,
respectively, of operating permits, tradenames, and customer relationships. Additionally, in 2019 we recognized
$228.3 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 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.
2021 10-K Annual Report
Stericycle, Inc. • 28
PART I
Based upon the information available to us from plan administrators as of March 30, 2021, 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 customers and affect our results of operations.
We are a party to 13 collective bargaining agreements in the U.S. and Canada, covering approximately 500 team
members, or approximately 4.6% 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. During 2021 the Company experienced a total of four work
stoppages at its facilities as a result of labor disputes.
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, and spills (including those caused by 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, placement
of prohibited materials into the waste stream, or malfunctioning plant equipment, such as power outages, or
ineffective backup systems.
2021 10-K Annual Report
Stericycle, Inc. • 29
PART I
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. Like many other route-based businesses, we are
being impacted by our industry’s driver and facility team member shortages. 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 drivers and other 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
Increasing occurrences of natural disasters or other catastrophic events caused by climate change or
otherwise 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. 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, which could have an adverse effect on our results of operations and financial condition.
Inflationary cost environment and supply chain disruption.
During 2021, we experienced inflationary cost increases in our underlying expenses, including labor, supply chain
related, and other expenses. We may continue to experience inflationary cost increases in labor, commodities,
facility and vehicle leases, third party expenditures, plant equipment and construction expenditures, and other
expenses. We may not be able to pass all of these cost increases on to our customers. We are also experiencing
delays in completing certain capital projects and have additional challenges due to macroeconomic supply chain
disruptions. Should these conditions persist, our business, financial condition, results of operations and cash flows
could be negatively impacted.
2021 10-K Annual Report
Stericycle, Inc. • 30
PART I
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
Information regarding certain legal proceedings in which we are involved can be found in Part II, Item 8. Financial
Statements and Supplementary Data; Note 19 - Legal Proceedings in the Consolidated Financial Statements and is
incorporated herein by reference.
Item 4. Mine Safety Disclosures
Not Applicable.
2021 10-K Annual Report
Stericycle, Inc. • 31
PART II
PART II
Item 5. Market for the Registrant’s Common Equity, 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 81
shareholders of record as of February 22, 2022.
We did not declare or pay any cash dividends on our common stock during 2021, 2020, or 2019. 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, 2021, we had purchased a
cumulative total of 22,219,146 shares. No common stock purchases were made during 2021.
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, 2021.
The graph assumes that the value for the investment in Stericycle and in each of the indices was $100 on
December 31, 2016 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.
Company/Index
Stericycle, Inc.
Nasdaq Global Select Market
Composite Index
S&P Mid Cap 400 Index
Dow Jones U.S. Waste & Disposal
Services Index
$
$
$
$
2016
2017
2018
2019
2020
2021
100.00 $
88.25 $
47.62 $
82.83 $
89.99 $
77.41
100.00 $
100.00 $
128.43 $
114.45 $
123.71 $
100.15 $
167.75 $
124.23 $
239.95 $
138.90 $
295.42
171.15
100.00 $
114.84 $
112.82 $
149.86 $
157.08 $
216.71
Item 6. Selected Financial Data
[Reserved]
2021 10-K Annual Report
Stericycle, Inc. • 32
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 2021 Form 10-K. For further discussion regarding operating and financial data for the year ended
December 31, 2020 as compared to the year ended December 31, 2019, refer to Part II, 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, 2020.
Overview
Stericycle is a global U.S. based business-to-business services company. We provide an array of highly specialized
compliance-based solutions that protect people and brands, promote health and well-being, and safeguard the
environment. Since our founding in 1989, we have grown from a small start-up in medical waste management into a
leader across a range of increasingly complex and highly regulated arenas, serving healthcare organizations and
commercial businesses of every size through Regulated Waste and Compliance Services and Secure Information
Destruction Services.
Through our family of brands, Stericycle serves customers in the U.S. and 16 other countries worldwide with
solutions for Regulated Waste and Compliance Services and Secure Information Destruction Services. To our
customers, team members and the communities we serve, Stericycle is a company that protects what matters.
Our service offerings appeal 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 relatively small.
Highlights for the year ended December 31, 2021 compared to the prior year include:
•
•
•
•
•
•
We completed deployment of our ERP system for North America finance and procurement processes
and SID business.
Organic revenues increased 5.4%, driven by RWCS organics revenues which increased 5.6% and
SID organic revenues which increased 5.0% for the year ended December 31, 2021 compared to the
prior year.
We renewed our Credit Agreement, which maintains our Revolving Credit Facility of $1.2 billion and
establishes a Term Loan Facility of $200.0 million, with new maturity dates of September 30, 2026.
We divested our RWCS operations in Japan for proceeds of $11.3 million in the third quarter of 2021
and divested our Environmental Solutions operations in Canada for proceeds of $24.4 million in the
fourth quarter of 2021, which are reported in International and North America, respectively.
We acquired a Midwest-based regulated waste business in the fourth quarter of 2021 for total
purchase consideration of $43.4 million.
We opened three new regulated waste facilities, upgraded five autoclaves in 2021, completed 13
non-autoclave facility modernization projects and completed a comprehensive, long-term facility
planning process.
For additional information, see Part II, Item 8, Financial Statements and Supplementary Data; Note 3 – Acquisitions,
Note 4 – Restructuring, Divestitures, and Impairments and Note 9 – Debt in the Consolidated Financial Statements.
COVID-19 Pandemic and Other Developments
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
2021 10-K Annual Report
Stericycle, Inc. • 33
PART II
within all business service offerings. We are monitoring future implications of the COVID-19 pandemic, including
COVID-19 variants, and continue to take actions to manage spending to align to operational requirements.
Our 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 CDC, OSHA, the DOT and regulatory agencies around the world to
ensure readiness for proper regulated waste management. Our team demonstrated leadership and commitment to
protecting what matters by working with pharmaceutical companies and government agencies to align on standards
for secure and compliant COVID-19 vaccination treatment protocols. Additionally, Stericycle supports the front end
of vaccination programs through our Communications Solutions service line. We provide scalable patient hotlines,
scheduling, and appointment reminders for vaccinations.
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 implemented more rigorous cleaning protocols
for all our facilities. Throughout the pandemic, our front-line workers have continued to meet the needs of our
customers.
Like many organizations, we too have been impacted by labor shortages and higher absences, particularly among
driver and operational team members. To date, we are addressing our internal needs through three main areas: (1)
recruitment, (2) market competitive compensation and benefits, and (3) employee engagement and retention.
Although we have been able to maintain near our desired staffing levels through these efforts, and that has enabled
us to continue to support our customers, labor shortages have not uniformly impacted our businesses. In certain
geographies and facilities, we have experienced more acute labor shortages. Those locations have required
additional team member overtime and re-allocation of team members to continue to support our customers.
Over several months in the second half of 2021, we had several hundred team members absent from work due to
Covid-related illness. Where we were unable to allocate resources to cover absent team member routes, our
transactional based revenue was negatively impacted.
During 2021, we have experienced inflationary cost increases in our underlying expenses, including labor and
supply-chain and other costs. We are also experiencing delays in completing certain capital projects and have
additional challenges due to macroeconomic supply chain disruptions. We continue to demonstrate to our
customers the value of the services we provide. One of the strengths of our quality of revenue initiative has been
working to create a more flexible pricing model with the necessary levers to adjust to these inflationary cost
challenges. We have the following pricing levers: (i) for existing contracts, we have been addressing the
standardization of contractual language and building in pricing flexibility, which affords us the opportunity to adjust
pricing in several ways at contract anniversary and renewal, (ii) for all new customers and purchasers of our one-
time services, we have the ability to adjust our rates at point of sale, and (iii) for many customers we also have the
ability to adjust surcharges and fees that provide inflationary cost protection for commodity and other price volatility
(e.g. fuel, recycled paper, and environmental surcharges and a new service cost recovery fee).
2021 10-K Annual Report
Stericycle, Inc. • 34
PART II
The impact of the COVID-19 pandemic across our revenue service categories in 2021 is as follows:
Revenue Service
Category
COVID-19 Pandemic Impact
Regulated Waste and
Compliance Services
RWCS organic revenue growth was 5.6% in 2021 compared to 2020.
North America RWCS organic revenues grew 4.8% as elective surgeries and maritime waste
services began to recover from the impacts of the pandemic, although they remain below pre-
pandemic levels.
International RWCS organic revenue growth was 8.4%, primarily attributable to supporting our
customers through the pandemic. Although International RWCS had strong organic revenue
growth in 2021 compared to 2020, in the fourth quarter of 2021 that growth narrowed as a result
of International COVID waste volumes beginning to decline as International markets we serve
begin to recover from the effects of the pandemic.
While still below pre-pandemic levels, SID organic revenue growth was 5.0% in 2021 compared
to 2020, primarily related to the continued recovery from the impact of the COVID-19 pandemic.
Secure Information
Destruction Services
In North America, SID organic revenue grew 4.3% compared to 2020. When evaluating 2021
against pre-pandemic results from 2019, service stops remain lower by approximately 9%.
International organic revenues increased 9.4% compared to 2020, primarily related to the
continued recovery from the impact of the COVID-19 pandemic.
Recycled paper tonnage volume for 2021 was approximately 529,000 tons, compared to 567,000
tons in 2020. Although tonnage was lower year-over-year, SOP recycling revenue in 2021 was
higher due to higher SOP prices.
Key Business Priorities
In 2021, our five key business priorities were the following:
• 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.
• Operational efficiency, modernization and innovation – As we manage through complex times, we
remain focused on operational efficiency, modernization, and innovation to control variable and
discretionary costs and improve performance and efficiencies in our field operations. In 2021, our
Engineering team completed a long-term planning process focused on our global facility network. Our goal
is to optimize our facilities with a strategic and standardized operating model. We are analyzing processing
capabilities, plant and transportation equipment needs, team member requirements, and potential customer
implications or benefits. In 2021, these efforts led to five facilities receiving new and upgraded autoclaves
and the opening of three new regulated waste operating facilities.
•
ERP implementation – In the third quarter of 2021, we completed deployment of our ERP system for North
America’s finance and procurement processes and for North America’s SID business. The ERP start-up
challenges and customer disruptions that we experienced in the third quarter have improved as we've
continued to fine tune the new technology and processes.
• Debt reduction and leverage improvement – We expect to improve our leverage ratio through continued
focus on operating margin expansion, free cash flow generation, and leveraging divestiture proceeds, if
applicable. We have reduced total debt to $1,623.7 million at December 31, 2021. As of December 31,
2021, our Credit Agreement Defined Debt Leverage Ratio was 3.61 times.
•
Portfolio optimization – In the third quarter of 2021 in International we divested our RWCS operations in
Japan for proceeds of $11.3 million and in the fourth quarter of 2021 in North America we divested our
Environmental Solutions operations in Canada for proceeds of $24.4 million. In the fourth quarter, we
completed the acquisition in North America of a Midwest-based regulated waste business for total purchase
consideration of $43.4 million.
2021 10-K Annual Report
Stericycle, Inc. • 35
Certain 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):
PART II
In millions
Pre-tax items:
Included in COR
Asset Impairments
Total included in COR
Included in SG&A
ERP Implementation
Intangible Amortization
Operational Optimization
Portfolio Optimization
Litigation, Settlements and Regulatory Compliance
Asset Impairments
Other
Total included in SG&A
Divestiture (gains) losses, net
Year Ended December 31,
2021
2020
$
— $
—
6.8
6.8
59.0
117.9
—
5.0
93.2
6.7
—
281.8
50.8
124.9
3.1
9.4
20.3
8.7
9.1
226.3
(1.7)
123.6
Total included in income (loss) from operations
280.1
356.7
Included in Other (income) expense, net
Other (including highly inflationary exchange loss)
Total pre-tax
After tax items:
CARES Act and Other Tax Matters
Total after-tax
$
$
$
—
280.1 $
1.2
357.9
(1.9) $
(1.9) $
(44.4)
(44.4)
The above priorities and other significant matters include the following types of activities:
Closure and Exit
Costs(1)
üü
Cash Charges
Internal (2)
üü
Consulting and
Professional
Fees
üü
üü
üü
üü
üü
Other (3)
Non-Cash
Charges (4)
üü
üü
üü
üü
üü
üü
ERP Implementation
Operational Optimization
Portfolio Optimization
Litigation, Settlements and
Regulatory Compliance
Other
(1)
(2)
(3)
(4)
Includes employee and contract termination, facility closure and clean-up costs.
Includes dedicated resources, including project related incentive compensation and stock-based
compensation.
Includes other costs related to each priority (e.g. software maintenance fees, litigation, settlement and
regulatory compliance charges, changes in contingent consideration and environmental provisions).
Includes impairments, accelerated depreciation and/or amortization, gain/loss on disposal and
changes in deferred consideration.
2021 10-K Annual Report
Stericycle, Inc. • 36
ERP Implementation
For the years presented and for the cumulative period since the inception of the ERP Implementation, we have
recognized the following, principally reported in Other Costs:
PART II
In millions
ERP development and implementation
Consulting and professional fees
Internal labor
Software usage/maintenance fees
Other related expenses
Operating expenditures
Capital expenditures
Total charges and capital expenditures
Non-cash charges
Cash charges and stock based compensation
Total operating expenditures
Year Ended December 31,
2021
2020
Cumulative
Since
Inception
$
41.8 $
21.8 $
106.8
7.9
7.5
1.8
59.0
19.9
13.1
12.1
3.8
50.8
51.3
$
$
$
78.9 $
102.1 $
0.6 $
58.4
59.0 $
2.0 $
48.8
50.8 $
39.1
42.3
11.5
199.7
180.7
380.4
16.2
183.5
199.7
As we continue to prepare to deploy the North America ERP for our operations, we will incur costs to develop and
deploy the system, which includes additional capital expenditures as well as operating expenditures. Upon the
substantial implementation of North America's finance and procurement processes and for North America's SID
business in the third quarter 2021, certain costs became incremental information technology ongoing costs for
running the new system, including maintenance, licensing, and depreciation expenses. Additionally, we will continue
to incur costs to maintain the legacy suite of applications that are also used by our international businesses until
their system portfolio is modernized or optimized.
Intangible Amortization
See table above of certain 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 and
certain assets reaching their full useful lives. 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 17
– Segment Reporting in the Consolidated Financial Statements.
Portfolio Optimization
See table above of key priorities and other significant matters for portfolio optimization (including Divestiture (gains)
losses, net) for the years presented, and how they are classified in the Consolidated Statements of Loss.
Professional fees are reported in Other Costs, while the various divestitures are included in the respective segment
in the table below.
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;
2021 10-K Annual Report
Stericycle, Inc. • 37
PART II
•
•
•
•
•
•
•
potential for margin improvement;
current divestiture value versus future divestiture value;
ongoing capital requirements of the business;
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 Divestiture (gains) losses, net in the Consolidated Statements of Loss:
In millions
North America Segment
Canada Environmental Solutions operations
Domestic Environmental Solutions operations
CRS businesses
Total North America charges, net
International Segment
Japan RWCS operations
CRS business
Argentina operations
Mexico RWCS operations
Chile RWCS operations
Total International charges, net
Divestiture (gains) losses, net
Year Ended December 31,
2021
2020
$
(12.6) $
—
—
(12.6)
10.9
—
—
—
—
10.9
(1.7) $
$
—
53.8
(38.8)
15.0
—
(4.0)
112.4
(4.9)
5.1
108.6
123.6
For additional information regarding Divestiture (gains) losses, net, 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.
Acquisition and Integration
A part of our portfolio optimization business priority, we are continuously evaluating the competitive environment and
considering opportunistic acquisitions that strengthen our core businesses. Acquisitions, when appropriately valued
and constructively integrated, are an efficient way to gain customers, scale treatment operations, and build critical
customer density for transportation. We will be focused on smaller accretive tuck-in acquisitions.
Details of the acquisition completed in the years ended December 31, 2021 and 2019 can be found in Part II, Item
8. Financial Statements and Supplementary Data; Note 3 – Acquisitions in the Consolidated Financial Statements.
Operational Optimization
See table above of certain key priorities and other significant matters for operational optimization for the years
presented and how they are classified in the Consolidated Statements of Loss.
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.
For additional information, see Part II, Item 8. Financial Statements and Supplementary Data; Note 4 –
Restructuring, Divestitures, and Impairments in the Consolidated Financial Statements.
2021 10-K Annual Report
Stericycle, Inc. • 38
PART II
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 19 – Legal Proceedings, in the Consolidated
Financial Statements. Our financial results may also include considerations of non-recurring matters including
settlements, environmental remediation, and legal related consulting and professional fees.
See table above of certain key priorities and other significant matters for litigation, settlement and regulatory
compliance charges. Among other things, the table reflects consulting and professional fees, contingent liability
provisions and settlements, net of insurance recoveries, impacting our business for the periods presented, primarily
in Other Costs. The year ended December 31, 2021 reflects an estimated aggregate FCPA settlement accrual
of $80.7 million. The table above also reflects how these matters are classified in the Consolidated Statements
of Loss.
Asset Impairments
Impairment charges comprise the following:
In millions
Asset impairments:
Property plant and equipment
Impairments included in COR
Property plant and equipment and Right of Use asset
Customer lists, permits and tradenames
Impairments included in SG&A
Total Asset impairments
Year Ended December 31,
2021
2020
$
— $
—
2.1
4.6
6.7
6.8
6.8
0.2
8.5
8.7
$
6.7 $
15.5
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 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 certain key priorities and other significant matters for other charges, primarily consulting and
professional fees related to internal control remediation activities, impacting our business for the periods presented,
primarily in Other Costs, and how they are classified in the Consolidated Statements of Loss.
See table above of certain key priorities and other significant matters for the impact of foreign exchange re-
measurement of net monetary assets held in Argentina, which was divested in August of 2020, 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.
U.S. CARES Act and Other Tax Matters
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):
2021 10-K Annual Report
Stericycle, Inc. • 39
PART II
Year Ended December 31,
In millions
2021
2020
Change
($)
Change
(%)
Components of Change (%)
Divestiture
s
Foreign
Exchange (2)
Organic
Growth (1)
Revenue by Service
Regulated Waste and Compliance Services (4) $ 1,854.0 $ 1,930.2 $
Secure Information Destruction Services
792.9
745.3
Total Revenues
$ 2,646.9 $ 2,675.5 $
North America
Regulated Waste and Compliance Services (4) $ 1,457.5 $ 1,541.9 $
Secure Information Destruction Services
647.3
679.0
Total North America Segment
$ 2,136.5 $ 2,189.2 $
(76.2)
47.6
(28.6)
(84.4)
31.7
(52.7)
(3.9%)
6.4%
(1.1%)
(5.5%)
4.9%
(2.4%)
International
Regulated Waste and Compliance Services (4) $
Secure Information Destruction Services
Total International Segment
$
396.5 $
388.3 $
113.9
510.4 $
98.0
486.3 $
8.2
15.9
24.1
2.1%
16.2%
5.0%
5.6 %
5.0 %
5.4 %
4.8 %
4.3 %
4.7 %
8.4 %
9.4 %
8.6 %
(10.6%)
—%
(7.7%)
(10.7%)
—%
(7.5%)
(10.3%)
—%
(8.2%)
1.1%
1.4%
1.2%
0.4%
0.6%
0.4%
4.0%
6.8%
4.6%
(1) Organic growth is a change in revenues which includes SOP (sorted office paper) pricing and volume and excludes the impact of
(2)
(3)
(4)
divestitures and foreign exchange.
The comparisons at constant currency rates (foreign exchange) reflect comparative local currency balances at prior period’s foreign
exchange rates. We calculated these percentages by taking current period reported Revenues less the respective prior period reported
Revenues, divided by the prior period reported Revenues, all at the respective prior period’s foreign exchange rates. This measure
provides information on the change in Revenues assuming that foreign currency exchange rates have not changed between the prior and
the current period. Management believes the use of this measure aids in the understanding of changes in Revenues without the impact of
foreign currency.
For further information, see Part II, Item 8. Financial Statements; Note 2 – Revenues from Contracts with Customers in the Consolidated
Financial Statements.
In the first quarter of 2021, we updated our service lines to include Communication Solutions (formerly part of CRS) in RWCS.
Revenues for the year ended December 31, 2021 were $2,646.9 million, a decrease of 1.1% compared to $2,675.5
million in the prior year. The year-over-year decline in revenue was mainly due to divestitures of the Environmental
Solutions business in the second quarter of 2020, the Argentina operations in the third quarter of 2020, the Expert
Solutions business in the fourth quarter of 2020, the Japan RWCS operations in the third quarter of 2021, and the
Canada Environmental Solutions business in the fourth quarter of 2021, which collectively reduced revenue by
$204.3 million or 7.7%. Partially offsetting these declines were organic revenue growth of $144.3 million or 5.4%,
largely attributable to the quality of revenue initiatives, COVID-related revenues, recovery from COVID-19 pandemic
impacts, and higher recycled paper revenues reflecting higher SOP pricing.
North America revenues decreased $52.7 million, or 2.4%, for the year ended December 31, 2021 to $2,136.5
million from $2,189.2 million in the prior year. The year-over-year decrease was primarily due to divestitures which
reduced revenues by $164.6 million or 7.5%. The decline in revenue was partially offset by an increase in organic
revenues of $102.5 million or 4.7%, largely attributable to the quality of revenue initiatives, COVID-related revenues,
recovery from COVID-19 pandemic impacts, and higher recycled paper revenues reflecting higher SOP pricing. In
the third quarter, we experienced typical ERP start-up challenges in North America SID. These challenges were
acute in the third quarter and we exited the fourth quarter and the full-year with year-over-year organic growth in
North America SID.
International revenues increased $24.1 million, or 5.0%, for the year ended December 31, 2021 to $510.4 million
from $486.3 million in the prior year. The increase in International revenues was primarily due to organic revenue
growth of $41.8 million, or 8.6%, primarily attributable to the recovery from COVID-19 pandemic impacts and the
favorable effect of foreign exchange rates of $22.0 million, or 4.6%. These improvements were partially offset by
reduced revenues from divestitures of $39.7 million or 8.2%.
Gross Profit
In millions
Gross profit
Year Ended December 31,
2021
2020
$
1,017.2
% of
Revenues
38.4%
$
1,053.1
% of
Revenues
39.4%
Change 2021 versus
2020
$
(35.9)
%
(3.4%)
The decrease in gross profit for the year ended December 31, 2021, as compared to 2020, was primarily due to the
impact of divestitures, higher labor costs, additional costs incurred for typical start-up challenges associated with the
ERP deployment, and supply chain and other inflationary costs. These were partially offset by increased revenues
2021 10-K Annual Report
Stericycle, Inc. • 40
related to quality of revenue initiatives, COVID-related revenues, recovery from COVID-19 pandemic impacts, and
higher recycled paper revenues reflecting higher SOP pricing. Further, for the year ended December 31, 2021, we
incurred lower charges associated with our certain key priorities and other significant matters discussed above.
PART II
SG&A
In millions
SG&A
Year Ended December 31,
2021
2020
Change 2021 versus
2020
$
946.6
% of
Revenues
35.8%
$
897.6
% of
Revenues
33.5%
$
%
49.0
5.5%
For the year ended December 31, 2021 compared to the prior year, we incurred higher SG&A charges associated
with certain key priorities and other significant matters discussed above, primarily due to Litigation, Settlement and
Regulatory Compliance matters which included an estimated aggregate FCPA settlement expense. The remaining
increases in SG&A for the year ended December 31, 2021, as compared to the prior year, was mainly due to higher
ERP related operating expenditures and depreciation, variable spending expenses associated with organic revenue
growth and higher labor costs. These were partially offset by changes in divestitures, net, lower bad debt expense,
and lower incentive compensation. Bad debt expense was lower for the year ended December 31, 2021 compared
to the prior year due primarily to a decrease in risk of collectability associated with the impacts of the COVID-19
pandemic.
Divestitures (Gains) Losses, Net
In millions
Divestitures (gains) losses, net
Year Ended December 31,
2021
2020
Change 2021 versus
2020
$
% of
Revenues
$
(1.7)
(0.1%) $
$
123.6
% of
Revenues
4.6% $
$
(125.3)
%
(101.4%)
For additional information regarding Divestiture (gains) losses, 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.
Segment Profitability
The Company uses Adjusted Income from Operations as its measure of segment profitability – see Part II, Item 8.
Financial Statements and Supplementary Data; Note 17 – 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:
In millions
Adjusted Income from Operations
North America
International
Other
Total
Reconciliation to Income from operations:
Adjusted Income from Operations
Adjusting Items Total(1)
Income from Operations
Change 2021
versus 2020
$
%
% of
Segment
Revenues
27.7%
9.6%
nm
14.5%
(18.4)
(3.0%)
7.1
15.3%
(24.9)
(36.2)
9.4%
(9.3%)
Year Ended December 31,
2020
2021
% of
Segment
Revenues
27.5%
10.5%
nm
13.3%
$
587.6
53.6
(288.8)
352.4
352.4
(280.1)
72.3
$
606.0
46.5
(263.9)
388.6
388.6
(356.7)
31.9
nm - percentage change not meaningful
(1) See Part II, Item 8. Financial Statements and Supplementary Data; Note 17 - Segment Reporting
2021 10-K Annual Report
Stericycle, Inc. • 41
PART II
Adjusted Income from Operations for North America decreased $18.4 million, or 3.0%, for the year ended
December 31, 2021 to $587.6 million from $606.0 million in the prior year. Adjusted Income from Operations
declined primarily due to typical start-up challenges associated with the ERP deployment, higher supply chain, labor
and other inflationary costs, the impact of divestitures and increased selling expenses, partially offset due to
impacts, higher recycled paper revenues
increased revenues related
reflecting higher SOP pricing and lower bad debt expense.
from COVID-19
the recovery
to
Adjusted Income from Operations for International increased $7.1 million, or 15.3%, for the year ended
December 31, 2021 to $53.6 million from $46.5 million for the prior year. The increase was primarily driven by
higher revenues related to higher waste volumes and the recovery from COVID-19 impacts and favorable
foreign exchange rates, partially offset by the impact of divestitures. Our International Adjusted Income from
Operations as a percentage of revenues is lower than North America Adjusted Income from Operations as a
percentage of revenues because our International RWCS operations have fewer small account customers, which
tend to generate higher Adjusted Income from Operations as a percentage of revenues.
Adjusted Loss from Operations for Other Costs increased for the year ended December 31, 2021 compared to the
prior year as certain costs became incremental information technology ongoing costs for running the new ERP
system, including maintenance, licensing, and depreciation expenses. These were partially offset by lower annual
incentive compensation related costs, and lower costs associated with divested businesses.
Interest Expense, Net
In millions
Interest expense, net
Year Ended December 31,
2021
2020
Change 2021 versus
2020
$
71.9
% of
Revenues
2.7%
$
81.9
% of
Revenues
3.1%
$
(10.0)
%
(12.2%)
The change for the year ended December 31, 2021 as compared to the prior year was a result of lower weighted
average debt balances. For further information see Part II, Item 8. Financial Statements and Supplementary Data;
Note 9 – Debt in the Consolidated Financial Statements.
Other Income (Expense), Net
In millions
Other income (expense), net
Year Ended December 31,
2021
2020
Change 2021 versus
2020
$
0.3
% of
Revenues
0.0%
$
(6.0)
% of
Revenues
(0.2%)
$
%
6.3
(105.0%)
Other income (expense), net is primarily comprised of foreign exchange gains and 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 (Expense) Benefit
In millions
Income tax (expense) benefit
nm - percentage change not meaningful
Year Ended December 31,
2021
2020
Change 2021 versus
2020
$
(27.5)
Effective
Rate
3,829.0%
$
Effective
Rate
0.1
0.2%
$
(27.6)
%
nm
For further information, see Part II, Item 8. Financial Statements and Supplementary Data; Note 10 – Income Taxes
in the Consolidated Financial Statements.
2021 10-K Annual Report
Stericycle, Inc. • 42
PART II
Liquidity and Capital Resources
The Company believes that it has sufficient liquidity to support its ongoing operations and to invest in future growth
to create value for its shareholders. Operating cash flows and the Company’s $1.2 billion Credit Facility are the
Company’s primary sources of liquidity and are expected to be used for, among other things, payment of interest
and principal on the Company’s long-term debt obligations, capital expenditures necessary to support growth and
productivity improvements. To the extent the Company needs to add additional funding options to meet additional
liquidity requirements or diversify its funding portfolio, the Company could seek additional financing from alternative
sources, including approaching the capital markets.
For further details concerning these matters see Part II, Item 8. Financial Statements and Supplementary Data;
Note 9 – Debt in the Consolidated Financial Statements.
Working Capital
At December 31, 2021, our working capital decreased $11.6 million to a negative working capital of $156.2 million
compared to a negative working capital of $144.6 million at December 31, 2020. This change is primarily driven by
an increase in accounts payable and accrued liabilities (including contingent liabilities related to an estimated
aggregate FCPA settlement accrual).
Current assets increased $23.0 million in 2021 to $575.5 million from $552.5 million in 2020 primarily driven by an
increase in accounts receivable, partially offset by a decrease in prepaid expenses.
Current liabilities increased $34.6 million in 2021 to $731.7 million from $697.1 million in 2020, primarily driven by
an increase in accounts payable and accrued liabilities (including contingent liabilities related to an estimated
aggregate FCPA settlement accrual), partially offset by a decrease in the current portion of long-term debt.
Cash Flow Summary:
The following table shows cash flow information for the Company by activity:
In millions
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Year Ended December 31,
2021
2020
$
303.1 $
(90.1)
(207.9)
(2.8)
2.3 $
$
530.2
381.4
(892.5)
(0.5)
18.6
Operating Cash Flows: Net cash from operating activities decreased $227.1 million for the year ended December
31, 2021 to $303.1 million from $530.2 million for the prior year. The year-over-year decline of $227.1 million was
primarily driven by favorable cash flow from items which was primarily driven by 2020 and 2021 non-recurring
differences $216.6 million and net working capital changes of $32.5 million, mainly driven by the timing of North
America SID customer collections. These decreases were partially offset by tax refunds of $22.0 million. The non-
recurring differences include (i) CARES Act net operating loss carryback refunds of $110.0 million in 2020, (ii)
government-related payment deferrals in 2020 associated with pandemic-related relief and subsequent 2021
payments in aggregate of $48.8 million (iii) an annual incentive compensation payout of $38.6 million in 2021 versus
a nominal payout in 2020, and (iv) advances received for services agreement related to the divestiture of Domestic
Environmental Solutions of $19.2 million.
DSO as of December 31, 2021, as reported was 58 days, compared to DSO of 52 days as of December 31, 2020.
When excluding divested revenues as of December 31, 2021 from the trailing twelve-months DSO calculations,
DSO was 59 days for the year ended December 31, 2021 compared to 56 days for the prior year. This difference is
primarily due to a delay in the North America SID customer invoicing schedule and subsequent collections due to
the ERP deployment as well as increased revenue compared to prior year.
Investing Cash Flows: Net cash from investing activities decreased $471.5 million for the year ended December
31, 2021 to net cash used of $90.1 million from net cash provided of $381.4 million in the prior year. In the second
quarter of 2020, we received $427.7 million from the divestiture of the Domestic Environmental Solutions business.
Our cash paid for capital expenditures decreased by $2.6 million to $116.9 million from $119.5 million primarily
driven by $31.4 million less in ERP capital expenditures in 2021, compared to the same period in 2020. For year
ended December 31, 2021, cash paid for an acquisition was $10.5 million.
2021 10-K Annual Report
Stericycle, Inc. • 43
PART II
Financing Cash Flows: Net cash used for financing activities decreased $684.6 million in the year ended
December 31, 2021 to $207.9 million from $892.5 million in the prior year. Our net repayments were $197.7 million
in the year ended December 31, 2021 compared to net repayments of $877.4 million in the prior year. The decrease
is due primarily to lower divestiture proceeds compared to the prior year.
Contractual Obligations
The Company’s contractual obligations and cash commitments at December 31, 2021 consisted of long term debt,
finance and operating lease liabilities, and estimated purchase obligations.
Long term debt: For details regarding long term obligations, see Part II, Item 8. Financial Statements and
Supplementary Data; Note 9 – Debt in the Consolidated Financial Statements.
Lease liabilities: For details regarding short and long term finance and operating lease liabilities, see Part II, Item
8. Financial Statements and Supplementary Data; Note 6 – Leases in the Consolidated Financial Statements.
Estimated purchase obligations: The Company’s estimated purchase obligations consist of agreements to
purchase goods and services that are entered into in the ordinary course of business. As of December 31, 2021, the
Company's short and long term estimated purchase obligations were $58.7 million and $37.8 million, respectively.
The Company establishes asset retirement obligations for the present value of estimated future costs to retire long-
lived assets at the termination or expiration of a lease. Most of these obligations are not expected to be paid until
many years in the future and are expected to be funded from general company resources at the time of removal.
For further details concerning asset retirement obligations, see Part II, Item 8. Financial Statements and
Supplementary Data; Note 12 – Commitments and Contingencies in the Consolidated Financial Statements.
Based on the uncertain nature of our liability for unrecognized tax benefits, we are unable to make an estimate of
the period of potential settlement, if any, with the applicable taxing authorities.
As of December 31, 2021, the Company had $71.4 million of stand-by letters of credit outstanding against our credit
facility, $32.5 million of surety bonds and $24.1 million of bank guarantees. The bank guarantees are issued mostly
by our international subsidiaries for various purposes, including leases, seller notes, contracts and permits. The
surety bonds are used for performance guarantees. Neither the bank guarantees nor the surety bonds affect our
ability to use our various lines of credit.
We anticipate that our operating cash flows, together with additional borrowings available under our Credit Facility,
will be sufficient to meet our anticipated future operating expenses, key business priorities, other capital
expenditures and debt service obligations as they become due during the next 12 months and the foreseeable
future.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated
financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial
statements requires management to make estimates, assumptions and judgments that affect the reported amounts
of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Although
management believes that its estimates and assumptions are reasonable, they are based upon information
available when they are made and therefore, actual results may differ from these estimates under different
assumptions or conditions. Our most critical accounting policies are those that may be material due to the levels of
subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to
change and those policies that have a material impact on the financial condition or operating performance of the
Company. Part II, Item 8. Financial Statements and Supplementary Data; Note 1 – Basis of Presentation and
Summary of Significant Accounting Polices in the Consolidated Financial Statements provides a detailed description
of all of our material accounting policies; however, we have identified the following as our most critical accounting
policies and estimates.
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue
recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these
good or services. Revenue is recognized net of revenue-based taxes assessed by governmental authorities.
The Company provides RWCS, which provide collection and processing of regulated and specialized waste,
including medical, pharmaceutical and hazardous waste, for disposal and compliance programs; SID Services,
2021 10-K Annual Report
Stericycle, Inc. • 44
PART II
which provide for the collection of personal and confidential information for secure destruction and recycling of
shredded paper; and communication solutions such as appointment reminders, secure messaging, event
registration and other communications for hospitals and IDN’s. The associated activities for each of these are a
series of distinct services that are substantially the same and have the same pattern of transfer over time; therefore,
the respective services are treated as a single performance obligation.
We recognize revenue by applying the right to invoice practical expedient as our right to consideration corresponds
directly to the value provided to the customer for performance to date. Revenues for our Regulated Waste and
Secure Information Destruction Services are recognized upon waste collection. Our compliance services are
recognized over the contractual service period. Revenues from communication solutions are recorded as the
services are performed.
Allowance for Doubtful Accounts
The Company reports accounts receivable at their net realizable value, which is management’s best estimate of the
cash that will ultimately be received. The Company maintains an allowance for doubtful accounts to reflect the
expected uncollectability of accounts receivable based on historical collection data and specific risks identified
among uncollected accounts, as well as management’s expectation of future economic conditions. If current or
expected future economic trends, events, or changes in circumstances indicate that specific receivable balances
may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted
accordingly. The adequacy of allowances for uncollectible accounts is reviewed at least quarterly and adjusted as
necessary based on such reviews. Management’s judgment is required to assess the collectability of an account,
based on detailed analysis of the aging of the receivables, the creditworthiness of the Company’s customers,
historical collection trends, and current and future expected economic trends.
Accounts receivable written off in subsequent periods can differ from the allowance for doubtful accounts provided,
but historically our provision has been adequate. Allowance for doubtful accounts was $43.3 million and
$56.2 million as of December 31, 2021 and 2020, respectively.
Impairment of Long-Lived Assets
Property, Plant and Equipment, Right of Use Assets and Intangible Assets (definite-lives), Net: Long-lived
assets are reviewed whenever events or changes in circumstances indicate that the related carrying
amounts may not be recoverable. Impairment of assets with definite-lives is generally determined by
comparing projected undiscounted cash flows to be generated by the asset, or appropriate grouping of
assets, to its carrying value. If impairment is identified, a loss is recognized equal to the excess of the
asset's net book value over its fair value and the cost basis is adjusted.
Determining the extent of impairment, if any, typically requires various estimates and assumptions including
using management's judgment, cash flows directly attributable to the asset, the useful life of the asset and
residual value, if any. When necessary, the Company uses internal cash flow estimates, quoted market
prices and appraisals as appropriate to determine fair value. Actual results could vary from these
estimates. In addition, the remaining useful life of the impaired asset is revised, if necessary.
(For additional information, see Part II, Item 8. Financial Statements and Supplementary Data; Note 5 –
Property, Plant and Equipment and Note 7 – Goodwill and Other Intangible Assets in the Consolidated
Financial Statements).
Intangible Assets (indefinite-lived): Indefinite-lived intangibles consist primarily of permits and tradenames.
Indefinite-lived intangibles are assessed for impairment annually, as of October 1, or more frequently if an
event occurs or circumstances change and are not subject to amortization but are assessed for impairment
in the same manner as goodwill. Indefinite lived intangibles may be assessed using either a qualitative or
quantitative approach. The qualitative approach first determines if it is more-likely-than-not that the fair
value of the asset is less than the carrying value. If no such determination is made, then the impairment
test is complete. If, however, it is determined that there is a likely impairment, a quantitative assessment is
performed. In the fourth quarter of 2021, we performed our annual impairment test on indefinite-lived
intangibles, other than goodwill, using the qualitative approach for certain assets and the quantitative
approach for the remaining assets. The calculated fair value of our indefinite-lived intangibles is based
upon, among other things, certain assumptions about expected future operating performance, internal and
external processing costs and an appropriate discount rate determined by management.
2021 10-K Annual Report
Stericycle, Inc. • 45
PART II
Future changes in our assumptions or the interrelationship of the assumptions described above may
negatively impact future valuations that would require non-cash charges and may have a material effect on
our financial condition and operating results.
Goodwill: Goodwill is assessed for impairment annually as of October 1 of each year, or more frequently if
an event occurs or circumstances change that could reduce the value of a reporting unit below its carrying
value.
We used a quantitative approach to assess goodwill for impairment. The fair value of each reporting unit is
calculated using the income approach (including DCF) and validated using a market approach with the
involvement of a third-party valuation specialist. Our reporting units are: Domestic RWCS, Domestic SID,
Europe, Asia Pacific, Domestic CRS, Canada and Latin America (note the last three reporting units have
accumulated goodwill impairment balances equal to the goodwill gross balance, or net zero goodwill
carrying value). The income approach uses expected future cash flows of each reporting unit and discounts
those cash flows to present value. Expected future cash flows are calculated using management
assumptions of growth rates,
long-term growth rates, capital expenditures and cost
efficiencies. Future acquisitions or divestitures are not included in the expected future cash flows. We use a
discount rate based on a calculated weighted average cost of capital which is adjusted for each of our
reporting units based on size, country and company specific risk premiums. The market approach
compares the valuation multiples of similar companies to that of the associated reporting unit. In addition,
we analyze differences between the sum of the fair value of the reporting units and our total market
capitalization for reasonableness, taking into account certain factors including control premiums.
including
The fair value is then compared to its carrying value including goodwill. If the fair value is in excess of its
carrying value, the related goodwill is not impaired. If the fair value is less than its carrying value, we
recognize an impairment charge in the amount that the carrying value exceeds the fair value but not to
exceed the carrying value of any goodwill.
We performed our annual goodwill assessment as of October 1, 2021. As a result of this assessment, no
goodwill impairment charges were recognized in 2021. For additional information, see Part II, Item 8.
Financial Statements and Supplementary Data; Note 7 – Goodwill and Other Intangible Assets in the
Consolidated Financial Statements.
A measure of sensitivity of the amount of goodwill impairment charges to key assumptions is the amount by
which each reporting unit's fair value exceeds its respective carrying value. As of the October 1, 2021
assessment, the estimated fair value of each reporting unit exceeded its carrying value by at least 50.0%.
We performed sensitivity analysis on our estimated fair values, noting that a 50 basis point increase in the
discount rate or a 50 basis point reduction in the long-term growth rate would not result in impairments for
any of our reporting units.
Intangible Assets Lives
We have determined that certain of our operating permits and certain tradenames have indefinite lives due to our
ability to renew them with minimal additional cost and therefore they are not amortized.
Our finite-lived intangible assets are amortized over their useful lives using the straight-line method. Our customer
relationships have useful lives from 10 to 25 years based upon the type of customer. We have non-compete
covenant intangibles with useful lives of 5 years. We also have tradename intangibles with useful lives from 20 to
40 years.
We evaluate the useful life of our intangible assets annually to determine whether events and circumstances
warrant a revision to their remaining useful life and changes are reflected prospectively as the intangible asset is
amortized over the revised remaining useful life. In the fourth quarter of 2021, we performed the annual
assessment of the useful life of our finite-lived intangibles. The Company updated the useful life of its customer
relationship intangibles as a result of analyzing recent quantitative and qualitative observations in the market and
factors impacting our business. The change in estimate will be accounted for prospectively. The weighted average
remaining life decreased from approximately 8.2 years to 6.8 years to reflect the new estimated useful lives. We
estimate that there will be an approximate increase of 5-10% in annual intangible amortization expense.
Assets and Liabilities Held-for-Sale
We classify Long-lived assets or disposal groups as held-for-sale when management having the appropriate
authority, generally our Board of Directors or certain of our Executive Officers, commits to a plan of sale, the
disposal group is ready for immediate sale, an active program to locate a buyer has been initiated and the sale is
2021 10-K Annual Report
Stericycle, Inc. • 46
PART II
probable and expected to be completed within one year. Once classified as held-for-sale disposal groups are
valued at the lower of their carrying amount or fair value less estimated selling costs. Where the disposal group
constitutes substantially all, generally more than 90% of the assets and liabilities of our operations in a foreign
country, the balance in the cumulative currency translation adjustment associated with that country is included in the
carrying value of the disposal group. If the carrying value, including any amount associated with the cumulative
currency translation adjustment, exceeds the fair value less estimated selling costs, a held-for-sale impairment
charge is recorded to reduce the carrying value.
The estimate for fair value is reviewed at the end of every reporting period that the disposal group is classified as
held-for-sale and the carrying value is adjusted whenever the estimated fair value less costs to sell is less than the
carrying value.
Contingencies and Litigation
We are subject to various legal proceedings, claims and regulatory matters, the outcomes of which are subject to
significant uncertainty. We determine whether to disclose or accrue for loss contingencies based on an assessment
of whether the risk of loss is remote, reasonably possible or probable, and whether it can be reasonably estimated.
We analyze our litigation and regulatory matters based on available information to assess the potential liabilities.
Management’s assessment is developed based on an analysis of possible outcomes under various strategies. We
record and disclose loss contingencies pursuant to the applicable accounting guidance for such matters. For
additional information, see Part II, Item 8. Financial Statements and Supplementary Data; Note 19 – Legal
Proceedings in the Consolidated Financial Statements).
Income Taxes
We record a provision for income taxes for the anticipated tax consequences of our reported results of operations
using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates
applicable to future years to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis as well as net operating loss and tax credit carryforwards. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any
tax benefits for which future realization is uncertain.
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.
In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and
negative evidence, including our past operating results, and our forecast of future earnings, future taxable income
and prudent and feasible tax planning strategies. The assumptions utilized in determining future taxable income
require significant judgment and are consistent with the plans and estimates we are using to manage the underlying
businesses. Actual operating results in future years could differ from our current assumptions, judgments and
estimates. However, we believe that it is more likely than not that most of the deferred tax assets recognized on our
Consolidated Balance Sheets will ultimately be realized. We record a valuation allowance to reduce our deferred
tax assets to the net amount that we believe is more likely than not to be realized.
We did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. We
may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial
statements from such positions are then measured based on the largest benefit that has a greater than 50%
likelihood of being realized upon settlement. At December 31, 2021, our estimated gross unrecognized tax benefits
were $19.7 million, of which $18.0 million, if recognized, would favorably impact our future earnings. Due to
uncertainties in any tax audit outcome, our estimates of the ultimate settlement of our unrecognized tax positions
may change and the actual tax benefits may differ significantly from the estimates.
The Tax Act established GILTI provisions that impose a tax on foreign income in excess of a deemed return on
intangible assets of foreign corporations. We recognize the taxes on GILTI as a period expense rather than
recognizing deferred taxes for basis differences that are expected to affect the amount of GILTI inclusion upon
reversal.
2021 10-K Annual Report
Stericycle, Inc. • 47
PART II
For further information see Part II, Item 8. Financial Statements and Supplementary Data; Note 10 – Income Taxes
in the Consolidated Financial Statements.
Insured and Self-Insured Claims
The Company’s insurance for workers’ compensation, auto/fleet, general liability, property and employee-related
health care benefits is obtained using high deductible insurance policies, if any, meaning that the Company has
retained a significant portion of the risks related to the claims associated with these programs. The estimated
exposure for unpaid claims and associated expenses, including incurred but not reported losses, is based on a
calculation performed by a third-party actuarial specialist. We use a third party to track and evaluate actual claims
experience and supply the data used in the semi-annual actuarial valuation. The actuarial-determined liability is
calculated using the Company’s historical claims experience. The accruals for these liabilities could be revised if
future occurrences or loss developments significantly differ from the assumptions used. Estimated recoveries
associated with insured claims are recognized as assets when the receipt of such amounts is probable. At
December 31, 2021 and 2020 we accrued $84.1 million and $78.1 million, respectively.
Stock-Based Compensation
We measure the cost of employee services received in exchange for an award of equity instruments based on the
grant-date fair value of the award. That cost is recognized over the period during which an employee is required to
provide service in exchange for the award—the requisite service period, usually the vesting period. Performance
based awards are recognized consistent with performance metrics and Accounting Standards Codification Section
718 Compensation – Stock Compensation. No compensation cost is recognized for equity instruments for which
employees do not render the requisite service.
We use the Monte Carlo simulation model to determine the fair value of PSU’s once the related performance criteria
have been established. The fair value model includes various assumptions, including the expected volatility and
expected life of the awards. Given the considerable judgment involved in these assumptions and complex modeling,
we typically obtain assistance from third-party valuation specialists. If an equity award is modified after the grant
date, we assess the impact of the modification and where necessary record compensation cost calculated as any
incremental fair value of the modified award over the fair value of the original award immediately before the
modification.
For further detail, see Part II, Item 8. Financial Statements and Supplementary Data; Note 14 – Stock Based
Compensation in the Consolidated Financial Statements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
In the normal course of business, we are exposed to market risks, including changes in interest rates, certain
commodity prices, including SOP and diesel fuel and foreign currency rates. We do not specifically hedge our
exposure to these risks.
We are subject to market risks arising from changes in interest rates which relate primarily to our financing activities.
We performed a sensitivity analysis to determine how market rate changes might affect the fair value of our market
risk-sensitive debt instruments (variable rate debt) which in aggregate as of December 31, 2021 are 27.5% of total
aggregate debt (including fixed- and variable-rate debt instruments). Our potential additional interest expense over
one year that would result from a hypothetical, instantaneous and unfavorable change of 100 basis points in the
interest rate on all of our variable rate obligations would be approximately $4.5 million on a pre-tax basis.
We have exposure to foreign currency fluctuations. We have subsidiaries in 16 foreign countries whose revenues
and expenses are denominated in local currency and who use local currency denominated lines of credit for their
funding needs. We translate results of operations of our international operations using an average exchange
rate. We have quantified and described the impact of foreign currency translation on our revenues. We estimate,
that based upon the amounts reported by individual countries during the year ended December 31, 2021 and
prevailing exchange rates at that date, a 1% devaluation of all the functional currencies of each of our foreign
businesses would result in an immaterial change to Net loss attributable to Stericycle, Inc. reported in our
Consolidated Statements of Loss.
We have cumulative currency translation adjustment losses as of December 31, 2021 of approximately
$218.8 million which are subject to continued fluctuations due to changes in foreign currency rates. In addition, to
the extent that we sell substantially all of the operations within one country, similar to the transactions undertaken in
2021 10-K Annual Report
Stericycle, Inc. • 48
Japan in 2021, Argentina in 2020 and Mexico and Chile in 2019, we would be required to recognize, in the
Consolidated Statements of Loss, the accumulated currency translation losses or gains associated with that
country.
The U.K.’s Financial Conduct Authority, which regulates LIBOR, announced in 2017 that it intends to phase out
LIBOR by the end of 2021. The Company’s contracts with respect to its borrowings already contain comparable
alternative reference rates that would automatically take effect upon the phasing out of LIBOR.
PART II
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Stericycle, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Stericycle, Inc. (the Company) as of
December 31, 2021 and 2020, the related consolidated statements of loss, comprehensive loss (income), changes
in equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and
2020, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on
criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated February 24, 2022 expressed
an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective or complex judgments. The communication of the critical audit matter does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the
account or disclosure to which it relates.
2021 10-K Annual Report
Stericycle, Inc. • 49
PART II
Valuation of Goodwill
Description of the Matter At December 31, 2021, the Company’s goodwill was $2,815.7 million. As disclosed in
Note 7 to the consolidated financial statements, goodwill is tested for impairment at the
reporting unit level annually as of October 1, or more frequently, if a triggering event
occurs. The Company determined no reporting unit’s carrying value was in excess of its
respective fair value.
Auditing management’s goodwill impairment assessment was complex and highly
judgmental due to the significant estimation required in determining the fair value of
certain of the Company’s reporting units. In particular, the fair value estimates were
sensitive to significant assumptions, such as discount rates, projections of revenue, and
cost of revenue and operating expense growth rates, which are affected by expectations
about future market or economic conditions, particularly those in markets with
challenging economic conditions.
How We Addressed the
Matter in
Our Audit
We obtained an understanding, evaluated the design, and tested the operating
effectiveness of controls over the Company’s goodwill impairment review process. For
example, we tested controls over management's review of the significant assumptions
discussed above used
tested
management's controls over the completeness and accuracy of the underlying data
used in the valuation.
fair value estimates. We also
to develop
the
To test the estimated fair value of the Company’s reporting units, we performed audit
procedures that included, among others, assessing methodologies and testing the
significant assumptions discussed above and the underlying data used by the Company
in its analysis. We involved our valuation specialists to review the Company’s model,
methods, and the more sensitive assumptions utilized such as the discount rate. We
compared the significant assumptions used by management to current industry and
economic trends, changes to the Company’s business model, customer base and other
relevant factors. In addition, we assessed the historical accuracy of management’s
estimates and performed sensitivity analyses of significant assumptions to evaluate the
changes in the fair value of the reporting units that would result from changes in the
assumptions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1991.
Chicago, Illinois
February 24, 2022
2021 10-K Annual Report
Stericycle, Inc. • 50
PART II
STERICYCLE, INC.
CONSOLIDATED STATEMENTS OF LOSS
In millions, except per share data
Revenues
Cost of revenues
Gross profit
Selling, general and administrative expenses
Goodwill impairment
Divestiture (gains) losses, net
Income (loss) from operations
Interest expense, net
Loss on early extinguishment of debt
Other income (expense), net
Income (loss) before income taxes
Income tax (expense) benefit
Net loss
Net income attributable to noncontrolling interests
Net loss attributable to Stericycle, Inc. common shareholders
Loss per common share attributable to Stericycle, Inc. common shareholders:
Basic
Diluted
Weighted average number of common shares
Outstanding:
Basic
Diluted
Year Ended December 31,
2020
2019
2021
$
2,646.9 $
2,675.5 $
1,629.7
1,017.2
946.6
—
(1.7)
72.3
(71.9)
—
0.3
0.7
(27.5)
(26.8)
(1.0)
(27.8) $
(0.30) $
(0.30) $
1,622.4
1,053.1
897.6
—
123.6
31.9
(81.9)
—
(6.0)
(56.0)
0.1
(55.9)
(1.4)
(57.3) $
(0.63) $
(0.63) $
91.8
91.8
91.5
91.5
$
$
$
3,308.9
2,134.4
1,174.5
1,055.1
228.3
103.0
(211.9)
(118.3)
(23.1)
(9.5)
(362.8)
16.8
(346.0)
(0.8)
(346.8)
(3.81)
(3.81)
91.0
91.0
See accompanying Notes to Consolidated Financial Statements.
2021 10-K Annual Report
Stericycle, Inc. • 51
PART II
STERICYCLE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
(LOSS) INCOME
In millions
Net loss
Year Ended December 31,
2020
2021
2019
$
(26.8) $
(55.9) $
(346.0)
Other comprehensive (loss) income:
Currency translation adjustments
Cumulative currency translation loss realized through disposition of Japan operations
Cumulative currency translation loss realized through disposition of Argentina operations
Cumulative currency translation loss realized through disposition of Mexico operations
Cumulative currency translation loss realized through disposition of Chile operations
Amortization of cash flow hedge into income, net of tax expense ($0.2 for the year ended
December 31, 2019)
Change in fair value of cash flow hedge, net of tax expense ($0.1 for the year ended
December 31, 2019)
Accelerated amortization of interest rate lock premiums, net of tax expense ($1.1 for the
year ended December 31, 2019)
Total other comprehensive (loss) income
Comprehensive (loss) income
Less: comprehensive income attributable to noncontrolling interests
Comprehensive (loss) income attributable to Stericycle, Inc. common shareholders $
(35.5)
3.8
—
—
—
—
—
—
(31.7)
(58.5)
0.7
(59.2) $
44.0
—
87.2
—
—
—
—
—
131.2
8.8
—
—
18.9
16.8
0.4
0.3
2.3
47.5
75.3
1.9
73.4 $
(298.5)
1.1
(299.6)
See accompanying Notes to Consolidated Financial Statements.
2021 10-K Annual Report
Stericycle, Inc. • 52
STERICYCLE, INC.
CONSOLIDATED BALANCE SHEETS
In millions, except per share data
ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts of $43.3 in 2021 and $56.2 in 2020
Prepaid expenses
Other current assets
Total Current Assets
Property, plant and equipment, less accumulated depreciation of $658.5 in 2021 and $629.7 in 2020
Operating lease right-of-use assets
Goodwill
Intangible assets, less accumulated amortization of $736.6 in 2021 and $641.6 in 2020
Other assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt
Bank overdraft
Accounts payable
Accrued liabilities
Operating lease liabilities
Other current liabilities
Total Current Liabilities
Long-term debt, net
Long-term operating lease liabilities
Deferred income taxes
Long-term tax payable
Other liabilities
Total Liabilities
Commitments and contingencies
Equity:
Preferred stock (par value $0.01 per share, 1.0 shares authorized), mandatory convertible preferred stock,
Series A, none issued and outstanding in 2021 and 2020
Common stock (par value $0.01 per share, 120.0 shares authorized, 91.9 and 91.6 issued and outstanding
in 2021 and 2020, respectively)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Stericycle, Inc.’s Equity
Noncontrolling interests
Total Equity
Total Liabilities and Equity
December 31,
2021
2020
$
55.6 $
420.4
45.6
53.9
575.5
711.0
344.8
2,815.7
964.5
61.6
5,473.1 $
19.9 $
1.6
218.9
359.6
85.5
46.2
731.7
$
$
53.3
380.7
63.0
55.5
552.5
701.3
365.0
2,819.3
1,087.4
56.4
5,581.9
91.0
—
181.2
289.4
86.2
49.3
697.1
1,589.8
1,689.1
279.8
411.0
19.1
38.9
3,070.3
—
0.9
1,261.8
1,354.8
(218.8)
2,398.7
4.1
2,402.8
299.0
380.4
22.7
59.2
3,147.5
—
0.9
1,234.0
1,382.6
(187.4)
2,430.1
4.3
2,434.4
5,581.9
See accompanying Notes to Consolidated Financial Statements.
$
5,473.1 $
2021 10-K Annual Report
Stericycle, Inc. • 53
STERICYCLE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
PART II
In millions
OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation
Intangible amortization
Loss on early extinguishment of debt and related charges
Stock-based compensation expense
Deferred income taxes
Goodwill impairment
Divestiture (gains) losses, net
Asset impairments, gain/loss on disposal of property plant and equipment and other charges
Other, net
Changes in operating assets and liabilities, net of the effects of acquisition and divestitures:
Accounts receivable
Prepaid expenses
Accounts payable
Accrued liabilities
Other assets and liabilities
Net cash from operating activities
INVESTING ACTIVITIES:
Capital expenditures
Payment for acquisition
Proceeds from divestitures of businesses
Other, net
Net cash from investing activities
FINANCING ACTIVITIES:
Repayments of long-term debt and other obligations
Proceeds from foreign bank debt
Repayment of foreign bank debt
Proceeds from term loan
Repayment of term loan
Repayment of private placement of long-term note
Proceeds from senior debt
Proceeds from senior credit facility
Repayment of senior credit facility
Proceeds from (repayment of) bank overdrafts, net
Payments of finance lease obligations
Payments of debt issuance costs
Proceeds from issuance of common stock, net of (payments of) taxes from withheld shares
Payments on early debt extinguishment
Payments to noncontrolling interests
Net cash from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
SUPPLEMENTAL CASH FLOW INFORMATION:
Net issuances of obligations for acquisition
Capital expenditures in accounts payable
Interest paid during the year, net of capitalized interest
Income taxes (refunded) paid during the year, net
Year Ended December 31,
2020
2021
2019
$
(26.8) $
(55.9) $
(346.0)
106.0
117.9
—
27.1
29.7
—
(1.7)
6.7
5.1
(57.2)
17.0
29.7
85.2
(35.6)
303.1
(116.9)
(10.5)
35.0
2.3
(90.1)
(20.4)
—
(29.6)
—
(222.5)
—
—
108.6
124.9
—
25.5
32.6
—
123.6
18.3
5.1
27.4
68.9
(5.5)
8.2
48.5
530.2
(119.5)
—
498.9
2.0
381.4
(31.1)
1.8
(10.7)
—
(749.7)
—
500.0
1,495.0
(1,420.2)
1,210.6
(1,798.3)
1.9
(3.9)
(3.9)
(3.4)
—
(0.9)
(207.9)
(2.8)
2.3
53.3
(1.7)
(4.3)
(7.3)
(0.4)
—
(1.4)
(892.5)
(0.5)
18.6
34.7
$
$
$
$
$
55.6 $
53.3 $
32.9 $
22.2 $
57.0 $
(7.8) $
— $
11.7 $
75.5 $
(83.7) $
127.6
145.2
26.5
17.1
(33.9)
228.3
103.0
28.1
2.5
24.5
(18.4)
(4.6)
(33.4)
(18.5)
248.0
(194.2)
(0.2)
86.6
3.8
(104.0)
(50.4)
12.1
(47.8)
365.0
(95.3)
(1,075.0)
600.0
1,752.2
(1,575.6)
(12.5)
(4.3)
(8.8)
19.9
(20.4)
(0.7)
(141.6)
(2.0)
0.4
34.3
34.7
0.3
33.8
101.5
6.9
See accompanying Notes to Consolidated Financial Statements.
2021 10-K Annual Report
Stericycle, Inc. • 54
PART II
STERICYCLE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
In millions
Balance as of January 1, 2019
Net loss
Currency translation adjustment
Change in qualifying cash flow hedge, net of tax
Accelerated amortization of interest rate lock premiums, net
of tax
Issuance of common stock for exercise of options, PSU and
RSU vesting and employee stock purchases, net
Cumulative currency translation loss realized through
disposition of Mexico operations
Cumulative currency translation loss realized through
disposition of Chile operations
Stock compensation expense
Changes to noncontrolling interest
Balance as of December 31, 2019
Net loss
Currency translation adjustment
Issuance of common stock for exercise of options, PSU and
RSU vesting and employee stock purchases, net
Cumulative currency translation loss realized through
disposition of Argentina operations
Stock compensation expense
Change in accounting principle
Changes to noncontrolling interest
Balance as of December 31, 2020
Net loss
Currency translation adjustment
Issuance of common stock for exercise of options, PSU and
RSU vesting and employee stock purchases, net
Cumulative currency translation loss realized through
disposition of Japan operations
Stock compensation expense
Changes to noncontrolling interest
Balance as of December 31, 2021
Stericycle, Inc. Equity
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total Equity
Common Stock
Shares
Amount
90.7
$
0.9 $ 1,162.6
$ 1,789.2 $
(365.3) $
9.7 $ 2,597.1
—
—
—
—
0.5
—
—
—
—
91.2
—
—
0.4
—
—
—
—
—
—
—
—
—
—
—
—
—
0.9
—
—
—
—
—
—
—
—
—
—
—
19.7
—
—
17.1
6.3
(346.8)
—
—
—
—
—
—
—
—
1,205.7
1,442.4
—
—
2.8
—
25.5
—
—
(57.3)
—
—
—
—
(2.5)
—
91.6
0.9
1,234.0
1,382.6
—
—
0.3
—
—
—
—
—
—
—
—
—
—
—
0.7
—
27.1
—
(27.8)
—
—
—
—
—
—
8.5
0.7
2.3
—
18.9
16.8
—
—
(318.1)
—
43.5
—
87.2
—
—
—
(187.4)
—
(35.2)
—
3.8
—
—
0.8
0.3
—
—
—
—
—
—
(7.0)
3.8
1.4
0.5
—
—
—
—
(1.4)
4.3
1.0
(0.3)
—
—
—
(0.9)
(346.0)
8.8
0.7
2.3
19.7
18.9
16.8
17.1
(0.7)
2,334.7
(55.9)
44.0
2.8
87.2
25.5
(2.5)
(1.4)
2,434.4
(26.8)
(35.5)
0.7
3.8
27.1
(0.9)
91.9
$
0.9 $ 1,261.8
$ 1,354.8 $
(218.8) $
4.1 $ 2,402.8
See accompanying Notes to Consolidated Financial Statements.
2021 10-K Annual Report
Stericycle, Inc. • 55
PART II
STERICYCLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share data and unless otherwise indicated)
Unless the context requires otherwise, “Company”, “Stericycle”, "we", "us", or "our" refers to Stericycle, Inc. and its
subsidiaries on a consolidated basis.
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Description of Business
Incorporated in 1989, Stericycle protects people and brands, promotes health and well-being, safeguards the
environment and communities, and reduces risk through highly specialized Regulated Waste and Compliance
Services and Secure Information Destruction Services. The Company serves customers in the U.S. and 16 other
countries with a concentration on the growing healthcare industry.
The Company’s segments (see Note 17 – Segment Reporting) core focus is on Regulated Waste and Compliance
Services and Secure Information Destruction Services, and it is the leading provider of these services in terms of
both revenue and operational infrastructure.
Summary of Significant Accounting Policies
Basis of Presentation: The accompanying consolidated financial statements include the accounts of Stericycle,
Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The
Company's consolidated financial statements were prepared in accordance with U.S. GAAP and include the assets,
liabilities, revenue and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the
Company exercises control. Outside stockholders' interests in subsidiaries are shown on the consolidated financial
statements as “Noncontrolling interests."
Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting
principles requires the Company to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Some areas where the Company makes estimates include
allowance for doubtful accounts, credit memo reserve, contingent liabilities, asset retirement obligations, stock
compensation expense, income tax assets and liabilities, accrued employee health and welfare benefits, accrued
auto, and workers’ compensation self-insured claims, leases, acquisition related long-lived assets, goodwill and held
for sale impairment valuations. Such estimates are based on historical trends and on various other assumptions
that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.
Revenue from Contracts with Customers: Revenue is recognized when a customer obtains control of promised
goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to
be entitled to receive in exchange for these goods or services. Revenue is recognized net of revenue-based taxes
assessed by governmental authorities.
The Company provides RWCS, which provide collection and processing of regulated and specialized waste,
including medical, pharmaceutical and hazardous waste,
for disposal and compliance programs, and
communication solutions such as appointment reminders, secure messaging, event registration and other
communications for hospitals and IDN; and SID Services, which provide for the collection of personal and
confidential information for secure destruction and recycling of shredded paper.
The associated activities for each of these are a series of distinct services that are substantially the same and have
the same pattern of transfer over time; therefore, the respective services are treated as a single performance
obligation.
The Company recognizes revenue by applying the right to invoice practical expedient as the Company’s right to
consideration corresponds directly to the value provided to the customer for performance to date. Revenues for the
Company’s Regulated Waste and Secure Information Destruction Services are recognized upon waste collection.
The Company’s compliance services revenues are recognized over the contractual service period. Revenues from
communication solutions are recognized as the services are performed.
2021 10-K Annual Report
Stericycle, Inc. • 56
PART II
Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable is recorded when billed or
when goods or services are provided. The carrying value of the Company’s receivables is presented net of an
allowance for doubtful accounts. The Company estimates its allowance for doubtful accounts based on past
collection history and specific risks identified among uncollected amounts, as well as management’s expectation of
future economic conditions. If current or expected future economic trends, events, or changes in circumstances
indicate that specific receivable balances may be impaired, further consideration is given to the collectability of
those balances and the allowance is adjusted accordingly. Past-due receivable balances are written off when the
Company’s internal collection efforts have been exhausted.
No single customer accounted for more than 2.9% of the Company’s accounts receivable or approximately 1.5% of
total revenues. During the year ended December 31, 2021, 2020, and 2019 bad debt expense was $9.0 million,
$21.7 million, and $25.7 million, respectively.
The changes in allowance for doubtful accounts were reported as follows:
In millions
2021
Year Ended December 31,
2020
2019
Balances at beginning of period
Bad debt expense, net of recoveries
Write-offs
Other changes (1)
Balances at end of period
$
$
56.2
$
67.9 $
9.0
(20.2)
(1.7)
21.7
(24.2)
(9.2)
43.3
$
56.2 $
71.9
25.7
(23.9)
(5.8)
67.9
(1) Amounts consist primarily of currency translation adjustments, and $0.7 million and $9.3 million relating to divestitures undertaken during 2021
and 2020, respectively. Additionally, 2020 amount includes impact of adoption of a new accounting standard.
Contract Liability: The Company records a contract liability when cash payments are received in advance of the
Company’s services being performed and is classified as current in Other current liabilities on the Consolidated
Balance Sheets since the amounts are earned within a year.
Contract Acquisition Costs: Incremental direct costs of obtaining a contract, which primarily represent sales
incentives, are deferred and amortized to SG&A over the estimated period of benefit to be derived from the cost
taking into consideration our standard contract terms and conditions and other factors.
Cash and Cash Equivalents: The Company considers all highly liquid investments with a maturity of less than
three months when purchased to be cash equivalents. Cash equivalents are carried at cost.
Financial Instruments: The Company’s financial instruments consist of cash and cash equivalents, accounts
receivable and payable, and long-term debt. Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of accounts receivable. Credit risk on trade receivables is minimized
as a result of the large size of the Company’s customer base, low concentration, and the performance of ongoing
credit evaluations of its customers. The Company also maintains allowances for potential credit losses.
Property, Plant and Equipment: Property, plant and equipment is stated at cost. Expenditures for software
purchases and software developed for internal use are capitalized and included in Software. For software
developed for internal use, external direct costs for materials and services and certain internal payroll and related
fringe benefit costs are capitalized.
Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the
assets as follows:
Building and improvements
Machinery and equipment
Containers
Vehicles
Office equipment and furniture
Software and Enterprise Resource Planning system
2 to 40 years
2 to 30 years
2 to 20 years
2 to 10 years
2 to 20 years
2 to 10 years
Capitalized Interest: The Company capitalizes interest incurred associated with projects under construction for the
duration of the asset construction period. During the years ended December 31, 2021, 2020, and 2019 the
Company capitalized interest of $0.8 million, $1.8 million, and $5.4 million, respectively.
2021 10-K Annual Report
Stericycle, Inc. • 57
Goodwill and Other Identifiable Intangible Assets: Goodwill represents the excess of the purchase price over
the fair value assigned the net tangible and identifiable tangible assets of businesses acquired. Intangible assets
with definite lives are amortized on a straight-line basis over their estimated useful lives. Certain indefinite-lived
permits may become subject to amortization to the extent events and circumstances warrant.
Impairment of Long - Lived Assets:
PART II
Property and Equipment and Intangible Assets (definite-lives), Net: Long-lived assets, such as
property, plant and equipment and amortizing intangible assets are reviewed whenever events or changes
in circumstances indicate that the related carrying amounts may not be recoverable. Impairment of assets
with definite-lives is generally determined by comparing projected undiscounted cash flows expected to be
generated by the asset, or asset groups, to its carrying value. If the carrying value of the long-lived asset or
asset group is not recoverable on an undiscounted basis, an impairment is recognized to the extent fair
value exceeds carrying value. Determining the extent of impairment, if any, typically requires various
estimates and assumptions including cash flows directly attributable to the asset, the useful life of the asset
and residual value, if any. When necessary, the Company uses internal cash flow estimates, quoted market
prices and appraisals, as appropriate, to determine fair value. Actual results could vary from these
estimates. In addition, the remaining useful life of the impaired asset is revised, if necessary.
Intangible Assets (indefinite-lived): Indefinite-lived
intangibles consist primarily of permits and
tradenames. Indefinite-lived intangibles are assessed for impairment annually as of October 1, or more
frequently if an event occurs or circumstances change, using either a qualitative or quantitative approach.
The qualitative approach first determines if it is more-likely-than-not that the fair value of the asset is less
than the carrying value. If no such determination is made, then the impairment test is complete. If,
however, it is determined that there is a likely impairment, a quantitative assessment is performed. The
Company performs its annual impairment test on indefinite-lived intangibles, using the qualitative approach
for certain assets and the quantitative approach for the remaining assets.
Goodwill: Goodwill is assessed for impairment at least annually as of October 1 of each year, or more
frequently if an event occurs or circumstances change that would reduce the fair value of a reporting unit
below its carrying value.
The Company uses a quantitative approach to assess goodwill for impairment. The fair value of each
reporting unit is calculated using the income approach (including DCF) and validated using a market
approach with the involvement of a third-party valuation specialist. The Company's reporting units
are: Domestic RWCS, Domestic SID, Domestic CRS, Canada, Europe, Asia Pacific and Latin
America. The income approach uses expected future cash flows of each reporting unit and discounts those
cash flows to present value. Expected future cash flows are estimated using management assumptions of
growth rates, including long-term growth rates, capital expenditures and cost efficiencies. Future
acquisitions or divestitures are not included in the expected future cash flows. The Company uses a
discount rate based on a calculated weighted average cost of capital which is adjusted for each of its
reporting units based on size, country and company specific risk premiums. The market approach
compares the valuation multiples of similar companies to that of the associated reporting unit. The
Company then reconciles the calculated fair values to its market capitalization. The fair value is then
compared to its carrying value including goodwill. If the fair value is in excess of its carrying value, the
related goodwill is not impaired. If the fair value is less than carrying value, an impairment charge is
recognized, equivalent to the amount that the carrying value exceeds the fair value.
The use of different assumptions, estimates or judgments in the goodwill impairment testing process may
significantly increase or decrease the estimated fair value of a reporting unit. Generally, changes in DCF
estimates would have a similar effect on the estimated fair value of the reporting unit. The Company
believes that the estimated fair value used in measuring the impairment was based on reasonable
assumptions but future changes in the underlying assumptions could differ due to the inherent judgment in
making such estimates.
Goodwill impairment charges may be recognized in future periods to the extent changes in factors or
circumstances occur, including deterioration in the macro-economic environment or in the equity markets,
2021 10-K Annual Report
Stericycle, Inc. • 58
PART II
including the market value of the Company’s common shares, deterioration in its performance or its future
projections, or changes in its plans for one or more reporting units.
Assets and Liabilities Held-for-Sale: Long-lived assets or disposal groups are classified as held-for-sale when
management having the appropriate authority, generally the Company’s Board of Directors or certain of its
Executive Officers, commits to a plan of sale, the disposal group is ready for immediate sale, an active program to
locate a buyer has been initiated and the sale is probable and expected to be completed within one year. Once
classified as held-for-sale disposal groups are valued at the lower of their carrying amount or fair value less
estimated selling costs. Where the disposal group constitutes substantially all of our operations of a foreign country,
the balance in the cumulative translation adjustment associated with that country is included in the carrying value of
the disposal group. If the carrying value, including any amount associated with the cumulative translation
adjustment, exceeds the fair value less estimated selling costs a held-for-sale impairment charge is recorded to
reduce the carrying value.
The estimate for fair value is reviewed at the end of every reporting period that the disposal group is classified as
held-for-sale and the carrying value adjusted whenever the estimated fair value less costs to sell is less than the
carrying value.
Acquisitions: The assets acquired and liabilities assumed are recorded on the date of acquisition at their
respective estimated fair values, with any excess of the purchase price over the estimated fair values of the net
assets acquired recorded as goodwill. We typically use an income method to estimate the fair value of intangible
assets, which is based on forecasts of the expected future cash flows attributable to the respective assets.
Assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the
amount and timing of future cash flows (including expected growth rates and related customer attrition and
profitability) and the discount rate applied to the cash flows. The majority of current assets acquired, and liabilities
assumed were recorded at their carrying values as of the date of acquisition, as their carrying values approximated
their fair values due to their short-term nature. Assigning intangible assets useful lives is based on the period of
substantial expected benefit derived from the asset.
Insurance and Self-Insurance: The Company’s insurance for workers’ compensation, auto/fleet, general liability,
property, and employee-related health care benefits is obtained using high deductible insurance policies, if any,
meaning that the Company has retained a significant portion of the risks related to the claims associated with these
programs. The estimated exposure for unpaid claims and associated expenses, including incurred but not reported
losses, is based on a calculation performed by a third-party actuarial specialist using the Company’s historical
claims experience. The accruals for these liabilities could be revised if future occurrences or loss developments
significantly differ from the assumptions used. Estimated recoveries associated with insured claims are recognized
as assets when the receipt of such amounts is probable.
Restructuring Charges: Involuntary termination benefits are accrued upon the commitment to a termination plan
and when the benefit arrangement is communicated to affected employees, or when liabilities are determined to be
probable and estimable, depending on the existence of a substantive plan for severance or termination. Costs for
one-time termination benefits in which the employee is required to render service beyond a minimum retention
period in order to receive the benefits are recognized ratably over the future service period. Contract termination
costs are recognized when contracts are terminated or when the Company ceases to use the leased facility and no
longer derive economic benefit from the contract. All other exit costs are expensed as incurred.
Stock-Based Compensation: The Company recognizes stock-based compensation expense based on the
estimated grant-date fair value. Expense is generally recognized on a straight-line basis over the period during
which awards are expected to vest. The Company presents stock-based compensation expense within the
Consolidated Statements of Loss based on the classification of the respective employees' cash compensation. The
Company records forfeitures as they occur.
Income Taxes: The Company is subject to income taxes in both the U.S. and numerous foreign jurisdictions. The
Company computes its provision for income taxes using the asset and liability method, under which deferred tax
assets and liabilities are recognized for the expected future tax consequences of temporary differences between the
financial reporting and tax basis of assets and liabilities and for operating loss and tax credit carry-forwards.
Deferred tax assets and liabilities are measured using the currently enacted tax rates that are expected to apply to
taxable income for the years in which those tax assets and liabilities are expected to reverse. Significant judgments
are required in order to determine the realizability of these deferred tax assets. In assessing the need for a
valuation allowance, the Company evaluates all significant available positive and negative evidence, including
2021 10-K Annual Report
Stericycle, Inc. • 59
PART II
historical operating results, estimates of future taxable income and the existence of prudent and feasible tax
planning strategies. Changes in the expectations regarding the realization of deferred tax assets could materially
impact income tax expense in future periods. Tax liabilities are recognized when, in management’s judgment, an
uncertain tax position does not meet the more likely than not (i.e. a likelihood of more than fifty percent) threshold
for recognition. For tax positions that meet the more likely than not threshold, a tax liability may still be recognized
depending on management’s assessment of how the tax position will ultimately be settled. The Company records
interest and penalties on unrecognized tax benefits in the provision for income taxes.
Leases: Operating leases are included in Operating lease ROU assets, Operating lease liabilities and Long-term
operating lease liabilities on the Company’s Consolidated Balance Sheets. Finance leases are included in Property,
plant and equipment, Current portion of long-term debt and Long-term debt on the Consolidated Balance Sheets.
Operating lease ROU assets, Operating lease liabilities and Long-term operating lease liabilities are recognized
based on the present value of the future minimum lease payments over the lease term at commencement
date. Nearly all of the Company’s lease contracts do not provide a readily determinable implicit rate. For these
contracts, the Company uses an estimated incremental borrowing rate, which is based on information available at
lease commencement.
The Company’s leases generally do not contain material variable lease payments and generally do not contain
options to purchase the leased property, any material residual value guarantees, or material restrictive
covenants. At commencement, the Operating lease ROU asset is equal to the lease liability and is adjusted for
lease incentives and initial direct costs incurred. The Company reviews all options to extend, terminate, or
purchase its ROU assets at the commencement of the lease and on an ongoing basis and accounts for these
options when they are reasonably certain of being exercised. Lease expense is recognized on a straight-line basis
over the lease term.
The Company has lease agreements with lease and non-lease components, including payments for common area
maintenance and vehicle maintenance costs, which are accounted for separately, based on their underlying nature,
for each class of underlying assets.
In addition, the Company applies the short-term lease recognition exemption for leases with terms at
commencement of not greater than 12 months.
Asset Retirement Obligations: The Company establishes assets and liabilities for the present value of estimated
future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are amortized over
the lease term and the recognized liabilities are accreted to the future value of the estimated retirement costs. The
related amortization and accretion expenses are presented within COR if the leased asset is used in the delivery of
the Company’s services and the remaining expenses are presented within SG&A on the Consolidated Statements
of Loss.
Foreign Currency: Assets and liabilities of foreign affiliates that use the local currency as their functional currency
are translated at the exchange rate on the last day of the accounting period and income statement accounts are
translated at the average rates during the period. Related translation adjustments are reported as a component of
accumulated other comprehensive loss on the Consolidated Balance Sheets. Foreign currency gains and losses
resulting from transactions that are denominated in currencies other than the entity’s functional currency, including
foreign currency gains and losses on intercompany balances that are not of a long-term investment nature, are
included within Other (income) expense, net on the Consolidated Statements of Loss.
Highly Inflationary Economy: Effective July 1, 2018, as a result of three-year cumulative inflation exceeding
100%, Argentina was classified as a highly inflationary economy. The Company's Argentina operations were
divested in August 2020. Accordingly, the Company recognized, in Other income (expense), net, a foreign exchange
loss of $1.2 million and $3.3 million during the years ended December 31, 2020 and 2019, respectively, arising from
the re-measurement of its Argentinian peso denominated net monetary assets.
Nonmonetary assets, liabilities, and related expenses are measured using historical exchange rates and do not
fluctuate with changes in the local exchange rate.
2021 10-K Annual Report
Stericycle, Inc. • 60
PART II
Adoption of New Accounting Standards
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes” (“ASU 2019-12”). ASU 2019-12 attempts to simplify aspects of accounting for franchise taxes and
enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax
basis of goodwill. ASU 2019-12 was effective for public business entities for fiscal years beginning after December
15, 2020, including interim periods within that fiscal year. The Company adopted ASU 2019-12 on January 1, 2021
and there was no material impact on the Company’s Consolidated Financial Statements.
Financial Instrument Credit Losses
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) associated with the measurement of
credit losses on financial instruments. ASU 2016-13 replaces the prior incurred loss impairment methodology of
recognizing credit losses when a loss was probable, with a methodology that reflects expected credit losses and
requires consideration of a broader range of reasonable and supportable information to assess credit loss
estimates. The amended guidance was effective for the Company on January 1, 2020. The Company recognized a
net decrease to Retained earnings in the Consolidated Financial Statements of $2.5 million as of January 1, 2020
for the cumulative effect of adopting ASU 2016-13.
Implementation Costs Incurred in a Cloud Computing Arrangement
In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal Use Software (Subtopic
350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a
Service Contract” (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs
incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation
costs for internal-use software. The accounting for any hosting contract is unchanged. ASU 2018-15 was effective
on January 1, 2020 and was adopted prospectively for implementation costs incurred after the date of adoption. The
adoption of ASU 2018-15 did not have a material impact on the Consolidated Financial Statements.
Accounting Standards Issued But Not Yet Adopted
To date, there have been no recent accounting pronouncements not yet effective that have a material, or potential
material, impact to our Consolidated Financial Statements.
NOTE 2 – REVENUES FROM CONTRACTS WITH CUSTOMERS
The Company provides RWCS, which provide collection and processing of regulated and specialized waste,
including medical, pharmaceutical and hazardous waste, for disposal and compliance programs and communication
solutions, and SID services, which provide for the collection of personal and confidential information for secure
destruction and recycling of shredded paper.
The Company’s customers typically enter into a contract for the provision of services on a regular and scheduled
basis, e.g., weekly, monthly or on an as needed basis over the contract term, e.g. one-time service. Under the
contract terms, the Company receives fees based on a monthly, quarterly or annual rate and/or fees based on
contractual rates depending upon measures including the volume, weight, and type of waste, number and size of
containers collected, weight and type of shredded paper, and number of call minutes.
Amounts are invoiced based on the terms of the underlying contract either on a regular basis, e.g., monthly or
quarterly, or as services are performed and are generally due within a short period of time after invoicing based
upon normal terms and conditions for our business type and the geography of the services performed.
Disaggregation of Revenue
In the first quarter of 2021, we updated our service lines to include Communication Solutions (formally part of CRS)
in RWCS. This reclassification was driven by the divestiture of the Company's global product recall business (Expert
Solutions) in December of 2020 and the remaining Communication Solutions service line synergies with the
Company's RWCS customers. For 2020 and 2019 periods presented, amounts have been recast to reflect this
change.
2021 10-K Annual Report
Stericycle, Inc. • 61
In millions
Revenue by Service
Regulated Waste and Compliance Services
Secure Information Destruction Services
Total Revenues
North America
Regulated Waste and Compliance Services
Secure Information Destruction Services
Total North America Segment
International
Regulated Waste and Compliance Services
Secure Information Destruction Services
Total International Segment
Contract Liabilities
PART II
Year Ended Year Ended December 31,
2020
2019
2021
$
$
$
$
$
$
1,854.0 $
792.9
2,646.9 $
1,457.5 $
679.0
2,136.5 $
396.5 $
113.9
510.4 $
1,930.2 $
745.3
2,675.5 $
1,541.9 $
647.3
2,189.2 $
388.3 $
98.0
486.3 $
2,407.0
901.9
3,308.9
1,970.4
769.5
2,739.9
436.6
132.4
569.0
Contract liabilities at December 31, 2021 and 2020 were $9.0 million and $8.8 million, respectively. Substantially all
of the contract liabilities as of December 31, 2021 are expected to be recognized as revenue during the year ending
December 31, 2022 and substantially all of the balance as of December 31, 2020 was recognized as revenue
during the year ended December 31, 2021.
Contract Acquisition Costs
The Company’s incremental direct costs of obtaining a contract, which consist primarily of sales incentives, are
deferred and amortized to SG&A over a weighted average estimated period of benefit of 6.5 years.
During the year ended December 31, 2021, 2020, and 2019 the Company amortized $12.7 million, $10.6 million,
and $9.1 million, respectively, of deferred sales incentives to SG&A.
Total contract acquisition costs, net of accumulated amortization, were classified as follows as of December 31:
In millions
Other current assets
Other assets
Total contract acquisition costs
NOTE 3 – ACQUISITIONS
Acquisitions
2021
2020
$
$
12.4 $
34.3
46.7 $
11.1
31.1
42.2
During the years ended December 31, 2021 and 2019, the Company completed an acquisition in North America,
respectively, and these acquisitions are considered to be complementary to existing operations and fit with the
Company’s portfolio optimization strategy, including its RWCS and SID service lines. There were no acquisitions in
the year ended December 31, 2020. All were accounted for as business combinations under the applicable
guidance.
The results of operations of these acquired businesses have been included in the Consolidated Statements of Loss
from the date of the acquisition. Pro forma results of operations for these acquisitions are not presented because
the pro forma effects, individually or in the aggregate, were not material to the Company’s consolidated results.
The following table summarizes the acquisition date fair value of consideration transferred for acquisitions
completed during the years ended December 31:
2021 10-K Annual Report
Stericycle, Inc. • 62
In millions
Cash
Promissory notes
Deferred consideration
Total purchase price
PART II
2021
2019
$
$
10.5 $
21.9
11.0
43.4 $
0.2
0.3
—
0.5
The total purchase consideration for the 2021 acquisition has been preliminarily allocated to the assets and
liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase
price over the net assets acquired recorded as goodwill based on the strategic benefits to be achieved and is
deductible for tax purposes. We are in the process of valuing all of the assets acquired in the acquisition and until
we have completed our valuation process, there may be adjustments to our estimates of fair value and resulting
preliminary purchase price allocation, specifically those related to intangibles.
The following table summarizes the purchase price allocation for the acquisitions during the years ended
December 31:
In millions
Fixed assets
Intangibles
Goodwill
Other assets and liabilities, net
Total purchase price
2021
2019
$
0.5 $
20.0
22.0
0.9
$
43.4 $
—
0.5
—
—
0.5
The customer relationships intangible has an estimated useful life of 15 years.
NOTE 4 – RESTRUCTURING, DIVESTITURES, AND IMPAIRMENTS
Restructuring – Operational Optimization
During the year ended December 31, 2020, the Company recognized $3.1 million of Operational Optimization costs
(see impairment related portion in table below) within our International segment related to the discontinuation of a
service line in the U.K.
During the year ended December 31, 2019, the Company recognized $14.5 million of Operational Optimization
costs (see impairment related portion in table below). The North America segment recognized $3.8 million of costs
in the Domestic RWCS operations primarily related to a site relocation and costs in the Domestic CRS operations
related to a headcount reduction and a non-cash impairment of intangible assets as a result of the exit from a
business line. The International segment recognized $10.7 million of costs related to site closures and facility exit
charges across the EMEA and LATAM regions.
Divestitures
Stericycle recognized the following Divestiture (gains) losses, net in the Consolidated Statements of Loss:
2021 10-K Annual Report
Stericycle, Inc. • 63
In millions
North America Segment
Canada Environmental Solutions operations
Domestic Environmental Solutions operations
CRS businesses
Total North America charges, net
International Segment
CRS businesses
Japan RWCS operations
Argentina operations
Mexico RWCS operations
Chile RWCS operations
U.K. businesses
Total International charges, net
Divestiture (gains) losses, net
North America Segment Divestitures:
PART II
Year Ended December 31,
2020
2021
2019
$
(12.6)
$
—
$
—
—
(12.6)
—
10.9
—
—
—
—
$
10.9
(1.7) $
53.8
(38.8)
15.0
(4.0)
—
112.4
(4.9)
5.1
—
108.6
—
—
45.5
45.5
—
—
—
43.2
19.0
(4.7)
57.5
123.6
$
103.0
On December 1, 2021, the Company completed the sale of its Environmental Solutions operations in Canada for
cash proceeds of $24.4 million pursuant to an agreement entered into in November. The transaction resulted in a
fourth quarter divestiture gain of $12.6 million. In connection with the closing, the Company entered into certain
additional ancillary agreements, including a TSA, for up to 12 months.
On December 1, 2020, the Company entered into an agreement and completed the sale of the Company's global
product recall business (Expert Solutions) for cash proceeds of $78.0 million. Expert Solutions business had
revenues of approximately $75.4 million for the year ended December 31, 2019, primarily reported in North
America, as part of the RWCS revenue category. The Company recognized a gain on divestment of $38.8 million in
North America and $4.0 million in International. In connection with the closing, the Company entered into certain
additional ancillary agreements, including a TSA for up to 12 months.
On April 6, 2020, the Company completed the sale of all of the outstanding equity interests of its U.S. Environmental
Solutions business for cash proceeds of $462.5 million, pursuant to the Purchase Agreement, dated February 6,
2020. The Purchase Agreement provided for the divestiture of the Company’s U.S. Environmental Solutions
business, exclusive of the Company’s healthcare hazardous waste services and unused consumer pharmaceutical
take-back services. The U.S. 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. In connection with the Purchase Agreement, the Company entered into
an HSA and TSA with the Buyer for a period of 7 years and 6 months, respectively. The Company allocated and
deferred a portion of the Transaction proceeds, $17.7 million related to the HSA and $1.5 million related to the TSA,
which will be recognized over the applicable duration of the HSA and TSA periods, subject to specific agreement
provisions, thereby offsetting the expenses incurred to deliver the respective services. The allocated proceeds are
reflected as an operating cash flow on the Consolidated Statement of Cash Flows, as they are advances received
for services to be provided prospectively. In aggregate, the Company recognized impairment charges and
subsequent loss on disposal of $53.8 million. Further, the Company released a $1.7 million benefit associated with
contingent consideration related to a prior acquisition agreement connected with the divested business (Fair value -
Level 3) that is reported in SG&A in the Company’s Consolidated Statements of Loss.
In 2019, the Company completed the sale of the telephone answering business, TAS, and its retail pharmaceutical
returns business in the U.S. and Puerto Rico for cash proceeds of $36.4 million resulting in total losses of
$45.5 million. In connection with the sale agreement for the TAS business, the Company entered into a TSA with the
buyer for a period of up to 15 months. The Company allocated and deferred $5.1 million of the proceeds, which was
recognized over the duration of the TSA period offsetting the expenses incurred to deliver the TSA services that
were not reimbursed by the buyer.
2021 10-K Annual Report
Stericycle, Inc. • 64
PART II
International Segment Divestitures:
On September 1, 2021, the Company completed the sale of its RWCS operations in Japan for cash proceeds of
approximately $11.3 million. The transaction resulted in a third quarter divestiture loss of $10.9 million, of which
$3.8 million related to the reclassification of accumulated currency translation adjustments to earnings.
In August 2020, the Company entered into an agreement and completed the sale of its operations in Argentina for
cash proceeds of approximately $3.9 million. The transaction resulted in a loss on disposal of $112.4 million, of
which $87.2 million related to the balance of cumulative currency translation adjustment.
Additionally, in December 2020, the Company recognized a $4.9 million gain related to a divestiture of a subsidiary
in Mexico, and a $5.1 million charge associated with the divested business in Chile (see Note 12 –
Commitments and Contingencies in the Consolidated Financial Statements).
During 2019, the Company had the following divestiture activity:
•
•
•
•
U.K. based texting business, for cash proceeds of $14.8 million, resulting in a gain of approximately
$5.1 million.
A reduction in the provision against a loan receivable originally arising from the sale of our U.K.
patient transport business, resulting in a $0.3 million gain.
Substantially all of the Company’s operations in Mexico for nominal consideration, resulting in
impairment charges and subsequent loss on disposal totaling $43.2 million, including the realization
of a loss of approximately $18.9 million related to the balance of cumulative currency translation
adjustment.
The Company’s operations in Chile for cash proceeds of $30.7 million, resulting in a loss of $19.0
million, including the realization of a loss of approximately $16.8 million related to the balance of
cumulative currency translation adjustment.
Impairments:
In millions
Impairments
Operational Optimization - COR
Operational Optimization - SG&A
Asset Impairment - COR
Asset Impairment - SG&A
Total Impairments
North America
Operational Optimization - COR
Operational Optimization - SG&A
Asset Impairment - COR
Asset Impairment - SG&A
Total North America Segment
International
Operational Optimization - COR
Operational Optimization - SG&A
Asset Impairment - COR
Asset Impairment - SG&A
Total International Segment
Year Ended December 31,
2021
2020
2019
— $
— $
—
—
6.7
6.7
2.8
6.8
8.7
$
18.3 $
— $
— $
—
—
2.1
2.1
—
6.1
4.2
$
10.3 $
— $
—
—
4.6
4.6
$
— $
2.8
0.7
4.5
8.0 $
5.6
1.7
5.2
16.9
29.4
2.0
0.4
1.6
0.5
4.5
3.6
1.3
3.6
16.4
24.9
$
$
$
$
$
$
Asset impairments in the year ended December 31, 2021, includes charges of $4.6 million in the Company’s
International reportable segment related to an impairment associated with certain customer relationship intangibles
in Romania and $2.1 million in North America related to an impairment associated with a Canada site exit. Asset
impairments in the year ended December 31, 2020, for the Company's North America reportable segment includes
charges associated with rationalization of software application assets and intangible assets as a result of a
discontinuation of a certain service line, and the Company's International reportable segment includes charges
associated with certain property, plant and equipment assets and permits primarily in the U.K. In the year ended
2021 10-K Annual Report
Stericycle, Inc. • 65
December 31, 2019, the Company's International reportable segment included impairment charges related to
customer lists and other long-lived assets in Brazil associated with an impairment review of its operations.
Operational optimization related impairments are associated with the Company's actions to reduce operating costs
and optimize operations. In the year ended December 31, 2020, the Company's International reportable segment
includes charges primarily related to the discontinuation of a service line in the U.K. In the year ended December
31, 2019, the Company's International reportable segment includes charges related to impairments of permits and
other long-lived assets in Europe and Latin America and in our North America reportable segment for charges
associated with a U.S. site movement.
PART II
NOTE 5 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31:
In millions
Land and improvements
Building and improvements
Machinery and equipment
Fleet vehicles
Containers
Office equipment and furniture
Software and Enterprise Resource Planning system(1)
Construction in progress(1)
Total property, plant and equipment
Less: accumulated depreciation
Property, plant and equipment, net
2021
2020
$
42.4 $
219.7
318.0
142.0
255.5
51.0
266.3
74.6
1,369.5
(658.5)
$
711.0 $
38.7
225.0
323.0
156.0
249.7
53.9
88.6
196.1
1,331.0
(629.7)
701.3
(1) In the third quarter of 2021, we completed deployment of our ERP system for North America’s finance and procurement processes and for
North America’s SID business.
Property, plant and equipment impairment charges included in SG&A and COR for the years ended December 31,
2020, and 2019, respectively, are further described in Note 4 - Restructuring, Divestitures, and Impairments in the
Consolidated Financial Statements.
NOTE 6 – LEASES
The Company has operating leases for fleet vehicles, transfer sites, processing facilities, communication centers,
corporate and regional offices, and certain equipment.
The components of net lease cost were as follows for the years ended December 31:
In millions
Operating lease cost
Finance lease cost:
Amortization of leased assets
Interest on lease liabilities
Net lease cost
2021
2020
$
$
108.2 $
3.4
1.1
112.7 $
114.2
4.7
1.9
120.8
Short-term lease costs were $11.8 million for the period ended December 31, 2021. Variable lease cost and
sublease income were not material during the years ended December 31, 2021 and 2020.
2021 10-K Annual Report
Stericycle, Inc. • 66
PART II
Supplemental cash flow information related to leases were as follows for the years ended December 31:
In millions
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from finance leases (interest)
Financing cash flows from finance leases (principal)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
Finance leases
2021
2020
$
107.1 $
1.1
3.9
96.8
0.5
117.1
1.9
4.3
79.8
1.1
Finance lease assets, net of accumulated amortization, were $19.5 million and $24.8 million as of December 31,
2021 and 2020, respectively, and are included in Property, Plant and Equipment, net on the Consolidated Balance
Sheet.
Information regarding lease terms and discount rates as of December 31 were as follows:
In millions
Weighted average remaining lease term (years):
Operating leases
Finance leases
Weighted average discount rate:
Operating leases
Finance leases
Maturities of lease liabilities as of December 31, 2021, were as follows:
In millions
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities
2021
2020
5.9
14.4
4.19 %
5.22 %
6.1
14.4
4.07 %
5.15 %
Operating
Leases
Finance
Leases
$
96.0 $
81.2
70.2
49.8
30.0
86.1
413.3
48.0
$
365.3 $
3.6
3.9
2.8
2.5
2.2
20.4
35.4
14.0
21.4
As of December 31, 2021, the Company had additional operating leases of $2.1 million which have not yet
commenced. These operating leases are expected to commence in fiscal year 2022 with lease terms up to
approximately 7 years.
NOTE 7 – GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill:
The changes in the carrying amount of goodwill were as follows:
2021 10-K Annual Report
Stericycle, Inc. • 67
In millions
Balance as of December 31, 2019
Divestitures
Changes due to foreign currency fluctuations and other
Balance as of December 31, 2020
Acquisition
Divestitures
Changes due to foreign currency fluctuations and other
Balance as of December 31, 2021
PART II
North
America
International
Total
$
2,631.6 $
(182.8)
—
2,448.8
22.0
—
—
2,470.8 $
$
350.6 $
(4.0)
23.9
370.5
—
(6.0)
(19.6)
344.9 $
2,982.2
(186.8)
23.9
2,819.3
22.0
(6.0)
(19.6)
2,815.7
Accumulated non-cash impairment charges by segment as of December 31 were as follows:
In millions
North America
International
Total
2021 and 2020 Impairments
2021
2020
$
$
421.1 $
175.6
596.7 $
421.1
175.6
596.7
The Company performed its annual goodwill impairment assessment as of October 1, 2021 and 2020 and
determined no reporting units' carrying values were in excess of their estimated fair value.
2019 Impairments
The Company performed its annual goodwill impairment assessment as of October 1, 2019 and determined that the
Environmental Solutions and Canada reporting units’ carrying values were in excess of their estimated fair value.
Factors that contributed to the estimated fair value of the reporting units being below their carrying values included:
•
•
Environmental Solutions: During 2019, we experienced higher operating costs, particularly related to
hazardous waste disposal costs. In addition, we anticipated that the timeline for achieving the
betterment plans for both revenue quality and cost improvements had been extended. The Company
also gathered insights from the process of evaluating Environmental Solutions as part of the
Company’s portfolio rationalization criteria.
Canada: During 2019, we experienced competitive pricing pressure in both SID and RWCS, lower
SOP pricing, higher regulated waste costs including Canada-based operating costs due to a reliance
on third-party disposal, and U.S.-based enabling support costs. The Company expected these
challenges to have a prolonged impact and the Company has adjusted them in current year long-
range plan.
These challenges were factored into updates to the Company’s long-range plan and forecasted cash-flow
assumptions. The Company also made certain adjustments to the risk premiums within the discount rates used to
present value these forecasted cash-flows. As a result, the Company recognized $80.8 million of non-cash
impairment charges related to its Environmental Solutions reporting unit and $126.6 million to fully impair the
goodwill associated with its Canada reporting unit.
During the first quarter of 2019, there were business and market developments and insights gathered from the
Company’s portfolio optimization considerations, which negatively impacted the estimated cash flows of the
Company’s Latin America reporting unit and triggered an interim assessment as of March 31, 2019. The Company
determined that the Latin America reporting unit’s carrying value was in excess of its estimated fair value and
recognized $20.9 million of non-cash goodwill impairment charges related to the Latin America reporting unit.
Following the impairment, the Latin America reporting unit goodwill was fully impaired.
The fair value of reporting units, used in both the annual and any interim goodwill impairment assessments in 2021,
2020 and 2019, are classified as Level 3 measurements within the fair value hierarchy due to significant
unobservable inputs such as discount rates, projections of revenue, cost of revenue and operating expense growth
rates, long-term growth rates and income tax rates. The fair value methodology is described further in Note 1 –
Basis of Presentation and Summary of Significant Accounting Policies.
2021 10-K Annual Report
Stericycle, Inc. • 68
PART II
Other Intangible Assets:
At December 31, the values of other intangible assets were as follows:
In millions
Amortizable intangibles:
Customer relationships
Covenants not-to-compete
Operating permits
Tradenames
Other
Indefinite-lived intangibles:
Operating permits
Tradenames
Total
2021
2020
Gross
Carrying
Amount
Accumulated
Amortization
Net Value
Gross
Carrying
Amount
Accumulated
Amortization
Net Value
$
1,297.6 $
722.9 $
574.7 $
1,314.9 $
630.2 $
684.7
3.5
12.1
3.6
0.6
70.0
3.2
8.5
1.4
0.6
—
313.7
1,701.1 $
$
—
736.6 $
0.3
3.6
2.2
—
70.0
313.7
964.5 $
3.5
11.5
3.6
0.6
79.6
3.0
6.5
1.3
0.6
—
315.3
1,729.0 $
—
641.6 $
0.5
5.0
2.3
—
79.6
315.3
1,087.4
2021 10-K Annual Report
Stericycle, Inc. • 69
The changes in the carrying amount of intangible assets were as follows:
In millions
Balance as of December 31, 2019
Divestitures
Impairments
Amortization
Changes due to foreign currency fluctuations
Balance as of December 31, 2020
Acquisition
Impairments
Divestitures
Amortization
Changes due to foreign currency fluctuations
Balance as of December 31, 2021
PART II
Total
$
1,422.4
(209.8)
(11.1)
(124.9)
10.8
1,087.4
20.0
(4.6)
(10.9)
(117.9)
(9.5)
964.5
$
The Company’s indefinite-lived intangible assets include operating permits and certain tradenames. The Company
has determined that certain of our operating permits and certain tradenames have indefinite lives due to our ability
to renew them with minimal additional cost and therefore they are not amortized.
The impairment charges included in SG&A and COR for the years ended December 31, 2021, 2020, and 2019,
respectively, are further described in Note 4 - Restructuring, Divestitures, and Impairments.
Finite-lived intangible assets are amortized over their estimated useful lives using the straight-line method with each
category having weighted average remaining useful lives as follows:
In years
Customer relationships
Covenants not-to-compete
Operating permits
Tradenames
Landfill air rights
Estimated
Useful Lives
10-25
5
1-2
20-40
5-10
Weighted
Average
Remaining
Useful Lives
6.8
3.6
1.2
16.5
2.7
The useful life of intangible assets is assessed annually to determine whether events and circumstances warrant a
revision to their remaining useful life and changes are reflected prospectively as the intangible asset is amortized
over the revised remaining useful life. In the fourth quarter of 2021, we performed the annual assessment of the
useful life of our finite-lived intangibles. The Company updated the useful life of its customer relationship intangibles
as a result of analyzing recent quantitative and qualitative observations in the market and factors impacting our
business. The change in estimate will be accounted for prospectively. The weighted average remaining life was
decreased from approximately 8.2 years to 6.8 years to reflect the new estimated useful lives. We estimate that
there will be an approximately 5-10% increase to annual amortization expense.
Our estimated intangible asset amortization expense for each of the next five years is as follows for the years
ending December 31:
In millions
2022
2023
2024
2025
2026
$
114.3
111.0
109.8
89.6
28.2
2021 10-K Annual Report
Stericycle, Inc. • 70
NOTE 8 – ACCRUED LIABILITIES
Accrued liabilities consisted of the following at December 31:
In millions
Compensation
Self-insurance
Taxes
Interest
Professional fees
Disposal and landfill liabilities
Contingent liability
Other
Total accrued liabilities
NOTE 9 – DEBT
Long-term debt consisted of the following at December 31:
In millions
$1.2 billion Credit Facility, due in 2026
$200 million term loan, due in 2026
$600 million Senior Notes, due in 2024
$500 million Senior Notes, due in 2029
Promissory notes and deferred consideration, weighted average maturity of 3.7 and 2.1 years for 2021 and
2020, respectively (Note 4)
Foreign bank debt, weighted average maturity of 6.0 years for 2021 and 1.1 years for 2020
Obligations under finance leases (Note 6)
Total debt
Less: current portion of total debt
Less: unamortized debt issuance costs
Long-term portion of total debt
PART II
2021
2020
$
91.2 $
84.1
37.7
26.3
9.9
2.9
92.0
15.5
97.6
78.1
51.2
19.4
11.2
1.6
14.5
15.8
$
359.6 $
289.4
2021
2020
$
247.0 $
200.0
600.0
500.0
54.6
0.7
21.4
1,623.7
19.9
14.0
1,589.8 $
$
173.3
422.5
600.0
500.0
42.3
32.3
24.8
1,795.2
91.0
15.1
1,689.1
The estimated fair value of our debt approximated $1.63 billion and $1.86 billion as of December 31, 2021 and
December 31, 2020, respectively. These fair value amounts were estimated using an income approach by applying
market interest rates for comparable instruments and developed based on inputs classified as Level 2.
Credit Agreement
The Company renewed its Credit Agreement, dated as of September 30, 2021, that amended and extended its
previous credit agreement dated November 17, 2017. The Credit Agreement provides for a term loan facility under
which the Company has outstanding term loans in an aggregate principal amount of $200.0 million and a revolving
credit facility of $1.2 billion. The Term Loan and the Credit Facility will mature on September 30, 2026. If the
Company's 2024 Senior Notes are still outstanding 91 days prior to their respective maturity date (the “Springing
Maturity Date”), then the Credit Agreement maturity date will be the Springing Maturity Date. The proceeds of the
Term Loan Facility and loans under the Revolving Credit Facility were used to refinance the loans and other credit
extensions that were made under the previous credit agreement. In the year ended December 31, 2021 and in
connection with the Credit Agreement, the Company incurred issuance costs of $4.1 million, of which $0.2 million
has been charged to Interest expense, net. The remainder was capitalized as unamortized debt issuance costs and
is being amortized to Interest expense, net over the remaining term of the Credit Agreement. A portion, $0.5 million,
of unamortized debt issuance costs associated with the previous credit agreement has been charged to Interest
expense, net.
The obligations under the Credit Agreement are secured by substantially all of the assets of the Company and all of
its material domestic subsidiaries and are guaranteed by certain subsidiaries of the Company, excluding certain
excluded subsidiaries pursuant to the Credit Agreement.
2021 10-K Annual Report
Stericycle, Inc. • 71
PART II
The Credit Agreement contains a financial covenant requiring maintenance of a minimum Consolidated Interest
Coverage Ratio (as defined in the Credit Agreement) of 3.00 to 1.00 as of the end of any fiscal quarter. The Credit
Agreement contains a financial covenant requiring maintenance of a maximum Consolidated Leverage Ratio of 4.25
to 1.00 in any fiscal quarter ending before September 30, 2022 and 4.00 to 1.00 for any fiscal quarter ending on or
after September 30, 2022, with a leverage holiday if a permitted acquisition or series of related permitted
acquisitions involving aggregate consideration in excess of $200 million (a “Material Acquisition”) occurs during a
fiscal quarter. If a Material Acquisition occurs, the Company shall have the right to increase the maximum
Consolidated Leverage Ratio covenant to 4.50 to 1.00 during such fiscal quarter and the subsequent three fiscal
quarters.
As of December 31, 2021, the Company was in compliance with its financial covenants. The Credit Agreement
Defined Debt Leverage Ratio covenant was 3.61 to 1.00, which was below the allowed maximum ratio of 4.25 to
1.00 as set forth in the Credit Agreement.
The Applicable Interest Rate for loans depends on the Consolidated Leverage Ratio for the Company. The tiered
pricing is based on the leverage grid provided in the Credit Agreement. Based on the then current Consolidated
Leverage Ratio, the initial pricing under the Credit Agreement was set at an Applicable Rate of 1.30% for
Eurocurrency Rate/SONIA Daily Rate Loans and 0.30% for Base Rate Loans, and the facility fee is set at a rate of
0.20% times the actual daily amount of the Revolving Credit Facility regardless of usage.
The weighted average interest rates on long-term debt, excluding finance leases, as of December 31, were as
follows:
$1.2 billion Credit Facility, due in 2026 (variable rate)
$200 million term loan, due in 2026 (variable rate)
$600 million Senior Notes, due in 2024 (fixed rate)
$500 million Senior Notes, due in 2029 (fixed rate)
Promissory notes and deferred consideration (fixed rate)
Foreign bank debt (variable rate)
Senior Notes
2021
2020
1.76 %
1.40 %
5.38 %
3.88 %
3.19 %
9.80 %
2.03 %
1.90 %
5.38 %
3.88 %
1.79 %
2.03 %
On November 24, 2020, the Company issued $500.0 million at par of aggregate principal amount of Senior Notes,
due January 2029, which are unsecured and bear interest at 3.88% per annum, payable on January 15 and July 15
of each year. The Senior Notes are fully and unconditionally guaranteed by each of the issuer’s current and, subject
to certain exceptions, future domestic subsidiaries that guarantee the issuer’s senior credit facility, term loan facility,
or certain other debt of the issuer or the subsidiary guarantors.
The 2020 Senior Notes will be redeemable, in whole or in part, at any time, and from time to time, on or after
November 15, 2023, at the redemption prices specified under “Description of Notes—Optional Redemption”, plus
accrued and unpaid interest, if any, to, but excluding, such redemption date. At any time and from time to time prior
to November 15, 2023, the notes may be redeemed, in whole or in part, at a redemption price of 100% the principal
amount thereof, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the
redemption date. In addition, the issuer may redeem up to 40% of the notes at any time and from time to time
before November 15, 2023, with the net cash proceeds from certain equity offerings at a redemption price equal to
103.875%, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
In connection with the issuance of the 2020 Senior Notes, the Company incurred $5.8 million of direct issuance
costs, which have been capitalized in unamortized debt issuance costs and are being amortized to Interest
expense, net over the term of the 2020 Senior Notes.
During 2019, the Company issued $600.0 million at par of aggregate principal amount of Senior Notes, due July
2024, which are unsecured and bear interest at 5.375% per annum, payable on January 15 and July 15 of each
year. The Senior Notes are fully and unconditionally guaranteed by each of the Company’s current domestic
subsidiaries that guarantee the Company’s Senior Credit Facility. The Indenture limits the ability of the Company
and its subsidiaries to incur certain liens, enter into certain sale and leaseback transactions, and consolidate, merge
or sell all or substantially all of their assets.
The 2019 Senior Notes will be redeemable, at the option of the Company, in whole or in part, at any time on or after
July 15, 2021, at the redemption prices specified in the Indenture along with accrued interest.
2021 10-K Annual Report
Stericycle, Inc. • 72
PART II
In connection with the issuance of the 2019 Senior Notes, the Company incurred $7.1 million of debt issuance
costs, which have been capitalized in unamortized debt issuance costs and are being amortized to Interest
expense, net over the term of the 2019 Senior Notes.
In the event of both a change of control of the Company and a rating downgrade by the rating agencies, the
Company will be required to offer to repurchase all outstanding 2020 and 2019 Senior Notes at 101% of their
principal amount, plus accrued and unpaid interest.
The Indentures contains customary events of default, which include (subject in certain cases to customary grace
and cure periods), nonpayment of principal or interest; breach of other agreements in the Indenture; failure to pay
certain other indebtedness; certain events of bankruptcy or insolvency; failure to pay certain final judgments; and
failure of certain guarantees to be enforceable.
Other Matters
Amounts committed to outstanding letters of credit and the unused portion of our Senior Credit Facility at
December 31 were as follows:
In millions
Outstanding stand-by letters of credit under Senior Credit Facility
Unused portion of the Revolving Credit Facility
2021
2020
$
71.4 $
881.5
79.5
947.2
Payments due on long-term debt, excluding finance lease obligations, during each of the five years subsequent to
December 31, 2021 are as follows:
In millions
2022
2023
2024
2025
2026
Thereafter
Total
$
$
16.8
14.2
616.8
12.5
441.5
500.5
1,602.3
NOTE 10 – INCOME TAXES
The U.S. and International components of income (loss) before income taxes consisted of the following for the
years ended, December 31:
In millions
U.S.
International
Total income (loss) before income taxes
2021
2020
2019
$
$
(14.0) $
14.7
0.7 $
65.6 $
(121.6)
(56.0) $
(150.5)
(212.3)
(362.8)
2021 10-K Annual Report
Stericycle, Inc. • 73
Significant components of the Company’s income tax (expense) benefit for the years ended December 31, are as
follows:
PART II
In millions
Current
U.S. - federal
U.S. - state and local
International
Deferred
U.S. - federal
U.S. - state and local
International
Total (expense) benefit
2021
2020
2019
$
4.9 $
108.3 $
(1.4)
(6.4)
(2.9)
(17.0)
(4.6)
(3.0)
(24.6)
(27.5) $
(2.9)
(6.0)
99.4
(85.9)
(13.7)
0.3
(99.3)
0.1 $
$
—
(10.7)
(6.4)
(17.1)
23.9
8.0
2.0
33.9
16.8
A reconciliation of the income tax provision computed at the U.S. federal statutory rate to the effective tax rate for
the years ended December 31, are as follows:
U.S. federal statutory income tax rate
Effect of:
State and local taxes, net of federal tax effect
International tax rates
Permanent - other items
Permanent - goodwill impairment
FCPA settlement accrual
CARES Act and other tax matters
Valuation allowance
Divestitures
Stock-based compensation and executive compensation disallowance
Other
Effective tax rate
2021
2020
2019
21.0%
21.0%
21.0%
(317.2%)
(938.5%)
248.2%
—%
3,118.2%
(268.4%)
1,727.9%
(708.4%)
908.6%
37.6%
3,829.0%
(11.2%)
14.3%
(2.1%)
—%
—%
79.2%
(26.5%)
(62.7%)
(11.9%)
0.1%
0.2%
1.2%
5.1%
(4.2%)
(14.1%)
—%
—%
(1.2%)
1.2%
(1.0%)
(3.4%)
4.6%
The comparability of the Company’s current year effective tax rate to the effective tax rates from previous years was
impacted by the Company’s near-nil income before taxes in 2021, resulting in a magnification of the percentage
point impact for each rate reconciling item, rendering the 2021 effective tax rate not meaningful. Accordingly, the
Company has included a reconciliation in both dollars and percentages below. Both the Company’s near-nil income
before taxes and the Company’s magnified effective tax rate are driven by the FCPA settlement accrual and its non-
deductibility for tax purposes (see Note 19 – Legal Proceedings for further information).
U.S. federal tax expense (benefit) at statutory income tax rate
Effect of:
State and local taxes, net of federal tax effect
International tax rates
Permanent - other items
FCPA settlement accrual
CARES Act and other tax matters
Valuation allowance
Divestitures
Stock-based compensation and executive compensation disallowance
Other
Effective tax expense (benefit)
2021 Tax
Expense
(Benefit)
Tax Rate
$
0.2
21.0%
(2.3)
(6.8)
1.8
22.5
(1.9)
12.5
(5.1)
6.5
0.1
27.5
(317.2%)
(938.5%)
248.2%
3,118.2%
(268.4%)
1,727.9%
(708.4%)
908.6%
37.6%
3,829.0%
$
2021 10-K Annual Report
Stericycle, Inc. • 74
Deferred tax liabilities and assets at December 31, were as follows:
In millions
Deferred tax liabilities:
Property, plant and equipment
Goodwill and intangibles
Leases - right of use asset
Other
Total deferred tax liabilities
Deferred tax assets:
Accrued liabilities
Leases - right of use liability
Net operating tax loss carry-forwards
Interest expense carry-forward
Other
Less: valuation allowance
Total deferred tax assets
Net deferred tax liabilities
PART II
2021
2020
$
(87.2) $
(394.4)
(89.9)
(15.7)
(587.2)
58.6
95.1
73.4
15.3
11.7
(61.4)
$
192.7
(394.5) $
(49.0)
(391.2)
(91.3)
(17.1)
(548.6)
63.1
96.5
49.0
11.3
15.0
(52.0)
182.9
(365.7)
The valuation allowance increased $9.4 million, net of divestitures, during the year ended December 31, 2021,
primarily due to non-benefited international losses.
In response to the COVID-19 pandemic the government took the following tax-related government actions:
• On March 11, 2021, the President signed into law the ARP Act, a legislative package which is generally not
significant to the Company's current business; however, the Company will continue to assess the ARP Act
on an ongoing basis.
• On December 27, 2020, the President signed the CAA 2021, which provides several business tax relief
provisions, which are generally not significant to the Company's current business; however, the Company
will continue to assess the CAA 2021 on an ongoing basis.
• On March 27, 2020, the President signed into law the CARES Act, which was a substantial tax-and-
spending package. As a result of the CARES Act tax law changes, for the year ended December 31, 2020,
we recognized a $44.4 million tax benefit related to our ability to carryback net operating losses to prior
years that had higher tax rates. Note that in the first quarter of 2020, the Company recognized an initial
$39.4 million tax benefit; in the fourth quarter of 2020, upon finalizing the 2019 U.S. federal income tax
return which impacted the carryback to prior years, the Company recognized an incremental $5.0 million tax
benefit. In July 2020, the Company received a cash refund of $48.0 million, and in December 2020, the
Company received $64.2 million (of which $62.0 million was the cash refund claim, and $2.2 million was
interest income). A remaining carryback claim of less than $1.0 million associated with the finalization of the
2019 U.S. federal income tax return was filed with the IRS and the refund was received in June of 2021.
Similar tax provisions and other stimulus measures have been granted either before or after December 31, 2021 by
certain international and U.S. state jurisdictions, which the Company continues to evaluate and apply, if applicable.
The Company filed a PFA with the IRS related to a claim under Internal Revenue Code Section 1341 concerning the
tax rate to be applied to the SQ Settlement on the Company’s 2018 tax return. As a result of the enactment of the
CARES Act, the Company was able to realize a benefit at the higher tax rate in prior years on a portion of the SQ
Settlement. In 2020, in consideration of the CARES Act, the Company revised the PFA, a portion of the long-term
receivable previously established for the Section 1341 claim was reclassified to a current income tax receivable and
the related uncertain tax position was released as part of the tax benefit recognized in 2020 (in part as described
above).
Subsequently in late 2020, the Company amended the 2018 tax return to reduce the Section 1341 benefit as a
result of discussions with the IRS as part of the PFA program. Consequently, the remaining long-term receivable
established for the Section 1341 claim and the corresponding uncertain tax position was reclassified to a current
income tax receivable and current income tax liability, respectively, as both were expected to settle in cash in 2021.
In April 2021, the Company was advised that the IRS completed its review of the 2018 tax return and took no
exception to the Section 1341 benefit. Consequently, the Company recorded a tax benefit of approximately $5.5
2021 10-K Annual Report
Stericycle, Inc. • 75
PART II
million in the second quarter of 2021 associated with the Section 1341 claim and received the related refund in
December 2021.
As of December 31, 2021, the Company plans to repatriate any undistributed earnings of its first-tier international
subsidiaries back to the U.S. only to the extent that they were previously taxed under the Tax Act, and future
repatriations may take the form as distributions from previously taxed earnings and profits and/or return of capital
distributions. All other undistributed earnings, to the extent there are any, will remain permanently reinvested to
support existing working capital needs in the international subsidiaries. A withholding tax, unrealized foreign
exchange gain, and state income tax accrual has been recorded, as applicable. The Company has not provided for
deferred taxes on outside basis differences for investments in its international subsidiaries that are unrelated to
unremitted earnings as these basis differences will be indefinitely reinvested. A determination of the unrecognized
deferred taxes related to these other components of outstanding basis difference is not practicable to calculate.
At December 31, 2021, the net operating loss carry-forwards from both international and U.S. operations are
approximately $281.6 million and certain of these net operating loss carry-forwards begin to expire in 2022. The tax
benefits of these net operating losses is approximately $73.4 million at December 31, 2021, on which valuation
allowances of $33.9 million were recognized offsetting such tax benefits. After the recognition of valuation
allowances, the majority of the remaining net operating losses are attributable to the Company’s U.S. operations.
The changes in the valuation allowance on deferred tax assets is as follows:
In millions
Balances at beginning of period
Additions Charged to Income Tax Expense(1)
Other Changes to Reserves (2)
Balances at end of period
Year Ended December 31,
2020
2019
2021
$
$
52.0 $
10.5
(1.1)
61.4 $
39.4 $
17.8
(5.2)
52.0 $
35.3
13.3
(9.2)
39.4
(1)
(2)
2021 amount includes valuation allowances on business operations (including the U.K., Brazil, and Spain). 2020 amount includes
valuation allowances on business operations (including the U.K. and Brazil).
2021 and 2020 amounts consist primarily of currency translation adjustments. 2019 amount consists primarily of divestiture valuation
allowances for businesses in Mexico and Chile.
The Company files income tax returns in the U.S., in various states and in certain international jurisdictions. We
generally are no longer subject to U.S. federal, state, local, or international income tax examinations by tax
authorities for years prior to 2015.
The Company has recognized liabilities to cover certain uncertain tax positions. Such uncertain tax positions relate
to additional taxes that the Company may be required to pay in various tax jurisdictions. During the course of
examinations by various taxing authorities, proposed adjustments may be asserted. The Company evaluates such
items on a case-by-case basis and adjusts the accrual for uncertain tax positions as deemed necessary, including
presenting the accrual as a reduction of a deferred tax asset for a tax loss or tax credit carryforward, when such
carryforward is available and permitted to be utilized to settle the tax liability.
The total amount of unrecognized tax benefit at December 31, 2021 is $19.7 million. The amount of uncertain tax
positions that, if recognized, would affect the effective tax rate is approximately $18.0 million. We recognized
interest and penalties related to income tax reserves as a charge in the amount of $0.4 million, a benefit of $1.5
million, and a benefit of $0.7 million for the years ended December 31, 2021, 2020 and 2019, respectively, as a
component of income tax expense. It is reasonably possible that our unrecognized tax benefits will decrease by as
much as $5.0 million to $10.0 million in the next 12 months primarily due to statute lapses and the progress of U.S.
federal, state, and international audits.
The following table summarizes the aggregate changes in unrecognized tax benefits:
2021 10-K Annual Report
Stericycle, Inc. • 76
In millions
Unrecognized tax positions as of December 31, 2019
Gross increases - tax positions in prior periods
Gross increases - current period tax positions
Settlements
Lapse of statute of limitations
Unrecognized tax positions as of December 31, 2020
Gross increases (decreases) - tax positions in prior periods
Gross increases - current period tax positions
Settlements
Lapse of statute of limitations
Unrecognized tax positions as of December 31, 2021
PART II
62.7
(33.5)
2.4
(0.8)
(6.5)
24.3
(5.7)
5.3
(0.2)
(4.0)
19.7
$
$
NOTE 11 – FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value hierarchy distinguishes between
(1) market participant assumptions developed based on market data obtained from independent sources
(observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on
the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three
broad levels as described below:
Level 1 – Quoted prices in active markets for identical assets or liabilities (highest priority).
Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted
prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that
market participants would use in pricing the asset or liability (lowest priority).
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to
the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement
requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value
hierarchy levels. The impact of our creditworthiness and non-performance risk has been considered in the fair
value measurements noted below. There were no movements of items between fair value hierarchies in the years
presented.
Our contingent consideration liabilities are reassessed at the end of every reporting period and are recorded using
Level 3 inputs. The amounts are classified as either other current liabilities or other liabilities and are presented as
follows as of December 31:
In millions
Other current liabilities
Other liabilities
Total contingent consideration
2021
2020
$
$
— $
5.3
5.3 $
0.4
5.3
5.7
Contingent consideration represents amounts expected to be paid as part of acquisition consideration only if certain
future events occur. The Company arrives at the fair value of contingent consideration by applying a weighted
probability of potential payment outcomes.
2021 10-K Annual Report
Stericycle, Inc. • 77
Changes to contingent consideration are reflected in the table below:
In millions
Contingent consideration as of January 1, 2019
Change in fair value reflected in SG&A
Currency Translation Adjustment
Decrease due to payments
Contingent consideration as of December 31, 2020
Change in fair value reflected in SG&A
Contingent consideration as of December 31, 2021
PART II
$
$
8.0
(2.1)
(0.1)
(0.1)
5.7
(0.4)
5.3
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to
record certain assets and liabilities at fair value on a nonrecurring basis, generally as result of acquisitions, the
classification of disposal groups as held-for-sale, or the re-measurement of assets resulting in impairment
charges. See Note 3 – Acquisitions, Note 4 – Restructuring, Divestitures, and Impairments, Note 5 Property, Plant
and Equipment, and Note 7 - Goodwill And Other Intangible Assets for further discussion of the fair value. These
values are generated principally using Level 3 inputs.
Fair Value of Debt: The estimated fair value of the Company’s debt obligations, using Level 2 inputs, compared to
the carrying amount at December 31 was as follows:
In billions
Fair value of debt obligations
Carrying value of debt obligations
2021
2020
$
1.63 $
1.62
1.86
1.80
The fair values were estimated using an income approach by applying market interest rates for comparable
instruments.
NOTE 12 – COMMITMENTS AND CONTINGENCIES
Asset Retirement Obligations
The Company has asset retirement obligations that it is required to perform under law or contract once an asset is
permanently taken out of service. Most of these obligations are not expected to be paid until many years in the
future and are expected to be funded from general company resources at the time of removal.
At December 31, 2021 and 2020, the total asset retirement obligation liabilities recognized were $19.2 million and
$19.7 million, respectively and were included in Other long-term liabilities on the Consolidated Balance Sheets.
Letters of Credit, Surety Bonds and Bank Guarantees
As of December 31, 2021 and 2020, the Company had $71.4 million and $79.5 million, respectively, of stand-by
letters of credit outstanding against our senior credit facility (see Note 9 – Debt). In addition, at December 31, 2021
and 2020 we had, $32.5 million and $37.9 million, respectively, of surety bonds and $24.1 million and $21.2 million,
respectively, of bank guarantees. The bank guarantees are issued mostly by the Company’s international
subsidiaries for various purposes, including leases, seller notes, contracts and permits. The surety bonds are used
for performance and financial guarantees. Neither the bank guarantees nor the surety bonds affect the Company’s
ability to use its various lines of credit.
Indemnifications
In the ordinary course of business and in connection with the sale of assets and businesses and other transactions,
we often indemnify our counterparties against certain liabilities that may arise in connection with the transaction or
that are related to events and activities prior to or following a transaction (see Note 4 - Restructuring, Divestitures,
and Impairments). If the indemnified party were to make a successful claim pursuant to the terms of the
indemnification, we may be required to reimburse the loss. These indemnifications are generally subject to various
restrictions and limitations. Historically, we have not paid material amounts under these provisions and, as of
December 31, 2021, these indemnifications obligations were not material.
2021 10-K Annual Report
Stericycle, Inc. • 78
NOTE 13 – RETIREMENT AND OTHER EMPLOYEE BENEFIT PROGRAMS
PART II
Defined Contribution Plans:
The Company has a 401(k) defined contribution retirement savings plan (the "Plan") covering substantially all
domestic employees. Each participant may elect to defer a portion of his or her compensation subject to certain
limitations. The Company may contribute up to 50% of compensation contributed to the Plan by each employee up
to a maximum of $3,000 per annum. During the years ended December 31, 2021, 2020 and 2019, the Company's
contributions were $9.2 million, $8.7 million and $11.0 million, respectively.
The Company also has several foreign defined contribution plans, which require the Company to contribute a
percentage of the participating employee’s salary according to local regulations. During the years ended
December 31, 2021, 2020 and 2019, the Company's total contributions were $4.7 million, $4.6 million and $5.0
million, respectively.
Multiemployer Defined Benefit Pension Plans:
The Company participates in two trustee-managed multiemployer defined benefit pension plans (“Multiemployer
Pension Plans”) for employees who are covered by collective bargaining agreements. The risks of participating in
these Multiemployer Pension Plans are different from single-employer plans in that (i) assets contributed to
the Multiemployer Pension Plan by one employer may be used to provide benefits to employees or former
employees of other participating employers; (ii)
the
Multiemployer Pension Plans, the unfunded obligations of the Multiemployer Pension Plan may be required
to be assumed by the remaining participating employers and (iii) if the Company chooses to stop participating in
any of its Multiemployer Pension Plans or if any event should significantly reduce or eliminate the need to
participate (such as employee layoffs or closure of a location), the Company may be required to pay those
Multiemployer Pension Plans a withdrawal amount based on the underfunded status of the Multiemployer
Pension Plan. Based upon the most recent information available, one of the Multiemployer Pension Plans the
Company participates in is in “critical” status due to an accumulated funding deficiency and has adopted a
rehabilitation plan to address the funding deficiency position.
if a participating employer stops contributing
to
The following table outlines the Company’s participation in Multiemployer Pension Plans:
Pension Plan Private
Sanitation Union, Local 813
IBT
Nurses And Local 813 IBT
Retirement Plan
Plan
Employer ID
Number
13-1975659
13-3628926
Pension Protection
Act Zone Status (1),
Plan #
2021
2020
(3)
FIP/RP
Status (2)
Company
Contributions (4)
(in millions)
2021
2020
Expiration Date of
Collective
Bargaining
Agreements
1
1
Red/
Critical
Red/
Critical
Implemented
$
1.5 $
Green
Green
N/A $
— $
0.6
0.1
various dates
various dates
(1)
(2)
(3)
(4)
Zone status is defined by the Department of Labor and the Pension Protection Act and represents the
level at which the plan is funded. Plans in the red zone are less than 65% funded, while plans in the
green zone are at least 80% funded. Status is based on information received from the Multiemployer
Pension Plans and is certified by a Multiemployer Pension Plan actuary.
The "FIP/RP Status" column indicates Multiemployer Pension Plans for which a Funding
Improvement Plan ("FIP”) or a Rehabilitation Plan ("RP") has been implemented or is pending. The
most recent Pension Protection Act zone status available in 2021 and 2020 is for the plans’ year-end
December 31, 2020.
A Multiemployer Pension Plan that has been certified as endangered, seriously endangered or critical
may begin to levy a statutory surcharge on contribution rates. Once authorized, the surcharge is at
the rate of 5% for the first 12 months and 10% for any periods thereafter, until certain conditions are
met. Contributing employers, however, may eliminate the surcharge by entering into a collective
bargaining agreement that meets the requirements of the applicable FIP or RP.
The Company was listed in the Form 5500 for the Pension Plan Private Sanitation Union Local 813
IBT as individually significant for contributing more than 5% of total contributions to such plan during
the plan years ended December 31, 2020. At the date these financial statements were issued, Forms
5500 were not available for the Multiemployer Pension Plans for the year ended December 31, 2021.
2021 10-K Annual Report
Stericycle, Inc. • 79
PART II
NOTE 14 – STOCK BASED COMPENSATION
At December 31, 2021, the Company had the following incentive stock plans:
•
•
•
•
•
•
the 2021 Plan;
the 2017 Plan;
the 2014 Plan;
the 2011 Plan;
the 2008 Plan; and
the 2005 Plan;
At December 31, 2021, the Company had reserved a total of 5,049,440 shares for issuance under its incentive
stock plans.
The Plans provide for the grant of ISOs, RSUs and PSUs intended to qualify under Section 422 of the Internal
Revenue Code. The Plans authorize awards to the Company’s officers, employees and consultants and to the
Company’s directors.
The exercise price per share of an option granted under any of the Plans may not be less than the closing price of a
share of the Company’s common stock on the date of grant. The maximum term of an option granted under any of
the Plans may not exceed 8 or 10 years. An option may be exercised only when it is vested and, in the case of an
option granted to an employee (including an officer), only while he or she remains an employee and for a limited
period following the termination of his or her employment. New shares are issued upon exercise of stock options.
Employee Stock Purchase Plan:
In October 2000, our Board of Directors adopted the ESPP, which our stockholders approved in May 2001 and was
made effective as of July 1, 2001. The ESPP authorizes 1,799,999 shares of our common stock, which substantially
all U.S. employees may purchase through payroll deductions at a price equal to 85% of the fair market values of the
stock as of the end of the 6 months offering period. An employee's payroll deductions and stock purchase, may not
exceed $5,000 during any offering period. During 2021, 2020, and 2019, 73,471 shares, 70,120 shares and 97,669
shares, respectively, were issued through the ESPP. At December 31, 2021, we had 514,234 shares available for
issuance under the ESPP plan.
Stock-Based Compensation Expense:
During 2021, there were no changes to our stock compensation plans or modifications to outstanding stock-based
awards which would change the value of any awards outstanding.
The following table presents the total stock-based compensation expense resulting from stock option awards,
RSUs, PSUs and the U.S. ESPP and Canada ESPP included in the Consolidated Statements of Loss:
In millions
SG&A - stock option plans
SG&A - RSUs
SG&A - PSUs
SG&A - U.S. ESPP and Canada ESPP
Total pre-tax expense
Year Ended December 31,
2021
2020
2019
$
2.0 $
3.2 $
14.8
9.6
0.7
15.6
5.9
0.8
$
27.1 $
25.5 $
8.0
7.8
0.5
0.8
17.1
During the years ended December 31, 2021, 2020 and 2019, the impact of forfeitures was a reduction to expense of
$3.3 million, $4.9 million, and $6.7 million, respectively.
Stock Options:
Options granted to non-employee directors vest in one year and options granted to officers and employees
generally vest over five years. Expense related to options with graded vesting is recognized using the straight-line
method over the vesting period.
Stock option activity for the year ended December 31, 2021 is summarized as follows:
2021 10-K Annual Report
Stericycle, Inc. • 80
Stock option activity for the year ended December 31, 2021 is summarized as follows:
PART II
Outstanding as of January 1, 2021
Granted
Exercised
Forfeited
Cancelled or expired
Outstanding as of December 31, 2021
Exercisable as of December 31, 2021
Number of
Options
Weighted
Average
Exercise
Price per
Share
Weighted
Average
Remaining
Contractual
Life
(in years)
Total
Aggregate
Intrinsic Value
(in millions)
2,860,468 $
— $
(50,099) $
(19,827) $
(872,012) $
1,918,530 $
96.00
—
52.33
66.60
98.64
96.25
1,751,550 $
100.02
1.94
1.70
$
$
2.6
1.5
At December 31, 2021, there was $1.3 million of total unrecognized compensation expense related to stock options,
which is expected to be recognized over a weighted average period of 1.0 year.
The following table sets forth the intrinsic value of options exercised for the years ended December 31:
In millions
Total exercise intrinsic value of options exercised
2021
2020
2019
$
1.1 $
0.5 $
2.1
The exercise intrinsic value represents the total pre-tax intrinsic value (the difference between the fair value on the
trading day the option was exercised and the exercise price associated with the respective option).
There were no stock options granted in the years ended December 31, 2021 and December 31, 2020.
Restricted Stock Units:
The fair value of RSUs is based on the closing price of the Company's common stock on the date of grant and is
amortized to expense over the service period. RSUs vest at the end of three or five years. The 2017 Plan includes
a share reserve for RSUs granted at a 1-1 ratio while our 2008, 2011 and 2014 Plans reserve at a 2-1 ratio. No
RSUs were granted under the 2005 Plan.
RSUs activity during the year ended December 31, 2021, is as follows:
Non-vested as of January 1, 2021
Granted
Vested and Released
Forfeited
Non-vested as of December 31, 2021
Number of
Units
Weighted
Average
Grant Date
Fair Value
547,235 $
253,860 $
(186,342) $
(58,431) $
556,322 $
54.96
68.71
55.26
58.23
60.79
Weighted
Average
Remaining
Contractual
Life
(in years)
Total
Aggregate
Intrinsic Value
(in millions)
0.88
$
33.2
At December 31, 2021, there was $18.5 million of total unrecognized compensation expense related to RSUs,
which is expected to be recognized over a weighted average period of 1.5 years. The intrinsic value of units that
vested during the years ended December 31, 2021, 2020, and 2019 was $18.9 million, $18.2 million, and $5.3
million, respectively.
Performance-Based Restricted Stock Units:
Our executive officers PSU program was introduced in 2017. PSUs issued to executive officers through 2019 vest,
or not, in three equal annual installments based on the achievement of pre-determined annual earnings per share
performance goals as approved by the Compensation Committee. Each of the PSU’s granted represent the right to
receive one share of the Company’s common stock at a specified future date.
Our PSU program was expanded in 2020 to include employees in additional levels below executive officer. PSUs
issued beginning in 2020 vest, or not, at the end of the three-year period following the grant date based on the
achievement of pre-determined annual earnings per share and annual return on invested capital performance goals
as approved by the Compensation Committee (each metric is weighted at 50% of the whole). At the end of the
three-year period, the results from each of the three years are averaged to calculate one achievement percentage
2021 10-K Annual Report
Stericycle, Inc. • 81
PART II
number, and then a relative total shareholder return (rTSR) modifier is applied to that number in order to determine
the final share amount, based on Stericycle’s stock’s market performance relative to performance of the S&P
MidCap 400 Index. The modifier can adjust the final shares issued by applying a multiplier of 75% - 125%. We use
the Monte Carlo simulation model to determine the fair value of PSU's, including the effect of the rTSR modifier,
once the related performance criteria have been established.
In addition, certain employees have been granted PSUs which vest, or not, in four equal annual installments based
on the achievement of performance goals related to the ERP implementation, as approved by the Compensation
Committee.
Compensation cost for the PSUs during the performance period is recognized based on the estimated achievement
of the performance criteria, which is evaluated on a quarterly basis. Each of the PSU’s granted represent the right to
receive one share of the Company’s common stock at a specified future date.
PSU activity during the year ended December 31, 2021, is as follows:
Non-vested as of January 1, 2021
Granted
Vested and Released
Forfeited
Non-vested as of December 31, 2021
Number of
Units
Weighted
Average
Grant Date
Fair Value
92,042 $
88,997 $
(88,269) $
(16,784) $
75,986 $
57.79
57.66
57.61
60.60
57.23
The table above reflects the number of shares at target which could be earned upon vesting of the executive and
ERP implementation PSU’s for which performance goals related to 2021 have been established. At December 31,
2021, approximately 246,000 additional PSUs exist which will vest in tranches based upon achievement of
performance goals to be established for fiscal years 2022 and 2023.
NOTE 15 – LOSS PER COMMON SHARE
Basic loss per share is computed by dividing Net Loss by the number of weighted average common shares
outstanding during the reporting period. Diluted earnings per share is calculated to give effect to all potentially
dilutive common shares that were outstanding during the reporting period, only in the periods in which such effect is
dilutive. The following table shows the effect of stock-based awards on the weighted average number of shares
outstanding used in calculating diluted earnings per share:
In millions, except per share data
Weighted average common shares outstanding - basic
Incremental shares outstanding related to stock-based awards (1)
Weighted average common shares outstanding - diluted
Year Ended December 31,
2020
2021
2019
91.8
—
91.8
91.5
—
91.5
91.0
—
91.0
(1)
In periods of net loss, stock-based awards are anti-dilutive and therefore excluded from the (loss) earnings per
share calculation.
Anti-dilutive stock-based awards excluded from the computation of diluted (loss) earnings per share using the
treasury stock method includes the following:
In thousands
Options excluded from computation of diluted loss per share.
RSUs excluded from computation of diluted loss per share.
Year Ended December 31,
2020
2019
2021
1,897
63
3,017
4
4,507
98
PSUs are offered to key employees and are subject to achievement of specified performance conditions.
Contingently issuable shares are excluded from the computation of diluted earnings per share based on current
period results. The shares would not be issuable if the end of the year were the end of the contingency period. If
such goals are not met, no compensation expense is recognized, and any previously recognized compensation
expense is reversed.
2021 10-K Annual Report
Stericycle, Inc. • 82
NOTE 16 – ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table sets forth the changes in the components of accumulated other comprehensive loss:
In millions
PART II
Balance as of January 1, 2019
Accelerated amortization of interest rate lock premiums
Cumulative currency translation loss realized through disposition of Mexico operations
Cumulative currency translation loss realized through disposition of Chile operations
Year change
Balance as of December 31, 2019
Cumulative currency translation loss realized through disposition of Argentina operations
Year change
Balance as of December 31, 2020
Cumulative currency translation loss realized through disposition of Japan operations
Year change
Balance as of December 31, 2021
NOTE 17 – SEGMENT REPORTING
Currency
Translation
(Loss) Income
Adjustments
$
(362.3) $
—
18.9
16.8
8.5
(318.1)
87.2
43.5
(187.4)
3.8
(35.2)
(218.8) $
$
Unrealized
Gains
(Losses) on
Cash Flow
Hedges
Accumulated
Other
Comprehensive
Loss
(3.0) $
2.3
—
—
0.7
—
—
—
—
—
—
— $
(365.3)
2.3
18.9
16.8
9.2
(318.1)
87.2
43.5
(187.4)
3.8
(35.2)
(218.8)
The Company evaluates, oversees and manages the financial performance of two operating and reportable
segments – North America and International. Other includes costs related to corporate enabling and shared
services functions, annual incentive compensation, and stock-based compensation.
The North America and International segments offer the following services: RWCS, which provide collection and
processing of regulated and specialized waste, including medical (including reusable sharps disposal management
services), pharmaceutical and hazardous waste, for disposal and compliance programs (under the Steri-Safe®,
Clinical Services, First Practice Management, SeguriMed and EnviroAssure brand names) and communication
solutions such as appointment reminders, secure messaging, event registration and other communications for
hospitals and IDN’s; and SID Services, which provide for the collection of personal and confidential information for
secure destruction and recycling of shredded paper.
.
2021 10-K Annual Report
Stericycle, Inc. • 83
The following tables show financial information for the Company's reportable segments:
PART II
In millions
Revenues
North America
International
Total
Depreciation (1)
North America
International
Other
Total
Intangible Amortization
North America
International
Other
Total
Adjusted Income from Operations
North America
International
Other
Total
Total Assets
North America
International
Other
Total
Year Ended December 31,
2020
2019
2021
2,136.5 $
2,189.2 $
2,739.9
510.4
486.3
569.0
2,646.9 $
2,675.5 $
3,308.9
73.5 $
78.1 $
19.2
12.7
21.7
6.8
88.7
27.3
9.8
105.4 $
106.6 $
125.8
95.8 $
98.3 $
22.1
—
26.6
—
117.9 $
124.9 $
587.6 $
606.0 $
53.6
(288.8)
46.5
(263.9)
352.4 $
388.6 $
111.1
34.1
—
145.2
595.0
70.7
(213.7)
452.0
4,364.6 $
4,377.5 $
5,183.5
876.4
232.1
946.0
258.4
980.4
273.1
$
$
$
$
$
$
$
$
$
$
5,473.1 $
5,581.9 $
6,437.0
(1) Excludes depreciation of $0.6 million, $2.0 million, and $1.8 million for the years ended December 31, 2021,
2020, and 2019, respectively, which is included as part of ERP Implementation.
The following table reconciles the Company's primary measure of segment profitability, Adjusted Income from
Operations, to (Loss) income from operations:
In millions
Year Ended December 31,
2020
2019
2021
Total Reportable Segment Adjusted Income from Operations
$
352.4 $
388.6 $
Intangible Amortization
ERP Implementation
Operational Optimization
Portfolio Optimization
Litigation, Settlements and Regulatory Compliance
Asset Impairments
Goodwill Impairment
Other
Income (loss) from operations
(117.9)
(59.0)
—
(3.3)
(93.2)
(6.7)
—
(124.9)
(50.8)
(3.1)
(133.0)
(20.3)
(15.5)
—
$
—
72.3 $
(9.1)
31.9 $
452.0
(145.2)
(67.7)
(14.5)
(118.2)
(28.2)
(22.1)
(228.3)
(39.7)
(211.9)
2021 10-K Annual Report
Stericycle, Inc. • 84
NOTE 18 – GEOGRAPHIC AREA
The following table presents consolidated revenues and long-lived assets by geographic region:
PART II
In millions
Revenues
U.S.
International:
Europe
Other international countries
Total international
Total
Long-Lived Assets
U.S.
International:
Europe
Other international countries
Total international
Total
Year Ended December 31,
2020
2019
2021
$
1,995.2 $
2,067.3 $
2,586.8
427.0
224.7
651.7
377.7
230.5
608.2
379.3
342.8
722.1
2,646.9 $
2,675.5 $
3,308.9
4,052.0 $
4,086.0 $
4,700.6
$
$
589.2
194.8
784.0
632.5
254.5
887.0
636.5
301.0
937.5
$
4,836.0 $
4,973.0 $
5,638.1
NOTE 19 – LEGAL PROCEEDINGS
The Company operates in highly regulated industries and responds to regulatory inquiries or investigations from
time to time that may be initiated for a variety of reasons. At any given time, the Company has matters at various
stages of resolution with the applicable government authorities. The Company is also routinely involved in actual or
threatened legal actions, including those involving alleged personal injuries and commercial, employment,
environmental, tax, and other issues. The outcomes of these matters are not within the Company’s complete control
and may not be known for prolonged periods of time. In some actions, claimants seek damages, as well as other
relief, including injunctive relief, that could require significant expenditures or result in lost revenue.
In accordance with applicable accounting standards, the Company establishes an accrued liability for loss
contingencies related to legal and regulatory matters when the loss is both probable and reasonably estimable. If
the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate than any
other, the minimum amount of the range is accrued. If a loss is not probable or a probable loss is not reasonably
estimable, no liability is recorded. When determining the estimated loss or range of loss, significant judgment is
required to estimate the amount and timing of a loss to be recorded. These accruals represent management’s best
estimate of probable losses and, in such cases, there may be an exposure to loss in excess of the amounts
accrued. Estimates of probable losses resulting from litigation and regulatory proceedings are difficult to predict.
Legal and regulatory matters inherently involve significant uncertainties based on, among other factors, the
jurisdiction and stage of the proceedings, developments in the applicable facts or law, and the unpredictability of the
ultimate determination of the merits of any claim, any defenses the Company may assert against that claim, and the
amount of any damages that may be awarded. The Company’s accrued liabilities for loss contingencies related to
legal and regulatory matters may change in the future as a result of new developments, including, but not limited to,
the occurrence of new legal matters, changes in the law or regulatory environment, adverse or favorable rulings,
newly discovered facts relevant to the matter, or changes in the strategy for the matter. Regardless of the outcome,
litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of
management resources and other factors.
Contract Class Action and Opt Out Lawsuits. Beginning on March 12, 2013, the Company was served with
several class action complaints filed in federal and state courts in several jurisdictions. These complaints asserted,
among other things, that the Company had imposed unauthorized or excessive price increases and other charges
on its customers in breach of its contracts and in violation of the Illinois Consumer Fraud and Deceptive Business
Practices Act. The complaints sought certification of the lawsuit as a class action and the award to class members
2021 10-K Annual Report
Stericycle, Inc. • 85
PART II
of appropriate damages and injunctive relief. These related actions were ultimately transferred to the United States
District Court for the Northern District of Illinois for centralized pretrial proceedings.
The parties engaged in discussions through and overseen by a mediator regarding a potential resolution of the
matter and reached a settlement agreement, as previously disclosed, which settlement agreement obtained court
approval on March 8, 2018. Under the terms of the SQ Settlement, the Company admitted no fault or wrongdoing
whatsoever, and it entered into the SQ Settlement to avoid the cost and uncertainty of litigation.
Certain class members who have opted out of the SQ Settlement have filed lawsuits against the Company, and the
Company is defending and intends to resolve those actions. The Company has made an accrual in respect of these
collective matters consistent with its accrual policies described above, which is not material.
Government Investigations. On June 12, 2017, the SEC issued a subpoena to the Company, requesting
documents and information relating to the Company’s compliance with the FCPA or other foreign or domestic anti-
corruption laws with respect to certain of the Company’s operations in Latin America. In addition, the DOJ notified
the Company that it was investigating this matter in parallel with the SEC. The Company is cooperating with these
agencies and certain foreign authorities. The Company also conducted 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 found evidence of improper conduct. As part of the
FCPA investigation discussed above, the SEC requested certain additional information from the Company.
As previously disclosed, the Company has engaged in settlement discussions in connection with the foregoing
government investigations. The Company has reached agreements in principle with the DOJ and the SEC to settle
these matters. Under the Company’s agreement in principle with the DOJ, the Company would enter into a deferred
prosecution agreement (“DPA”) with the DOJ, under which the DOJ would defer criminal prosecution of the
Company for a period of three years for charges relating to conspiracy to violate the anti-bribery and books and
records provisions of the FCPA. If the Company remains in compliance with the DPA during its three-year term, the
deferred charge against the Company would be dismissed with prejudice. The Company would pay $52.5 million in
criminal fines to the DOJ. Under the Company’s agreement in principle with the SEC, the Company would enter into
an administrative resolution with the SEC with respect to alleged violations of the anti-bribery, books and records
and internal controls provisions of the FCPA, and would disgorge $22.2 million and pay pre-judgment interest of
$6.0 million to the SEC. In addition, under both the agreement in principle with the DOJ and with the SEC, the
Company would engage an independent compliance monitor for two years and undertake compliance with self-
reporting obligations for an additional year. Based on these agreements in principle and as provided by U.S. GAAP,
in addition to the $61.0 million previously accrued, the Company has recognized an additional estimated aggregate
accrued liability for these matters of approximately $19.7 million within its consolidated financial statements as of
December 31, 2021, for a total accrual of $80.7 million relating to these matters. Final resolution of these matters is
subject to negotiation of documentation satisfactory to all parties. It is also subject to final approvals by the
Company’s board of directors, the DOJ, and the SEC, and may require court approval of the DPA. The Company is
also discussing potential settlement of investigations by Brazilian authorities. Because negotiations with the
Brazilian authorities are ongoing, the Company cannot predict with certainty the outcome of these negotiations,
including whether a settlement will be reached, the amount of any potential monetary payments, or injunctive or
other relief. In the event the Company is able to negotiate a settlement with the Brazilian authorities, certain
monetary portions of the agreements in principle with the DOJ and SEC may be offset by payments made thereto.
At the present time, the Company is unable to reasonably estimate nor provide any assurance regarding the
amount of any potential loss in excess of the amount accrued relating to these matters.
In addition, the Company has been informed that the office of the United States Attorney for the Southern District of
New York is conducting an investigation into compliance with the False Claims Act and other federal statutes in
connection with the collection, transportation and disposal of hazardous waste by the Company’s former ESOL
business unit. The Company has also been informed that the State of California Department of Justice is conducting
an investigation related to the Company’s collection, transportation, and disposal of waste generated by government
customers in California. The Company is cooperating with these investigations.
The Company has not accrued any amounts in respect of the investigation matters set forth in the preceding
paragraph, as it cannot estimate any reasonably possible loss or any range of reasonably possible losses that the
Company may incur. The Company is unable to make such an estimate because, based on what the Company
knows now, in the Company’s judgment, the factual and legal issues presented in these matters are sufficiently
unique that the Company is unable to identify other circumstances sufficiently comparable to provide guidance in
making estimates.
Environmental and Regulatory Matters. The Company is regulated by federal, state and local laws enacted to
regulate the discharge of materials into the environment, the generation, transportation and disposal of waste, and
2021 10-K Annual Report
Stericycle, Inc. • 86
PART II
the cleanup of contaminated soil and groundwater and protection of the environment. Because of the highly
regulated nature of its business, the Company frequently becomes a party to legal or administrative proceedings
involving various governmental authorities and other interested parties. The issues involved in these proceedings
generally relate to alleged violations of existing permits and licenses or alleged responsibility under federal or state
Superfund laws to remediate contamination at properties owned either by the Company or by other parties to which
either the Company or the prior owners of certain of its facilities shipped waste. From time to time, the Company
may be subject to fines or penalties in regulatory proceedings relating primarily to waste treatment, storage or
disposal facilities.
Effective April 6, 2020, the Company completed the divestiture of its Domestic Environmental Solutions business,
including the facility in Rancho Cordova, California, to Harsco Corporation. Pursuant to the Purchase Agreement,
the Company may have liability under certain indemnification claims for matters relating to those Environmental
Solutions facilities, including potentially with respect to the investigations by the Southern District of New York and
California Department of Justice described above and the Rancho Cordova, California, and DEA Investigation
matters discussed below.
Rancho Cordova, California. On June 25 and 26, 2018, the California DTSC conducted a Compliance Enforcement
Inspection of the Company’s former Environmental Solutions facility in Rancho Cordova, California. On February
14, 2020, DTSC filed an action in the Superior Court for the State of California, Sacramento County Division,
alleging violations of California’s Hazardous Waste Control Law and the facility’s hazardous waste permit arising
from the inspection. That action is ongoing.
Separately, on August 15, 2019, the Company received from DTSC a written Intent to Deny Hazardous Waste
Facility Permit application for the Rancho Cordova facility. A public hearing was held on September 22, 2019, and
the public comment period closed on October 25, 2019. The Company entered a written submission as part of that
process. On August 27, 2020, DTSC issued a Notice of Denial of Hazardous Waste Facility Permit Application and
on September 25, 2020, the Company filed a Petition for Review, which instituted an administrative appeal of
DTSC’s action, which is currently pending.
The Company is vigorously defending itself in all of the Rancho Cordova, California matters. The Company has not
accrued any amounts in respect of these matters and cannot estimate the reasonably possible loss or the range of
reasonably possible losses that it may incur. The Company is unable to make such an estimate because (i) litigation
is by its nature uncertain and unpredictable and (ii) in the Company’s judgment, the factual and legal allegations
asserted by DTSC are sufficiently unique that it is unable to identify other proceedings with circumstances
sufficiently comparable to provide guidance in making estimates.
DEA Investigation. On February 11, 2020, the Company received an administrative subpoena from the DEA, which
executed a search warrant at the Company’s former Environmental Solutions facility at Rancho Cordova, California
and an administrative inspection warrant at the Company’s former facility in Indianapolis, Indiana for materials
related to the former Environmental Solutions business of collecting, transporting, and destroying controlled
substances from retail customers (the “ESOL Retail Controlled Substances Business”). On that same day, agents
from the DTSC executed a separate search warrant at the Rancho Cordova facility. Since that time, the U.S.
Attorney’s Office for the Eastern District of California (“USAO EDCA”) has been overseeing criminal and civil
investigations of the ESOL Retail Controlled Substances Business. The USAO EDCA has informed the Company
that it may have civil liability under the Controlled Substances Act related to the Domestic Environmental Solutions
Retail Controlled Substances Business. The Company is cooperating with the civil and criminal investigations,
which are ongoing.
The Company has not accrued any amounts in respect of these investigations and cannot estimate the reasonably
possible loss or any range of reasonably possible losses that the Company may incur. The Company is unable to
make such an estimate because, based on what the Company knows now, in the Company’s judgment, the factual
and legal issues presented in this matter are sufficiently unique that the Company is unable to identify other
circumstances sufficiently comparable to provide guidance in making estimates.
European Retrovirus Investigations. In conjunction with Europol, governmental authorities of Spain, Portugal, and
Romania have conducted coordinated inspections of a large number of medical waste management facilities,
including Stericycle facilities, relating to the transportation, management and disposal of waste that may be infected
with the COVID-19 virus, and related matters. The inspections have resulted in proceedings in Spain and Portugal.
The Company intends to vigorously defend itself in these proceedings.
The Company has not accrued any amounts in respect of these investigations, as it cannot estimate the reasonably
possible loss or any range of reasonably possible losses that the Company may incur. The Company is unable to
make such an estimate because, based on what the Company knows now, in the Company’s judgment, the factual
2021 10-K Annual Report
Stericycle, Inc. • 87
and legal issues presented in this matter are sufficiently unique that the Company is unable to identify other
circumstances sufficiently comparable to provide guidance in making estimates.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
PART II
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that material information relating to us and our
consolidated subsidiaries is accumulated and communicated to our management, including our Chief Executive
Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding our required disclosures.
The Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act are effective as of
December 31, 2021, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-
15(b) of the Exchange Act.
Management’s Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting. The Company’s internal control system is designed to provide reasonable assurance regarding the
preparation and fair presentation of published financial statements in accordance with generally accepted
accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, effective internal control over financial reporting provides only reasonable, and not absolute, assurance
with respect to the preparation and presentation of financial statements in accordance with generally accepted
accounting principles.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2021, using the criteria set forth in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management
concluded that, as of December 31, 2021, the Company’s internal control over financial reporting is effective.
The Company’s independent registered public accounting firm has issued an attestation report on the effectiveness
of the Company’s internal control over financial reporting as of December 31, 2021 (included elsewhere herein).
Changes in Internal Controls
During the fourth quarter, there were no changes that have materially affected or are reasonably likely to materially
affect the Company’s internal control over financial reporting.
2021 10-K Annual Report
Stericycle, Inc. • 88
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Stericycle, Inc.
Opinion on Internal Control Over Financial Reporting
PART II
We have audited Stericycle, Inc.’s internal control over financial reporting as of December 31, 2021, based on
criteria established
the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Stericycle, Inc.
(the Company) maintained, in all material respects, effective internal control over financial reporting as of December
31, 2021, based on the COSO criteria.
Internal Control—Integrated Framework
issued by
in
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related
consolidated statements of loss, comprehensive (loss) income, changes in equity and cash flows for each of the
three years in the period ended December 31, 2021, and the related notes and our report dated February 24, 2022
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
/s/ Ernst & Young LLP
Chicago, Illinois
February 24, 2022
2021 10-K Annual Report
Stericycle, Inc. • 89
Item 9B. Other Information
None.
Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspection
None.
PART II
2021 10-K Annual Report
Stericycle, Inc. • 90
PART III
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item regarding our directors is incorporated by reference to the information
contained under the caption "Election of Directors" in our definitive proxy statement for our 2022 Annual Meeting of
Stockholders to be filed pursuant to Regulation 14A.
The information required by this Item regarding our executive officers is contained under the caption "Information
about our Executive Officers" in Item 1 of Part I of this Report.
The information required by this Item regarding compliance with Section 16(a) of the Exchange Act is incorporated
by reference to the information contained under the caption "Delinquent Section 16(a) Reports" in our definitive
proxy statement for our 2022 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A.
We have adopted a code of business conduct that applies to all of our employees. The Code of Business Conduct
and Ethics is available on our website, www.stericycle.com, under "About Us/Investors/Investor Relations/Corporate
Governance/Governance Documents." We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-
K regarding any amendments to, or waiver from, a provision of our Code of Business Conduct and Ethics by posting
such information on our website.
The information required by this Item regarding certain corporate governance matters is incorporated by reference
to the information contained under the caption "Election of Directors" in our definitive proxy statement for our 2022
Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to the information contained under the caption
"Compensation Discussion and Analysis" and following sections (up to Item 3) in our definitive proxy statement for
our 2022 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The information required by this Item is incorporated by reference to the information contained under the captions
"Stock Ownership" and "Compensation Discussion and Analysis" and following sections (up to Item 2) in our
definitive proxy statement for our 2022 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A.
Equity Compensation Plans
The following table summarizes information as of December 31, 2021 relating to our equity compensation plans
pursuant to which stock option grants, RSUs, PSUs or other rights to acquire shares of our common stock may be
made or issued:
Equity Compensation Plan Information
In millions, except per share data
Plan Category
Equity compensation plans approved by our security holders (1)
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options and
Vesting of RSUs
(a)
Weighted-Average
Exercise Price
of Outstanding
Options
(b)
Number
of Securities
Remaining
Available for Future
Issuance Under
Equity
Compensation
Plans (Excluding
Securities
Reflected in
Column (a))
(c)
2.8 $
91.21
5.5
(1)
These plans consist of our 2021 Plan, 2017 Plan, 2014 Plan, 2011 Plan, 2008 Plan, 2005 Plan, the ESPP Plan, and the Canadian ESPP.
2021 10-K Annual Report
Stericycle, Inc. • 91
PART III
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required by this Item regarding our policies and procedures for the review, approval or ratification of
transactions with related persons is incorporated by reference to the information contained under the caption "Policy
on Related Party Transactions" in Item 1 of our definitive proxy statement for our 2022 Annual Meeting of
Stockholders, to be filed pursuant to Regulation 14A.
The information required by this Item regarding director independence is incorporated by reference to the
information contained in Item 1 of our definitive proxy statement for our 2022 Annual Meeting of Stockholders, to be
filed pursuant to Regulation 14A.
Item 14. Principal Accounting Fees and Services
Incorporated by reference from the information under the caption "Ratification of the Appointment of Ernst & Young
LLP as Our Independent Registered Public Accounting Firm for 2022" in our definitive proxy statement for our 2022
Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A.
2021 10-K Annual Report
Stericycle, Inc. • 92
PART IV
Item 15. Exhibits
(a) List of Financial Statements and Exhibits
We have filed the following financial statements as part of this report:
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Consolidated Financial Statements of Stericycle, Inc. and Subsidiaries:
Consolidated Statements of Loss
Consolidated Statements of Comprehensive (Loss) Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Internal Control Over
Financial Reporting
PART IV
Page
49
51
52
53
54
55
56
89
2021 10-K Annual Report
Stericycle, Inc. • 93
All other financial statement schedules have been omitted because they are not applicable to us or the required
information is shown on the Consolidated Financial Statements or notes thereto.
We have filed the following exhibits with this report:
Exhibit Index
Description
Filed with
Electronic
Submission
PART IV
2.1*
3(i).1*
3(i).2*
3(i).3*
3(i).4*
3(i).5*
3(i).6*
3(i).7*and 4.2*
3(i).8* and 4.3*
3(i).8* and 4.4*
Stock Purchase Agreement, dated as of February 6, 2020, by and among Stericycle, Inc., Harsco
Corporation and CEI Holding, LLC (incorporated by reference to Exhibit 2.1 to our Current Report on
Form 8-K filed February 7, 2020)
Amended and restated certificate of incorporation (incorporated by reference to Exhibit 3.1 to our
registration statement on Form S-1 declared effective on August 22, 1996)
First certificate of amendment to amended and restated certificate of incorporation (incorporated by
reference to Exhibit 3.1 to our current report on Form 8-K filed November 29, 1999)
Second certificate of amendment to amended and restated certificate of incorporation (incorporated by
reference to Exhibit 3.4 to our annual report on Form 10-K for 2002)
Third certificate of amendment to amended and restated certificate of incorporation (incorporated by
reference to Exhibit 3.4 to our registration statement on Form S-4 declared effective on October 10,
2007)
Fourth certificate of amendment to amended and restated certificate of incorporation (incorporated by
reference to Exhibit 3(i).1 to our quarterly report on Form 10-Q filed August 7, 2014)
Certificate of Designation setting forth the specific rights, preferences, limitations, restrictions and other
terms and conditions of the Series A Convertible Preferred Stock, par value $0.01 per share
(incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed November 29, 1999)
Certificate of Elimination of the Certificate of Designations relating to Series A Convertible Preferred
Stock, par value 0.01 per share (incorporated by reference to Exhibit 3.1 and 4.1 to our current report on
Form 8-K filed September 15, 2015)
Certificate of Designations setting forth the specific rights, preferences, limitations, restrictions and other
terms and conditions of the Mandatory Convertible Preferred Stock (incorporated by reference to Exhibit
4.1 to our Registration Statement on Form 8-A filed September 15, 2015)
Certificate of Elimination of the Certificate of Designations relating to 5.25% Series A Mandatory
Convertible Preferred Stock (incorporated by reference to Exhibit 3.9 to our Quarterly Report on Form
10-Q filed November 11, 2018)
3(ii).1*
Amended and restated bylaws (incorporated by reference to Exhibit 3(ii).1 to our current report on Form
8-K filed June 1, 2016)
4.1*
4.5
4.6*
4.7*
4.8*
4.9*
10.1*
10.2*†
10.3*†
10.4*†
10.5*†
10.6*†
10.7*†
10.8*†
10.9*†
Specimen certificate for shares of our common stock, par value $.01 per share (incorporated by
reference to Exhibit 4.1 to our registration statement on Form S-1 declared effective on August 22, 1996
(Registration No. 333-05665))
Description of the Company's Common Stock
Indenture dated as of June 14, 2019 between Stericycle, the named guarantors and U.S. Bank National
Association, as trustee (incorporated by reference to Exhibit 4.1 to our current report on Form 8-K filed
June 14, 2019
Form of 5.375% Senior Notes due July 2024 (incorporated by reference to Exhibit 4.1 to our current
report on Form 8-K filed June 14, 2019)
Indenture, dated as of November 24, 2020, between Stericycle, Inc., the name guarantors and U.S.
Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to our Current Report on
Form 8-K filed November 24, 2020)
Form of 3.875% Senior Notes due January 2029 (incorporated by reference to Exhibit 4.2 to our Current
Report on Form 8-K filed November 24, 2020)
Amended and Restated Credit Agreement, dated as of September 30, 2021, among Stericycle, Inc. and
certain subsidiaries as borrowers, Bank of America, N.A., as administrative agent, swing line lender, a
lender and a letter of credit issuer, and the other lenders party thereto (incorporated by reference to
Exhibit 10.1 to our Current Report on Form 8-K filed October 4, 2021)
2000 Non-statutory Stock Option Plan ("2000 Plan") (incorporated by reference to Exhibit 10.13 to our
Annual Report on Form 10-K filed March 25, 2002)
2005 Incentive Stock Plan ("2005 Plan") (incorporated by reference to Exhibit 4.1 to our registration
statement on Form S-8 filed August 9, 2005 (Registration No. 333-127353))
First amendment to 2005 Plan (incorporated by reference to Exhibit 10.15 to our annual report on Form
10-K for 2008)
2008 Incentive Stock Plan ("2008 Plan") (incorporated by reference to Exhibit 4.1 to our registration
statement on Form S-8 filed August 8, 2008 (Registration No. 333-152877))
First amendment to 2008 Plan (incorporated by reference to Exhibit 10.19 to our annual report on Form
10-K for 2009)
Amendment to 2000 Plan, 2005 Plan and 2008 Plan (incorporated by reference to Exhibit 10.21 to our
annual report on Form 10-K for 2012)
2011 Incentive Stock Plan ("2011 Plan") (incorporated by reference to Exhibit 4.1 to our registration
statement on Form S-8 filed August 9, 2011 (Registration No. 333-176165))
2014 Incentive Stock Plan ("2014 Plan") (incorporated by reference to Exhibit 4.1 to our registration
statement on Form S-8 filed December 23, 2014 (Registration No. 333-201236))
2021 10-K Annual Report
Stericycle, Inc. • 94
PART IV
10.10*†
10.11*†
10.12*†
10.13*†
10.14*†
10.15*†
10.16*†
10.17*†
10.18*†
10.19*†
10.20*†
10.21*†
10.22*†
10.23*†
10.24*†
10.25*†
10.26*†
10.27*†
10.28*†
10.29*†
10.30*
10.31*†
10.32*†
10.33*†
10.34*†
10.35*†
10.36*†
10.37*†
10.38*†
10.39*†
10.40*†
10.41*†
10.42*†
Stericycle, Inc. 2017 Long-Term Incentive Plan ("2017 Plan") (incorporated by reference to Exhibit B to
our Definitive Proxy Statement on Schedule 14A filed April 14, 2017)
Form of Stock Option Agreement under 2005 Plan, 2008 Plan, 2011 Plan, and 2014 Plan (incorporated
by reference to Exhibit 10.20 to our Annual Report on Form 10-K filed February 28, 2012)
Form of Restricted Stock Unit Award under 2008 Plan, 2011 Plan, and 2014 Plan (incorporated by
reference to Exhibit 10.21 to our Annual Report on Form 10-K filed February 28, 2012)
Form of Performance-Based Restricted Stock Unit Award under 2011 Plan and 2014 Plan (incorporated
by reference to Exhibit 10.24 to our Annual Report on Form 10-K filed March 15, 2017)
Form of Agreement for Stock Option Grant under 2008 Plan (incorporated by reference to Exhibit 10.1 to
our Current Report on Form 8-K filed March 15, 2018)
Form of Agreement for Stock Option Grant under 2011 Plan (incorporated by reference to Exhibit 10.19
to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Restricted Stock Unit Award under the 2011 Incentive Stock Plan (incorporated
by reference to Exhibit 10.1 to our quarterly report on Form 10-Q filed April 29, 2021)
Form of Agreement for Performance-Based Restricted Stock Unit Award under the 2011 Incentive Stock
Plan (incorporated by reference to Exhibit 10.2 to our quarterly report on Form 10-Q filed April 29, 2021)
Form of Agreement for Stock Option Grant under 2014 Plan (incorporated by reference to Exhibit 10.20
to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Stock Option Grant under 2017 Plan (incorporated by reference to Exhibit 10.21
to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Restricted Stock Unit Award under 2017 Plan (incorporated by reference to
Exhibit 10.5 to our Current Report on Form 8-K filed March 15, 2018)
Form of Performance-Based Restricted Stock Unit Award under 2017 Plan (incorporated by reference to
Exhibit 10.23 to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Performance-Based Restricted Stock Unit Award (Digital Transformation) under
2017 Plan (incorporated by reference to Exhibit 10.7 to our Current Report on Form 8-K filed March 15,
2018)
Form on Agreement of Stock Option Grant under 2017 Plan (incorporated by reference to Exhibit 10.46
to our annual report on Form 10-K for 2018)
Form on Agreement of Stock Option Grant under 2017 Plan (incorporated by reference to Exhibit 10.26
to our Annual Report on Form 10-K filed February 28, 2020)
Bonus conversion program (2018 plan year) (incorporated by reference to Exhibit 10.28 to our annual
report on Form 10-K for 2017)
Amended and Restated Employee Stock Purchase Plan effective May 24, 2017 (incorporated by
reference to Exhibit A to our Definitive Proxy Statement on Schedule 14A filed April 14, 2017)
Canadian Employee Stock Purchase Plan (incorporated by reference to Exhibit A to our Definitive Proxy
Statement on Schedule 14A filed April 15, 2016)
Plan of Compensation for Outside Directors (incorporated by reference to Exhibit 10.1 to our quarterly
report on Form 10-Q filed August 9, 2016)
Form of Director Restricted Stock Unit Award under 2017 Plan (incorporated by reference to Exhibit
10.32 to our Annual Report on Form 10-K filed February 26, 2018)
Form of Indemnification Agreement for Directors and Officers (incorporated by reference to Exhibit 10.29
to our Annual Report on Form 10-K filed March 15, 2017)
Executive Severance and Change in Control Plan (as amended) (incorporated by reference to Exhibit
10.33 to our Annual Report on Form 10-K filed February 28, 2020)
Supplemental Retirement Plan (incorporated by reference to Exhibit 10.1 to our current report on Form
8-K filed December 30, 2016)
Form of Agreement for Stock Option Grant under 2011 Plan (incorporated by reference to Exhibit 10.35
to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Stock Option Grant under 2014 Plan (incorporated by reference to Exhibit 10.36
to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Stock Option Grant under 2017 Plan (related to Spain) (incorporated by
reference to Exhibit 10.37 to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Stock Option Grant under 2017 Plan (related to U.K. Executive) (incorporated by
reference to Exhibit 10.38 to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Stock Option Grant under 2017 Plan (related to U.K. Non-Executive)
(incorporated by reference to Exhibit 10.39 to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Stock Option Grant under 2017 Plan (related to Ireland Non-Executive)
(incorporated by reference to Exhibit 10.40 to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Stock Option Grant under 2017 Plan (related to Canada Non-Executive)
(incorporated by reference to Exhibit 10.41 to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Stock Option Grant under 2017 Plan (related to Singapore Non-Executive)
(incorporated by reference to Exhibit 10.42 to our Annual Report on Form 10-K filed February 28, 2020)
Form of Agreement for Performance-Based Restricted Stock Unit Award (Digital Transformation) under
2017 Plan (incorporated by reference to Exhibit 10.43 to our Annual Report on Form 10-K filed February
28, 2020)
Form of Agreement for Stock Option Grant under 2017 Plan (related to Chile Non-Executive)
(incorporated by reference to Exhibit 10.44 to our Annual Report on Form 10-K filed February 28, 2020)
2021 10-K Annual Report
Stericycle, Inc. • 95
10.43*†
10.44*
10.45*†
10.46*†
10.47*†
10.48*†
14*
21
23
31.1
31.2
32
101
104
Stock Option Award Agreement under 2017 Plan (Participants Not Eligible for Executive Severance and
CIC Plan) (incorporated by reference to Exhibit 10.47 to our Annual Report on Form 10-K filed February
28, 2019)
Cooperation Agreement, dated as of March 26, 2020, between Stericycle, Inc. and Saddle Point
Management, L.P. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed
March 30, 2020)
Stericycle, Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Appendix B to our
Definitive Proxy Statement on Schedule 14A filed April 14, 2021)
Form of Agreement for Director Restricted Stock Unit Award under the 2021 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.2 to our quarterly report on Form 10-Q filed August 6, 2021)
Form of Restricted Stock Unit Award Agreement under the 2021 Long-Term Incentive Plan
Form of Performance Stock Unit Award Agreement under the 2021 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.4 to our quarterly report on Form 10-Q filed August 6, 2021)
Code of ethics (incorporated by reference to Exhibit 10.14 to our annual report on Form 10-K file March
15, 2004
Subsidiaries
Consent of Independent Registered Public Accounting Firm
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
The following financial information from our Annual Report on Form 10-K for the year ended
December 31, 2021, formatted in iXBRL (Inline Extensible Business Reporting Language) includes: (i)
the Cover Page, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Loss, (iv) the
Consolidated Statements of Comprehensive (Loss) Income, (v) the Consolidated Statements of
Changes in Shareholders’ Equity, (vi) the Consolidated Statements of Cash Flows, and (vii) the Notes to
Consolidated Financial Statements, tagged in summary and detail.
Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)
x
*
†
Filed herewith
Previously filed
Management contract or compensatory plan required to be filed pursuant to Item 601 of Regulation S-K
Item 16. Form 10-K Summary
None.
PART IV
x
x
x
x
x
x
x
2021 10-K Annual Report
Stericycle, Inc. • 96
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: February 24, 2022
STERICYCLE, INC.
(Registrant)
By: /s/ Janet H. Zelenka
Janet H. Zelenka
Executive Vice President, Chief Financial Officer, and
Chief Information Officer
STERICYCLE, INC.
(Registrant)
By: /s/ Richard J. Hoffman
Richard J. Hoffman
Senior Vice President and Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Dated: February 24, 2022
2021 10-K Annual Report
Stericycle, Inc. • 97
Title
SIGNATURES
Date
Chief Executive Officer and Director (Principal Executive Officer)
February 24, 2022
Executive Vice President, Chief Financial Officer, and Chief Information
Officer (Principal Financial Officer)
February 24, 2022
Senior Vice President and Chief Accounting Officer (Principal
Accounting Officer)
February 24, 2022
Chairman of the Board of Directors
Director
Director
Director
Name
/s/ CINDY J. MILLER
Cindy J. Miller
/s/ JANET H. ZELENKA
Janet H. Zelenka
/s/ RICHARD J. HOFFMAN
Richard J. Hoffman
/s/ ROBERT S. MURLEY
Robert S. Murley
/s/ BRIAN P. ANDERSON
Brian P. Anderson
/s/ LYNN D. BLEIL
Lynn D. Bleil
/s/ THOMAS F. CHEN
Thomas F. Chen
/s/ J. JOEL HACKNEY JR.
Director
J. Joel Hackney Jr.
/s/ VERONICA M. HAGEN
Veronica M. Hagen
/s/ STEPHEN C. HOOLEY
Stephen C. Hooley
/s/ JAMES J. MARTELL
James J. Martell
/s/ KAY G. PRIESTLY
Kay G. Priestly
/s/ JAMES L. WELCH
James L. Welch
/s/ MIKE S. ZAFIROVSKI
Mike S. Zafirovski
Director
Director
Director
Director
Director
Director
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
2021 10-K Annual Report
Stericycle, Inc. • 98
Our Company At A GlanceStericycle is a global business-to-business services company. We provide an array of highly specialized solutions that protect the health and well-being of the people and places around us in a safe, responsible, and sustainable way. Since our founding in 1989, we have grown from a small start-up in medical waste management into a leader across a range of increasingly complex and highly regulated arenas, serving healthcare organizations and commercial businesses of every size through:• Regulated waste management and compliance solutions• Secure information destruction• Patient engagement solutionsEvery organization today must comply with increasingly strict regulatory requirements and quality controls in the delivery of their core products or services. Large or small, businesses can’t always do it on their own. They seek out Stericycle to help them protect what matters. We have the expertise and passion to take on many complicated and often behind-the-scenes services our clients don’t always know how to do well but that ultimately make their businesses better. Founded in 1989 Headquarters in Bannockburn, IL15,000+ Team Members WorldwideOver 1 Million Customers WorldwidePresence in 17 Countries$2.7 Billion 2021 RevenuePublic in 1996 (NASDAQ: SRCL)Because at Stericycle, we’re shaping a healthier and safer world for everyone, everywhere, every day.ANNUAL REPORT 2021 The following four brand pillars are crucial elements of our brand messaging that set Stericycle apart from our competitors. They encompass the major themes, benefits, and selling points that make our brand unique.Our PillarsWe protect what matters.To protect your health and well-being in a safe, responsible, and sustainable way.Our mission statement explains WHAT we protect (health and well-being) and HOW we do it every day (safely, responsibly, and sustainably).Shaping a healthier and safer world for everyone, everywhere, every day.Our vision explains the ASPIRATION for impact we will have on the WORLD. It also gives us the latitude to expand our suite of solutions beyond the workplace and into homes and communities.OUR PROMISEOUR MISSIONOUR VISIONOur BrandThe Stericycle brand is the essence of our organization. It’s all-encompassing, including our mission and vision, core values, team members, products, and services.INNOVATIONCOMPLIANCEPROTECTIONENGAGEMENTANNUAL REPORT 2021 Stericycle, Delivering on Our Promise. By Living Our Values.We work tirelessly to safeguard our earth, human health, and quality of life in communities around the world.We deliver the strongest impact when we collaborate, harnessing the collective strengths, ideas, and expertise of our global team members to achieve great things.We deliver value to our customers through safe, compliant, and sustainable solutions. We never stop working to win the trust of our customers.We are committed to the safety and well-being of our team members and strive daily for a workplace with zero incidents and injuries. We hold ourselves to the highest standards. Integrity is our compass, and accountability our true north. We go above and beyond to deliver exceptional results, challenge the status quo, and constantly innovate.WE PROTECT THE ENVIRONMENTWE ARE UNITED— ONE TEAM. ONE GOAL.WE ARE CUSTOMER DRIVEN WE COMMIT TO SAFETY ALWAYSWE DO THE RIGHT THINGWE STRIVE FOR EXCELLENCEWe foster a culture of belonging that encourages, supports, and celebrates the diverse voices of our team members. It fuels our innovation and strengthens our connection to our customers and the communities we serve. WE EMBRACE DIVERSITY AND INCLUSIONANNUAL REPORT 2021 The Global Impact of Our ServiceStericycle provides essential sustainability services that help protect communities from harmful wastes, enable recycling and alternative use opportunities, and lead to greater consumer safety and satisfaction. Here is a sample of the annual global impact of our services:Learn more about our sustainability efforts at Stericycle.com/About-Us/SustainabilityANNUAL REPORT 202140 MILLION POUNDSof unused medications safely disposed through our pharmaceutical waste services in 202111.1 BILLION POUNDSof paper recycled through Shred-it’s secure information destruction services in 20211104 MILLION POUNDS of plastic generation avoided and diverted from landfills from our reusable sharps containers in 202111.5 BILLION POUNDSof medical waste treated in 20211 ANNUAL REPORT 2021
Corporate Information
COMPANY HEADQUARTERS
INVESTOR RELATIONS
Stericycle, Inc.
2355 Waukegan Road
Bannockburn, IL 60015
800-643-0240
Stericycle.com
INDEPENDENT AUD ITORS
Ernst & Young LLP
155 N. Wacker Drive
Chicago, Illinois 60606
TRA NSF ER AGENT
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120
For information on the company, additional copies
of this Annual Report or other information, please
contact Stericycle at StericycleIR@Stericycle.com
or 800-643-0240 ext. 2012. You may also visit the
Investor section on the Company website at
investors.stericycle.com.
ANNUAL MEETING
The Annual Meeting of Stockholders will be held
at 8:30am CT on Thursday, May 26, 2022 virtually
at www.virtualshareholdermeeting.com/SRCL2022
NASDAQ® SYMBOL
SRCL
S A F E H A R B O R S TAT E M E N T
This document may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. When we use words such as “believes”, “expects”,
“anticipates”, “estimates”, “may”, “plan”, “will”, “goal”, or similar expressions, we are making forward-looking statements. Forward-looking statements are prospective in
nature and are not based on historical facts, but rather on current expectations and projections of our management about future events and are therefore subject to
risks and uncertainties, which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Factors that
could cause such differences include, among others, inflationary cost pressure in labor, supply chain and other expenses, decreases in the volume of regulated wastes
or personal and confidential information collected from customers, the ability to implement the remaining phases of our ERP system, and disruptions resulting from
deployment of our ERP system, disruptions in our supply chain, disruptions in or attacks on information technology systems, 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, 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, labor shortages, an economic disruption 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, charges related to portfolio optimization or the failure of acquisitions or divestitures to achieve the desired results, failure to consummate transactions with
respect to non-core businesses, the obligations to service substantial indebtedness and comply with the covenants and restrictions contained in our credit agreements and
notes, 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, 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.
1Stericycle global data, 2021.
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