Sotera Health Company · NASDAQ:SHC
Sotera Health — Q4 2023 Earnings Presentation
26 slides from Sotera Health's earnings presentation, Feb 27, 2024
Slide 1: Fourth-Quarter and Full-Year 2023 Earnings Results
Fourth-Quarter and Full-Year 2023 Earnings Results FEBRUARY 27, 2024
Slide 2: Cautionary Note Regarding Forward-Looking Statements and Non-GAAP Financial Measures
Cautionary Note Regarding Forward-Looking Statements and Non-GAAP Financial Measures 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 appropria
Slide 3: Speakers
Speakers Michael B. Petras, Jr. Chairman and Chief Executive Officer Jonathan M. Lyons Senior Vice President and Chief Financial Officer 2
Slide 4: Safeguarding Global Health Through Our Sterilization Services, Lab Testing and Advisory Services
Safeguarding Global Health® Through Our Sterilization Services, Lab Testing and Advisory Services What we do… …and how we do it… …leads to strong results Leader in sterilization services Provide mission-critical services to blue chip Annual revenue growth every year since customers with multi-ye
Slide 5: Our Customers Trust and Value Our Expertise
Our Customers Trust and Value Our Expertise ~5,000 customers 900+ Customers laboratory located in 50+ tests countries Safeguarding Global Health® Deep market focus Customers include Significant industry expertise Customers include over 40 of top 9 of top 10 50 medical device End-to-end solutions pha
Slide 6: Safeguarding Global Health
Safeguarding Global Health® • Our mission is at the heart of our work • Click here to view how our global teams help to reduce the prevalence of hospital acquired infections, benefiting both patients and hospitals • Our end-to-end services, in addition to our industry-leading expertise in science, s
Slide 7: Q4 2023 Highlights
Q4 2023 Highlights • Nordion successfully delivered 50% of FY 2023 revenue in Q4 Business & Market • Sterigenics and Nelson Labs continued to experience volume softness Update • Challenging macro-economic backdrop, including interest rate, inflation and customer supply-chain pressures • Top- and bot
Slide 8: 2023 Full-Year Highlights
2023 Full-Year Highlights Another year of top- and bottom-line growth and 50%+ Adjusted EBITDA margins (1) Nordion delivered significant Q4 volume Double-digit growth in advisory services at Nelson Labs Four Sterigenics capacity expansions completed Continued progress in Sterigenics indust
Slide 9: Corporate Responsibility is Integral to Sotera Health
Corporate Responsibility is Integral to Sotera Health • Focus follows naturally from our Mission and Values – Committed to Safeguarding Global Health® – We help to ensure the safety of millions of patients and health care workers globally – Our work aligns with the UN Sustainable Development Goal 3
Slide 10: Financial Overview
FINANCIAL OVERVIEW Sotera » Health
Slide 11: Full Year 2023 Consolidated Financial Performance
Full Year 2023 Consolidated Financial Performance $ In millions, except Adjusted EPS and Adjusted EBITDA margin Fourth Quarter Full Year +23% $1,004 +5% $1,049 $310 $252 Revenue 2022 2023 2022 2023 $506 +4% $528 +29% $167 $130 Adjusted EBITDA (1) 51.5%(2) 53.7%(2) 50.4%(2) 50.3%(2) 2022 2023 2022 20
Slide 12: Sterigenics 2023 Financial Performance
Sterigenics 2023 Financial Performance $ In millions Fourth Quarter Full Year Revenue +7% Revenue +6% Segment income (1) +6% Segment income (1) +7% $172 $667 $162 $627 $89 $95 $339 $362 55.1%(2) 55.0%(2) 54.1%(2) 54.3%(2) 2022 2023 2022 2023 Revenue Segment Income Revenue Segment Income • Revenue gr
Slide 13: Nordion 2023 Financial Performance
Nordion 2023 Financial Performance $ In millions Fourth Quarter Full Year Revenue +134% Revenue +4% Segment income (1) +163% Segment income (1) +8% $80 $154 $160 $53 $89 $97 $34 $20 59.5%(2) 66.8%(2) 58.2%(2) 60.3%(2) 2022 2023 2022 2023 Revenue Segment Income Revenue Segment Income • Revenue, segme
Slide 14: Nelson Labs 2023 Financial Performance
Nelson Labs 2023 Financial Performance $ In millions Fourth Quarter Full Year Revenue +4% Revenue -1% Segment income(1) -8% Segment income (1) -11% $58 $223 $222 $56 $20 $19 $78 $69 (2) 36.3%(2) 32.1%(2) 34.7% 31.2%(2) 2022 2023 2022 2023 Revenue Segment Income Revenue Segment Income • Revenue growt
Slide 15: Net Leverage, Liquidity and Investments
Net Leverage, Liquidity and Investments $ In millions Liquidity Net Leverage (1) Capital Expenditures (2) $1,007 $215 $359 4.2x 4.2x $182 $696 3.8x $635 $645 3.2x 3.4x $477 (3) $400 $81 $408 $372 $400 $395 $240 $263 $245 $296 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 12/31/22 3/31/23 6/30/23 9/30/23
Slide 16: 2024 Outlook
2024 Outlook On the following slides, Sotera Health presents an overview of its full-year 2024 outlook, including certain non-GAAP financial measures. As outlined in the Company’s February 27, 2024 press release, Sotera Health does not provide a reconciliation of the forward-looking Adjusted EBITDA,
Slide 17: Full-year 2024 Outlook
Full-year 2024 Outlook (1) FY 2024 Outlook Net Revenues +4.0% to +6.0% Adj EBITDA(2) +4.0% to +6.0% Interest Expense $170M to $180M Adj NI Tax Rate(2) 31.5% to 34.5% Adj EPS(2) $0.67 to $0.75 Weighted Avg. Diluted Shares 283M to 285M Capital Expenditures $205M to $225M (1) The outlook provided above
Slide 18: Other 2024 Guidance Items
Other 2024 Guidance Items • 2024 Guidance assumes no M&A activity General • Guidance assumes January 31, 2024 foreign exchange rates remain constant in 2024 Commentary • Interest expense change in presentation (see slide 18) • Q1 typically the softest quarter of the year Cadence • Nordion and Nelson
Slide 19: Interest Expense Presentation
Interest Expense Presentation $ In millions • In Q2 2023, the Company closed on a new $500M term loan to fund the $408M Illinois EO settlement • Consistent with the Company’s treatment of EO litigation-related costs, beginning at loan inception the Company excluded the tax-effected interest expense
Slide 20: Appendix
Appendix Sotera » Health
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures (unaudited) Three Months Ended December 31, Year Ended December 31, (dollars in thousands, except per share amounts) 2023 2022 2023 2022 Net income (loss) $ 38,681 $ (319,719) $ 51,376 $ (233,570) Amortization of intangible assets 20,058 19,958 81,348 81,554 Share-based c
Slide 22: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) (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 an
Slide 23: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) (unaudited) Twelve Months Ended (dollars in thousands) September 30, 2023 June 30, 2023 March 31, 2023 Net loss $ (307,024) $ (268,274) $ (261,369) Amortization of intangible assets 81,248 81,286 81,979 Share-based compensation(a) 30,391 26,629 24,021 Loss on
Slide 24: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) (a) Represents share-based compensation expense to employees and Non-Employee Directors. (b) 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 custome
Slide 25: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) As of December 31, As of March 31, As of June 30, As of September 30, As of December 31, 2022 2023 2023 2023 2023 Current portion of long-term debt $ 197,119 $ 4,031 $ 5,225 $ 5,235 $ 4,797 Long-term debt less current portion $ 1,747,115 $ 2,222,333 $ 2,221,98
Slide 26: Non-GAAP Financial Measures Definitions
Non-GAAP Financial Measures Definitions • Adjusted Net Income is defined 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. • Adjusted EBITDA is defined as Adjusted Net Income be
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