Q1 2024 Sotera Health Co Earnings Call Transcript
Key Points
- Sotera Health Co (SHC) reported a 12.5% increase in total company revenues and a 13.7% increase in adjusted EBITDA compared to the first quarter of 2023.
- Nordion, one of SHC's business segments, experienced a significant revenue growth of 181% year-over-year, primarily due to favorable volume and mix related to the timing of reactor harvest schedules.
- Nelson Labs, another SHC business segment, showed a revenue increase of 10.8% driven by favorable volume and mix as well as pricing.
- SHC is reaffirming its 2024 outlook for revenue and adjusted EBITDA growth in the range of 4% to 6% versus 2023, indicating confidence in the company's performance for the remainder of the year.
- SHC has made significant proactive investments in U.S. ethylene oxide facilities, positioning the company to comply with the finalized EPA NESHAP regulations within the specified timeframe without requiring a material amount of additional CapEx.
- Sterigenics, SHC's largest reporting segment, experienced soft volumes as customers continued to work through supply chain challenges, with a slight unfavorable volume and mix of 1.6%.
- The company reported an increase in interest expense to $42 million in Q1 2024 from $29 million in Q1 2023, driven by higher interest rates and the impact of a $500 million term loan.
- Adjusted EPS remained flat at $0.13 for the quarter, as improved operating results were offset by the increased interest expense.
- Core lab testing volumes at Nelson Labs are down year-over-year, primarily due to the extension of deadlines for the European Union Medical Device Regulations.
- SHC is facing ongoing litigation related to ethylene oxide claims, which poses potential risks and uncertainties, although the company remains confident in its compliance and operational safety.
Good morning, and welcome to the Sotera Health's First Quarter 2024 Conference Call. (Operator Instructions) Please note this event is being recorded. I would like now to turn the conference over to Vice President and Treasurer, Jason Peterson. Please go ahead.
Good morning, and thank you. Welcome to Sotera Health's First Quarter 2024 Results Call. You can find today's press release and accompanying supplemental slides on the Investors section of our website at soterahealth.com.
This webcast is being recorded, and a replay will be available in the Investors section of the Sotera Health website. On the call with me today are Chairman and Chief Executive Officer, Michael Petras; and Chief Financial Officer, Jon Lyons. During the call, some of our comments may be considered forward-looking statements. The matters addressed in these statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied.
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