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 months ended March 31, 2023.
First-quarter 2023 net revenues decreased 6.8% to $221 million,
compared with $237 million in the first-quarter 2022. Net revenues
decreased 5.3% on a constant currency basis. Net income (“net
income”) was $3 million, or $0.01 per diluted share, compared with
net income of $31 million, or $0.11 per diluted share in the
first-quarter 2022. Adjusted EBITDA for the first-quarter 2023
decreased by 14.6% to $98 million compared to $115 million in the
first-quarter 2022. First-quarter 2023 Adjusted Earnings Per
Diluted Share (“Adjusted EPS”) was $0.13, compared to $0.22 in the
first-quarter 2022. Adjusted EBITDA and Adjusted EPS are non-GAAP
financial measures; please refer to the section “Non-GAAP Financial
Measures” provided later in this release.
“As we outlined in our fourth-quarter 2022 earnings call, our
first-quarter total revenue was below the same quarter last year,
driven by the anticipated timing of Nordion Cobalt-60 harvest
schedules and lower volumes for the Nelson Labs and Sterigenics
businesses, which is typical for the first quarter of the year,”
said Chairman and Chief Executive Officer, Michael B. Petras, Jr.
“We continue to expect financial contribution from Sterigenics and
Nelson Labs to increase as we move through the year, in a similar
cadence to prior years. Additionally, we are still forecasting
Nordion’s Cobalt-60 harvest schedules to be uneven, with
approximately 75% of Nordion’s full-year revenue occurring in the
back half of the year.”
Petras continued, “Looking to the remainder of the year, we feel
good about how we are positioned and are reaffirming the 2023
revenue and adjusted EBITDA growth outlook of 5% to 9% that we
first provided in February. As always, we remain focused on
supporting our global team members and customers while delivering
on our mission of Safeguarding Global Health®.”
First-Quarter Review by Business Segment
Sterigenics
For first-quarter 2023, Sterigenics’ net revenue was $160
million, an increase of 7.0% compared to the first quarter a year
ago. Segment income was $83 million, an increase of 4.3%.
Net revenue and segment income growth for the first-quarter 2023
were driven by favorable pricing as well as volume and mix,
partially offset by unfavorable changes in foreign currency
exchange rates.
Segment income margin decline was driven by the impacts
referenced above, offset by the impact of current staffing levels
versus the typical lighter first-quarter volume relative to the
remainder of the year, as well as inflation.
Nordion
For first-quarter 2023, Nordion net revenue was $9 million, a
decrease of 74.9% compared to the first quarter a year ago. Segment
income decreased 91.9% to $2 million.
The decreases in net revenue, segment income and segment income
margin for the first-quarter 2023 were driven by anticipated volume
decline and change in mix due to Cobalt-60 (“Co-60”) harvest
schedule timing, and an unfavorable impact from changes in foreign
currency exchange rates.
Nelson Labs
For first-quarter 2023, Nelson Labs net revenue was $52 million,
a decrease of 2.3% compared to the first quarter a year ago.
Segment income decreased by 17.3% to $14 million.
The decline in net revenue for the first-quarter 2023 was driven
by volume decline and change in mix and an unfavorable impact from
changes in foreign currency exchange rates, partially offset by
favorable pricing.
Segment income and segment income margin declines were driven by
the factors referenced above, as well as the impact of current
staffing levels versus the typical lighter first-quarter volume
relative to the remainder of the year.
Balance Sheet and Liquidity
As of March 31, 2023, Sotera Health had $2.3 billion in
total debt, and $648 million in cash and cash equivalents, compared
to $2.0 billion in total debt and $395 million in cash and cash
equivalents as of December 31, 2022. The Company closed on a
$500 million Term Loan B during the first-quarter 2023, which along
with cash on hand, was used to pay off the $200 million of
borrowings under the Company’s revolving credit facility and to
fund into escrow the $408 million related to the ethylene oxide
(“EO”) settlement (the “Illinois EO Settlement”), which occurred on
May 1, 2023. The Company used the remaining proceeds to further
enhance liquidity and for general corporate purposes. The $408
million will be held as restricted cash on the balance sheet in the
second-quarter 2023. During the first quarter, the Company also
closed on an amendment to its First Lien Credit Agreement, which
added revolving loan commitments of $76.3 million and increased the
total aggregate principal amount of available commitments to $423.8
million. As of March 31, 2023 the Company had no balance
outstanding on its revolving credit facility. Sotera Health’s net
leverage ratio as of March 31, 2023 was 3.4x. Please refer to
the section “Non-GAAP Financial Measures” provided later in this
release.
Reaffirming 2023 Outlook
Today, Sotera Health is reaffirming the 2023 outlook first
provided on February 28, 2023. That outlook is:
- Net revenues in the range of $1.055 to
$1.090 billion, representing growth of approximately 5% to 9%,
compared to the prior year,
- Adjusted EBITDA in
the range of $530 to $550 million, representing growth of
approximately 5% to 9%, compared to the prior year,
- Tax rate applicable
to Adjusted Net Income in the range of 30% to 33%,
- Adjusted EPS in the
range of $0.78 to $0.86, representing a decline of 10% to 19%
versus the prior year, primarily driven by increased interest
expense and an increased tax rate,
- A fully diluted
share count in the range of 283 to 285 million shares on a
weighted-average basis,
- Capital expenditures
in the range of $185 to $215 million, and
- 2023 year-end Net Leverage Ratio to be
within the long-term stated range of 2.0x - 4.0x.
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,
Adjusted EPS and Net Leverage Ratio 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
EO and Co-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 March 31, 2023 remain
constant for the remainder of 2023. Our outlook is based on current
plans and expectations and is subject to a number of 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 1-866-777-2509 if dialing in from the United States, or
1-412-317-5413 if dialing in from other locations. For direct
connection to the conference call, participants are strongly
encouraged to preregister by clicking on this link. 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 available later in the day on May 3rd.
Upcoming Investor Events
- Sotera Health 2023
Annual Meeting of Shareholders at 9:00 a.m. Eastern Time, May 25,
2023
Live and archived webcasts and presentations associated with the
conferences listed above may be accessed on the Investor Relations
section of the Sotera Health website at: Presentation & Events
| Sotera Health.
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 that 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 version 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 Co-60, including geopolitical
risks related to the supply of Co-60 from Russia; foreign currency
exchange rates and changes in those rates; changes in industry
trends, environmental, health and safety regulations or
preferences; satisfaction of conditions to completing the Illinois
EO Settlement, including the participation by substantially all
Illinois plaintiffs in the settlement; the impact of current and
future legal proceedings and liability claims, including litigation
related to purported exposure to emissions of EO from our
facilities in Illinois, Georgia and New Mexico and the possibility
that other claims will be made in the future relating to these or
other facilities; adverse judgments against two of our subsidiaries
in the Illinois EO tort litigation, which if the Illinois EO
Settlement is not successful may require an appellate bond or
alternative form of security to appeal, and plaintiff efforts to
enforce judgments against us, any of which may have an adverse
impact on our liquidity in the near and long terms, or may cause
the need for us to increase our borrowings and, consequently,
increase our interest expense; uncertainty in the capital markets
and other risks to our ability to raise additional debt financing
on reasonable terms or at all, including availability of capital
and the impact of future litigation developments on our ability to
access capital markets; our ability to increase capacity at
existing facilities, renew leases for our leased facilities and
build new facilities in a timely and cost-effective manner;
competition for qualified employees in the industries in which we
operate; the risks of doing business internationally; and any
inability to pursue strategic transactions or find suitable
acquisition targets. 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 Net
Income, Adjusted EPS, Net Debt, 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.
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, plus 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
are useful because they 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 absent this 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 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 CONTACTS |
|
|
|
|
|
Jason PetersonVice President & Treasurer, Sotera
HealthIR@soterahealth.com |
|
Sally J. Curley, IRCCurley Global IR, LLCIR@soterahealth.com |
|
|
|
MEDIA CONTACT |
|
|
|
|
|
Kristin GibbsChief Marketing Officer, Sotera
Healthkgibbs@soterahealth.com |
|
|
|
|
|
Source: Sotera Health Company
Sotera Health
CompanyConsolidated Statements of
Operations (in thousands, except per share
amounts)(unaudited)
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Revenues: |
|
|
|
Service |
$ |
214,510 |
|
|
$ |
206,218 |
|
Product |
|
6,080 |
|
|
|
30,536 |
|
Total net
revenues |
|
220,590 |
|
|
|
236,754 |
|
Cost of
revenues: |
|
|
|
Service |
|
104,210 |
|
|
|
94,576 |
|
Product |
|
4,877 |
|
|
|
13,303 |
|
Total cost of
revenues |
|
109,087 |
|
|
|
107,879 |
|
Gross
profit |
|
111,503 |
|
|
|
128,875 |
|
Operating
expenses: |
|
|
|
Selling, general and administrative expenses |
|
61,910 |
|
|
|
59,542 |
|
Amortization of intangible assets |
|
16,227 |
|
|
|
15,841 |
|
Total operating
expenses |
|
78,137 |
|
|
|
75,383 |
|
Operating
income |
|
33,366 |
|
|
|
53,492 |
|
Interest expense, net |
|
28,870 |
|
|
|
10,404 |
|
Foreign exchange loss |
|
347 |
|
|
|
788 |
|
Other income, net |
|
(1,253 |
) |
|
|
(2,967 |
) |
Income before income
taxes |
|
5,402 |
|
|
|
45,267 |
|
Provision for income
taxes |
|
2,560 |
|
|
|
14,626 |
|
Net
income |
|
2,842 |
|
|
|
30,641 |
|
|
|
|
|
Earnings per
share |
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
0.11 |
|
Diluted |
|
0.01 |
|
|
|
0.11 |
|
Weighted average
number of common shares outstanding |
|
|
|
Basic |
|
280,691 |
|
|
|
279,829 |
|
Diluted |
|
282,977 |
|
|
|
279,908 |
|
|
|
|
|
|
|
|
|
Sotera Health Company
Segment Data(in thousands)(unaudited)
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Segment
revenues: |
|
|
|
Sterigenics |
$ |
159,997 |
|
|
$ |
149,462 |
|
Nordion |
|
8,551 |
|
|
|
34,002 |
|
Nelson Labs |
|
52,042 |
|
|
|
53,290 |
|
Total net
revenues |
$ |
220,590 |
|
|
$ |
236,754 |
|
Segment
income: |
|
|
|
Sterigenics |
$ |
82,840 |
|
|
$ |
79,403 |
|
Nordion |
|
1,526 |
|
|
|
18,903 |
|
Nelson Labs |
|
14,102 |
|
|
|
17,043 |
|
Total segment
income |
|
98,468 |
|
|
|
115,349 |
|
Less
adjustments: |
|
|
|
Interest
expense, net(a) |
|
26,540 |
|
|
|
16,750 |
|
Depreciation and amortization(b) |
|
39,538 |
|
|
|
36,049 |
|
Share-based compensation(c) |
|
7,348 |
|
|
|
4,538 |
|
Gain on
foreign currency and derivatives not designated as hedging
instruments, net(d) |
|
535 |
|
|
|
(6,552 |
) |
Acquisition and divestiture related charges, net(e) |
|
592 |
|
|
|
(160 |
) |
Business
optimization project expenses(f) |
|
2,534 |
|
|
|
104 |
|
Plant
closure expenses(g) |
|
(895 |
) |
|
|
671 |
|
Professional services and other expenses relating to EO
sterilization facilities(h) |
|
16,302 |
|
|
|
18,059 |
|
Accretion of asset retirement obligation(i) |
|
572 |
|
|
|
520 |
|
COVID-19
expenses(j) |
|
— |
|
|
|
103 |
|
Consolidated income
before income taxes |
$ |
5,402 |
|
|
$ |
45,267 |
|
|
|
|
|
|
|
|
|
(a) The three months ended March 31, 2023 excludes $2.3 million
of interest expense, net on Term Loan B attributable to the loan
proceeds that were used to fund the $408.0 million Illinois EO
litigation settlement. The three months ended March 31, 2022
excludes a $6.3 million net increase in the fair value of interest
rate derivatives not designated as hedging instruments recorded to
interest expense.(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 effects
of (i) fluctuations in foreign currency exchange rates,
(ii) non-cash mark-to-fair value of embedded derivatives
relating to certain customer and supply contracts at Nordion, and
(iii) unrealized gains on interest rate caps not designated as
hedging instruments. (e) Represents (i) certain direct and
incremental costs related to the acquisitions of RCA and BioScience
Labs and certain related integration efforts as a result of those
acquisitions, (ii) the earnings impact of fair value adjustments
(excluding those recognized within amortization expense) resulting
from the businesses acquired, and (iii) transition services income
and non-cash deferred lease income associated with the terms of the
divestiture of the Medical Isotopes business in 2018.(f) Represents
professional fees, contract termination and exit costs, severance
and other payroll costs, and other costs associated with business
optimization and cost savings projects relating to the integration
of acquisitions, operating structure realignment and other process
enhancement projects. (g) Represents professional fees, severance
and other payroll costs, and other costs, including ongoing lease
and utility expenses associated with the closure of the
Willowbrook, Illinois facility. The three months ended March 31,
2023 includes a $1.0 million cancellation fee received from a
tenant in connection with the termination of an office space lease
at the Nordion facility.(h) Represents litigation and other
professional fees associated with our EO sterilization facilities.
This amount also includes $2.3 million of interest expense, net
associated with Term Loan B that was issued to finance the $408.0
million cost to settle 880+ pending and threatened EO claims
against the Defendant Subsidiaries in Illinois under Settlement
Agreements entered into on March 28, 2023, subject to substantially
all of the plaintiffs providing opt-in consents to their individual
settlement allocations and dismissing their claims with prejudice.
(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 (without regard for whether the decommissioning
services would be performed by employees of Nordion, instead of by
a third party) and are accreted over the life of the asset.(j)
Represents non-recurring costs associated with the COVID-19
pandemic, including incremental costs to implement workplace health
and safety measures.
Sotera Health Company
Condensed Consolidated Balance Sheets(in
thousands)(unaudited)
|
As of March 31, |
|
As of December 31, |
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
660,180 |
|
|
$ |
396,294 |
|
Accounts receivable, net |
|
109,163 |
|
|
|
118,482 |
|
Inventories, net |
|
46,736 |
|
|
|
37,145 |
|
Other current assets |
|
107,720 |
|
|
|
93,089 |
|
Total current assets |
|
923,799 |
|
|
|
645,010 |
|
Property, plant, and
equipment, net |
|
816,164 |
|
|
|
774,527 |
|
Operating lease assets |
|
24,941 |
|
|
|
26,481 |
|
Other intangible assets,
net |
|
471,860 |
|
|
|
491,265 |
|
Goodwill |
|
1,103,420 |
|
|
|
1,101,768 |
|
Other assets |
|
73,989 |
|
|
|
78,654 |
|
Total assets |
$ |
3,414,173 |
|
|
$ |
3,117,705 |
|
Liabilities and equity |
|
|
|
Total current liabilities |
$ |
600,149 |
|
|
$ |
791,567 |
|
Long-term debt, less current
portion |
|
2,222,333 |
|
|
|
1,747,115 |
|
Other noncurrent
liabilities |
|
167,340 |
|
|
|
160,761 |
|
Deferred income taxes |
|
63,226 |
|
|
|
68,024 |
|
Total liabilities |
|
3,053,048 |
|
|
|
2,767,467 |
|
Total equity |
|
361,125 |
|
|
|
350,238 |
|
Total liabilities and
equity |
$ |
3,414,173 |
|
|
$ |
3,117,705 |
|
|
|
|
|
|
|
|
|
Sotera Health
CompanyCondensed Consolidated Statements of Cash
Flows(in thousands)(unaudited)
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Operating
activities: |
|
|
|
Net income |
$ |
2,842 |
|
|
$ |
30,641 |
|
Non-cash items |
|
47,239 |
|
|
|
41,231 |
|
Changes in operating assets
and liabilities |
|
(16,210 |
) |
|
|
(21,905 |
) |
Net cash provided by operating
activities |
|
33,871 |
|
|
|
49,967 |
|
Investing
activities: |
|
|
|
Purchases of property, plant
and equipment |
|
(45,000 |
) |
|
|
(35,546 |
) |
Adjustments to purchase of
Regulatory Compliance Associates Inc. |
|
— |
|
|
|
63 |
|
Other investing
activities |
|
32 |
|
|
|
— |
|
Net cash used in investing
activities |
|
(44,968 |
) |
|
|
(35,483 |
) |
Financing
activities: |
|
|
|
Proceeds from long-term
borrowings |
|
500,000 |
|
|
|
— |
|
Payment on revolving credit
facility |
|
(200,000 |
) |
|
|
— |
|
Payments of debt issuance
costs |
|
(24,457 |
) |
|
|
(31 |
) |
Other financing
activities |
|
(1,627 |
) |
|
|
(418 |
) |
Net cash used in financing
activities |
|
273,916 |
|
|
|
(449 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
1,067 |
|
|
|
487 |
|
Net increase in cash and cash
equivalents, including restricted cash |
|
263,886 |
|
|
|
14,522 |
|
Cash and cash equivalents,
including restricted cash, at beginning of period |
|
396,294 |
|
|
|
106,924 |
|
Cash and cash equivalents,
including restricted cash, at end of period |
$ |
660,180 |
|
|
$ |
121,446 |
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
Cash paid during the period for interest |
$ |
35,456 |
|
|
$ |
15,809 |
|
Cash paid during the period for income taxes, net of tax refunds
received |
|
14,014 |
|
|
|
13,505 |
|
Equipment purchases included in accounts payable |
|
13,061 |
|
|
|
9,508 |
|
|
|
|
|
|
|
|
|
Sotera Health
CompanyNon-GAAP Financial Measures(in
thousands, except per share amounts)(unaudited)
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Net
income |
$ |
2,842 |
|
|
$ |
30,641 |
|
Amortization of intangible assets |
|
20,607 |
|
|
|
20,182 |
|
Share-based compensation(a) |
|
7,348 |
|
|
|
4,538 |
|
Gain on foreign currency and derivatives not designated as hedging
instruments, net(b) |
|
535 |
|
|
|
(6,552 |
) |
Acquisition and divestiture related charges, net(c) |
|
592 |
|
|
|
(160 |
) |
Business optimization project expenses(d) |
|
2,534 |
|
|
|
104 |
|
Plant closure expenses(e) |
|
(895 |
) |
|
|
671 |
|
Professional services and other expenses relating to EO
sterilization facilities(f) |
|
16,302 |
|
|
|
18,059 |
|
Accretion of asset retirement obligation(g) |
|
572 |
|
|
|
520 |
|
COVID-19 expenses(h) |
|
— |
|
|
|
103 |
|
Income tax benefit associated with pre-tax adjustments(i) |
|
(12,392 |
) |
|
|
(7,852 |
) |
Adjusted Net
Income |
|
38,045 |
|
|
|
60,254 |
|
Interest expense, net(j) |
|
26,540 |
|
|
|
16,750 |
|
Depreciation(k) |
|
18,931 |
|
|
|
15,867 |
|
Income tax provision applicable to Adjusted Net Income(l) |
|
14,952 |
|
|
|
22,478 |
|
Adjusted
EBITDA(m) |
$ |
98,468 |
|
|
$ |
115,349 |
|
|
|
|
|
Net
Revenues |
$ |
220,590 |
|
|
$ |
236,754 |
|
Adjusted EBITDA
Margin |
|
44.6 |
% |
|
|
48.7 |
% |
Weighted average
number of shares outstanding |
|
|
|
Basic |
|
280,691 |
|
|
|
279,829 |
|
Diluted |
|
282,977 |
|
|
|
279,908 |
|
Earnings per
share: |
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
0.11 |
|
Diluted |
|
0.01 |
|
|
|
0.11 |
|
Adjusted earnings per
share: |
|
|
|
Basic |
$ |
0.14 |
|
|
$ |
0.22 |
|
Diluted |
|
0.13 |
|
|
|
0.22 |
|
|
|
|
|
|
|
|
|
(a) Represents share-based compensation expense to employees and
Non-Employee Directors.(b) Represents the effects of
(i) fluctuations in foreign currency exchange rates,
(ii) non-cash mark-to-fair value of embedded derivatives
relating to certain customer and supply contracts at Nordion, and
(iii) unrealized gains on interest rate caps not designated as
hedging instruments.(c) Represents (i) certain direct and
incremental costs related to the acquisitions of RCA and BioScience
Labs and certain related integration efforts as a result of those
acquisitions, (ii) the earnings impact of fair value adjustments
(excluding those recognized within amortization expense) resulting
from the businesses acquired, and (iii) transition services income
and non-cash deferred lease income associated with the terms of the
divestiture of the Medical Isotopes business in 2018. (d)
Represents professional fees, contract termination and exit costs,
severance and other payroll costs, and other costs associated with
business optimization and cost savings projects relating to the
integration of acquisitions, operating structure realignment and
other process enhancement projects.(e) Represents professional
fees, severance and other payroll costs, and other costs, including
ongoing lease and utility expenses associated with the closure of
the Willowbrook, Illinois facility. The three months ended March
31, 2023 includes a $1.0 million cancellation fee received from a
tenant in connection with the termination of an office space lease
at the Nordion facility.(f) Represents litigation and other
professional fees associated with our EO sterilization facilities.
This amount also includes $2.3 million of interest expense, net
associated with Term Loan B that was issued to finance the $408.0
million cost to settle 880+ pending and threatened EO claims
against the Defendant Subsidiaries in Illinois under Settlement
Agreements entered into on March 28, 2023, subject to substantially
all of the plaintiffs providing opt-in consents to their individual
settlement allocations and dismissing their claims with prejudice.
(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 (without regard for whether the decommissioning
services would be performed by employees of Nordion, instead of by
a third party) and are accreted over the life of the asset.(h)
Represents non-recurring costs associated with the COVID-19
pandemic, including incremental costs to implement workplace health
and safety measures.(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) The three months ended March 31, 2023
excludes $2.3 million of interest expense, net on Term Loan B
attributable to the loan proceeds that were used to fund the $408.0
million Illinois EO litigation settlement. The three months ended
March 31, 2022 excludes a $6.3 million net increase in the fair
value of interest rate derivatives not designated as hedging
instruments recorded to interest expense.(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) $22.9
million and $19.8 million of the adjustments for the three months
ended March 31, 2023 and 2022, respectively, are included in
cost of revenues, primarily consisting of amortization of
intangible assets, depreciation, and accretion of asset retirement
obligations.
Sotera Health
CompanyNon-GAAP Financial Measures($’s in
thousands)(unaudited)
|
As of March 31, |
|
As of December 31, |
|
|
2023 |
|
|
|
2022 |
|
Current portion of long-term
debt |
$ |
4,031 |
|
|
$ |
197,119 |
|
Long-term debt |
$ |
2,222,333 |
|
|
$ |
1,747,115 |
|
Current portion of finance
leases |
|
8,588 |
|
|
|
1,722 |
|
Finance leases less current
portion |
|
61,735 |
|
|
|
56,955 |
|
Total
Debt |
|
2,296,687 |
|
|
|
2,002,911 |
|
Less: cash and cash
equivalents |
|
(647,948 |
) |
|
|
(395,214 |
) |
Total Net
Debt |
$ |
1,648,739 |
|
|
$ |
1,607,697 |
|
|
|
|
|
Adjusted
EBITDA(a) |
$ |
489,368 |
|
|
$ |
506,249 |
|
Net
Leverage |
|
3.4x |
|
|
|
3.2x |
|
|
|
|
|
(a) Represents Adjusted EBITDA for the twelve months ended
March 31, 2023 and December 31, 2022, respectively. Refer
to the Adjusted EBITDA reconciliations for detail.
Sotera Health
CompanyNon-GAAP Financial Measures(in
thousands)(unaudited)
|
Twelve Months Ended March 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
Net
income |
$ |
(261,369 |
) |
|
$ |
(233,570 |
) |
Amortization of intangible assets |
|
81,979 |
|
|
|
81,554 |
|
Share-based compensation(a) |
|
24,021 |
|
|
|
21,211 |
|
Gain on foreign currency and derivatives not designated as hedging
instruments, net(b) |
|
10,237 |
|
|
|
3,150 |
|
Acquisition and divestiture related charges, net(c) |
|
2,150 |
|
|
|
1,398 |
|
Business optimization project expenses(d) |
|
4,656 |
|
|
|
2,226 |
|
Plant closure expenses(e) |
|
3,164 |
|
|
|
4,730 |
|
Impairment of investment in unconsolidated affiliate(f) |
|
9,613 |
|
|
|
9,613 |
|
Professional services and other expenses relating to EO
sterilization facilities(g) |
|
70,882 |
|
|
|
72,639 |
|
Illinois EO litigation settlement(h) |
|
408,000 |
|
|
|
408,000 |
|
Accretion of asset retirement obligation(i) |
|
2,246 |
|
|
|
2,194 |
|
COVID-19 expenses(j) |
|
52 |
|
|
|
155 |
|
Income tax benefit associated with pre-tax adjustments(k) |
|
(107,621 |
) |
|
|
(103,081 |
) |
Adjusted Net
Income |
|
248,010 |
|
|
|
270,219 |
|
Interest expense, net(l) |
|
88,280 |
|
|
|
78,490 |
|
Depreciation(m) |
|
67,064 |
|
|
|
64,000 |
|
Income tax provision applicable to Adjusted Net Income(n) |
|
86,014 |
|
|
|
93,540 |
|
Adjusted
EBITDA(o) |
$ |
489,368 |
|
|
$ |
506,249 |
|
|
|
|
|
Net
Revenues |
$ |
987,523 |
|
|
$ |
1,003,687 |
|
Adjusted EBITDA
Margin |
|
49.6 |
% |
|
|
50.4 |
% |
|
|
|
|
|
|
|
|
(a) Represents share-based compensation expense to employees and
Non-Employee Directors.(b) Represents the effects of
(i) fluctuations in foreign currency exchange rates,
(ii) non-cash mark-to-fair value of embedded derivatives
relating to certain customer and supply contracts at Nordion, and
(iii) unrealized gains on interest rate caps not designated as
hedging instruments.(c) Represents (i) certain direct and
incremental costs related to the acquisitions of RCA and BioScience
Labs and certain related integration efforts as a result of those
acquisitions, (ii) the earnings impact of fair value adjustments
(excluding those recognized within amortization expense) resulting
from the businesses acquired, and (iii) transition services income
and non-cash deferred lease income associated with the terms of the
divestiture of the Medical Isotopes business in 2018.(d) Represents
professional fees, contract termination and exit costs, severance
and other payroll costs, and other costs associated with business
optimization and cost savings projects relating to the integration
of acquisitions, operating structure realignment and other process
enhancement projects.(e) Represents professional fees, severance
and other payroll costs, and other costs, including ongoing lease
and utility expenses associated with the closure of the
Willowbrook, Illinois facility. The three months ended March 31,
2023 includes a $1.0 million cancellation fee received from a
tenant in connection with the termination of an office space lease
at the Nordion facility.(f) Represents an impairment charge on our
equity method investment in a joint venture.(g) Represents
litigation and other professional fees associated with our EO
sterilization facilities. The twelve months ended March 31, 2023
also includes $2.3 million of interest expense, net associated with
Term Loan B that was issued to finance the $408.0 million cost to
settle 880+ pending and threatened EO claims against the Defendant
Subsidiaries in Illinois under Settlement Agreements entered into
on March 28, 2023, subject to substantially all of the plaintiffs
providing opt-in consents to their individual settlement
allocations and dismissing their claims with prejudice. (h)
Represents the cost to settle 880+ pending and threatened EO claims
against the Defendant Subsidiaries in Illinois under settlement
Agreements entered into on March 28, 2023, subject to substantially
all of the plaintiffs providing opt-in consents to their individual
settlement allocations and dismissing their claims with prejudice.
(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 (without regard for whether the decommissioning
services would be performed by employees of Nordion, instead of by
a third party) and are accreted over the life of the asset.(j)
Represents non-recurring costs associated with the COVID-19
pandemic, including incremental costs to implement workplace health
and safety measures.(k) 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.(l) The twelve months ended March 31, 2023
excludes $2.3 million of interest expense, net on Term Loan B
attributable to the loan proceeds that will be used to fund the
$408.0 million Illinois EO litigation settlement. The twelve months
ended March 31, 2023 also excludes an $8.0 million net decrease in
the fair value of interest rate derivatives not designated as
hedging instruments recorded to interest expense. The twelve months
ended December 31, 2022 excludes a $1.7 million net decrease in the
fair value of interest rate derivatives not designated as hedging
instruments recorded to interest expense. (m) Includes depreciation
of Co-60 held at gamma irradiation sites.(n) 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 (k).(o) $86.7
million and $83.6 million of the adjustments for the twelve months
ended March 31, 2023 and December 31, 2022, respectively,
are included in cost of revenues, primarily consisting of
amortization of intangible assets, depreciation, and accretion of
asset retirement obligations.
Sotera Health (NASDAQ:SHC)
과거 데이터 주식 차트
부터 4월(4) 2024 으로 5월(5) 2024
Sotera Health (NASDAQ:SHC)
과거 데이터 주식 차트
부터 5월(5) 2023 으로 5월(5) 2024