Q2 2024 net revenues of $277 million increased 8%, compared to Q2 2023 Q2 2024 net income of $9 million or $0.03 per diluted share, compared to net income of $24 million or $0.08 per diluted share in Q2 2023 Q2 2024 Adjusted EBITDA(1) of $137 million increased 7%, compared to Q2 2023 Q2 2024 Adjusted EPS(1) of $0.19 declined $0.01 per diluted share, compared to Adjusted EPS of $0.20 in Q2 2023 Successfully refinanced debt structure, extending debt maturities to 2031 Reaffirming 2024 outlook CLEVELAND, Aug. 05, 2024 (GLOBE NEWSWIRE) -- Sotera Health Company ("Sotera Health" or the "Company") (NASDAQ:SHC), a leading global provider of mission-critical end-to-end sterilization solutions, lab testing and advisory services for the healthcare industry, today announced financial results for the three and six months ended June 30, 2024. Second-quarter 2024 net revenues increased 8.3% to $277 million, compared to $255 million in the second-quarter 2023. Net revenues increased 8.8% on a constant currency basis. Net income was $9 million, or $0.03 per diluted share, compared to net income of $24 million, or $0.08 per diluted share in the second-quarter of 2023. The net income decline was primarily driven by customary charges associated with the successful refinancing of both of the Company's term loans. Adjusted EBITDA for the second-quarter 2024 increased 6.9% to $137 million compared to $128 million in the second-quarter 2023. Second-quarter 2024 Adjusted Earnings Per Diluted Share ("Adjusted EPS") of $0.19 declined $0.01 compared to $0.20 in the second quarter of 2023 driven by higher interest expense. For the first six months of 2024, net revenues increased 10.3% to $525 million, compared to $476 million for the same period in 2023. Net revenues increased approximately 10.2% on a constant currency basis. Net income was $15 million, or $0.05 per diluted share for the first half of 2024, compared to net income of $26 million, or $0.09 per diluted share, for the same period last year. Adjusted EBITDA for the first half of 2024 increased 9.8% to $249 million and Adjusted EPS decreased by $0.01 to $0.32 compared to the first half of 2023. "We are pleased to have achieved both revenue and Adjusted EBITDA growth for the second quarter with all three business segments reporting volume increases," said Chairman and Chief Executive Officer, Michael B. Petras, Jr. "With the first half of the year completed and as the market continues to slowly stabilize, we are reaffirming our 2024 outlook." Second-Quarter and First-Half 2024 Review by Business Segment Sterigenics For second-quarter 2024, Sterigenics net revenues were $176 million, an increase of 5.9% compared to the second quarter a year ago. Second-quarter 2024 segment income was $97 million, an increase of 5.8%. For the first six months of 2024, Sterigenics net revenues were $343 million, an increase of 5.0% compared to the same period in 2023. Segment income increased 4.8% to $183 million. Net revenue growth for the second-quarter 2024 was driven by favorable pricing as well as volume and changes in mix, partially offset by unfavorable changes in foreign currency exchange rates. The increase in segment income for the second-quarter 2024 was driven by favorable pricing as well as volume and changes in mix, partially offset by inflation. Nordion For second-quarter 2024, Nordion net revenues were $41 million, an increase of 29.0% compared to the second quarter a year ago. Second-quarter 2024 segment income increased 31.7% to $23 million. For the first six months of 2024, Nordion net revenues were $65 million, an increase of 61.0% compared to the same period in 2023. Segment income increased 77.1% to $34 million. The timing of reactor harvest schedules resulted in the favorable volume and mix increase at Nordion, which was a primary driver for net revenue, segment income and segment income margin growth for the quarter. Favorable pricing also drove improvement, partially offset by unfavorable changes in foreign currency exchange rates. Nelson Labs For the second-quarter 2024, Nelson Labs net revenues were $59 million, an increase of 4.0% compared to the second quarter a year ago. Second-quarter 2024 segment income decreased by 11.0% to $17 million. For the first six months of 2024, Nelson Labs net revenues were $117 million, an increase of 7.3% compared to the same period in 2023. Segment income declined 2.6% to $32 million. Net revenue growth for the second-quarter 2024 was driven by favorable pricing as well as volume and changes in mix, partially offset by unfavorable changes in foreign currency exchange rates. Segment income and segment income margin declines for the second-quarter 2024 were primarily due to the impacts of volume and mix, as well as higher labor costs, partially offset by favorable pricing. Balance Sheet and Liquidity As of June 30, 2024, Sotera Health had $2.3 billion of total debt, and $246 million in unrestricted cash and cash equivalents, compared to $2.3 billion in total debt and $296 million in unrestricted cash and cash equivalents as of December 31, 2023. As of June 30, 2024 the Company had no balance outstanding on its revolving credit facility. Sotera Health's Net Leverage Ratio(2) as of June 30, 2024 was 3.8x. On May 30, 2024, the Company refinanced its existing term loans totaling $2.3 billion maturing in December of 2026 with a $1.5 billion term loan maturing on May 30, 2031 and $750.0 million of 7.375% senior secured notes maturing on June 1, 2031. 2024 Outlook Today, Sotera Health is reaffirming the 2024 outlook previously provided. As a reminder, the outlook is: Net revenues and Adjusted EBITDA growth in the range of 4.0% to 6.0%, Interest Expense in the range of $165 million to $175 million, Tax rate applicable to Adjusted Net Income(3) in the range of 31.5% to 34.5%, Adjusted EPS in the range of $0.67 to $0.75, A weighted-average fully diluted share count in the range of 283 million to 285 million shares, and Capital expenditures in the range of $205 million to $225 million The Company does not provide a reconciliation for non-GAAP financial measures on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items without unreasonable effort. The Company cannot reconcile its expected Adjusted EBITDA, Adjusted Net Income Tax Rate, Adjusted Net Income and Adjusted EPS without unreasonable effort because certain items that impact net income, earnings per share and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time, including uncertainties caused by changes to the regulatory landscape, restructuring items and certain fair value measurements, all of which are potential adjustments for future earnings. The outlook provided above contains a number of assumptions, including, among others, the Company's current expectations regarding supply chain continuity, particularly for the supply of ethylene oxide "EO" and Cobalt-60, the impact of inflationary trends including the impact on energy prices and the supply of labor, and the expectation that exchange rates as of June 30, 2024 remain constant for the remainder of 2024. Our outlook is based on current plans and expectations and is subject to several known and unknown risks and uncertainties, including those set forth below under "Cautionary Note Regarding Forward-Looking Statements." Earnings Webcast Sotera Health management will host a conference call and webcast to discuss the Company's operating highlights and financial results at 9:00 a.m. Eastern Time today. To participate in the live call, please dial 1-844-481-2916 if dialing in from the United States, or 1-412-317-0709 if dialing in from other locations. A live webcast of the conference call and accompanying materials may also be accessed via the Investor Relations section of the Company's website at Presentation & Events | Sotera Health. A replay of the webcast will be archived on the Company's website. Updates on recent developments in matters relevant to investors can be found on the Investor Relations section of the Sotera Health website at Investor Relations | Sotera Health. For developments related to EO, updates can be found at Ethylene Oxide | Sotera Health. Cautionary Note Regarding Forward-Looking StatementsUnless expressly indicated or the context requires otherwise, the terms "Sotera Health," "Company," "we," "us," and "our" in this document refer to Sotera Health Company, a Delaware corporation, and, where appropriate, its subsidiaries on a consolidated basis. This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and reflect management's expectations about future events and the Company's operating plans and performance and speak only as of the date hereof. You can identify these forward-looking statements by the use of forward-looking words such as "will," "may," "plan," "estimate," "project," "believe," "anticipate," "expect," "intend," "should," "would," "could," "target," "goal," "continue to," "positioned to," "are confident" or the negative versions of those words or other comparable words. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, are forward-looking statements. Any forward-looking statements contained in this release are based upon our historical performance and on our current plans, estimates and expectations of the Company's future performance and the future performance of the markets in which the Company operates in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. These forward-looking statements are subject to various risks, uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. These risks and uncertainties include, without limitation, any disruption in the availability or supply of, or increases in the price of EO or Cobalt-60, or our other direct materials, services and supplies, including as a result of geopolitical instability and/or sanctions against Russia; fluctuations in foreign currency exchange rates; changes in industry trends, environmental, health and safety regulations or preferences, and general economic, social and business conditions; the impact and outcome of current and future legal proceedings and liability claims, including litigation related to use of EO and/or emission and releases of EO from our facilities in California, Georgia, Illinois and New Mexico and the possibility that other claims will be made in the future relating to these or other facilities; our ability to increase capacity at existing facilities, build new facilities in a timely and cost-effective manner and renew leases for our leased facilities; our ability to attract and retain qualified employees; the risks of doing business internationally, including global and regional economic and political instability and compliance with numerous and sometimes inconsistent laws and regulations in multiple jurisdictions; and an inability to pursue strategic transactions, find suitable acquisition targets, or integrate strategic acquisitions into our business successfully. For additional discussion of these risks and uncertainties, please refer to the Company's filings with the SEC, such as its annual and quarterly reports. We do not undertake any obligation to publicly update or revise these forward-looking statements, except as otherwise required by law. Non-GAAP Financial Measures To supplement our consolidated financial statements presented in accordance with GAAP, we consider Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted EPS, Segment income margin, Net Debt and Net Leverage Ratio and constant currency, financial measures that are not based on any standardized methodology prescribed by GAAP. We define Adjusted Net Income as net income (loss) before amortization and certain other adjustments that we do not consider in our evaluation of our ongoing operating performance from period to period. We define Adjusted EBITDA as Adjusted Net Income before interest expense, depreciation (including depreciation of Co-60 used in our operations) and income tax provision applicable to Adjusted Net Income. Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net revenues. Segment income margin is equal to segment income divided by net segment revenues. We define Adjusted EPS as Adjusted Net Income divided by the weighted average number of diluted shares outstanding. Our Net Debt is equal to our total debt net of unamortized debt issuance costs and debt discounts, less cash and cash equivalents. Our Net Leverage Ratio is equal to Net Debt divided by Adjusted EBITDA. Constant currency is a non-GAAP financial measure we use to assess performance excluding the impact of foreign currency exchange rate changes. We calculate constant currency net revenues by translating prior year net revenues in local currency at the average exchange rates applicable for the current period. The translated results are then used to determine year-over-year percentage increases or decreases. We generally refer to such amounts calculated on a constant currency basis as excluding the impact of foreign currency exchange rates. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP. We use these non-GAAP financial measures as the principal measures of our operating performance. Management believes these measures allow management to more effectively evaluate our operating performance and compare the results of our operations from period to period without the impact of certain non-cash items and non-routine items that we do not expect to continue at the same level in the future and other items that are not core to our operations. We believe that these measures are useful to our investors because they provide a more complete understanding of the factors and trends affecting our business than could be obtained without these measures and their disclosure. In addition, we believe these measures will assist investors in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented. Our management also uses these measurements in their financial analysis and operational decision-making and Adjusted EBITDA serves as the key metric for the attainment of our primary annual incentive program. These measures may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies. About Sotera Health Sotera Health Company is a leading global provider of mission-critical end-to-end sterilization solutions and lab testing and advisory services for the healthcare industry. Sotera Health goes to market through three businesses – Sterigenics®, Nordion® and Nelson Labs®. Sotera Health is committed to its mission, Safeguarding Global Health®. INVESTOR RELATIONS Jason Peterson                                                                         Vice President Investor Relations & Treasurer, Sotera MEDIA Kristin GibbsChief Marketing Officer, Sotera Source: Sotera Health Company _________________________ (1) This is non-GAAP financial measure used throughout this press release; please refer to the section "Non-GAAP Financial Measures" for explanations of our Non-GAAP financial measures and the schedules provided later in this release for reconciliations of reported GAAP to Non-GAAP financial measures.(2) This is non-GAAP financial measure used throughout this press release; please refer to the section "Non-GAAP Financial Measures" for explanations of our Non-GAAP financial measures and the schedules provided later in this release for reconciliations of reported GAAP to Non-GAAP financial measures.(3) This is a non-GAAP financial measure used throughout this press release; please refer to the section "Non-GAAP Financial Measures" for explanations of our Non-GAAP financial measures and the schedules provided later in this release for reconciliations of reported GAAP to Non-GAAP financial measures. Sotera Health CompanyConsolidated Statements of Operations(in thousands, except per share amounts)(unaudited)     Three Months EndedJune 30,   Six Months EndedJune 30,     2024       2023       2024       2023   Revenues:               Service $ 237,756     $ 226,050     $ 464,237     $ 440,560   Product   38,838       29,232       60,533       35,312   Total net revenues   276,594       255,282       524,770       475,872   Cost of revenues:               Service   109,136       103,900       219,988       208,110   Product   14,667       11,794       24,876       16,671   Total cost of revenues   123,803       115,694       244,864       224,781   Gross profit   152,791       139,588       279,906       251,091   Operating expenses:               Selling, general and administrative expenses   60,575       60,287       118,784       122,197   Amortization of intangible assets   15,417       16,097       31,149       32,324   Total operating expenses   75,992       76,384       149,933       154,521   Operating income   76,799       63,204       129,973       96,570   Interest expense, net   40,388       30,728       82,159       59,598   Loss on refinancing of debt   23,400       —       24,090       —   Foreign exchange (gain) loss   (611 )     465       (1,183 )     812   Other income, net   (1,520 )     (2,474 )     (1,249 )     (3,727 ) Income before income taxes   15,142       34,485       26,156       39,887   Provision for income taxes   6,388       10,972       11,079       13,532   Net income $ 8,754     $ 23,513     $ 15,077     $ 26,355                   Earnings per share:               Basic $ 0.03     $ 0.08     $ 0.05     $ 0.09   Diluted   0.03       0.08       0.05       0.09   Weighted average number of common shares outstanding:               Basic   282,894       280,893       282,403       280,793   Diluted   284,541       283,147       284,264       283,040     Sotera Health CompanySegment Data(in thousands)(unaudited)     Three Months EndedJune 30,   Six Months EndedJune 30,     2024       2023