Sotera Health Reports Second-Quarter and First-Half 2024 Results
Sotera Health Company (Nasdaq: SHC) reported its Q2 2024 financial results, showing 8.3% growth in net revenues to $277 million. However, net income decreased to $9 million ($0.03 per diluted share) from $24 million ($0.08 per diluted share) in Q2 2023, primarily due to debt refinancing charges. Adjusted EBITDA increased by 6.9% to $137 million, while Adjusted EPS slightly declined to $0.19.
For the first half of 2024, net revenues increased by 10.3% to $525 million, with Adjusted EBITDA up 9.8% to $249 million. The company successfully refinanced its debt structure, extending maturities to 2031. Sotera Health reaffirmed its 2024 outlook, projecting 4-6% growth in net revenues and Adjusted EBITDA.
Sotera Health Company (Nasdaq: SHC) ha riportato i risultati finanziari per il secondo trimestre del 2024, evidenziando una crescita del 8.3% nei ricavi netti pari a 277 milioni di dollari. Tuttavia, l'utile netto è diminuito a 9 milioni di dollari (0,03 dollari per azione diluita) rispetto ai 24 milioni di dollari (0,08 dollari per azione diluita) del secondo trimestre del 2023, principalmente a causa dei costi di rifinanziamento del debito. L'EBITDA rettificato è aumentato del 6.9% raggiungendo 137 milioni di dollari, mentre l'EPS rettificato è leggermente calato a 0,19 dollari.
Per il primo semestre del 2024, i ricavi netti sono aumentati del 10.3% raggiungendo 525 milioni di dollari, con un EBITDA rettificato in aumento del 9.8% a 249 milioni di dollari. L'azienda ha rifinanziato con successo la propria struttura del debito, estendendo le scadenze fino al 2031. Sotera Health ha confermato le previsioni per il 2024, prevedendo una crescita del 4-6% nei ricavi netti e nell'EBITDA rettificato.
Sotera Health Company (Nasdaq: SHC) reportó sus resultados financieros del segundo trimestre de 2024, mostrando un crecimiento del 8.3% en ingresos netos alcanzando los 277 millones de dólares. Sin embargo, el ingreso neto disminuyó a 9 millones de dólares (0.03 dólares por acción diluida) desde 24 millones de dólares (0.08 dólares por acción diluida) en el segundo trimestre de 2023, principalmente debido a los cargos por refinanciamiento de deuda. El EBITDA ajustado aumentó un 6.9% hasta los 137 millones de dólares, mientras que el EPS ajustado disminuyó ligeramente a 0.19 dólares.
En la primera mitad de 2024, los ingresos netos aumentaron un 10.3% alcanzando los 525 millones de dólares, con un EBITDA ajustado que creció un 9.8% hasta los 249 millones de dólares. La compañía refinanció con éxito su estructura de deuda, extendiendo los vencimientos hasta 2031. Sotera Health reafirmó su perspectiva para 2024, proyectando un crecimiento del 4-6% en ingresos netos y EBITDA ajustado.
Sotera Health Company (Nasdaq: SHC)는 2024년 2분기 재무 결과를 발표하며 순수익이 8.3% 증가하여 2억 7700만 달러에 도달했다고 합니다. 그러나 순이익은 9백만 달러(희석 주당 0.03 달러)로 감소했으며, 이는 2023년 2분기의 2천4백만 달러(희석 주당 0.08 달러)에서 하락한 것입니다. 주로 부채 재융자 비용 때문입니다. 조정된 EBITDA는 6.9% 증가하여 1억 3700만 달러에 이르렀고, 조정된 EPS는 약간 감소하여 0.19 달러가 되었습니다.
2024년 상반기 동안, 순수익은 10.3% 증가하여 5억 2500만 달러에 이르렀고, 조정된 EBITDA는 9.8% 증가하여 2억 4900만 달러에 도달했습니다. 이 회사는 성공적으로 부채 구조를 재융자하여 만기를 2031년까지 연장했습니다. Sotera Health는 2024년 전망을 재확인하며, 순수익과 조정된 EBITDA에서 4-6%의 성장을 예상하고 있습니다.
Sotera Health Company (Nasdaq: SHC) a annoncé ses résultats financiers pour le deuxième trimestre 2024, montrant une croissance de 8,3 % des revenus nets atteignant 277 millions de dollars. Cependant, le bénéfice net a diminué à 9 millions de dollars (0,03 dollar par action diluée) contre 24 millions de dollars (0,08 dollar par action diluée) au deuxième trimestre 2023, principalement en raison des frais de refinancement de la dette. Le EBITDA ajusté a augmenté de 6,9 % pour atteindre 137 millions de dollars, tandis que le BPA ajusté a légèrement baissé à 0,19 dollar.
Pour le premier semestre 2024, les revenus nets ont augmenté de 10,3 % pour atteindre 525 millions de dollars, avec un EBITDA ajusté en hausse de 9,8 % à 249 millions de dollars. L'entreprise a réussi à refinancer sa structure de dette, en étendant les échéances jusqu'en 2031. Sotera Health a confirmé ses prévisions pour 2024, anticipant une croissance de 4 à 6 % des revenus nets et de l'EBITDA ajusté.
Sotera Health Company (Nasdaq: SHC) hat seine Finanzergebnisse für das zweite Quartal 2024 veröffentlicht und zeigt ein Wachstum von 8,3% bei den Nettoumsätzen auf 277 Millionen Dollar. Der Nettogewinn fiel jedoch auf 9 Millionen Dollar (0,03 Dollar je verwässerte Aktie) im Vergleich zu 24 Millionen Dollar (0,08 Dollar je verwässerte Aktie) im zweiten Quartal 2023, hauptsächlich aufgrund von Kosten für die Refinanzierung von Schulden. Das bereinigte EBITDA stieg um 6,9% auf 137 Millionen Dollar, während das bereinigte EPS leicht auf 0,19 Dollar zurückging.
Für das erste Halbjahr 2024 stiegen die Nettoumsätze um 10,3% auf 525 Millionen Dollar, das bereinigte EBITDA wuchs um 9,8% auf 249 Millionen Dollar. Das Unternehmen hat seine Schuldenstruktur erfolgreich refinanziert und die Fälligkeiten bis 2031 verlängert. Sotera Health bekräftigte die Prognose für 2024 und erwartet ein Wachstum von 4-6% bei den Nettoumsätzen und dem bereinigten EBITDA.
- Net revenues increased by 8.3% to $277 million in Q2 2024
- Adjusted EBITDA grew by 6.9% to $137 million in Q2 2024
- First-half 2024 net revenues increased by 10.3% to $525 million
- All three business segments reported volume increases
- Successfully refinanced debt structure, extending maturities to 2031
- Reaffirmed 2024 outlook with projected 4-6% growth in net revenues and Adjusted EBITDA
- Net income decreased to $9 million in Q2 2024 from $24 million in Q2 2023
- Q2 2024 Adjusted EPS declined to $0.19 from $0.20 in Q2 2023
- Higher interest expense impacted Adjusted EPS
- Nelson Labs segment income decreased by 11.0% to $17 million in Q2 2024
Insights
Sotera Health's Q2 2024 results present a mixed picture. While net revenues increased by 8.3% to
The company's Adjusted EBITDA grew by 6.9% to
Segment-wise, Sterigenics and Nordion showed growth, while Nelson Labs faced challenges. The reaffirmed 2024 outlook suggests management's confidence in navigating current market conditions. Investors should monitor the company's ability to manage debt and improve profitability in the coming quarters.
Sotera Health's performance reflects broader industry trends. The
The Nordion segment's
The company's debt refinancing, while impacting short-term profits, demonstrates proactive financial management. With a Net Leverage Ratio of 3.8x, Sotera Health's debt levels require ongoing attention. The reaffirmed outlook of
- Q2 2024 net revenues of
$277 million increased8% , 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 increased7% , 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
For the first six months of 2024, net revenues increased
“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
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
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
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
On May 30, 2024, the Company refinanced its existing term loans totaling
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% to6.0% , - 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% to34.5% , - Adjusted EPS in the range of
$0.67 t o$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 Statements
Unless 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 Health
IR@soterahealth.com
MEDIA
Kristin Gibbs
Chief Marketing Officer, Sotera Health
kgibbs@soterahealth.com
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 Company Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 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 Company Segment Data (in thousands) (unaudited) | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||
| Segment revenues: | |||||||||||||
| Sterigenics | $ | 176,354 | $ | 166,590 | $ | 342,851 | $ | 326,587 | |||||
| Nordion | 41,244 | 31,975 | 65,251 | 40,526 | |||||||||
| Nelson Labs | 58,996 | 56,717 | 116,668 | 108,759 | |||||||||
| Total net revenues | $ | 276,594 | $ | 255,282 | $ | 524,770 | $ | 475,872 | |||||
| Segment income: | |||||||||||||
| Sterigenics | $ | 96,778 | $ | 91,450 | $ | 182,596 | $ | 174,290 | |||||
| Nordion | 23,420 | 17,784 | 34,205 | 19,310 | |||||||||
| Nelson Labs | 17,137 | 19,251 | 32,478 | 33,353 | |||||||||
| Total segment income | 137,335 | 128,485 | 249,279 | 226,953 | |||||||||
| Less adjustments: | |||||||||||||
| Interest expense, net(a) | $ | 40,388 | $ | 30,728 | $ | 82,159 | $ | 59,598 | |||||
| Depreciation and amortization(b) | 39,830 | 39,490 | 80,260 | 79,028 | |||||||||
| Share-based compensation(c) | 10,206 | 8,409 | 18,863 | 15,757 | |||||||||
| Loss on refinancing of debt(d) | 23,400 | — | 24,090 | — | |||||||||
| (Gain) loss on foreign currency and derivatives not designated as hedging instruments, net(e) | (698 | ) | (409 | ) | 532 | 126 | |||||||
| Business optimization expenses(f) | 593 | 3,604 | 647 | 5,835 | |||||||||
| Professional services relating to EO sterilization facilities(g) | 7,818 | 11,623 | 14,157 | 25,595 | |||||||||
| Secondary offering costs(h) | 20 | — | 1,137 | — | |||||||||
| Accretion of asset retirement obligation(i) | 636 | 555 | 1,278 | 1,127 | |||||||||
| Consolidated income before income taxes | $ | 15,142 | $ | 34,485 | $ | 26,156 | $ | 39,887 | |||||
| (a) | Interest expense, net presented in this reconciliation for the three and six months ended June 30, 2023 has been adjusted to conform to the current year presentation to include interest expense, net on Term Loan B due 2026 attributable to the loan proceeds that were used to fund the |
| (b) | Includes depreciation of Co-60 held at gamma irradiation sites. |
| (c) | Represents share-based compensation expense to employees and Non-Employee Directors. |
| (d) | Represents the write-off of unamortized debt issuance costs and discounts, as well as certain other costs incurred related to the Refinancing Term Loans and the Secured Notes. The six months ended June 30, 2024 includes |
| (e) | Represents the effects of (i) fluctuations in foreign currency exchange rates and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion. |
| (f) | Represents (i) certain costs related to acquisitions and the integration of recent acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in 2018, (iv) professional fees and other costs associated with business optimization, cost saving and other process enhancement projects, and (v) professional fees, payroll costs, and other costs, including ongoing lease and utility expenses associated with the closure of the Willowbrook, Illinois facility. The six months ended June 30, 2023 includes a |
| (g) | Represents litigation and other professional fees associated with our EO sterilization facilities. Amounts presented for the three and six months ended June 30, 2023 have been adjusted to exclude interest expense, net associated with Term Loan B due 2026 attributable to the loan proceeds that were used to fund the |
| (h) | Represents expenses incurred in connection with the secondary offering of our common stock that closed on March 4, 2024. |
| (i) | Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities and are accreted over the life of the asset. |
| Sotera Health Company Condensed Consolidated Balance Sheets (in thousands) (unaudited) | |||||
| As of June 30, | As of December 31, | ||||
| 2024 | 2023 | ||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 247,758 | $ | 301,654 | |
| Accounts receivable, net | 123,659 | 147,696 | |||
| Inventories, net | 57,872 | 48,316 | |||
| Other current assets | 68,388 | 59,578 | |||
| Total current assets | 497,677 | 557,244 | |||
| Property, plant, and equipment, net | 994,614 | 946,914 | |||
| Operating lease assets | 24,272 | 24,037 | |||
| Other intangible assets, net | 367,938 | 416,318 | |||
| Goodwill | 1,098,306 | 1,111,190 | |||
| Other assets | 75,011 | 74,717 | |||
| Total assets | $ | 3,057,818 | $ | 3,130,420 | |
| Liabilities and equity | |||||
| Total current liabilities | $ | 169,633 | $ | 230,654 | |
| Long-term debt, less current portion | 2,213,518 | 2,223,674 | |||
| Other noncurrent liabilities | 197,819 | 167,904 | |||
| Deferred income taxes | 54,084 | 64,454 | |||
| Total liabilities | 2,635,054 | 2,686,686 | |||
| Total equity | 422,764 | 443,734 | |||
| Total liabilities and equity | $ | 3,057,818 | $ | 3,130,420 | |
| Sotera Health Company Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) | |||||||
| Six Months Ended June 30, | |||||||
| 2024 | 2023 | ||||||
| Operating activities: | |||||||
| Net income | $ | 15,077 | $ | 26,355 | |||
| Non-cash items | 112,589 | 101,474 | |||||
| Changes in operating assets and liabilities | (56,672 | ) | (430,533 | ) | |||
| Net cash provided by (used in) operating activities | 70,994 | (302,704 | ) | ||||
| Investing activities: | |||||||
| Purchases of property, plant and equipment | (76,811 | ) | (98,134 | ) | |||
| Other investing activities | 37 | 32 | |||||
| Net cash used in investing activities | (76,774 | ) | (98,102 | ) | |||
| Financing activities: | |||||||
| Proceeds from long-term borrowings | 2,259,350 | 500,000 | |||||
| Payments on long-term borrowings | (2,260,600 | ) | — | ||||
| Payment on revolving credit facility | — | (200,000 | ) | ||||
| Payments of debt issuance costs and debt discount | (30,204 | ) | (24,672 | ) | |||
| Buyout of leased facilities | (6,736 | ) | — | ||||
| Other financing activities | (3,172 | ) | (2,122 | ) | |||
| Net cash (used in) provided by financing activities | (41,362 | ) | 273,206 | ||||
| Effect of exchange rate changes on cash and cash equivalents | (6,754 | ) | 1,796 | ||||
| Net decrease in cash and cash equivalents, including restricted cash | (53,896 | ) | (125,804 | ) | |||
| Cash and cash equivalents, including restricted cash, at beginning of period | 301,654 | 396,294 | |||||
| Cash and cash equivalents, including restricted cash, at end of period | $ | 247,758 | $ | 270,490 | |||
| Supplemental disclosures of cash flow information: | |||||||
| Cash paid during the period for interest | $ | 111,169 | $ | 78,352 | |||
| Cash paid during the period for income taxes, net of tax refunds received | 27,714 | 27,590 | |||||
| Purchases of property, plant and equipment included in accounts payable | 13,538 | 16,986 | |||||
| Sotera Health Company Non-GAAP Financial Measures (in thousands, except per share amounts) (unaudited) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net income | $ | 8,754 | $ | 23,513 | $ | 15,077 | $ | 26,355 | |||||||
| Amortization of intangible assets | 19,755 | 20,502 | 39,879 | 41,109 | |||||||||||
| Share-based compensation(a) | 10,206 | 8,409 | 18,863 | 15,757 | |||||||||||
| Loss on refinancing of debt(b) | 23,400 | — | 24,090 | — | |||||||||||
| (Gain) loss on foreign currency and derivatives not designated as hedging instruments, net(c) | (698 | ) | (409 | ) | 532 | 126 | |||||||||
| Business optimization project expenses(d) | 593 | 3,604 | 647 | 5,835 | |||||||||||
| Professional services relating to EO sterilization facilities(e) | 7,818 | 11,623 | 14,157 | 25,595 | |||||||||||
| Secondary offering costs(f) | 20 | — | 1,137 | — | |||||||||||
| Accretion of asset retirement obligation(g) | 636 | 555 | 1,278 | 1,127 | |||||||||||
| Income tax benefit associated with pre-tax adjustments(h) | (15,297 | ) | (12,280 | ) | (24,844 | ) | (24,530 | ) | |||||||
| Adjusted Net Income | 55,187 | 55,517 | 90,816 | 91,374 | |||||||||||
| Interest expense, net(i) | 40,388 | 30,728 | 82,159 | 59,598 | |||||||||||
| Depreciation(j) | 20,075 | 18,988 | 40,381 | 37,919 | |||||||||||
| Income tax provision applicable to Adjusted Net Income(k) | 21,685 | 23,252 | 35,923 | 38,062 | |||||||||||
| Adjusted EBITDA(l) | $ | 137,335 | $ | 128,485 | $ | 249,279 | $ | 226,953 | |||||||
| Net Revenues | $ | 276,594 | $ | 255,282 | $ | 524,770 | $ | 475,872 | |||||||
| Adjusted EBITDA Margin | 49.7 | % | 50.3 | % | 47.5 | % | 47.7 | % | |||||||
| Weighted average number of shares outstanding: | |||||||||||||||
| Basic | 282,894 | 280,893 | 282,403 | 280,793 | |||||||||||
| Diluted | 284,541 | 283,147 | 284,264 | 283,040 | |||||||||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.03 | $ | 0.08 | $ | 0.05 | $ | 0.09 | |||||||
| Diluted | 0.03 | 0.08 | 0.05 | 0.09 | |||||||||||
| Adjusted earnings per share: | |||||||||||||||
| Basic | $ | 0.20 | $ | 0.20 | $ | 0.32 | $ | 0.33 | |||||||
| Diluted | 0.19 | 0.20 | 0.32 | 0.33 | |||||||||||
| (a) | Represents share-based compensation expense to employees and Non-Employee Directors. |
| (b) | Represents the write-off of unamortized debt issuance costs and discounts, as well as certain other costs incurred related to the Refinancing Term Loans and the Secured Notes. The six months ended June 30, 2024 includes |
| (c) | Represents the effects of (i) fluctuations in foreign currency exchange rates and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion. |
| (d) | Represents (i) certain costs related to acquisitions and the integration of recent acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in 2018, (iv) professional fees and other costs associated with business optimization, cost saving and other process enhancement projects, and (v) professional fees, payroll costs, and other costs, including ongoing lease and utility expenses associated with the closure of the Willowbrook, Illinois facility. The six months ended June 30, 2023 includes a |
| (e) | Represents litigation and other professional fees associated with our EO sterilization facilities. Amounts presented for the three and six months ended June 30, 2023 have been adjusted to exclude interest expense, net associated with Term Loan B due 2026 attributable to the loan proceeds that were used to fund the |
| (f) | Represents expenses incurred in connection with the secondary offering of our common stock that closed on March 4, 2024. |
| (g) | Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities and are accreted over the life of the asset. |
| (h) | Represents the income tax impact of adjustments calculated based on the tax rate applicable to each item. We eliminate the effect of tax rate changes as applied to tax assets and liabilities and unusual items from our presentation of adjusted net income. |
| (i) | Interest expense, net presented in this reconciliation for the three and six months ended June 30, 2023 has been adjusted to conform to the current year presentation to include interest expense, net on Term Loan B due 2026 attributable to the loan proceeds that were used to fund the |
| (j) | Includes depreciation of Co-60 held at gamma irradiation sites. |
| (k) | Represents the difference between income tax provision or benefit as determined under U.S. GAAP and the income tax provision or benefit associated with pre-tax adjustments described in footnote (h) |
| (l) | |
| Sotera Health Company Non-GAAP Financial Measures (in thousands) (unaudited) | |||||||
| As of June 30, | As of December 31, | ||||||
| 2024 | 2023 | ||||||
| Current portion of long-term debt | $ | 11,092 | $ | 4,797 | |||
| Long-term debt | 2,213,518 | 2,223,674 | |||||
| Current portion of finance leases | 2,767 | 8,771 | |||||
| Finance leases less current portion | 93,518 | 63,793 | |||||
| Total Debt | 2,320,895 | 2,301,035 | |||||
| Less: cash and cash equivalents | (246,084 | ) | (296,407 | ) | |||
| Net Debt | $ | 2,074,811 | $ | 2,004,628 | |||
| Adjusted EBITDA(a) | $ | 550,355 | $ | 528,029 | |||
| Net Leverage | 3.8x | 3.8x | |||||
| (a) | Represents Adjusted EBITDA for the twelve months ended June 30, 2024 and December 31, 2023, respectively. Refer to the reconciliation of net income (the most comparable GAAP measure) to Adjusted EBITDA on the following page. |
| Sotera Health Company Non-GAAP Financial Measures (in thousands) (unaudited) | |||||||
| Twelve Months Ended June 30, | Twelve Months Ended December 31, | ||||||
| 2024 | 2023 | ||||||
| Net income | $ | 40,098 | $ | 51,376 | |||
| Amortization of intangible assets | 80,118 | 81,348 | |||||
| Share-based compensation(a) | 35,470 | 32,364 | |||||
| Loss on refinancing of debt(b) | 24,090 | — | |||||
| Gain on foreign currency and derivatives not designated as hedging instruments, net(c) | (1,146 | ) | (1,552 | ) | |||
| Business optimization expenses(d) | 2,474 | 7,662 | |||||
| Professional services relating to EO sterilization facilities(e) | 33,874 | 45,312 | |||||
| Georgia EO litigation settlement(f) | 35,000 | 35,000 | |||||
| Secondary offering costs(g) | 1,137 | — | |||||
| Accretion of asset retirement obligation(h) | 2,564 | 2,413 | |||||
| Income tax benefit associated with pre-tax adjustments(i) | (49,911 | ) | (49,597 | ) | |||
| Adjusted Net Income | 203,768 | 204,326 | |||||
| Interest expense, net(j) | 165,439 | 142,878 | |||||
| Depreciation(k) | 79,039 | 76,577 | |||||
| Income tax provision applicable to Adjusted Net Income(l) | 102,109 | 104,248 | |||||
| Adjusted EBITDA(m) | $ | 550,355 | $ | 528,029 | |||
| Net Revenues | $ | 1,098,186 | $ | 1,049,288 | |||
| Adjusted EBITDA Margin | 50.1 | % | 50.3 | % | |||
| (a) | Represents share-based compensation expense to employees and Non-Employee Directors. |
| (b) | Represents the write-off of unamortized debt issuance costs and discounts, as well as certain other costs incurred related to the Refinancing Term Loans and the Secured Notes. The twelve months ended June 30, 2024 includes |
| (c) | Represents the effects of (i) fluctuations in foreign currency exchange rates and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion. |
| (d) | Represents (i) certain costs related to acquisitions and the integration of recent acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in 2018, (iv) professional fees and other costs associated with business optimization, cost saving and other process enhancement projects, and (v) professional fees, payroll costs, and other costs, including ongoing lease and utility expenses associated with the closure of the Willowbrook, Illinois facility. The twelve months ended December 31, 2023 includes a |
| (e) | Represents litigation and other professional fees associated with our EO sterilization facilities. Amounts presented for the twelve months ended June 30, 2024 and December 31, 2023 have been adjusted to exclude interest expense, net associated with Term Loan B attributable to the loan proceeds that were used to fund the |
| (f) | Represents the cost to settle 79 pending EO claims against Sterigenics U.S., LLC and Sotera Health LLC in Georgia under a Settlement Term Sheet entered into on December 21, 2023. |
| (g) | Represents expenses incurred in connection with the secondary offering of our common stock that closed on March 4, 2024. |
| (h) | Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities and are accreted over the life of the asset. |
| (i) | Represents the income tax impact of adjustments calculated based on the tax rate applicable to each item. We eliminate the effect of tax rate changes as applied to tax assets and liabilities and unusual items from our presentation of adjusted net income. |
| (j) | Interest expense, net presented in this reconciliation for the twelve months ended June 30, 2024 and December 31, 2023 has been adjusted to conform to the current year presentation to include interest expense, net on Term Loan B due 2026 attributable to the loan proceeds that were used to fund the |
| (k) | Includes depreciation of Co-60 held at gamma irradiation sites. |
| (l) | Represents the difference between income tax provision or benefit as determined under U.S. GAAP and the income tax provision or benefit associated with pre-tax adjustments described in footnote (i) |
| (m) |
FAQ
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What is Sotera Health's (SHC) financial outlook for 2024?
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