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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023March 31, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
Commission file number   001-39729
soterahealth_v_clr_rgb_RegisteredMark.jpg
SOTERA HEALTH COMPANY
(Exact name of registrant as specified in its charter)
Delaware47-3531161
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
9100 South Hills Blvd, Suite 300
Broadview Heights, Ohio44147
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code(440)262-1410
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareSHCThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes    No
As of July 27, 2023,April 25, 2024, there were 282,615,723283,070,826 shares of the registrant’s common stock, $0.01 par value per share, outstanding.


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SOTERA HEALTH COMPANY
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often characterized by the use of words such as “believes,” “estimates,” “expects,” “projects,” “may,” “intends,” “plans” or “anticipates,” or by discussions of strategy, plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance, achievements, or industry results, to differ materially from historical results or any future results, performance or achievements expressed, suggested or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to:
anya disruption in the availability or supply of, or increases in the price of, ethylene oxide (“EO”), Cobalt-60 (“Co-60”) or our other direct materials, services and supplies, including as a result of geopolitical instability andand/or sanctions arising fromagainst Russia by the United States, Canadian,Canada, United Kingdom and/or the European Union relations with Russia;Union;
fluctuations in foreign currency exchange rates and changes in those rates;
changes in environmental, health and safety regulations or preferences, and general economic, social and business conditions;
health and safety risks associated with the use, storage, transportation and disposal of potentially hazardous materials such as EO and Co-60;
the impact and outcome of current and future legal proceedings and liability claims, including litigation related to purported exposure tothe use, emissions and releases of EO from our facilities in California, Georgia, Illinois Georgia and New Mexico and the possibility that otheradditional claims will be made in the future relating to these or other facilities;
allegations of our failure to properly perform services and potential product liability claims, recalls, penalties and reputational harm;
compliance with the extensive regulatory requirements to which we are subject, the related costs, and any failures to receive or maintain, or delays in receiving, required clearanceclearances or approvals;
adverse changes in industry trends;
competition we face;
market changes, including inflationary trends, that impact our long-term supply contracts with variable price clauses and increase our cost of revenues;
business continuity hazards, including supply chain disruptions and other risks associated with our operations;
the risks of doing business internationally, including global and regional economic and political instability and compliance with numerous laws and sometimes inconsistent laws and regulations in multiple jurisdictions;
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;
severe health events such as the COVID-19 pandemic, or environmental events;
cyber securitycybersecurity breaches, unauthorized data disclosures, and our dependence on information technology systems;
anyan inability to pursue strategic transactions, or find suitable acquisition targets, or our failure to integrate strategic acquisitions successfully into our business;business successfully;
our ability to maintain effective internal controls over financial reporting;
our reliance on intellectual property to maintain our competitive position and the risk of claims from third parties that we infringehave infringed or misappropriatemisappropriated, or are infringing or misappropriating, their intellectual property rights;
our ability to comply with rapidly evolving data privacy and security laws and regulations in various jurisdictions and any ineffective compliance efforts with such laws and regulations;
our ability to maintain profitability in the future;
impairment charges on our goodwill and other intangible assets with indefinite lives, as well as other long-lived assets and intangible assets with definite lives;
the effects of unionization efforts and labor regulations in certain countries in which we operate;
adverse changes to our tax positions in U.S. or non-U.S. jurisdictions or the interpretation and application of recent U.S. tax legislation or other changes in U.S. or non-U.S. taxation of our operations; and
our significant leverage and how this significant leverage could adversely affect our ability to raise additional capital, limit our ability to react to challenges confronting our Company or broader changes in our industry or the economy, or our industry, limit our flexibility in operating our business through restrictions contained in our debt agreements and/or prevent us from meeting our obligations under our existing and future indebtedness.
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These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them publicly in light of new information or future events, except as required by law. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved.
You should carefully consider the above factors, as well as the factors discussed elsewhere in this Quarterly Report on Form 10-Q, including under Part II, Item 1A, “Risk Factors,” as well as Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 20222023 (the “2022 Form“2023 10-K”). If any of these trends, risks or uncertainties actually occur or continue, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.
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.
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Part I—FINANCIAL INFORMATION
Item 1. Financial Statements
Sotera Health Company
Consolidated Balance Sheets
(in thousands, except per share amounts)
As of
June 30, 2023December 31, 2022
As ofAs of
March 31, 2024March 31, 2024December 31, 2023
AssetsAssets(Unaudited)
Current assets:Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalentsCash and cash equivalents$262,700 $395,214 
Restricted cash short-termRestricted cash short-term7,790 1,080 
Accounts receivable, net of allowance for uncollectible accounts of $1,965 and $1,871, respectively117,307 118,482 
Accounts receivable, net of allowance for uncollectible accounts of $3,925 and $4,689, respectively
Inventories, netInventories, net42,102 37,145 
Prepaid expenses and other current assetsPrepaid expenses and other current assets90,910 80,995 
Income taxes receivableIncome taxes receivable25,883 12,094 
Total current assetsTotal current assets546,692 645,010 
Property, plant, and equipment, netProperty, plant, and equipment, net859,138 774,527 
Operating lease assetsOperating lease assets25,179 26,481 
Deferred income taxesDeferred income taxes4,157 4,101 
Post-retirement assetsPost-retirement assets39,004 35,570 
Other assetsOther assets34,082 38,983 
Other intangible assets, netOther intangible assets, net456,120 491,265 
GoodwillGoodwill1,110,498 1,101,768 
Total assetsTotal assets$3,074,870 $3,117,705 
Liabilities and equityLiabilities and equity
Current liabilities:Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payableAccounts payable$55,580 $74,139 
Accrued liabilitiesAccrued liabilities103,450 490,130 
Deferred revenues13,840 12,140 
Deferred revenue
Current portion of long-term debtCurrent portion of long-term debt5,225 197,119 
Current portion of finance lease obligationsCurrent portion of finance lease obligations8,605 1,722 
Current portion of operating lease obligationsCurrent portion of operating lease obligations7,111 7,554 
Current portion of asset retirement obligations793 2,896 
Income taxes payable
Income taxes payable
Income taxes payableIncome taxes payable5,726 5,867 
Total current liabilitiesTotal current liabilities200,330 791,567 
Long-term debt2,221,987 1,747,115 
Long-term debt, less current portion
Finance lease obligations, less current portionFinance lease obligations, less current portion61,283 56,955 
Operating lease obligations, less current portionOperating lease obligations, less current portion20,538 21,577 
Noncurrent asset retirement obligationsNoncurrent asset retirement obligations44,492 42,586 
Deferred lease incomeDeferred lease income19,045 18,902 
Post-retirement obligationsPost-retirement obligations8,008 7,910 
Noncurrent liabilitiesNoncurrent liabilities12,626 12,831 
Deferred income taxesDeferred income taxes68,194 68,024 
Total liabilitiesTotal liabilities2,656,503 2,767,467 
See Commitments and contingencies noteSee Commitments and contingencies noteSee Commitments and contingencies note
Equity:Equity:
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at June 30, 2023 and December 31, 20222,860 2,860 
Preferred stock, with $0.01 par value, 120,000 authorized; no shares issued at June 30, 2023 and
December 31, 2022
 — 
Treasury stock, at cost (3,493 and 3,616 shares at June 30, 2023 and December 31, 2022, respectively)(28,700)(29,775)
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at March 31, 2024 and December 31, 2023
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at March 31, 2024 and December 31, 2023
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at March 31, 2024 and December 31, 2023
Preferred stock, with $0.01 par value, 120,000 authorized; no shares issued at March 31, 2024 and
December 31, 2023
Treasury stock, at cost (2,966 and 3,207 shares at March 31, 2024 and December 31, 2023, respectively)
Additional paid-in capitalAdditional paid-in capital1,202,972 1,189,622 
Retained deficitRetained deficit(679,461)(705,816)
Accumulated other comprehensive lossAccumulated other comprehensive loss(79,304)(106,653)
Total equityTotal equity418,367 350,238 
Total liabilities and equityTotal liabilities and equity$3,074,870 $3,117,705 
See notes to consolidated financial statements.
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Sotera Health Company
Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
(Unaudited)(Unaudited)
Revenues:Revenues:
Service
Service
ServiceService$226,050 $221,529 $440,560 $427,747 
ProductProduct29,232 45,110 35,312 75,646 
Total net revenuesTotal net revenues255,282 266,639 475,872 503,393 
Cost of revenues:Cost of revenues:
Service
Service
ServiceService103,900 98,407 208,110 192,983 
ProductProduct11,794 17,836 16,671 31,139 
Total cost of revenuesTotal cost of revenues115,694 116,243 224,781 224,122 
Gross profitGross profit139,588 150,396 251,091 279,271 
Operating expenses:Operating expenses:
Selling, general and administrative expensesSelling, general and administrative expenses60,287 63,132 122,197 122,674 
Selling, general and administrative expenses
Selling, general and administrative expenses
Amortization of intangible assetsAmortization of intangible assets16,097 15,769 32,324 31,610 
Total operating expensesTotal operating expenses76,384 78,901 154,521 154,284 
Operating incomeOperating income63,204 71,495 96,570 124,987 
Interest expense, netInterest expense, net30,728 14,044 59,598 24,448 
Impairment of investment in unconsolidated affiliate 9,613  9,613 
Foreign exchange loss (gain)465 (755)812 33 
Other (income) expense, net(2,474)485 (3,727)(2,482)
Foreign exchange (gain) loss
Other expense (income), net
Income before income taxesIncome before income taxes34,485 48,108 39,887 93,375 
Provision for income taxesProvision for income taxes10,972 17,690 13,532 32,316 
Net incomeNet income23,513 30,418 26,355 61,059 
Other comprehensive income (loss) net of tax:Other comprehensive income (loss) net of tax:
Pension and post-retirement benefits (net of taxes of $6, $179, $(11), and $87, respectively)18 532 (33)258 
Interest rate derivatives (net of taxes of $1,036, $1,241, $(2,360) and $3,350, respectively)4,002 3,178 (5,249)9,357 
Pension and post-retirement benefits (net of taxes of $37 and $(17), respectively)
Pension and post-retirement benefits (net of taxes of $37 and $(17), respectively)
Pension and post-retirement benefits (net of taxes of $37 and $(17), respectively)
Interest rate derivatives (net of taxes of $146 and $(3,396), respectively)
Foreign currency translationForeign currency translation21,374 (46,038)32,631 (31,063)
Comprehensive income (loss)$48,907 $(11,910)$53,704 $39,611 
Comprehensive (loss) income
Earnings per share:Earnings per share:
Basic
Basic
BasicBasic$0.08 $0.11 $0.09 $0.22 
DilutedDiluted0.08 0.11 0.09 0.22 
Weighted average number of shares outstanding:Weighted average number of shares outstanding:
BasicBasic280,893 279,990 280,793 279,910 
Basic
Basic
DilutedDiluted283,147 280,171 283,040 280,038 
See notes to consolidated financial statements.
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Sotera Health Company
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months Ended June 30,
20232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
(Unaudited)(Unaudited)
Operating activities:Operating activities:
Net incomeNet income$26,355 $61,059 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
Depreciation
DepreciationDepreciation37,920 31,611 
Amortization of intangible assetsAmortization of intangible assets41,108 41,378 
Impairment of investment in unconsolidated affiliate 9,613 
Deferred income taxes
Deferred income taxes
Deferred income taxesDeferred income taxes315 10,416 
Share-based compensation expenseShare-based compensation expense15,661 10,339 
Accretion of asset retirement obligationsAccretion of asset retirement obligations1,127 1,118 
Unrealized foreign exchange losses4,601 1,274 
Unrealized gains on derivatives not designated as hedging instruments(747)(8,029)
Unrealized foreign exchange (gain) loss
Unrealized loss on derivatives not designated as hedging instruments
Amortization of debt issuance costsAmortization of debt issuance costs4,112 2,836 
OtherOther(2,623)(4,043)
Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Accounts receivable
Accounts receivable
Accounts receivableAccounts receivable2,549 (13,921)
InventoriesInventories(3,877)14,012 
Other current assetsOther current assets(9,220)(6,683)
Accounts payableAccounts payable(20,325)(9,993)
Accrued liabilitiesAccrued liabilities22,273 (11,869)
Illinois EO litigation settlement(407,712)— 
Georgia EO litigation settlement
Income taxes payable / receivable, netIncome taxes payable / receivable, net(14,067)(15,968)
Other liabilitiesOther liabilities(512)(468)
Other long-term assetsOther long-term assets358 (4,426)
Net cash provided by (used in) operating activities(302,704)108,256 
Net cash provided by operating activities
Investing activities:Investing activities:
Purchases of property, plant and equipmentPurchases of property, plant and equipment(98,134)(71,642)
Adjustment to purchase of Regulatory Compliance Associates Inc.450 
Purchases of property, plant and equipment
Purchases of property, plant and equipment
Other investing activitiesOther investing activities32— 
Net cash used in investing activitiesNet cash used in investing activities(98,102)(71,192)
Financing activities:Financing activities:
Proceeds from long-term borrowingsProceeds from long-term borrowings500,000 — 
Payment of revolving credit facility(200,000)— 
Payments of debt issuance costs and debt discount(24,672)(27)
Proceeds from long-term borrowings
Proceeds from long-term borrowings
Payment on long-term borrowings
Payment on revolving credit facility
Payments of debt issuance costs
Buyout of leased facilities
Other financing activitiesOther financing activities(2,122)(1,056)
Net cash provided by (used in) financing activities273,206 (1,083)
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents1,796 (2,287)
Net increase (decrease) in cash and cash equivalents, including restricted cash(125,804)33,694 
Net (decrease) increase in cash and cash equivalents, including restricted cash
Cash and cash equivalents, including restricted cash, at beginning of periodCash and cash equivalents, including restricted cash, at beginning of period396,294 106,924 
Cash and cash equivalents, including restricted cash, at end of periodCash and cash equivalents, including restricted cash, at end of period$270,490 $140,618 
Supplemental disclosures of cash flow information:Supplemental disclosures of cash flow information:
Cash paid during the period for interestCash paid during the period for interest$78,352 $42,057 
Cash paid during the period for interest
Cash paid during the period for interest
Cash paid during the period for income taxes, net of tax refunds receivedCash paid during the period for income taxes, net of tax refunds received27,590 37,340 
Purchases of property, plant and equipment included in accounts payablePurchases of property, plant and equipment included in accounts payable16,986 17,923 
See notes to consolidated financial statements.
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Sotera Health Company
Consolidated Statements of Equity
(in thousands)
(Unaudited)
Three Months Ended June 30, 2023
Common Stock
Additional
Paid-In
Capital
Retained
Earnings /
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
(Loss) Income
Total
Equity
SharesAmount
Treasury
Stock
Balance at March 31, 2023282,516 $2,860 $(29,420)$1,195,357 $(702,974)$(104,698)$361,125 
SharesSharesAmount
Additional
Paid-In
Capital
Retained
Earnings /
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
(Loss) Income
Total
Equity
Common
Stock
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022
Share-based compensation plansShare-based compensation plans28 — 720 7,615 — — 8,335 
Comprehensive income (loss):Comprehensive income (loss): 
Pension and post-retirement plan adjustments, net of tax
Pension and post-retirement plan adjustments, net of tax
Pension and post-retirement plan adjustments, net of taxPension and post-retirement plan adjustments, net of tax— — — — — 18 18 
Foreign currency translationForeign currency translation— — — — — 21,374 21,374 
Interest rate derivatives, net of taxInterest rate derivatives, net of tax— — — — — 4,002 4,002 
Net incomeNet income— — — — 23,513 — 23,513Net income— — — — — — — 2,842 2,842 — — 2,8422,842
Balance at June 30, 2023282,544 $2,860 $(28,700)$1,202,972 $(679,461)$(79,304)$418,367 
Balance at March 31, 2023
Six Months Ended June 30, 2023
Common Stock

Additional
Paid-In
Capital
Retained
Earnings /
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
(Loss) Income
Total
Equity
SharesAmount
Treasury
Stock
Balance at December 31, 2022282,421 $2,860 $(29,775)$1,189,622 $(705,816)$(106,653)$350,238 
SharesSharesAmount
Additional
Paid-In
Capital
Retained
Earnings /
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
(Loss) Income
Total
Equity
Common
Stock
Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
Share-based compensation plansShare-based compensation plans123 — 1,075 13,350 — — 14,425 
Comprehensive income (loss):Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax
Pension and post-retirement plan adjustments, net of tax
Pension and post-retirement plan adjustments, net of taxPension and post-retirement plan adjustments, net of tax— — — — — (33)(33)
Foreign currency translationForeign currency translation— — — — — 32,631 32,631 
Interest rate derivatives, net of taxInterest rate derivatives, net of tax— — — — — (5,249)(5,249)
Net incomeNet income— — — — 26,355 — 26,355Net income— — — — — — — 6,323 6,323 — — 6,3236,323
Balance at June 30, 2023282,544 $2,860 $(28,700)$1,202,972 $(679,461)$(79,304)$418,367 
Balance at March 31, 2024
See notes to consolidated financial statements.
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Sotera Health Company
Consolidated Statements of Equity (continued)
(in thousands)
(Unaudited)
Three Months Ended June 30, 2022
Common Stock

Additional
Paid-In
Capital
Retained
Earnings /
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
(Loss) Income
Total
Equity
SharesAmount
Treasury
Stock
Balance at March 31, 2022282,930 $2,860 $(33,536)$1,177,097 $(441,605)$(62,686)$642,130 
Share-based compensation plans(28)— 882 4,898 — — 5,780 
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax— — — — — 532 532 
Foreign currency translation— — — — — (46,038)(46,038)
Interest rate derivatives, net of tax— — — — — 3,178 3,178 
Net income— — — — 30,418 — 30,418 
Balance at June 30, 2022282,902 $2,860 $(32,654)$1,181,995 $(411,187)$(105,014)$636,000 
Six Months Ended June 30, 2022
Common Stock

Additional
Paid-In
Capital
Retained
Earnings /
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
(Loss) Income
Total
Equity
SharesAmount
Treasury
Stock
Balance at December 31, 2021282,985 $2,860 $(33,545)$1,172,593 $(472,246)$(83,566)$586,096 
Share-based compensation plans(83)— 891 9,402 — — 10,293 
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax— — — — — 258 258 
Foreign currency translation— — — — — (31,063)(31,063)
Interest rate derivatives, net of tax— — — — — 9,357 9,357 
Net income— — — — 61,059 — 61,059
Balance at June 30, 2022282,902 $2,860 $(32,654)$1,181,995 $(411,187)$(105,014)$636,000 
See notes to consolidated financial statements.
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Sotera Health Company
Notes to Consolidated Financial Statements

1.Basis of Presentation
Principles of Consolidation – Sotera Health Company (also referred to herein as the “Company,” “we,” “our,” “us” or “its”), is a leading global provider of mission-critical end-to-end sterilization solutions, lab testing and advisory services for the healthcare industry with operations primarily in the Americas, Europe and Asia.
We operate and report in three segments,segments: Sterigenics, Nordion and Nelson Labs. We describe our reportable segments in Note 17,16, “Segment Information”. All significant intercompany balances and transactions have been eliminated in consolidation.
In July 2020, we acquired a 60% equity ownership interest in a joint venture to construct an E-beam facility in Alberta, Canada in connection with our acquisition of Iotron Industries Canada, Inc. (“Iotron”). Our equity ownership interest in the joint venture was determined to be an investment in a variable interest entity (“VIE”). The investment was not consolidated as the Company concluded that it was not the primary beneficiary of the VIE. The Company accounted for the joint venture using the equity method.

During the year ended December 31, 2022, we identified certain events and circumstances that indicated a decline in value of our investment in this joint venture that was other-than-temporary. Consequently, in the second quarter of 2022, we wrote down the investment in the joint venture to its fair value of $0, resulting in an impairment charge of approximately $9.6 million. In February 2023, we entered into a Share Purchase Agreement to transfer our equity ownership interest to the joint venture partner, thereby terminating our equity ownership interest.
Use of Estimates – In preparing our consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”), we make estimates and assumptions that affect the amounts reported and the accompanying notes. We regularly evaluate the estimates and assumptions used and revise them as new information becomes available. Actual results may vary from those estimates.
Interim Financial Statements – The accompanying consolidated financial statements include the assets, liabilities, operating results, and cash flows of the Company and its wholly owned subsidiaries. These financial statements are prepared in accordance with U.S. GAAP for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These unaudited interim financial statements should be read in conjunction with the Company's annual consolidated financial statements and accompanying notes in our 2022 Form2023 10-K.
2.Recent Accounting Standards
Adoption of Accounting StandardStandards Updates (“ASU”) Issued But Not Yet Adopted
Effective January 1,
In November 2023, we adopted the Financial Accounting Standards Board (“FASB”) issued ASU 2021-08 - Business Combinations2023-07-Segment Reporting (Topic 805)280): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).Improvements to Reportable Segment Disclosures. The amendments in ASU 2021-082023-07 require that an acquiring entity recognizeto provide enhanced disclosures about significant segment expenses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and measure contract assets and contract liabilities acquiredinterim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). At the acquisition date, an acquirer should account forprocess of evaluating the related revenue contracts in accordance with ASC Topic 606 as if it had originated the contracts. The adoptionimpact of this standard did not have a material impact on our consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09-Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU require entities to disclose, on an annual basis, specific categories in the reconciliation of the provision (benefit) for income taxes to the statutory rate and provide additional information for reconciling items that meet a quantitative threshold. Additionally, the update requires entities to disclose a disaggregation of taxes paid by category (federal, state and foreign taxes) as well as individual jurisdictions. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024. The Company is in the process of evaluating the impact of this standard on our consolidated financial statements and disclosures.
3.Revenue Recognition
The following table shows disaggregated net revenues from contracts with external customers by timing of revenue and by segment for the three and six months ended June 30, 2023March 31, 2024 and 2022:2023:
(thousands of U.S. dollars)Three Months Ended March 31, 2024
SterigenicsNordionNelson LabsConsolidated
Point in time$166,497 $23,051 $— $189,548 
Over time— 956 57,672 58,628 
Total$166,497 $24,007 $57,672 $248,176 
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Notes to Consolidated Financial Statements
(thousands of U.S. dollars)Three Months Ended June 30, 2023
SterigenicsNordionNelson LabsConsolidated
Point in time$166,590 $30,653 $— $197,243 
Over time— 1,322 56,717 58,039 
Total$166,590 $31,975 $56,717 $255,282 
(thousands of U.S. dollars)Three Months Ended June 30, 2022
SterigenicsNordionNelson LabsConsolidated
Point in time$157,792 $46,386 $— $204,178 
Over time— 4,092 58,369 62,461 
Total$157,792 $50,478 $58,369 $266,639 
(thousands of U.S. dollars)Six Months Ended June 30, 2023
SterigenicsNordionNelson LabsConsolidated
Point in time$326,587 $38,241 $— $364,828 
Over time— 2,285 108,759 111,044 
Total$326,587 $40,526 $108,759 $475,872 
(thousands of U.S. dollars)Six Months Ended June 30, 2022
SterigenicsNordionNelson LabsConsolidated
Point in time$307,254 $79,671 $— $386,925 
Over time— 4,809 111,659 116,468 
Total$307,254 $84,480 $111,659 $503,393 
Contract Balances
As of June 30, 2023, and December 31, 2022, contract assets included in “Prepaid expenses and other current assets” on the Consolidated Balance Sheets totaled approximately $18.8 million and $19.8 million, respectively, resulting from revenue recognized over time in excess of the amount billed to the customer.
(thousands of U.S. dollars)Three Months Ended March 31, 2023
SterigenicsNordionNelson LabsConsolidated
Point in time$159,997 $7,588 $— $167,585 
Over time— 963 52,042 53,005 
Total$159,997 $8,551 $52,042 $220,590 
When we receive consideration from a customer prior to transferring goods or services under the terms of a sales contract, we record deferred revenue, which represents a contract liability. Deferred revenue totaled $13.8$12.9 million and $12.1$13.5 million at June 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. We recognize deferred revenue after we have transferred control of the
goods or services to the customer and all revenue recognition criteria are met.
4.Acquisitions
Acquisition of Regulatory Compliance Associates Inc.
On November 4, 2021, we acquired Regulatory Compliance Associates Inc. (“RCA”) for approximately $30.6 million, net of $0.6 million of cash acquired. RCA is an industry leader in providing life sciences consulting focused on quality, regulatory, and technical advisory services for the pharmaceutical, medical device and combination device industries. Headquartered in Pleasant Prairie, Wisconsin, RCA expands and further strengthens our technical consulting and expert advisory capabilities within our Nelson Labs segment.
The purchase price of RCA was allocated to the underlying assets acquired and liabilities assumed based upon management's estimated fair values at the date of acquisition. As of June 30, 2023, approximately $25.3 million of goodwill was recorded related to the RCA acquisition, representing the excess of the purchase price over the estimated fair values of all of the assets acquired and liabilities assumed. We also recorded $6.4 million of finite-lived intangible assets, primarily related to customer relationships. We funded this acquisition using available cash. The acquisition price and the results of operations for this acquired entity are not material in relation to our consolidated financial statements.
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Notes to Consolidated Financial Statements
5.Inventories
Inventories consisted of the following:
(thousands of U.S. dollars)(thousands of U.S. dollars)
June 30, 2023December 31, 2022
March 31, 2024
March 31, 2024
March 31, 2024December 31, 2023
Raw materials and suppliesRaw materials and supplies$36,600 $36,402 
Work-in-processWork-in-process881 584 
Finished goodsFinished goods4,739 276 
42,220 37,262 
51,573
Reserve for excess and obsolete inventoryReserve for excess and obsolete inventory(118)(117)
Inventories, netInventories, net$42,102 $37,145 
6.5.Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
(thousands of U.S. dollars)
June 30, 2023December 31, 2022
Prepaid taxes$27,814 $26,598 
Prepaid business insurance4,904 9,964 
Prepaid rent1,083 998 
Customer contract assets18,800 19,777 
Insurance and indemnification receivables2,039 3,724 
Current deposits422 660 
Prepaid maintenance contracts683 324 
Value added tax receivable3,561 1,640 
Prepaid software licensing2,873 1,832 
Stock supplies3,640 3,656 
Embedded derivatives1,551 2,721 
Interest receivable - interest rate cap settlement7,596 — 
Interest receivable - Illinois EO litigation settlement funds(a)
1,319 — 
Other14,625 9,101 
Prepaid expenses and other current assets$90,910 $80,995 
(a)Represents interest receivable on funds on deposit in a settlement escrow fund that was used to pay all settlement fees and expenses and cash payments to the Eligible Claimants participating in the Illinois EO litigation settlement. Refer to Note 15, “Commitments and Contingencies”.
(thousands of U.S. dollars)
March 31, 2024December 31, 2023
Prepaid taxes$3,717 $4,129 
Prepaid business insurance6,261 7,174 
Prepaid rent1,193 1,150 
Customer contract assets18,550 17,785 
Current deposits416 715 
Prepaid maintenance contracts448 422 
Value added tax receivable3,549 4,306 
Prepaid software licensing2,265 2,503 
Stock supplies3,754 3,669 
Embedded derivative assets1,667 1,225 
Other11,843 10,768 
Prepaid expenses and other current assets$53,663 $53,846 
7.6.Goodwill and Other Intangible Assets
Changes to goodwill during the sixthree months ended June 30, 2023March 31, 2024 were as follows:
(thousands of U.S. dollars)SterigenicsNordionNelson LabsTotal
Goodwill at December 31, 2022$657,458 $270,966 $173,344 $1,101,768 
Changes due to foreign currency exchange rates2,156 6,014 560 8,730 
Goodwill at June 30, 2023$659,614 $276,980 $173,904 $1,110,498 
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Notes to Consolidated Financial Statements
(thousands of U.S. dollars)SterigenicsNordionNelson LabsTotal
Goodwill at December 31, 2023$659,888 $276,929 $174,373 $1,111,190 
Changes due to foreign currency exchange rates(1,682)(5,903)(754)(8,339)
Goodwill at March 31, 2024$658,206 $271,026 $173,619 $1,102,851 
Other intangible assets consisted of the following:
(thousands of U.S. dollars)(thousands of U.S. dollars)
Gross Carrying
Amount
Accumulated
Amortization
(thousands of U.S. dollars)
Gross Carrying
Amount
Accumulated
Amortization
As of June 30, 2023
As of March 31, 2024
Finite-lived intangible assetsFinite-lived intangible assets
Finite-lived intangible assets
Finite-lived intangible assets
Customer relationships
Customer relationships
Customer relationshipsCustomer relationships$656,345 $454,212 
Proprietary technologyProprietary technology84,710 53,332 
Trade namesTrade names2,568 965 
Land-use rightsLand-use rights8,542 1,705 
Sealed source and supply agreementsSealed source and supply agreements208,958 101,347 
OtherOther4,518 2,453 
Total finite-lived intangible assetsTotal finite-lived intangible assets965,641 614,014 
Indefinite-lived intangible assetsIndefinite-lived intangible assets
Indefinite-lived intangible assets
Indefinite-lived intangible assets
Regulatory licenses and other(a)
Regulatory licenses and other(a)
Regulatory licenses and other(a)
Regulatory licenses and other(a)
78,699 — 
Trade names / trademarksTrade names / trademarks25,794 — 
Total indefinite-lived intangible assetsTotal indefinite-lived intangible assets104,493 — 
TotalTotal$1,070,134 $614,014 
As of December 31, 2022
Gross Carrying
Amount
Accumulated
Amortization
As of December 31, 2023As of December 31, 2023
Gross Carrying
Amount
Accumulated
Amortization
Finite-lived intangible assetsFinite-lived intangible assets
Customer relationships
Customer relationships
Customer relationshipsCustomer relationships$652,811 $422,277 
Proprietary technologyProprietary technology86,054 50,952 
Trade namesTrade names2,553 701 
Land-use rightsLand-use rights8,986 1,683 
Sealed source and supply agreementsSealed source and supply agreements204,391 93,034 
OtherOther4,469 1,979 
Total finite-lived intangible assetsTotal finite-lived intangible assets959,264 570,626 
Indefinite-lived intangible assetsIndefinite-lived intangible assets
Indefinite-lived intangible assets
Indefinite-lived intangible assets
Regulatory licenses and other(a)
Regulatory licenses and other(a)
Regulatory licenses and other(a)
Regulatory licenses and other(a)
76,978 — 
Trade names / trademarksTrade names / trademarks25,649 — 
Total indefinite-lived intangible assetsTotal indefinite-lived intangible assets102,627 — 
TotalTotal$1,061,891 $570,626 
(a)Includes certain transportation certifications, a class 1B nuclear license and other intangibles related to obtaining such licensure. These assets are considered indefinite-lived as the decision for renewal by the Canadian Nuclear Safety Commission is highly based on a licensee’s previous assessments, reported incidents, and annual compliance and inspection results. New applications for license can take a significant amount of time and cost; whereas an existing licensee with a historical record of compliance and current operating conditions more than likely ensures renewal for another 10-year license period as Nordion has demonstrated over its 75 years of history.
Amounts include the impact of foreign currency translation. Fully amortized amounts are written off.
Amortization expense for other intangible assets was $20.5 million ($4.4 million is included in “Cost of revenues” and $16.1 million in “Amortization of intangible assets”) and $41.1 million ($8.8 million is included in “Cost of revenues” and $32.3 million in “Amortization of intangible assets”) in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2023, respectively.
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Amounts include the impact of foreign currency translation. Fully amortized amounts are written off.
Amortization expense for otherfinite-lived intangible assets was $21.2$20.1 million ($5.4and $20.6 million isfor the three months ended March 31, 2024 and 2023, respectively. $15.7 million and $16.2 million was included in “Cost of revenues” and $15.8 million in “Amortization of intangible assets”) and $41.4 million ($9.8 million is included in “Cost of revenues” and $31.6 million in “Amortization of intangible assets”) in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2022, respectively.March 31, 2024 and 2023, respectively, whereas the remainder was included in “Cost of revenues.”
The estimated aggregate amortization expense for finite-lived intangible assets for each of the next five years and thereafter is as follows:
(thousands of U.S. dollars)(thousands of U.S. dollars)
For the remainder of 2023$40,372 
202480,050 
For the remainder of 2024
For the remainder of 2024
For the remainder of 2024
2025202542,671 
2026202622,492 
2027202721,416 
2028
ThereafterThereafter144,626 
TotalTotal$351,627 
The weighted-average remaining useful life of the finite-lived intangible assets was approximately nine9 years as of June 30, 2023.March 31, 2024.
8.7.Accrued Liabilities
Accrued liabilities consisted of the following:
(thousands of U.S. dollars)(thousands of U.S. dollars)
June 30, 2023December 31, 2022
March 31, 2024
March 31, 2024
March 31, 2024
March 31, 2024
March 31, 2024
March 31, 2024
March 31, 2024
March 31, 2024
March 31, 2024December 31, 2023
Accrued employee compensationAccrued employee compensation$32,385 $32,936 
Georgia EO litigation settlement reserve
Illinois EO litigation settlement reserveIllinois EO litigation settlement reserve288 408,000 
Legal reserves2,954 3,776 
Other legal reserves
Accrued interest expenseAccrued interest expense30,591 23,291 
Embedded derivativesEmbedded derivatives1,613 3,508 
Professional feesProfessional fees23,259 6,436 
Accrued utilitiesAccrued utilities1,998 1,906 
Insurance accrualInsurance accrual2,253 2,392 
Accrued taxesAccrued taxes3,070 2,567 
OtherOther5,039 5,318 
Accrued liabilitiesAccrued liabilities$103,450 $490,130 
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Notes to Consolidated Financial Statements
9.8.Long-Term Debt
Long-term debt consisted of the following:
(thousands of U.S. dollars)(thousands of U.S. dollars)
As of June 30, 2023Gross AmountUnamortized Debt Issuance CostsUnamortized Debt DiscountNet Amount
As of March 31, 2024
As of March 31, 2024
As of March 31, 2024Gross AmountUnamortized Debt Issuance CostsUnamortized Debt DiscountNet Amount
Term loan, due 2026Term loan, due 2026$1,763,100 $(1,911)$(12,013)1,749,176 
Term loan B, due 2026Term loan B, due 2026500,000 (8,354)(14,059)477,587 
Other long-term debt450 (1) 449 
2,263,550 (10,266)(26,072)2,227,212 
2,259,350
2,259,350
2,259,350
Less current portionLess current portion5,450 (84)(141)5,225 
Long-term debtLong-term debt$2,258,100 $(10,182)$(25,931)$2,221,987 
(thousands of U.S. dollars)(thousands of U.S. dollars)
As of December 31, 2022Gross AmountUnamortized Debt Issuance CostsUnamortized Debt DiscountNet Amount
As of December 31, 2023
As of December 31, 2023
As of December 31, 2023Gross AmountUnamortized Debt Issuance CostsUnamortized Debt DiscountNet Amount
Term loan, due 2026Term loan, due 2026$1,763,100 $(2,140)$(13,845)1,747,115 
Revolving credit facility200,000 (3,328)$— 196,672 
Other long-term debt450 (3)$— 447 
1,963,550 (5,471)(13,845)1,944,234 
Term loan B, due 2026
2,260,600
Less current portionLess current portion$200,450 $(3,331)$— $197,119 
Long-term debtLong-term debt$1,763,100 $(2,140)$(13,845)$1,747,115 
Debt Facilities
Senior Secured Credit Facilities
On December 13, 2019, Sotera Health Holdings, LLC (“SHH”), our wholly ownedwholly-owned subsidiary, entered into senior secured first lien credit facilities (the “Senior Secured Credit Facilities”), consisting of both a prepayable senior secured first lien term loan (the “Term Loan”) and a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) pursuant to a first lien credit agreement (the “Credit Agreement”). The Term Loan matures on DecemberJune 13, 2026. After giving effect to the Revolving Credit Facility Amendment (defined below), theThe total borrowing capacity under the Revolving Credit Facility is $423.8 million. The Senior Secured Credit Facilities also provide SHH the right at any time and under certain conditions to request incremental term loans or incremental revolving credit commitments based on a formula defined in the Senior Secured Credit Facilities. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, total borrowings under the Term Loan were $1,763.1 million. The weighted average interest rate on borrowings under the Term Loan for the three months ended June 30,March 31, 2024 and March 31, 2023 was 8.26% and June 30, 2022 was 7.89%7.44%, respectively.
On March 1, 2024, the Company and 3.53%SHH entered into Amendment No. 3 (“Amendment No. 3”) to the Revolving Credit Facility. Among other changes, the Amendment provides (i) for new commitments under the existing Revolving Credit Facility to replace existing revolving commitments in an aggregate principal amount of $83.0 million, respectively, and 7.66% and 3.39%(ii) that certain of the lenders providing revolving credit commitments shall also provide additional commitments for the six months ended June 30, 2023issuance of letters of credit under the Revolving Credit Facility in an aggregate principal amount of $37.5 million and June 30, 2022, respectively.(iii) for the extension of the maturity date of the Revolving Credit Facility to the earlier of (a) March 1, 2029, and (b) the date that is 91 days prior to the maturity date of the Company’s existing term loans.

Amendment No. 3 does not give effect to any other material changes to the terms and conditions of the Credit Agreement, including with respect to the amount of commitments under the Revolving Credit Facility, which remains
$423.8 million, the representations and warranties, events of default, affirmative or negative covenants.
On February 23, 2023, we entered into the First Lien Credit Agreement (the “2023 Credit Agreement”), which provides for, among other things, a new Term Loan B facility (the “2023 Term Loan”) in an aggregate principal amount of $500.0 million and bears interest, at the Company’s option, at a variable rate per annum equal to either (x) the Term Secured Overnight Financing Rate (“Term SOFR”) (as defined in the 2023 Credit Agreement) plus an applicable margin of 3.75% or (y) an alternative base rate (“ABR”) plus an applicable margin of 2.75%. The 2023 Credit Agreement is secured on a first priority basis onby substantially all of our assets and is guaranteed by certain of our subsidiaries. It is prepayable without premium or
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Notes to Consolidated Financial Statements
penalty at any time six months after the closing date. The principal balance shall be paid at 1% of the aggregate principal amount ($5.0 million) per year, with the balance due at the end of 2026. The Company used the proceeds of the 2023 Term Loan to fund a previously announced $408.0 million EO litigation settlement in Cook County, Illinois and pay down the $200.0 million of existing borrowings under the Revolving Credit Facility concurrent with the funding of the 2023 Term Loan on February 23, 2023. In addition, theThe Company plans to useutilized the remaining proceeds to further enhance liquidity and for general
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Notes to Consolidated Financial Statements
corporate purposes. The weighted average interest rate on borrowings under the 2023 Term Loan for the three and six months ended June 30,March 31, 2024 and the three months ended March 31, 2023 was 9.09% and 8.82%.
, respectively.
On March 21, 2023, the Company entered into an Incremental Facility Amendment to the First Lien Credit Agreement (“Revolving Credit Facility Amendment”), which provides for an increase in the commitments under the existing Revolving Credit Facility in an aggregate principal amount of $76.3 million. In addition, certain of the lenders providing revolving credit commitments provided additional commitments for the issuance of the letters of credit under the Revolving Credit Facility in an aggregate principal amount of $165.1 million. The Revolving Credit Facility Amendment also provides for the replacement of the reference interest rate option for Revolving Loans from London Interbank Offered Rate (“LIBOR”) to SOFRSecured Overnight Financing Rate (“SOFR”) plus an applicable credit spread adjustment of 0.10% (subject to a minimum floor of 0.00%0%). After giving effect to the Revolving Credit Facility Amendment, the aggregate amount of the Lenders’ Revolving Commitmentslenders' revolving commitments is $423.8 million. The maturity date of the Revolving Credit Facility remains June 13, 2026. The Company borrowed $200.0 million under the Revolving Credit Facility during the fourth quarter of 2022, which was repaid in the first quarter of 2023, as noted above. As of June 30, 2023,March 31, 2024 there were no borrowings outstanding under the Revolving Credit Facility.
The Senior Secured Credit Facilities and 2023 Credit Agreement contain additional covenants that, among other things, restrict, subject to certain exceptions, our ability and the ability of our restricted subsidiaries to engage in certain activities, such as incur indebtedness or permit to exist any lien on any property or asset now owned or hereafter acquired, as specified in the Senior Secured Credit Facilities and 2023 Credit Agreement. The Senior Secured Credit Facilities and 2023 Credit Agreement also contain certain customary affirmative covenants and events of default, including upon a change of control. An event of default under the Senior Secured Credit Facilities and 2023 Credit Agreement would occur if the Company or certain of its subsidiaries received one or more enforceable judgmentjudgments for payment in an aggregate amount in excess of $100.0 million which judgment orand the judgments arewere not stayed or remainremained undischarged for a period of 60sixty consecutive days or if, in order to enforce such a judgment,judgments, a judgment creditor attached or leviedwere to attach liens upon assets that are material to the business and operations taken as a whole,
of the Company and certain of its subsidiaries.subsidiaries as a whole. As of June 30, 2023,March 31, 2024, we were in compliance with all of the Senior Secured Credit Facilities and 2023 Credit Agreement covenants.

All of SHH’s obligations under the Senior Secured Credit Facilities and 2023 Credit Agreement are unconditionally guaranteed by the Company and each existing and subsequently acquired or organized direct or indirect wholly-owned domestic restricted subsidiary of the Company, with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in material adverse tax consequences. All obligations under the Senior Secured Credit Facilities and 2023 Credit Agreement, and the guarantees of such obligations, are secured by substantially all assets of the borrower and guarantors, subject to permitted liens and other exceptions and exclusions, as outlined in the Senior Secured Credit Facilities and 2023 Credit Agreement.
Outstanding letters of credit are collateralized by encumbrances against the Revolving Credit Facility and the collateral pledged thereunder, or by cash placed on deposit with the issuing bank. As of June 30, 2023,March 31, 2024, the Company had $51.7$23.7 million of letters of credit issued against the Revolving Credit Facility, resulting in total availability under the Revolving Credit Facility of $372.1$400.1 million.
Term Loan Interest Rate Risk Management
The Company utilizes interest rate derivatives to eliminatereduce the variability of cash flows in the interest payments associated with our variable rate debt due to changes in LIBOR (up to June 22, 2023) and Term SOFR. For additional information on the derivative instruments described above, refer to Note 16,15, “Financial Instruments and Financial Risk”, “Derivative Instruments.”
LIBOR Transition
Publication of all U.S. LIBOR tenors ceased after June 30, 2023. To align with the market phaseout of LIBOR, SHH entered into an amendment to the Senior Secured Credit Facilities to replace the LIBOR-based reference interest rate option under the Term Loan with a reference interest rate option based on Term SOFR plus an applicable credit spread adjustment of 0.11448% (for one-month interest periods), 0.26161% (for three-month interest periods) and 0.42826% (for six-month interest periods) (in all cases, subject to a minimum floor of 0.50%).
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Notes to Consolidated Financial Statements
In accordance with ASC 848 Reference Rate Reform, we have elected to apply certain optional expedients for contract modifications and hedging relationships for derivative instruments impacted by the benchmark interest rate transition. The optional expedients remove the requirement to remeasure contract modifications or dedesignate hedging relationships impacted by reference rate reform.
Aggregate Maturities
Aggregate maturities of the Company’s long-term debt, excluding debt discounts, as of June 30, 2023,March 31, 2024, are as follows:
(thousands of U.S. dollars)
2023$2,950 
20245,000 
20255,000 
20262,250,600 
2027 
Thereafter 
Total$2,263,550 

(thousands of U.S. dollars)
20243,750 
20255,000 
20262,250,600 
2027 
2028 
Thereafter 
Total$2,259,350 
10.9.Income Taxes
Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate. In determining the estimated annual effective income tax rate, we analyze various factors, including projections of our annual earnings and the taxing jurisdictions where the earnings will occur, the impact of state and local taxes, our ability to utilize tax credits and net operating loss carryforwards and available tax planning alternatives.

Our effective tax rates were 31.8%rate was 42.6% and 33.9%47.4% for the three and six months ended June 30,March 31, 2024 and 2023, respectively, compared to 36.8% and 34.6% for the three and six months ended June 30, 2022, respectively.
Income tax expense for the three months ended June 30, 2023March 31, 2024 differed from the statutory rate primarily due to the impact of the foreign rate differential,a net increase in the valuation allowance attributable to the limitation on the deductibility of interest expense and global intangible low-taxthe impact of the foreign rate differential, partially offset by a benefit for state income (“GILTI”).taxes. Income tax expense for the three months ended June 30, 2022March 31, 2023 differed from the statutory rate primarily due to a net increase in the valuation allowance attributable to the limitation on the deductibility of interest expense, the impact of the foreign rate differential and GILTI.
Income tax expense for the six months ended June 30, 2023 differed from the statutory rate primarily due to the impact of the foreign rate differential, the valuation allowance attributable to the limitation on the deductibility of interest expense and GILTI, partially offset by a benefit for state income taxes. Income tax expense for the six months ended June 30, 2022 differed from the statutory rate primarily due to a net increase in the foreign rate differential and GILTI.non-deductible compensation.
11.10.Employee Benefits
The Company sponsors various post-employment benefit plans including, in certain countries outside the U.S., defined benefit and defined contribution pension plans, retirement compensation arrangements, and plans that provide extended health care coverage to retired employees, the majority of which relate to Nordion.
Defined benefit pension plan
The following defined benefit pension plan disclosure relates to Nordion. Certain immaterial foreign defined benefit pension plans have been excluded from the table below. The interest cost, expected return on plan assets and amortization of net actuarial gain are recorded in “Other expense (income), net” and the service cost component is included in the same financial statement line item as the applicable employee’s wages in the Consolidated Statements of Operations and Comprehensive Income (Loss). The components of net periodic pension benefit for the defined benefit plans for the three months ended March 31, 2024 and 2023 were as follows:
Three Months Ended
(thousands of U.S. dollars)March 31,
2024
March 31,
2023
Service cost$145 $131 
Interest cost2,651 2,724 
Expected return on plan assets(4,019)(4,019)
Net periodic benefit$(1,223)$(1,164)
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Income (Loss). The components of net periodic pension benefit for the defined benefit plan for the three and six months ended June 30, 2023 and 2022 were as follows:
Three Months Ended June 30,Six Months Ended June 30,
(thousands of U.S. dollars)2023202220232022
Service cost$132 $247 $263 $496 
Interest cost2,742 1,889 5,466 3,792 
Expected return on plan assets(4,046)(3,676)(8,065)(7,380)
Net periodic benefit$(1,172)$(1,540)$(2,336)$(3,092)
Other benefit plans
Other benefit plans disclosed below relate to Nordion and include a supplemental retirement arrangement, a retirement and termination allowance, and post-retirement benefit plans, which include contributory health and dental care benefits and contributory life insurance coverage. Certain immaterial other foreign benefit plans have been excluded from the table below. All but one non-pension post-employment benefit plans are unfunded. The components of net periodic benefitpension cost for the other benefit plans for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 were as follows:
Three Months Ended June 30,Six Months Ended June 30,
Three Months EndedThree Months Ended
(thousands of U.S. dollars)(thousands of U.S. dollars)2023202220232022(thousands of U.S. dollars)March 31,
2024
March 31,
2023
Service costService cost$2 $$4 $
Interest costInterest cost90 65 180 130 
Amortization of net actuarial gainAmortization of net actuarial gain(44)(2)(88)(4)
Net periodic benefit costNet periodic benefit cost$48 $67 $96 $134 
WeThe Company currently expecthas no funding requirements of approximately $0.3 million in each ofas the next five years to fund the regulatory solvency deficit,Nordion pension plan has a going concern surplus as defined by Canadian federal regulation, which requires solvency testing on defined benefit pension plans.plans on an annual basis.
The Company may obtain a qualifying letter of credit for solvency payments, up to 15% of the market value of solvency liabilities as determined on the valuation date, instead of paying cash into the pension fund. As of June 30, 2023,March 31, 2024 and December 31, 2022,2023, we had letters of credit outstanding relating to the defined benefit plans totaling $43.7 million and $44.1 million, respectively.$16.0 million. The actual funding requirements over the five-year period will be dependent on subsequent annual actuarial valuations. These amounts are estimates, which may change with actual investment performance, changes in interest rates, any pertinent changes in Canadian government regulations and any voluntary contributions.
12.11.Other Comprehensive Income (Loss)
Amounts in accumulated other comprehensive income (loss) are presented net of the related tax. Foreign currency translation is not adjusted for income taxes.
Changes in our accumulated other comprehensive income (loss) balances, net of applicable tax, were as follows:
(thousands of U.S. dollars)
Defined
Benefit
Plans
Foreign
Currency
Translation
Interest
Rate
Derivatives
Total
Beginning balance – January 1, 2024$(7,297)$(91,031)$5,646 $(92,682)
Other comprehensive income (loss) before
reclassifications
146 (27,706)4,051 (23,509)
Amounts reclassified from accumulated other
comprehensive income (loss)
(33)(a) (3,632)(b)(3,665)
Net current-period other comprehensive income (loss)113 (27,706)419 (27,174)
Ending balance – March 31, 2024$(7,184)$(118,737)$6,065 $(119,856)
Beginning balance – January 1, 2023$3,209 $(131,205)$21,343 $(106,653)
Other comprehensive income (loss) before
reclassifications
(7)11,257 (2,493)8,757 
Amounts reclassified from accumulated other
comprehensive income (loss)
(44)(a)— (6,758)(b)(6,802)
Net current-period other comprehensive income (loss)(51)11,257 (9,251)1,955 
Ending balance – March 31, 2023$3,158 $(119,948)$12,092 $(104,698)
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Notes to Consolidated Financial Statements
Changes in our accumulated other comprehensive income (loss) balances, net of applicable tax, were as follows:
(thousands of U.S. dollars)
Defined
Benefit
Plans
Foreign
Currency
Translation
Interest
Rate
Derivatives
Total
Beginning balance – April 1, 2023$3,158 $(119,948)$12,092 $(104,698)
Other comprehensive income (loss) before
reclassifications
62 21,374 10,950 32,386 
Amounts reclassified from accumulated other
comprehensive income (loss)
(44)(a) (6,948)(b)(6,992)
Net current-period other comprehensive income (loss)18 21,374 4,002 25,394 
Ending balance – June 30, 2023$3,176 $(98,574)$16,094 $(79,304)
Beginning balance – January 1, 2023$3,209 $(131,205)$21,343 (106,653)
Other comprehensive income (loss) before
reclassifications
55 32,631 8,555 41,241 
Amounts reclassified from accumulated other
comprehensive income (loss)
(88)(a) (13,804)(b)(13,892)
Net current-period other comprehensive income (loss)(33)32,631 (5,249)27,349 
Ending balance – June 30, 2023$3,176 $(98,574)$16,094 $(79,304)
(thousands of U.S. dollars)
Defined
Benefit
Plans
Foreign
Currency
Translation
Interest
Rate
Derivatives
Total
Beginning balance – April 1, 2022$(17,855)$(51,414)$6,583 $(62,686)
Other comprehensive income (loss) before
reclassifications
534 (46,038)3,178 (42,326)
Amounts reclassified from accumulated other
comprehensive income (loss)
(2)(a)— — (2)
Net current-period other comprehensive income (loss)532 (46,038)3,178 (42,328)
Ending balance – June 30, 2022$(17,323)$(97,452)$9,761 $(105,014)
Beginning balance – January 1, 2022$(17,581)$(66,389)$404 $(83,566)
Other comprehensive income (loss) before
reclassifications
262 (31,063)9,357 (21,444)
Amounts reclassified from accumulated other
comprehensive income (loss)
(4)(a)— — (4)
Net current-period other comprehensive income (loss)258 (31,063)9,357 (21,448)
Ending balance – June 30, 2022$(17,323)$(97,452)$9,761 $(105,014)
(a)For defined benefit pension plans, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Other expense (income), net” within the Consolidated Statements of Operations and Comprehensive Income (Loss).
(b)For interest rate derivatives, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Interest expense, net” within the Consolidated Statements of Operations and Comprehensive Income (Loss).
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Notes to Consolidated Financial Statements
13.12.Share-Based Compensation
Pre-IPO Awards

Restricted stock distributed in respect of pre-IPO Class B-1 time vesting units vests on a daily basis pro rata over a five-year vesting period (20% per year) beginning on the original vesting commencement date of the corresponding Class B-1 time vesting units, subject to the grantee’s continued services through each vesting date. Upon the occurrence of a change in control of the Company, all then outstandingthen-outstanding unvested shares of our common stock distributed in respect of Class B-1 Units will become vestedvest as of the date of consummation of such change in control, subject to the grantee’s continued services through the consummation of the change in control.
Restricted stock distributed in respect of pre-IPO Class B-2 Units (which were considered performance vesting units) are scheduled to vest only upon satisfactionunits. The required performance threshold for the vesting of certain thresholds. These units generally vest as ofB-2 restricted stock is the first date on which (i) our Sponsors have received actual cash proceeds in an amount equal to or in excess of at least two and one-half times their invested capital in Sotera Health Topco Parent, L.P. (of which the Company was a direct wholly owned subsidiary prior to the IPO) and (ii) the Sponsors’ internal rate of return exceeds 20%, subject to such grantee’s continued services through such date. In the event ofBoth performance thresholds were satisfied on March 4, 2024 and, as a change in control of the Company, anyresult, all outstanding shares of our common stock distributed in respect of Class B-2 Units fully vested as of that remain unvested immediately following the consummation of such a change in control of the Company shall be immediately canceled and forfeited without compensation.date. Stock based compensation expense attributed to the pre-IPO Class B-2 awards was recorded in the fourth quarter of 2020 as the related performance conditions were considered probable of achievement and the implied service conditions were met. As of June 30, 2023, these awards remain unvested.
We recognized $0.5$0.4 million and $0.5 million of share-based compensation expense related to the pre-IPO Class B-1 awardsUnits for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, and $1.0 million and $1.1 million for the six months ended June 30, 2023 and 2022, respectively.
A summary of the activity for the sixthree months ended June 30, 2023March 31, 2024 related to the restricted stock awards distributed in respect of the pre-IPO awards (Class B-1 and B-2 Units) is presented below:
Restricted
Stock - Pre-
IPO B-1
Restricted
Stock - Pre-
IPO B-2
Unvested at December 31, 2022716,091 1,098,415 
Forfeited(5,378)(80,051)
Vested(172,654)— 
Unvested at June 30, 2023538,059 1,018,364 
Number of shares
Restricted Stock
Pre-IPO B-1
Restricted Stock - Pre-IPO B-2
Unvested at December 31, 2023352,447 987,111 
Vested(74,335)(987,111)
Unvested at March 31, 2024278,112  
2020 Omnibus Incentive Plan
We maintain a long-term incentive plan (the “2020 Omnibus Incentive Plan” or the “2020 Plan”) that allows for grants of incentive stock options to employees (including employees of any of our subsidiaries), nonstatutory stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and other cash-based, equity-based or equity-related awards to employees, directors, and consultants, including employees or consultants of our subsidiaries.

We recognized $7.9recognized $8.2 million ($3.73.9 million for stock options and $4.2$4.3 million for RSUs) and $5.3$6.8 million ($2.23.1 million for stock options and $3.1$3.7 million for RSUs) of share-based compensation expense for these awards for the three months ended June 30, 2023 and 2022, respectively. We recognized $14.7 million ($6.8 million for stock options and $7.9 million for RSUs) and $9.2 million ($3.7 million for stock options and $5.5 million for RSUs) for the six months ended June 30, 2023 and 2022, respectively, in our Consolidated Statements of Operations and Comprehensive Income (Loss), in “Selling, general and administrative expenses.expenses, for the three months ended March 31, 2024 and 2023, respectively.
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Notes to Consolidated Financial Statements
Stock Options
Stock options generally vest ratably over a period of two to four years. They have an exercise price equal to the fair market value of a share of common stock on the date of grant, and a contractual term of 10 years. The following table summarizes our stock option activity for the sixthree months ended June 30, 2023:March 31, 2024:
Number of
Shares
Weighted-average
Exercise Price
At December 31, 20225,990,470 $14.84 
Granted1,059,769 17.55 
Forfeited(61,571)20.93 
Exercised— — 
At June 30, 20236,988,668 $15.20 
Number of
Shares
Weighted-
average
Exercise Price
Outstanding stock options at December 31, 20236,972,661 $15.17 
Granted1,570,336 14.59 
Forfeited(43,652)20.77 
Outstanding stock options at March 31, 20248,499,345 $15.04 
As of June 30, 2023,March 31, 2024, there were 1.43.5 million vested and exercisable stock options.

RSUs
RSUs generally vest ratably over a period of one to four years and are valued based on our market price on the date of grant. The following table summarizes our unvested RSUs activity for the sixthree months ended June 30, 2023:March 31, 2024:
Number of
Shares
Weighted-average Grant
Date Fair Value
Unvested at December 31, 20222,482,435 $13.09 
Number of
Shares
Number of
Shares
Weighted-
average Grant
Date Fair
Value
Unvested at December 31, 2023
GrantedGranted821,673 16.97 
ForfeitedForfeited(112,634)12.47 
VestedVested(280,557)20.48 
Unvested at June 30, 20232,910,917 $13.50 
Unvested at March 31, 2024
14.13.Earnings Per Share
Basic earnings per share represents the amount of income attributable to each common share outstanding. Diluted earnings per share represents the amount of income attributable to each common share outstanding adjusted for the effects of potentially dilutive common shares. Potentially dilutive common shares include stock options and other stock-based awards. In the periods where the effect would be antidilutive, potentially dilutive common shares are excluded from the calculation of diluted earnings per share.
In periods in which the Company has net income, earnings per share is calculated using the two-class method. This method is required as unvested restricted stock distributed in respect of pre-IPO Class B-1 and B-2 awards have the right to receive non-forfeitable dividends or dividend equivalents if the Company were to declare dividends on its common stock. Pursuant to the two-class method, earnings for each period are allocated on a pro-rata basis to common stockholders and unvested pre-IPO Class B-1 and B-2 restricted stock awards. As of March 4, 2024, the performance threshold applicable to all Class B-2 restricted stock awards were fully satisfied, thereby releasing the vesting and forfeiture restrictions on these common shares. Beginning on that date, B-2 restricted stock was not included in the earnings allocation. Diluted earnings per share is computed using the more dilutive of (a) the two-class method, or (b) treasury stock method, as applicable, to the potentially dilutive instruments.
Our basic and diluted earnings per common share are calculated as follows:
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Notes to Consolidated Financial Statements
Our basic and diluted earnings per common share are calculated as follows:
Three Months EndedSix Months Ended
Three Months EndedThree Months Ended
in thousands of U.S. dollars and share amounts (except per share amounts)in thousands of U.S. dollars and share amounts (except per share amounts)June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
in thousands of U.S. dollars and share amounts (except per share amounts)March 31,
2024
March 31,
2023
Earnings:Earnings:
Net income
Net income
Net incomeNet income$23,513 $30,418 $26,355 $61,059 
Less: Allocation to participating securitiesLess: Allocation to participating securities137 308 159 645 
Net income attributable to Sotera Health Company common shareholdersNet income attributable to Sotera Health Company common shareholders$23,376 $30,110 $26,196 $60,414 
Weighted Average Common Shares:Weighted Average Common Shares:
Weighted-average common shares outstanding - basicWeighted-average common shares outstanding - basic280,893 279,990 280,793 279,910 
Weighted-average common shares outstanding - basic
Weighted-average common shares outstanding - basic
Dilutive effect of potential common sharesDilutive effect of potential common shares2,254 181 2,247 128 
Weighted-average common shares outstanding - dilutedWeighted-average common shares outstanding - diluted283,147 280,171 283,040 280,038 
Earnings per Common Share:Earnings per Common Share:
Net income per common share attributable to Sotera Health Company common shareholders - basic$0.08 $0.11 $0.09 $0.22 
Net income per common share attributable to Sotera Health Company common shareholders - diluted0.08 0.11 0.09 0.22 
Net income attributable to Sotera Health Company common shareholders - basic
Net income attributable to Sotera Health Company common shareholders - basic
Net income attributable to Sotera Health Company common shareholders - basic
Net income attributable to Sotera Health Company common shareholders - diluted
Diluted earnings per share does not consider the following potential common shares as the effect would be anti-dilutive:
Three Months EndedSix Months Ended
Three Months EndedThree Months Ended
in thousands of share amountsin thousands of share amountsJune 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
in thousands of share amountsMarch 31,
2024
March 31,
2023
Stock optionsStock options4,283 3,780 3,928 3,337 Stock options4,7203,570
RSUsRSUs1,308 11 1,138 17 RSUs150492
Total anti-dilutive securitiesTotal anti-dilutive securities5,591 3,791 5,066 3,354 Total anti-dilutive securities4,8704,062
15.14.Commitments and Contingencies
From time to time, we may be subject to various lawsuits and other claims, as well as gain contingencies, in the ordinary course of our business. In addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which we operate. We assess these regulatory and legal actions to determine if a contingent liability should be recorded. In making these determinations, we may, depending on the nature of the matter, consult with internal and external legal counsel and technical experts.
We establish reserves for specific liabilities in connection with regulatory and legal actions that we determine to be both probable and reasonably estimable. AsThe outcomes of June 30, 2023 no material amounts have been accruedregulatory and legal actions can be difficult to predict and are often resolved over long periods of time, making our probability and estimability determinations highly judgmental. Probability determinations require the analysis of various possible outcomes, assessments of potential damages and the impact of multiple factors beyond our control, including potential actions by others, interpretations of the law, and changes and developments in our consolidated financial statements with respect to any loss contingencies.relevant facts, circumstances, regulations and other laws. If a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability is disclosed, together with an estimate of the range of possible loss if the range is determinable and material, would be disclosed.material. In certain of the matters described below, we are not able to make a reasonable estimate of anypotential liability because of the uncertainties related to the outcomeoutcome(s) and/or the amountamount(s) or rangerange(s) of loss. While it is not possible to determine the ultimate disposition of each of these matters, we do not expect that theThe ultimate resolution of pending regulatory and legal matters in future periods, including the matters described below, willmay have a material adverse effect on our financial condition, results of operations and/or liquidity. Despite the above, theThe Company may also incur material defense and settlement costs, diversion of management resources and other adverse effects on our business, financial condition, and/or results of operations.
Ethylene Oxide Tort Litigation
Sterigenics U.S., LLC (“Sterigenics”) and other medical supply sterilization companies have been subjected to tort lawsuits alleging various injuries caused by low-level environmental exposure to EO emissionsused at or emitted from sterilization facilities. Those lawsuits, as detailed further below, are individual claims, as opposed to class actions.
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Notes to Consolidated Financial Statements
Illinois
More than 854 plaintiffs filed lawsuits, and approximately 28 individuals threatened to file lawsuits, against subsidiaries of the Company and other parties, alleging personal injuries (including cancer and other diseases) or wrongful death resulting from purported emissions and releases of EO from Sterigenics’ former Willowbrook facility. Additional derivative claims were alleged on behalf of relatives of some of these personal injury plaintiffs. The lawsuits were consolidated for pre-trial purposes by the Circuit Court of Cook County, Illinois (the “Consolidated Case”). Jury trials were conducted during 2022 in two of the individual cases included in the Consolidated Case, and 12 individual cases were scheduled for trials in 2023. The first trial began on August 12, 2022, and on September 19, 2022, the jury rendered a verdict in favor of the plaintiff and awarded damages in the amount of $358.7 million, including $36.1 million of compensatory damages, $320.0 million of punitive damages and $2.6 million of prejudgment interest against Sterigenics and Sotera Health LLC (the “Defendant Subsidiaries”). Post-judgment interest accrued on the compensatory and punitive damages awards from September 20, 2022, the date of the judgment order. The Defendant Subsidiaries filed a Motion for Post Trial Relief, which was denied on December 19, 2022. On January 9, 2023 the Defendant Subsidiaries filed a Notice of Appeal to the First District Appellate Court in Illinois, appealing the September 20, 2022 adverse judgment. The deadline for posting an appellate bond for the appeal was extended to February 8, 2023. The second individual trial began on October 6, 2022, and on November 18, 2022, the jury returned a defense verdict on all counts. On January 4, 2023, the plaintiff in the second trial filed a motion for post-trial relief seeking an order reversing and/or vacating the verdict, granting a new trial, and/or entering judgment in the plaintiff’s favor notwithstanding the verdict.
On November 1, 2022 certain plaintiffs in the Consolidated Case filed a lawsuit in the Circuit Court of Cook County against the Company and certain affiliates, subsidiaries and current and former officers, alleging that certain transfers of assets occurring after December 2016 were intended to make assets unavailable to satisfy judgments the plaintiffs might win in future trials in their individual personal injury cases included in the Consolidated Case (the “Asset Transfer Case”). On November 10, 2022, the Asset Transfer Case was removed to the United States District Court for the Northern District of Illinois and all defendants filed answers and affirmative defenses.
On January 9, 2023, the Defendant Subsidiaries (the “Settling Defendants”) entered into binding term sheets (the “Term Sheets”) with the “Plaintiffs’ Executive Committee” (the “PEC”) appointed to act on behalf of the more than 20 law firms (“Plaintiffs’ Counsel”) representing the plaintiffs in the Consolidated Case, the Asset Transfer Case, and other clients with personal injury claims that had not yet been filed (each an “Eligible Claimant” and collectively, the “Eligible Claimants”). Upon entering into the Term Sheets, and based on our assessment that it was probable that the conditions to the Term Sheets would be satisfied or waived, we recorded a charge of $408.0 million for the year ended December 31, 2022. The Term Sheets provided an agreed path to final settlement of the Eligible Claimants’ claims, subject to the satisfaction or waiver of certain conditions, including but not limited to the negotiation and execution of full settlement agreements in accordance with the Term Sheets.
On January 11, 2023 and January 13, 2023, the Circuit Court of Cook County entered orders staying all proceedings and deadlines and vacating all trial dates in the Consolidated Case, and staying all enforcement proceedings relating to the September 20, 2022 adverse judgment. On January 16, 2023 the United States District Court for the Northern District of Illinois entered an order staying all proceedings in the Asset Transfer Case. On January 23, 2023 the First District Appellate Court in Illinois entered an order staying the Settling Defendants’ appeal of the September 20, 2022 adverse judgment.
On March 28, 2023, the Settling Defendants and the PEC entered into full settlement agreements (the “Settlement Agreements”). The Settlement Agreements provided a pathway to resolve the claims that were or could have been alleged by 882 Eligible Claimants related to or arising from alleged emissions of EO from Sterigenics’ operations in or around Willowbrook and related claims that were or could have been alleged by Eligible Claimants seeking to challenge any transfer of assets to or from the Company, its subsidiaries and certain affiliates to any other entity or person (the “Covered Claims”). The Company and Settling Defendants deny any liability for the Covered Claims and, per their express terms, the Settlement Agreements are not to be construed as an admission of liability or that the Company or Settling Defendants engaged in any wrongful, tortious, or unlawful activity or that use and/or emissions of EO from Sterigenics’ operations in or around Willowbrook posed any safety hazard to the surrounding communities.
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Notes to Consolidated Financial Statements
The Settlement Agreements provided that final settlement was conditioned, among other things, on successful completion of a claims administration process and satisfaction (or waiver by the Settling Defendants) of specific participation requirements, the dismissal with prejudice of the Covered Claims of all Eligible Claimants participating in the settlement, and court approval of the settlement as a good faith settlement under the Illinois Joint Contribution Among Tortfeasors Act.
On May 1, 2023, Sterigenics contributed $408.0 million to settlement escrow funds (the “Settlement Funds”) to be used, if the conditions of the Settlement Agreements were satisfied or waived, to pay all settlement fees and expenses and cash payments to the Eligible Claimants participating in the settlement.
The claims administration process concluded with 879 of 882 Eligible Claimants providing opt-in consent to participate in the settlement (the “Settling Claimants”). Pursuant to the Settlement Agreements, the three Eligible Claimants who did not opt in (each a “Non-Settling Claimant,” and collectively the “Non-Settling Claimants”) created an option for the Settling Defendants to exercise walkaway rights. On June 22, 2023, after evaluating the available information about the claims of the Non-Settling Claimants, the Settling Defendants waived their walkaway rights and chose to proceed to final settlement with the Settling Claimants (the “Willowbrook Settlement”).
On June 23, 2023 the Circuit Court of Cook County entered an order confirming that the Willowbrook Settlement was a good-faith settlement under the Illinois Contribution Among Joint Tortfeasors Act. On June 30, 2023, the Settlement Funds were released from escrow to the PEC’s Qualified Settlement Funds. The amounts allocated by the PEC to the Non-Settling Claimants represent an immaterial fraction of the Settlement Funds and will remain in escrow until December 31, 2023, at which point, absent an opt-in election by a Non-Settling Claimant, the funds allocated to that Non-Settling Claimant will revert to Sterigenics. On July 6, 2023, the claims of the Settling Claimants against the Settling Defendants were dismissed with prejudice, with the Circuit Court of Cook County retaining jurisdiction to adjudicate disputes over liens on the settlement proceeds to be paid to the Settling Claimants and to oversee the administration of the settlements of the wrongful death cases.
The three Non-Settling Claimants’ cases will proceed in the Circuit Court of Cook County, Illinois. In June 2023, six new personal injury lawsuits relating to the Willowbrook facility were filed in the Circuit Court of Cook County against Sterigenics, Sotera Health Services, LLC and other parties (the “Post-Settlement Cases”). One Post-Settlement Case has been removed to the United States District Court for the Northern District of Illinois, and a motion to remand is pending. The remaining Post-Settlement Cases will proceed in the Circuit Court of Cook County.
Georgia
Subsidiaries of the Company and other parties are defendants in approximately 25 lawsuits in Illinois in which plaintiffs allege personal injuries or wrongful death resulting from purported use, emissions and releases of EO from or at Sterigenics’ former Willowbrook facility (the “Willowbrook Cases”). The Willowbrook Cases are pending in the StateCircuit Court of CobbCook County Georgia and have been assigned to a single judge for coordinated discovery and pretrial proceedings. We intend to vigorously defend the State Court of Gwinnett County,Willowbrook Cases.
Georgia
Sterigenics, Sotera Health, LLC and other parties are defendants in lawsuits in Georgia in which plaintiffs allege personal injuryinjuries, wrongful death and property devaluation resulting from use, emissions orand releases of EO from or at Sterigenics’ Atlanta facility and seek damages and other forms of relief.(the “Atlanta Cases”).
OneApproximately 255 personal injury lawsuitand wrongful death claims are pending in Gwinnettthe State Court of Cobb County is scheduled for trial in October 2023. Approximately 300 personal injury lawsuits pending in Cobb Countyand have been consolidated for pretrial purposes (the “Consolidated Personal Injury Cases”). The Consolidated Personal Injury Cases are proceeding under a case management order pursuant to which a “pool” of ten personal injuryeight cases will proceed to judicial determination of general causation issues in Phase 1 and specific causation issues in Phase 2; the first trial of any “pool” case that survives Phases 1 and 2 is not expected to begin before September 2025. The remaining Consolidated Personal Injury Cases are stayed. One personal injury lawsuit pending in Cobb County has not been consolidated and is proceeding independently. Nine lawsuits pending in Cobb County(including nine cases that include both personal injury and property claims (the “Dual Injury Cases”). By agreementclaims) are stayed. Two additional personal injury lawsuits pending in Cobb County have not been consolidated. The parties have jointly asked the court to stay one of these cases along with the parties, the Dual Injury Cases will be includedstayed cases in the Consolidated Personal Injury CasesCases. In the other case, employees of a sterilization customer of Sterigenics allege they were injured by exposure while working at the customer’s distribution facility to residual EO allegedly emanating from products of the customer that had been sterilized at Sterigenics’ Atlanta facility; discovery is underway and, stayed.pursuant to the customer’s contract with Sterigenics, the customer is indemnifying Sterigenics against this lawsuit.
Our subsidiariesSterigenics and Sotera Health LLC are also defendants in approximately 366365 property devaluation lawsuits. One property lawsuit islawsuits pending in Gwinnett County and the parties are conducting discovery. The remaining property lawsuits are pending inState Court of Cobb County andthat have been consolidated for pretrial purposes (the “Consolidated Property Cases”). TheTen of the Consolidated Property Cases are proceeding under a case management order pursuant to which ten cases will proceed with dispositive motions and discovery, andorders while the remaining cases are stayed. Discovery in five of the cases is underway; dispositive motions remain pending in the other five.
We intend to vigorously defend the Atlanta Cases.
California
In March 2024 and April 2024, two lawsuits were filed against the Company, Sterigenics, other subsidiaries of the Company and other parties in Los Angeles County Superior Court for personal injuries and wrongful death allegedly resulting from emissions and releases of EO from Sterigenics’ Vernon facilities (the “Vernon Cases”). Plaintiffs in these cases allege that 18 cases of cancer and other illnesses were caused by exposure to EO at locations in close proximity to the Vernon facilities, including residences located in Maywood, California, and a commercial facility located next door to Sterigenics’ Vernon facilities. The lawsuits remain in preliminary stages and case management orders have yet to be entered.
We intend to vigorously defend the Vernon Cases.
New Mexico
The Company and certain subsidiaries are defendants in a lawsuit in the Third Judicial District Court, Doña Ana County, New Mexico in which the New Mexico Attorney General ( “NMAG”) alleges that emissions and releases of EO from Sterigenics’ facility in Santa Teresa have deteriorated the air quality in surrounding communities and materially contributed to increased health risks for residents of those communities. In April 2024, the Court of Appeals of the State of New Mexico denied the NMAG’s petition for leave to file an interlocutory appeal of the August 2023 order granting Sterigenics’ motion for summary judgment on strict liability, the Unfair Practices Act claim, and the claims for decreased property values, increased healthcare costs and medical monitoring costs. The case has been remanded to the District Court of Doña Ana County for further
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Notes to Consolidated Financial Statements
New Mexico
On December 22, 2020,proceedings on the New Mexico Attorney General filed a lawsuit in the Third Judicial District Court, Doña Ana County, New Mexico against the Company and certain subsidiaries alleging that emissions and releases of EO from Sterigenics’ facility in Santa Teresa, New Mexico have deteriorated the air quality in Santa Teresa and surrounding communities and materially contributed to increased health risks suffered by residents of those communities. The Complaint asserts claims for public nuisance, negligence, strict liability, violations of New Mexico’s Public Nuisance Statute and Unfair Practices Act and seeks various forms of relief including a temporary restraining order, preliminary injunctive relief and damages. On June 29, 2021, the Court entered an Order Granting Preliminary Injunction (the “Order”) prohibiting Sterigenics from allowing any uncontrolled emission or release of EO from the facility. On December 20, 2021 the Court entered an order establishing a protocol to monitor Sterigenics’ compliance with the Order. Operations at the facility continue to be in compliance with the June 2021 and December 2021 orders.remaining claims. A defense motion challenging the Court’s jurisdiction over Sotera Health Company and another defendant and a motion for summary judgment by Sterigenics and Sotera Health LLC arealso remains pending. A Scheduling Order was entered on September 13, 2022, including a June 3, 2024 trial date. The Company expects the Court to issue rulings on the pending motions and address the schedule for the remainder of the case in August 2023.
On April 24, 2023, a lawsuit was filed in the Third Judicial District Court, Doña Ana County, New Mexico against theThe Company, Sterigenics and certain other subsidiaries are also defendants in a lawsuit pending in the United States District Court for the District of New Mexico alleging wrongful death caused byresulting from purported exposure to emissionsEO used, emitted and releases of EOreleased from Sterigenics’ facility in Santa Teresa, New Mexico while the decedent was working at a different company’s facility approximately one mile away. Sterigenics removedThe case is set for trial in October 2025.
We intend to vigorously defend the caselawsuits relating to the United States District Court for the District of New Mexico on April 27, 2023, and filed a partial motion to dismiss on June 2, 2023.Santa Teresa facility.
* * *
Additional EO tort lawsuits may be filed in the future against the Company and/or its subsidiaries relating to Sterigenics’ Willowbrook, Atlanta, Santa Teresa, Vernon or other EO facilities. The Company denies allegationsBased on our view of the strength of the science and related evidence that itsemissions of EO from Sterigenics’ operations have not caused and could ornot have caused the harms alleged in such lawsuits, and does notwe believe that the facts and law justify the September 20, 2022 adverse judgmentlosses in the first trial in Illinoisremaining or thatfuture EO cases are not probable. Although the verdict and damage awards in that case or the Willowbrook Settlement are predictive of potential future verdicts in other EO tort cases in Illinois or other jurisdictions. The Company intends to defend itself vigorously on the merits, future settlements of EO tort lawsuits are reasonably possible. The Willowbrook and Atlanta Settlements (as previously defined in allNote 20, Commitments and Contingencies of our 2023 10-K) were driven by dynamics unique to the cases that were settled and thus should not give rise to presumptions that the Company will settle additional EO tort lawsuits and/or that any such litigation, whichsettlements will be for comparable amounts.
Potential trial and settlement outcomes can vary widely based a host of factors. EO tort lawsuits will be presided over by different judges, tried by different counsel presenting different evidence and fact and expert witness testimony at trial, and decided by different juries. The substantive and procedural laws of jurisdictions vary and can meaningfully impact the litigation process and outcome of a case. Each plaintiff’s claim involves unique facts and evidence including but not limited to, the circumstances of the plaintiff’s alleged exposure, the type and severity of the plaintiff’s disease, and the plaintiff’s medical history and course of treatment.treatment, the location of and other factors related to the plaintiff’s real property, and other circumstances. The outcomes of trials before juries are rarely certain and a judgment rendered or settlement reached in one case is not necessarily representative of potential outcomes of other seemingly comparable cases. As a result, we believe that losses in such subsequent cases are not probable and that it is not possible to estimate thea reasonably possible loss or range of loss. Dueloss with respect to the uncertainties associated with the amount of any such liability and/future EO tort lawsuit, trial or the nature of any other remedy which may be imposed in such litigation, any potential liability determined to be attributable to the Company or any of its subsidiaries arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition. An estimate of the potential impact on the Company’s results of operations, liquidity or financial condition cannot be made to a reasonable or meaningful degree of certainty due to the aforementioned uncertainties.settlement.
Insurance Coverage for Environmental Liabilities
OurAn environmental liability insurance policy under which we have received coverage for litigation related to alleged environmental liabilities, like the litigation pendingEO tort lawsuits in Illinois, Georgia and New Mexico described above hashad limits of $10.0 million per occurrence and $20.0 million in the aggregate. TheThose per occurrence limit related to the Willowbrook, Illinois litigation wasand aggregate limits were fully utilized by June 30, 2020. The remaining $10.0 million was fully utilized by March 31, 2023 for occurrences related toin the EO litigation indefense of the Illinois, Georgia and New Mexico described above.litigation. Our insurance for future alleged environmental liabilities excludes coverage for EO claims.
In addition, weWe are pursuing otheradditional insurance coverage for our legal expenses related to litigationEO tort lawsuits like the Illinois, Georgia and New Mexico matters described above. In 2021, Sterigenics filed an insurance coverage lawsuit in the U.S. District Court for the Northern District of Illinois relating to two commercial general liability policies issued in the 1980s (the “No. Dist.“Northern District of ILIllinois Coverage Lawsuit”). The court has issued ordersan order declaring that the defendant insurer owes Sterigenics and another insured party a duty to defend the EO tort litigation relatingWillowbrook Cases (the “Duty to Defend Order”) and entered judgment for Sterigenics in January 2024 in the amount of $110.2 million for certain defense costs incurred in the Willowbrook facilityCases as of August 2022 (the “Defense Costs Judgment”). The defendant insurer has appealed the Duty to Defend Order and owes Sterigenics approximately $75.5 million in defense costs through September 30, 2022.Defense Costs Judgment. Sterigenics is also a party in insurance coverage lawsuits pending in the Circuit Court of Cook County, Illinois and the Delaware Superior Court relating to insurance coverage from various historical commercial general liability policies for certain EO litigation settlement amounts and defense costs that the insurer in the Northern District of Illinois Coverage Lawsuit may fail to fund. The Delaware Superior Court has granted Sterigenics’ motion to stay the case pending resolution of the same and similar issues in the coverage lawsuit pending in the Circuit Court of Cook County, Illinois. It is not possible to predict how much, if any, of the insurance proceeds sought will ultimately be recovered.
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in the Delaware Superior Court and the Circuit Court of Cook County, seeking insurance coverage from various historical commercial general liability policies for certain EO litigation settlement amounts and defense costs the insurer in the No. Dist. of IL Coverage Lawsuit may fail to fund. It is unknown how much, if any, of the insurance proceeds sought will be recovered.
Sotera Health Company Securities Litigation & Related Matters
OnIn January 24, 2023, a putative stockholder class action was filed in the U.S. District Court for the Northern District of Ohio against the Company, itscertain past and present directors certainand senior executives, the Company’s private equity stockholders and the underwriters of the Company’s initial public offering (“IPO”) in November 2020 and the Company’s secondary public offering (“SPO”) in March 2021 (the “Michigan Funds Litigation”). OnIn April 17, 2023, the court appointed the Oakland County Employees’ Retirement System, Oakland County Voluntary Employees’ Beneficiary Association, and Wayne County Employees’ Retirement System (the “Michigan Funds”) to serve as lead plaintiff to prosecute claims on behalf of a proposed class of stockholders who acquired shares of the Company in connection with our IPO or SPO or between November 20, 2020 and September 19, 2022 (the “Proposed Class”). The Michigan Funds allege that statements made regarding the safety of the Company’s use of EO and/or the litigationits EO tort lawsuits and other risks of its EO operations violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (when made in the registration statements for the IPO and SPO) and violated Sections 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 (when made in subsequent securities filings and other contexts). On June 1, 2023 the Michigan Funds filed an Amended Complaint seeking damages and other relief on behalf of the Proposed Class. Defendants’ motionDefendants have moved to dismiss the Amended Complaint was filed on August 2, 2023. and that motion remains pending.
In addition, on May 15,2023, July 2023 and July 25, 2023April 2024, the Company received demands pursuant to 8 Del. C. §220 for inspectioninspections of its books and records from individual shareholders purporting to be investigating the Company’s internal operations, disclosure practices and other matters alleged and at issue in the Michigan Funds Litigation (the “220 Demands”). and related to the Company’s March 2024 Secondary Public Offering. The Company is producing documents in response to the 220 Demands.
The Company believes that the allegations and claims byin the Michigan Funds Litigation and in the 220 Demands are without merit and plans to vigorously defend the Michigan Funds Litigation.Litigation.
16.15.Financial Instruments and Financial Risk
Derivative Instruments
We do not use derivatives for trading or speculative purposes and are not a party to leveraged derivatives.
Derivatives Designated in Hedge Relationships
From time to time, the Company utilizes interest rate derivatives designated in hedge relationships to manage interest rate risk associated with our variable rate borrowings. These instruments are measured at fair value with changes in fair value recorded as a component of “Accumulated other comprehensive income (loss)” on our Consolidated Balance Sheets.

In March 2023, we entered into an interest rate swap agreement with a notional amount of $400.0 million. The interest rate swap has a forward start date ofwas effective on August 23, 2023 and expires on August 23, 2025. We have designated the interest rate swap as a cash flow hedge designed to hedge the variability of cash flows attributable to changes in the SOFR benchmark interest rate of our 2023 Term Loan.Loan (or any successor thereto). We receive interest at the one-month Term SOFR rate and pay a fixed interest rate under the terms of the swap agreement.
In May 2022, we entered into two interest rate cap agreements with a combined notional amount of $1,000.0 million for a total option premium of $4.1 million. The interest rate caps have a forward start datebecame effective as of July 31, 2023 and expire on July 31, 2024. We have designated these interest rate caps as cash flow hedges designed to hedge the variability of cash flows attributable to changes in the benchmark interest rate of our Term Loan.Loan (or any successor thereto). Under the current terms of the loan agreement, the benchmark interest rate index transitioned from LIBOR to Term SOFR on June 30, 2023. Accordingly, the interest rate cap agreements hedge the variability of cash flows attributable to changes in SOFR by limiting our cash flow exposure related to Term SOFR under a portion of our variable rate borrowings to 3.5%.

In October 2021, we entered into two interest rate cap agreements with a combined notional amount of $1,000.0 million for a total option premium of $1.8 million. Both interest rate caps were effective on December 31, 2022 and expireexpired on July 31, 2023. These interest rate caps arewere designated as cash flow hedges and are designed to hedge the variability of cash flows attributable
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to changes in LIBOR (or its successor), the benchmark interest rate being hedged, by limiting our cash flow exposure related to the LIBOR base rate under a portion of our variable rate borrowings to 1.0%.
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Derivatives Not Designated in Hedge Relationships
Additionally, from time to time, the Company enters into interest rate derivatives to manage economic risks associated with our variable rate borrowings that are not designated in hedge relationships. These instruments are recorded at fair value on the Consolidated Balance Sheets, with any changes in the value recorded in “Interest expense, net” in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company also routinely enters into foreign currency forward contracts to manage foreign currency exchange rate risk of our intercompany loans in certain of our international subsidiaries.subsidiaries and non-functional currency assets and liabilities. The foreign currency forward contracts expire on a monthly basis.
Embedded Derivatives
We have embedded derivatives in certain of our customer and supply contracts as a result of the currency of the contract being different from the functional currency of the parties involved. Changes in the fair value of the embedded derivatives are recognized in “Other expense (income), net” in the Consolidated Statements of Operations and Comprehensive Income (Loss).
The following table provides a summary of the notional and fair values of our derivative instruments:
June 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
(in U.S. Dollars; notional in millions, fair value in thousands)(in U.S. Dollars; notional in millions, fair value in thousands)Fair ValueFair Value(in U.S. Dollars; notional in millions, fair value in thousands)Fair ValueFair Value
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Notional
Amount
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Derivatives designated as hedging instrumentsDerivatives designated as hedging instruments
Interest rate caps
Interest rate caps
Interest rate capsInterest rate caps$2,000.0 (a)$20,939 $ $2,000.0 $34,764 $— 
Interest rate swapsInterest rate swaps400.0 (b)4,777  — — — 
Derivatives not designated as hedging instrumentsDerivatives not designated as hedging instruments
Foreign currency forward contracts
Foreign currency forward contracts
Foreign currency forward contractsForeign currency forward contracts$157.3 $24 $14 $151.5 $— $272 
Embedded derivativesEmbedded derivatives167.9 (c)1,551 1,613 179.9 2,721 3,508 
TotalTotal$2,325.6 $27,291 $1,627 $2,331.4 $37,485 $3,780 
(a)$1,000.0 million notional amount of interest rate caps designated as hedging instruments have a forward start date beginning on July 31, 2023.
(b)The notional amount of interest rates swaps designated as hedging instruments reflected in the table above has a forward start date beginning on August 23, 2023.
(c)Represents the total notional amounts for certain of the Company’s supply and sales contracts accounted for as embedded derivatives.
Embedded derivativesderivative assets/liabilities and foreign currency forward contracts are included in “Prepaid expenses and other current assets” and “Accrued liabilities”Liabilities” on our Consolidated Balance Sheets depending upon their position at period end. Interest rate swaps and interest rate caps are included in “Other assets,”assets” and “Noncurrent liabilities”, respectively, on the Consolidated Balance Sheets depending upon their position at period end.
The following table summarizes the activities of our derivative instruments for the periods presented, and the line item in which they are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss):
(thousands of U.S. dollars)
Three Months Ended March 31,20242023
Realized gain on interest rate derivatives recorded in interest expense, net(a)
(4,897)(9,648)
Unrealized loss on embedded derivatives recorded in other expense (income), net1,833 227 
Realized loss on foreign currency forward contracts recorded in foreign exchange (gain) loss4,008 449 
Unrealized gain on foreign currency forward contracts recorded in foreign exchange (gain) loss(580)— 
(a)For the three months ended March 31, 2024, amounts represent quarterly settlement of interest rate caps and swaps.
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The following tables summarize the activities of our derivative instruments for the periods presented, and the line item they are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss):
(thousands of U.S. dollars)Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Unrealized gain on interest rate derivatives recorded in interest expense, net$ $(3,100)$ $(9,446)
Realized gain on interest rate derivatives recorded in interest expense, net(a)
(9,400)(1,279)(18,571)(1,279)
Unrealized loss (gain) on embedded derivatives recorded in other expense (income), net(973)2,435 (747)1,417 
Realized loss (gain) on foreign currency forward contracts recorded in foreign exchange (gain) loss(2,393)1,035 (1,944)(495)
Unrealized loss (gain) on foreign currency forward contracts recorded in foreign exchange (gain) loss — (282)— 
(a)    For the three and six months ended June 30, 2023, amounts primarily represent quarterly settlement of interest rate caps.
We expect to reclassify approximately $19.3$8.0 million of pre-tax net gains on derivative instruments from accumulated other comprehensive income (loss) to income during the next 12 months associated with our cash flow hedges. Refer to Note 12,“Other11, “Other Comprehensive Income (Loss)” for unrealized gains on interest rate derivatives, net of applicable tax, recorded in other comprehensive income (loss) and amounts reclassified from accumulated other comprehensive income to interest expense, net of applicable tax, during the three and six months ended June 30, 2023.March 31, 2024.
Credit Risk
Certain of our financial assets, including cash and cash equivalents, are exposed to credit risk.
We are also exposed, in our normal course of business, to credit risk from our customers. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, accounts receivable was net of an allowance for uncollectible accounts of $2.0$3.9 million and $1.9$4.7 million, respectively.
Credit risk on financial instruments arises from the potential for counterparties to default on their contractual obligations to us. We are exposed to credit risk in the event of non-performance, but do not anticipate non-performance by any of the counterparties to our financial instruments. We limit our credit risk by dealing with counterparties that are considered to be of high credit quality. In the event of non-performance by counterparties, the carrying value of our financial instruments represents the maximum amount of loss that would be incurred.
Our credit team evaluates and regularly monitors changes in the credit risk of our customers. We routinely assess the collectability of accounts receivable and maintain an adequate allowance for uncollectible accounts to address potential credit losses. The process includes a review of customer financial information and credit ratings, current market conditions as well as the expected future economic conditions that may impact the collection of trade receivables. We regularly review our customers’ past due amounts through an analysis of aged accounts receivables, specific customer past due aging amounts, and the history of trade receivables written off. Upon concluding that a receivable balance is not collectible, the balance is written off against the allowance for uncollectible accounts.
Fair Value Hierarchy
The fair value of our financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques we would use to determine such fair values are described as follows: Level 1—fair values determined by inputs utilizing quoted prices in active markets for identical assets or liabilities; Level 2—fair values based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable; Level 3—fair values determined by unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.
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The following table discloses the fair value of our financial assets and liabilities:
As of June 30, 2023Fair Value
As of March 31, 2024As of March 31, 2024Fair Value
(thousands of U.S. dollars)(thousands of U.S. dollars)Carrying
Amount
Level 1Level 2Level 3(thousands of U.S. dollars)Carrying
Amount
Level 1Level 2Level 3
Derivatives designated as hedging instruments(a)
Derivatives designated as hedging instruments(a)
Interest rate caps
Interest rate caps
Interest rate capsInterest rate caps$20,939 $ $20,939 $ 
Interest rate swapsInterest rate swaps4,777 — 4,777 — 
Derivatives not designated as hedging instruments(b)
Derivatives not designated as hedging instruments(b)
Foreign currency forward contract assetsForeign currency forward contract assets24  24  
Foreign currency forward contract liabilities14  14  
Foreign currency forward contract assets
Foreign currency forward contract assets
Embedded derivative assets
Embedded derivative assets
Embedded derivative assetsEmbedded derivative assets1,551  1,551  
Embedded derivative liabilitiesEmbedded derivative liabilities1,613  1,613  
Current portion of long-term debt(c)
Current portion of long-term debt(c)
Term loan B, due 2026Term loan B, due 20264,776  4,982  
Other long-term debt(c)
449  449  
Long-Term Debt(d)
Term loan B, due 2026
Term loan B, due 2026
Long-Term Debt(c)
Term loan, due 2026
Term loan, due 2026
Term loan, due 2026Term loan, due 20261,749,176  1,710,207  
Term loan B, due 2026Term loan B, due 2026472,811  493,169  
Finance Lease Obligations (with current portion)(e)
69,888  69,888  
Finance Lease Obligations (with current portion)(d)
As of December 31, 2022Fair Value
As of December 31, 2023As of December 31, 2023Fair Value
(thousands of U.S. dollars)(thousands of U.S. dollars)Carrying
Amount
Level 1Level 2Level 3(thousands of U.S. dollars)Carrying
Amount
Level 1Level 2Level 3
Derivatives designated as hedging instruments(a)
Derivatives designated as hedging instruments(a)
Interest rate capsInterest rate caps$34,764 $— $34,764 $— 
Interest rate caps
Interest rate caps
Interest rate swaps
Derivatives not designated as hedging instruments(b)
Derivatives not designated as hedging instruments(b)
Foreign currency forward contracts272 — 272 — 
Foreign currency forward contracts assets
Foreign currency forward contracts assets
Foreign currency forward contracts assets
Foreign currency forward contracts liabilities
Embedded derivative assetsEmbedded derivative assets2,721 — 2,721 — 
Embedded derivative liabilitiesEmbedded derivative liabilities3,508 — 3,508 — 
Current portion of long-term debt(c)
Current portion of long-term debt(c)
Revolving credit facility196,672 — $196,672 — 
Other long-term debt447 — $447 — 
Term loan B, due 2026
Term loan B, due 2026
Term loan B, due 2026
Long-Term Debt(d)(c)
Long-Term Debt(d)(c)
Term loan, due 2026Term loan, due 20261,747,115 — 1,626,460 — 
Finance Lease Obligations (with current portion)(e)
58,677 — 58,677 — 
Term loan, due 2026
Term loan, due 2026
Term loan B, due 2026
Finance Lease Obligations (with current portion)(d)
(a)Derivatives designated as hedging instruments are measured at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss). Interest rate caps and swaps are valued using pricing models that incorporate observable market inputs, including interest rate and yield curves.
(b)Derivatives that are not designated as hedging instruments are measured at fair value with gains or losses recognized immediately in the Consolidated Statements of Operations and Comprehensive Income (Loss). Embedded derivatives are valued using internally developed models that rely on observable market inputs, including foreign currency forward curves. Foreign currency forward contracts are valued by reference to changes in the forward foreign currency exchange rate over the life of the contract.
(c)Carrying valueamounts of othercurrent portion of long-term debt and revolving credit facility approximates fair value.
(d)Carrying amounts of long-term debt instruments are reported net of discounts and debt issuance costs. The estimated fair valuevalues of these instruments isare based onupon quoted prices for the term loans due in 2026 in inactive markets as provided by an independent fixed income security pricing service. Fair value approximates carrying value for “Other long-term debt.”
(e)(d)Fair value approximates carrying value.
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17.16.Segment Information
We identify our operating segments based on the way we manage, evaluate and internally report our business activities for purposes of allocating resources and assessing performance. We have three reportable segments: Sterigenics, Nordion and Nelson Labs. We have determined our reportable segments based upon an assessment of organizational structure, service types, and internally prepared financial statements. Our chief operating decision makerdecision-maker evaluates performance and allocates resources based on net revenues and segment income after the elimination of intercompany activities. The accounting policies of our reportable segments are the same as those described in Note 1, “Significant Accounting Policies” of the Company’sCompany's annual consolidated financial statements and accompanying notes in our 2022 Form2023 10-K.
Sterigenics
Sterigenics provides outsourced terminal sterilization and irradiation services for the medical device, pharmaceutical, food safety and advanced applications markets using three major technologies: gamma irradiation, EO processing and E-beam irradiation.
Nordion
Nordion is a leading global provider of Co-60 used in the sterilization and irradiation processes for the medical device, pharmaceutical, food safety, and high-performance materials industries, as well as in the treatment of cancer. In addition, Nordion is a leading global provider of gamma irradiation systems.
Nelson Labs
Nelson Labs provides outsourced microbiological and analytical chemistry testing and advisory services for the medical device and pharmaceutical industries.
For the three months ended June 30, 2023, five customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 31.3%, 13.4%, 12.5%, 10.7%, and 10.7% of the total segment’s external net revenues for the three months ended June 30, 2023. For the three months ended June 30, 2022,March 31, 2024, four customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 21.7%18.9%, 15.4%18.8%, 13.2%,16.7% and 15.9%10.7% of the total segment’s external net revenues for the three months ended June 30, 2022.
March 31, 2024. For the sixthree months ended June 30,March 31, 2023, fourtwo customers reported within the Nordion segment individually represented 10% or more of the segment’ssegment's total net revenues. These customers represented 26.3%, 17.5%, 10.7%,54.6% and 10.1% of the total segment’s external net revenues for the six months ended June 30, 2023. For the six months ended June 30, 2022, four customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 18.8%, 12.8%, 15.5%, and 10.6%11.3% of the total segment's external net revenues for the sixthree months ended June 30, 2022.
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Notes to Consolidated Financial Statements
Financial information for each of our segments is presentedrevenues from these customers in the following table:three months ended March 31, 2023 mainly stemmed from the low sales volume pattern during that period.
Three Months Ended June 30,Six Months Ended June 30,
(thousands of U.S. dollars)(thousands of U.S. dollars)2023202220232022(thousands of U.S. dollars)Three Months Ended March 31,
202420242023
Segment revenues(a)
Segment revenues(a)
Sterigenics
Sterigenics
SterigenicsSterigenics$166,590 $157,792 $326,587 $307,254 
NordionNordion31,975 50,478 40,526 84,480 
Nelson LabsNelson Labs56,717 58,369 108,759 111,659 
Total net revenuesTotal net revenues$255,282 $266,639 $475,872 $503,393 
Segment income(b)
Segment income(b)
SterigenicsSterigenics$91,450 $85,098 $174,290 $164,501 
Sterigenics
Sterigenics
NordionNordion17,784 29,982 19,310 48,885 
Nelson LabsNelson Labs19,251 21,055 33,353 38,098 
Total segment incomeTotal segment income$128,485 $136,135 $226,953 $251,484 
(a)Revenues are reported net of intersegment sales. Our Nordion segment recognized $14.7$10.0 million and $15.8$2.9 million in revenues from sales to our Sterigenics segment for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, and $17.6 million and $31.3 million in revenues from sales to our Sterigenics segment for the six months ended June 30, 2023 and 2022, respectively, that is not reflected in net revenues in the table above. Intersegment sales for Sterigenics and Nelson Labs are immaterial for these periods.both periods presented.
(b)Segment income is only provided on a net basis to the chief operating decision makerdecision-maker and is reported net of intersegment profits.
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Corporate operating expenses for executive management, accounting, information technology, legal, human resources, treasury, investor relations, corporate development, tax, purchasing, and marketing not directly incurred by a segment are allocated to the segments based on total net revenue. Corporate operating expenses that are directly incurred by a segment are reflected in each segment’s income.
Capital expenditures by segment for the sixthree months ended June 30,March 31, 2024 and 2023 and 2022 were as follows:
Six Months Ended June 30,
(thousands of U.S. dollars)(thousands of U.S. dollars)20232022(thousands of U.S. dollars)Three Months Ended March 31,
202420242023
SterigenicsSterigenics$73,725 $55,065 
NordionNordion16,283 10,741 
Nelson LabsNelson Labs8,126 5,836 
Total capital expendituresTotal capital expenditures$98,134 $71,642 
Total assets and depreciation and amortization expense by segment are not readily available and are not reported separately to the chief operating decision maker.
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decision-maker.
A reconciliation of segment income to consolidated income before taxes is as follows:
(thousands of U.S. dollars)Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Segment income$128,485 $136,135 $226,953 $251,484 
Less adjustments:
Interest expense, net(a)
25,271 17,144 51,811 33,894 
Depreciation and amortization(b)
39,490 36,939 79,028 72,988 
Share-based compensation(c)
8,409 5,801 15,757 10,339 
Gain on foreign currency and derivatives not designated as hedging instruments, net(d)
(409)(1,430)126 (7,982)
Acquisition and divestiture related charges, net(e)
153 691 745 531 
Business optimization project expenses(f)
3,322 470 5,856 574 
Plant closure expenses(g)
129 478 (766)1,149 
Impairment of investment in unconsolidated affiliate(h)
 9,613  9,613 
Professional services and other expenses relating to EO sterilization facilities(i)
17,080 17,678 33,382 35,737 
Accretion of asset retirement obligation(j)
555 598 1,127 1,118 
COVID-19 expenses(k)
 45  148 
Consolidated income before taxes$34,485 $48,108 $39,887 $93,375 
(thousands of U.S. dollars)Three Months Ended March 31,
20242023
Segment income$111,944 $98,468 
Less adjustments:
Interest expense, net(a)
41,771 28,870 
Depreciation and amortization(b)
40,430 39,538 
Share-based compensation(c)
8,657 7,348 
Loss on foreign currency and derivatives not designated as hedging instruments, net(d)
1,230 535 
Business optimization expenses(e)
54 2,231 
Refinancing and secondary offering costs(f)
1,807 — 
Professional services relating to EO sterilization facilities(g)
6,339 13,972 
Accretion of asset retirement obligation(h)
642 572 
Consolidated income before taxes$11,014 $5,402 
(a)TheInterest expense, net presented in this reconciliation for the three and six months ended June 30,March 31, 2023 exclude $5.5 million and $7.8 million, respectively, ofhas been adjusted to conform to the current year presentation to include interest expense, net on Term Loan B attributable to the loan proceeds that were used to fund the $408.0$408.0 million Illinois EO litigation settlement. The three and six months ended June 30, 2022 exclude $3.1 million and $9.4 million, respectively, of unrealized gains on interest rate derivatives not designated as hedging instruments.
(b)Includes depreciation of Co-60 held at gamma irradiation sites.
(c)Represents share-based compensation expense to employees and non-employee directors.Non-Employee Directors.
(d)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, and (iii) unrealized gains on interest rate caps not designated as hedging instruments.Nordion.
(e)Represents (i) certain direct and incremental costs related to acquisitions and the acquisitionsintegration of RCA and BioScience Labs and certain related integration efforts as a result of thoserecent 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)Represents2018, (iv) professional fees 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 realignmentsaving and other process enhancement projects.
(g)Representsprojects, and (v) 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 sixthree months ended June 30,March 31, 2023 also 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)(f)Represents an impairment chargeThe three months ended March 31, 2024 includes $1.1 million of expenses incurred in connection with the secondary offering of our common stock that closed on our equity method investmentMarch 4, 2024 and write-off of unamortized debt issuance costs in a joint venture. Referconnection with Amendment No. 3 to Note 1, “Basis of Presentation”.the Revolving Credit Facility.
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(i)Table of Contents
Sotera Health Company
Notes to Consolidated Financial Statements
(g)Represents litigation and other professional fees associated with our EO sterilization facilities. This includes $5.5 million and $7.8 million ofAmounts presented for the three months ended March 31, 2023 have been adjusted to exclude interest expense, net for the three and six months ended June 30, 2023, respectively, associated with Term Loan B attributable to the loan proceeds that was issuedwere used to financefund the $408.0$408.0 million cost to settle approximately 880 pending and threatened Illinois EO claims against the Settling Defendants in Illinois under Settlement Agreements entered into on March 28, 2023. See Note 15, “Commitments and Contingencies.”litigation settlement.
(j)(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 (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.
(k)Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 20222023 Form 10-K. This discussion and analysis contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of various factors, including the factors we describe in the section entitled Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, as well as Part I, Item 1A, “Risk Factors” in our 20222023 Form 10-K.
OVERVIEW
We are a leading global provider of mission-critical end-to-end sterilization solutions, lab testing and advisory services for the healthcare industry. We are driven by our mission: Safeguarding Global Health®. We provide end-to-end sterilization as well as microbiological and analytical lab testing and advisory services to help ensure that medical, pharmaceutical and food products are safe for healthcare practitioners, patients and consumers in the United States and around the world. Our services are an essential aspect of our customers’ manufacturing process and supply chains, helping to ensure sterilized medical products reach healthcare practitioners and patients. Most of these services are necessary for our customers to satisfy applicable government requirements.
We serve our customers throughout their product lifecycles, from product design to manufacturing and delivery, helping to ensure the sterility, effectiveness and safety of their products for the end user. We operate across two core businesses: sterilization services and lab services. The combination of Sterigenics, our terminal sterilization business, and Nordion, our Co-60 supply business, makes us the only vertically integrated global gamma sterilization provider in the sterilization industry. For financial reporting purposes, our sterilization services business consists of two reportable segments, Sterigenics and Nordion, and our lab services business consists of one reportable segment, Nelson Labs.
For the three and six months ended June 30, 2023, respectively,March 31, 2024, we recorded net revenues of $255.3 million and $475.9$248.2 million, net income of $23.5 million and $26.4$6.3 million, Adjusted Net Income of $59.3 million and $97.3$35.6 million and Adjusted EBITDA of $128.5 million and $227.0$111.9 million. For the definition of Adjusted Net Income and Adjusted EBITDA and the reconciliation of these non-GAAP measures from net income, please see “Non-GAAP Financial Measures.”
STRATEGIC DEVELOPMENTS AND KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS
The following summarizes strategic developments and key factors that have impacted our operating results for the three and six months ended June 30, 2023March 31, 2024 and may continue to affect our performance and financial condition in future periods.
Business and market conditions. Consolidated revenueNet revenues and netsegment income for each of our three segments increased in the three and six months ended June 30,March 31, 2024 compared to the three months ended March 31, 2023, declined from the same periodswhich was primarily a result of the prior year, mainly driven by expectedan overall improvement in volume at Nordion Co-60 harvest schedule timing combined with unfavorable volume and change in mix at Nelson Labs and Sterigenics. Notwithstanding these headwinds,sustained favorability in pricing at Sterigenics sustained favorable revenue growth forand Nelson Labs. Nordion’s volume increased in the three and six months ended June 30, 2023March 31, 2024 as compared to the same periodsunusually light volume in the prior year, fueled mainly bythree months ended March 31, 2023 due to the benefitstiming of favorable pricing. As previously disclosed, we continue to expect Nordion Co-60 harvest schedules to improve in the second half of the year.schedules.
As discussed in more detail in our 20222023 Form 10-K, a portion of our supply of Co-60 is generated by Russian nuclear
reactors. We continue to monitor the potential for disruption in the supply of Co-60 from Russian nuclear reactors but
we do not expect a materialreactors. There was no impact for the remainder of 2023 onto our supply or revenue.revenue during the three months ended March 31, 2024.
Investment initiatives. We remain focused oncontinue to advance our growth-related investments, including our three active capacity expansion projects within the Sterigenics segment and Co-60 development projects in capacity expansions and facility improvements as well as in ourthe Nordion segment. In addition, Nelson Labs has progressed with expansion efforts to strengthen our Co-60 supply chain. For the six months ended June 30, 2023, we increased capital expenditures by $26.5 million comparedsupport pharma testing services alongside enhancements to the six months ended June 30, 2022.its lab information management system.
Disciplined and strategic M&A activityactivity.. We remain committed to our highly disciplined acquisition strategy and continue to seek suitable acquisition targets.
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Litigation costs. We are currently the subject of tort lawsuits alleging personal injury by purported exposure to EO used, emitted or released by current facilities in Atlanta, Georgia, Santa Teresa, New Mexico, and Los Angeles, California and our former facility in Willowbrook, Illinois and our current facilities in Atlanta, Georgia and Santa Teresa, New Mexico.Illinois. In addition, we are defendants in a lawsuit brought by the State of New Mexico Attorney General alleging that emissions of EO from our Santa Teresa facility constitute a public nuisancenegatively impacted Santa Teresa and materially contributed to increased health risks suffered by residents in the area.surrounding communities. We maintain that these facilities did not pose and do not pose any safety risk to their surrounding communities. We deny the allegations in these lawsuits and are vigorously defending against these claims.
In connection with the ongoing litigation related to our Willowbrook, Illinois, Atlanta, Georgia and Santa Teresa, New Mexico facilities, as described in Note 15, “Commitments and Contingencies”, we recorded costs of $17.1 million and $33.4 million for the three and six months ended June 30, 2023, respectively. On January 9, 2023, Sterigenics U.S., LLC and Sotera Health LLC (the “Settling Defendants”) entered into binding term sheets and on March 28, 2023 the Settling Defendants entered into full agreements to settle 879 pending and threatened EO claims against the Defendant Subsidiaries in the Circuit Court of Cook County, Illinois, and U.S. District Court for the Northern District of Illinois (the “Settlement Agreements”). On May 1, 2023, pursuant to the Settlement Agreements, the Company paid $408.0 million into a settlement escrow fund to settle the claims, subject to the satisfaction or waiver of certain conditions, including but not limited to substantially all of the plaintiffs providing opt-in consents to their individual settlement allocations and dismissing their claims with prejudice.
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On June 22, 2023, the opt-in process was completed for the January 2023 settlements of the EO claims against the Settling Defendants in the Circuit Court of Cook County, Illinois and the Settling Defendants elected to proceed with settlements with the 879 eligible claimants who opted in. On June 30, 2023, all but an immaterial fraction of the settlement funds were released from escrow. The claims of the Settling Claimants against the Settling Defendants were dismissed with prejudice. An immaterial fraction of the settlement funds remains in escrow with respect to three claimants who did not opt in; these funds will revert to Sterigenics U.S., LLC if these claimants do not opt in before December 31, 2023.
The Settlement Agreements provided a pathway to comprehensively resolve the claims pending and threatened against the Company in Illinois and thereby enable the Company to focus its attention on operating the business. The Company denies any liability and maintains that its Willowbrook, Illinois operations did not pose a safety risk to the community in which it operated and believes the evidence ultimately would have compelled the rejection of the plaintiffs’ claims. See Part II. Item 1., “Legal Proceedings” and Note 15,14, “Commitments and Contingencies” to our consolidated financial statements.
For the three months ended March 31, 2024 and 2023, we recorded costs of $6.3 million and $14.0 million, respectively, representing professional fees and other expenses related to litigation associated with our EO sterilization facilities.
With respect to the litigation related to our Atlanta, Georgia facility, in October 2023, Sterigenics, agreed to pay $35.0 million to settle 79 of the Atlanta Cases, including a personal injury case that was scheduled to begin trial in the State Court of Gwinnett County that month, and 78 other cases being pursued by the same Plaintiff’s counsel (previously referred to as the “Atlanta Settlement”). The Atlanta Settlement was completed in January 2024, with the settling plaintiffs agreeing to file the necessary dismissals and, where required, motions for court approval. The Company denies any liability and the Atlanta Settlement explicitly provides that the settlement is not to be construed as an admission of any liability or that emissions from Sterigenics’ Atlanta facility have ever posed any safety hazard to the surrounding communities.
Borrowings, financing costs and financial leverage. On February 23, 2023March 1, 2024, the Company successfully closed on aentered into Amendment No. 3 to the First Lien Credit Agreement. Among other changes, the Amendment provides (i) for new senior secured Term Loan B facilitycommitments under the existing Revolving Credit Facility to replace existing revolving commitments in an aggregate principal amount of $500.0 million. The Company used$83 million, (ii) that certain of the proceeds of this debt to pay down existing borrowings under the Company’slenders providing revolving credit facility and fund the $408.0 million EO litigation settlement in Cook County, Illinois. In addition, the Company plans to use the remaining proceeds to further enhance liquidity and for other general corporate purposes.
On March 21, 2023, the Companycommitments shall also entered into an Incremental Facility Amendment to the First Lien Credit Agreement (“Revolving Credit Facility Amendment”), which provides for an increase in the commitments under the existing revolving credit facility in an aggregate principal amount of $76.3 million. The Revolving Credit Facility Amendment also providesprovide additional commitments for the issuance of letters of credit under the Revolving Credit Facility in an aggregate principal amount of $165.1 million. After giving effect to$37.5 million, and (iii) for the extension of the maturity date of the Revolving Credit Facility to the earlier of (a) March 1, 2029, and (b) the date that is 91 days prior to the maturity date of the Company’s existing term loans. The Amendment does not give effect to any other material changes to the aggregateterms and conditions of the Credit Agreement, including with respect to the amount of the revolving commitments under the Revolving Credit Facility iswhich remains $423.8 million.
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CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended June 30, 2023March 31, 2024, as compared to Three Months Ended June 30, 2022March 31, 2023
The following table sets forth the components of our results of operations for the three months ended June 30, 2023March 31, 2024 and 2022.2023:
(thousands of U.S. dollars)(thousands of U.S. dollars)20232022$ Change% Change(thousands of U.S. dollars)20242023$ Change% Change
Total net revenues
Total net revenues
Total net revenuesTotal net revenues$255,282 $266,639 $(11,357)(4.3)%$248,176 $$220,590 $$27,586 12.5 12.5 %
Total cost of revenuesTotal cost of revenues115,694 116,243 (549)(0.5)%Total cost of revenues121,061 109,087 109,087 11,974 11,974 11.0 11.0 %
Total operating expensesTotal operating expenses76,384 78,901 (2,517)(3.2)%Total operating expenses73,941 78,137 78,137 (4,196)(4,196)(5.4)(5.4)%
Operating incomeOperating income63,204 71,495 (8,291)(11.6)%Operating income53,174 33,366 33,366 19,808 19,808 59.4 59.4 %
Net incomeNet income23,513 30,418 (6,905)(22.7)%Net income6,323 2,842 2,842 3,481 3,481 122.5 122.5 %
Adjusted Net Income(a)
Adjusted Net Income(a)
59,295 75,825 (16,530)(21.8)%
Adjusted Net Income(a)
35,630 35,857 35,857 (227)(227)(0.6)(0.6)%
Adjusted EBITDA(a)
Adjusted EBITDA(a)
128,485 136,135 (7,650)(5.6)%
Adjusted EBITDA(a)
111,944 98,468 98,468 13,476 13,476 13.7 13.7 %
(a)Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. For more information regarding our calculation of Adjusted Net Income and Adjusted EBITDA, including information about their limitations as tools for analysis and a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Net Income and Adjusted EBITDA, please see the reconciliation included below in “Non-GAAP Financial Measures.”
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Total Net Revenues
The following table compares our revenues by type for the three months ended June 30, 2023March 31, 2024 to the three months ended June 30, 2022.March 31, 2023:
(thousands of U.S. dollars)(thousands of U.S. dollars)
Net revenues for the three months ended June 30,20232022$ Change% Change
Net revenues for the three months ended March 31,
Net revenues for the three months ended March 31,
Net revenues for the three months ended March 31,20242023$ Change% Change
Service
Service
ServiceService$226,050 $221,529 $4,521 2.0 %$226,481 $$214,510 $$11,971 5.6 5.6 %
ProductProduct29,232 45,110 (15,878)(35.2)%Product21,695 6,080 6,080 15,615 15,615 256.8 256.8 %
Total net revenuesTotal net revenues$255,282 $266,639 $(11,357)(4.3)%Total net revenues$248,176 $$220,590 $$27,586 12.5 12.5 %
Net revenues were $255.3$248.2 million in the three months ended June 30, 2023, a decreaseMarch 31, 2024, an increase of $11.4$27.6 million, or 4.3%12.5%, as compared with the three months ended June 30, 2022.March 31, 2023. Excluding the impact of foreign currency exchange rates, net revenues in the three months ended June 30, 2023 decreasedMarch 31, 2024 increased approximately 4.1%11.8% compared with the three months ended June 30, 2022.March 31, 2023.
Service revenues
Service revenues increased $4.5$12.0 million, or 2.0%5.6%, to $226.1$226.5 million infor the three months ended June 30, 2023March 31, 2024, as compared to $221.5$214.5 million infor the three months ended June 30, 2022.March 31, 2023. The growth in net service revenuerevenues was driven by favorable pricing of $10.6$7.9 million and $2.1$1.6 million in the Sterigenics and Nelson Labs segments, respectively, coupled withfavorable improvements in volume and mix of $3.9 million in the Nelson Labs segment and a $1.0$1.4 million favorable impact from changes in foreign currency exchange rates across all segments. Partially offsetting these growth factors was a decline in service revenuean unfavorable impact from volume and change in mix of $4.1 million, $2.7 million, and $2.4 million in the Nelson Labs, Sterigenics and Nordion segments, respectively.segment.
Product revenues
Product revenues decreased $15.9increased $15.6 million, or 35.2%256.8%, to $29.2$21.7 million infor the three months ended June 30, 2023March 31, 2024, as compared to $45.1$6.1 million infor the three months ended June 30, 2022.March 31, 2023. The decreaseincrease in product revenues was mainly driven almost entirely by expectedimprovements in volume decline and change in mix of $17.2 million dueat Nordion, which was largely attributable to a more favorable Co-60 harvest schedule timing in the Nordion segment and an unfavorable impact from changes in foreign currency exchange rates of $1.6 million. Partially offsetting this decline was a favorable pricing impact of $2.9 million.three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Total Cost of Revenues
The following table compares our cost of revenues by type for the three months ended June 30, 2023March 31, 2024 to the three months ended June 30, 2022.March 31, 2023:
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(thousands of U.S. dollars)(thousands of U.S. dollars)
Cost of revenues for the three months ended June 30,20232022$ Change% Change
Cost of revenues for the three months ended March 31,
Cost of revenues for the three months ended March 31,
Cost of revenues for the three months ended March 31,20242023$ Change% Change
Service
Service
ServiceService$103,900 $98,407 $5,493 5.6 %$110,852 $$104,210 $$6,642 6.4 6.4 %
ProductProduct11,794 17,836 (6,042)(33.9)%Product10,209 4,877 4,877 5,332 5,332 109.3 109.3 %
Total cost of revenuesTotal cost of revenues$115,694 $116,243 $(549)(0.5)%Total cost of revenues$121,061 $$109,087 $$11,974 11.0 11.0 %
Total cost of revenues accounted for approximately 45.3%48.8% and 43.6%49.5% of our consolidated net revenues for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively.
Cost of service revenues
Cost of service revenues increased $5.5$6.6 million, or 5.6%6.4%, for the three months ended June 30, 2023March 31, 2024, as compared to the three months ended June 30, 2022.March 31, 2023. The growth in cost of service revenues was partiallyprimarily driven by $3.6higher employee compensation costs of $3.7 million coupled with an increase of $1.3 million in repairs and maintenance costs, $1.0 million of depreciation related to capital assets recently placed in service, and higher energy costs. In addition, cost of service revenue increased by $2.1a $0.7 million as a result of higher labor costs, largely stemmingunfavorable impact from both the addition of new personnel and higher compensation costs.changes in foreign currency exchange rates.
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Cost of product revenues
Cost of product revenues decreased $6.0increased $5.3 million, or 33.9%109.3%, for the three months ended June 30, 2023March 31, 2024, as compared to the three months ended June 30, 2022.March 31, 2023. The decreaseincrease was primarily a result of lowerhigher volumes of Co-60 shipments, which resulted in increases in direct material and material transportation costs of $5.5 million due to expected Co-60 harvest schedule timing in the Nordion segment coupled with a $0.7 million impact due to changes in foreign currency exchange rates.$4.9 million.
Operating Expenses
The following table compares our operating expenses for the three months ended June 30, 2023March 31, 2024 to the three months ended June 30, 2022:March 31, 2023:
(thousands of U.S. dollars)(thousands of U.S. dollars)
Operating expenses for the three months ended June 30,20232022$ Change% Change
Operating expenses for the three months ended March 31,
Operating expenses for the three months ended March 31,
Operating expenses for the three months ended March 31,20242023$ Change% Change
Selling, general and administrative expensesSelling, general and administrative expenses$60,287 $63,132 $(2,845)(4.5)%
Selling, general and administrative expenses
Selling, general and administrative expenses$58,209 $61,910 $(3,701)(6.0)%
Amortization of intangible assetsAmortization of intangible assets16,097 15,769 328 2.1 %Amortization of intangible assets15,732 16,227 16,227 (495)(495)(3.1)(3.1)%
Total operating expensesTotal operating expenses$76,384 $78,901 $(2,517)(3.2)%
Total operating expenses
Total operating expenses$73,941 $78,137 $(4,196)(5.4)%
Operating expenses accounted for approximately 29.9%29.8% and 29.6%35.4% of our consolidated net revenues for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively.
Selling, general and administrative expenses (“SG&A”)&A
SG&A decreased $2.8$3.7 million, or 4.5%6.0%, for the three months ended June 30, 2023March 31, 2024, as compared to the three months ended June 30, 2022.March 31, 2023. The decrease was driven primarily by a $6.0$7.6 million decreasedecline in litigation and other professional services expense associated with EO sterilization facilities. Partially offsetting this decrease wasfacilities, partially offset by a $2.6$2.8 million increase in selling, general and administrative compensation-related costs and a $1.3 million increase in share-based compensation expense attributable to awards granted under the 2020 Omnibus Incentive Plan and $1.0 million in incremental SG&A personnel in support of various business enhancement and compliance efforts.expense.
  Amortization of intangible assets
Amortization of intangible assets increased $0.3 million to $16.1decreased $0.5 million, or 2.1%,3.1% for the three months ended June 30, 2023March 31, 2024, as compared to the three months ended June 30, 2022March 31, 2023 due mainly to changes in foreign currency exchange rates.
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Interest Expense, Net
Interest expense, net increased $16.7$12.9 million, or 118.8%44.7%, for the three months ended June 30, 2023March 31, 2024, as compared to the three months ended June 30, 2022. The varianceMarch 31, 2023. Approximately $8.4 million of this change was driven by an increaseattributable to a combination of higher variable benchmark interest rates and changes in principal balances outstanding. A decline in the variablebenefit from interest rate driving increased interest expensederivatives of $16.7$4.3 million on borrowings previously outstanding inalso contributed to the same period of the prior year coupled with interest expense of $11.1 million on incremental borrowings. Partially offsetting the increase was a $6.8 million increase in interest income on cash and cash equivalents on deposit at financial institutions and a $5.0 million net favorable change due to interest rate derivative activity.increase. The weighted average interest rate on our outstanding debt was 8.20%8.39% and 3.81%7.85% at June 30,March 31, 2024 and 2023, and 2022, respectively.
Impairment of Investment in Unconsolidated Affiliate
During the three months ended June 30, 2022, we recorded an impairment charge of $9.6 million related to a joint venture investment in Auralux Enterprises Ltd. (“Auralux”) which was acquired as part of the 2020 Iotron acquisition. Due to a shift in business strategy, the joint venture will not proceed, and our joint venture partner will continue to rely on our other existing operating facilities. Based on these facts and circumstances, we concluded that the investment was impaired as of June 30, 2022.
Foreign Exchange (Gain) Loss (Gain)
Foreign exchange lossgain was $0.5$0.6 million for the three months ended June 30, 2023 asMarch 31, 2024 compared to a gainloss of $0.8$0.3 million infor the three months ended June 30, 2022.March 31, 2023. The change in foreign exchange loss (gain) in our Consolidated Statements of Operations and Comprehensive Income (Loss) mainly relates to short-term gains and losses (offset by short-term gains) on salestransactions denominated in currencies other than the functional currency of our operating entities. As described in Note 16,15, “Financial Instruments and Financial Risk”, we enter into monthly U.S. dollar-denominated foreign currency forward contracts to manage foreign currency exchange rate risk related to our international subsidiaries.
Other Expense (Income), Net
Other income,expense, net was $2.5$1.0 million for the three months ended June 30, 2023March 31, 2024 compared to other expenseincome of $0.5$1.3 million for the three months ended June 30, 2022.March 31, 2023. The majorityvariance was primarily a result of the variance stemmed from an increase$1.6 million of changes in the fair value of embedded derivatives in Nordion’s embedded derivative assetspurchase contracts as well as $0.7 million of refinancing costs incurred in connection with Amendment No. 3 to the three months ended June 30, 2023, resulting in an increase in other income of $3.4 million from the three months ended June 30, 2023.Revolving Credit Facility.
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Provision for Income Taxes
Provision for income tax decreased $6.7taxes increased $2.1 million to a net provision of $11.0$4.7 million for the three months ended June 30, 2023March 31, 2024, as compared to $17.7$2.6 million infor the three months ended June 30, 2022.March 31, 2023. The change was primarily attributable to lowerhigher pre-tax income for the three months ended June 30, 2023March 31, 2024 compared to the three months ended June 30, 2022, partially offset byMarch 31, 2023 combined with an increase in the valuation allowance whichagainst our excess interest expense carryforward balance and the foreign rate differential. The increase in the valuation allowance was a direct result of the $408.0 million Illinois EO litigation settlement as describedsettlements in Note 15, “CommitmentsIllinois and Contingencies”. This expense will eliminate a current deductionGeorgia. Both payments eliminated the deductibility of 2023 U.S. interest in the current year and the year ended December 31, 2023, which resulted in an increase to the valuation allowance against our excess interest expense carryforward balance.
Provision for income taxes for the three months ended June 30, 2023March 31, 2024 differed from the statutory rate primarily due to an increase in the valuation allowance against our excess interest expense carryforward balance and the impact of the foreign rate differential, the valuation allowance attributable to the limitation on the deductibility of interest expense, and global intangible low-taxpartially offset by a benefit for state income (“GILTI”).taxes. Provision for income taxes for the three months ended June 30, 2022March 31, 2023 differed from the statutory rate primarily due to a netan increase in the valuation allowance attributable to the limitation on the deductibility ofagainst our excess interest expense carryforward balance, the impact of the foreign rate differential and GILTI.non-deductible compensation.
Net Income, Adjusted Net Income and Adjusted EBITDA
Net income for the three months ended June 30, 2023March 31, 2024 was $23.5$6.3 million, as compared to net income of $30.4$2.8 million for the three months ended June 30, 2022March 31, 2023. Adjusted Net Income was $35.6 million for the three months ended March 31, 2024, as compared to $35.9 million for the three months ended March 31, 2023, due to the factors described above. Adjusted Net IncomeEBITDA was $59.3$111.9 million for the three months ended June 30, 2023,March 31, 2024, as compared to $75.8$98.5 million for the three months ended June 30, 2022, and Adjusted EBITDA was $128.5 million forMarch 31, 2023, due to the three months ended June 30, 2023, as compared to $136.1 million for the three months ended June 30, 2022.factors described above. Please see “Non-GAAP Financial Measures” below for a reconciliation of Adjusted Net Income and Adjusted EBITDA to their most directly comparable financial measure calculated and presented in accordance with GAAP.
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Six Months Ended June 30, 2023 as compared to Six Months Ended June 30, 2022
The following table sets forth the components of our results of operations for the six months ended June 30, 2023 and 2022.
(thousands of U.S. dollars)20232022$ Change% Change
Total net revenues$475,872 $503,393 $(27,521)(5.5)%
Total cost of revenues224,781 224,122 659 0.3 %
Total operating expenses154,521 154,284 237 0.2 %
Operating income96,570 124,987 (28,417)(22.7)%
Net income26,355 61,059 (34,704)(56.8)%
Adjusted Net Income(a)
97,340 136,079 (38,739)(28.5)%
Adjusted EBITDA(a)
226,953 251,484 (24,531)(9.8)%
(a)Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. For more information regarding our calculation of Adjusted Net Income and Adjusted EBITDA, including information about their limitations as tools for analysis and a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Net Income and Adjusted EBITDA, please see the reconciliation included below in “Non-GAAP Financial Measures.”
Total Net Revenues
The following table compares our revenues by type for the six months ended June 30, 2023 to the six months ended June 30, 2022.
(thousands of U.S. dollars)
Net revenues for the six months ended June 30,20232022$ Change% Change
Service$440,560 $427,747 $12,813 3.0 %
Product35,312 75,646 (40,334)(53.3)%
Total net revenues$475,872 $503,393 $(27,521)(5.5)%
Net revenues were $475.9 million in the six months ended June 30, 2023, a decrease of $27.5 million, or 5.5%, as compared with the six months ended June 30, 2022. Excluding the impact of foreign currency exchange rates, net revenues in the six months ended June 30, 2023 decreased approximately 4.6% compared with the six months ended June 30, 2022.
Service revenues
Service revenues increased $12.8 million, or 3.0%, to $440.6 million in the six months ended June 30, 2023 as compared to $427.7 million in the six months ended June 30, 2022. The growth in net service revenues was driven by favorable pricing of $19.8 million and $4.2 million in the Sterigenics and Nelson Labs segments, respectively. Partially offsetting the favorable price increases was a decline in service revenue volume and change in mix of $6.9 million and $3.3 million in the Nelson Labs and Nordion segments, respectively, coupled with a $1.2 million unfavorable impact from changes in foreign currency exchange rates across all segments.
Product revenues
Product revenues decreased $40.3 million, or 53.3%, to $35.3 million in the six months ended June 30, 2023 as compared to $75.6 million in the six months ended June 30, 2022. The decrease in product revenues was mainly driven by expected volume decline and change in mix of $40.3 million due to Co-60 harvest schedule timing in the Nordion segment and an unfavorable impact from changes in foreign currency exchange rates of $2.9 million. Partially offsetting this decline was a favorable pricing impact of $2.9 million.
Total Cost of Revenues
The following table compares our cost of revenues by type for the six months ended June 30, 2023 to the six months ended June 30, 2022.
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(thousands of U.S. dollars)
Cost of revenues for the six months ended June 30,20232022$ Change% Change
Service$208,110 $192,983 $15,127 7.8 %
Product16,671 31,139 (14,468)(46.5)%
Total cost of revenues$224,781 $224,122 $659 0.3 %
Total cost of revenues accounted for approximately 47.2% and 44.5% of our consolidated net revenues for the six months ended June 30, 2023 and 2022, respectively.
Cost of service revenues
Cost of service revenues increased $15.1 million, or 7.8%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. The growth in cost of service revenues was partially driven by $8.7 million of higher energy costs and depreciation related to capital assets recently placed in service. In addition, cost of service revenue increased by $6.2 million and $1.0 million, respectively, as a result of higher employee compensation and professional service costs. Partially offsetting this increase was a $1.0 million impact from changes in foreign currency exchange rates.
Cost of product revenues
Cost of product revenues decreased $14.5 million, or 46.5%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. The decrease was primarily a result of lower direct material and material transportation costs of $12.5 million due to expected Co-60 harvest schedule timing in the Nordion segment coupled with a $1.6 million impact due to changes in foreign currency exchanges rates.
Operating Expenses
The following table compares our operating expenses for the six months ended June 30, 2023 to the six months ended June 30, 2022:
(thousands of U.S. dollars)
Operating expenses for the six months ended June 30,20232022$ Change% Change
Selling, general and administrative expenses$122,197 $122,674 $(477)(0.4)%
Amortization of intangible assets32,324 31,610 714 2.3 %
Total operating expenses$154,521 $154,284 $237 0.2 %
Operating expenses accounted for approximately 32.5% and 30.6% of our consolidated net revenues for the six months ended June 30, 2023 and 2022, respectively.
SG&A
SG&A decreased $0.5 million, or 0.4%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. The decrease was driven primarily by a $10.0 million decrease in litigation and other professional services expense associated with EO sterilization facilities. This decrease was partially offset by the following factors:
$5.4 million increase in share-based compensation expense attributable to awards granted under the 2020 Omnibus Incentive Plan;
$2.5 million in professional fees and other costs associated with business optimization and cost savings projects relating to the integration of recent acquisitions; and
$1.7 million of incremental SG&A personnel costs in support of various business enhancement and compliance efforts.
Amortization of intangible assets
Amortization of intangible assets increased $0.7 million to $32.3 million, or 2.3%, for the six months ended June 30, 2023 as compared to the three months ended June 30, 2022 due mainly to changes in foreign currency exchange rates.
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Interest Expense, Net
Interest expense, net increased $35.2 million, or 143.8%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. The variance was driven by an increase in the variable interest rate driving increased interest expense of $33.5 million on borrowings previously outstanding in the same period of the prior year coupled with interest expense of $17.7 million on incremental borrowings. Partially offsetting the increase was a $9.4 million increase in interest income on cash and cash equivalents on deposit at financial institutions and a $7.9 million net favorable change due to interest rate derivative activity. The weighted average interest rate on our outstanding debt was 8.20% and 3.81% at June 30, 2023 and 2022, respectively.
Impairment of Investment in Unconsolidated Affiliate
During the six months ended June 30, 2022, we recorded an impairment charge of $9.6 million related to a joint venture investment in Auralux, which was acquired as part of the 2020 Iotron acquisition. Due to a shift in business strategy, the joint venture will not proceed, and our joint venture partner will continue to rely on our other existing operating facilities. Based on these facts and circumstances, we concluded that the investment was impaired as of June 30, 2022.
Foreign Exchange Loss
Foreign exchange loss was $0.8 million for the six months ended June 30, 2023 as compared to an immaterial loss in the six months ended June 30, 2022. The change in foreign exchange loss in our Consolidated Statements of Operations and Comprehensive Income (Loss) mainly relates to short-term losses (offset by short-term gains) on sales denominated in currencies other than the functional currency of our operating entities. As described in Note 16, “Financial Instruments and Financial Risk”, we enter into monthly U.S. dollar-denominated foreign currency forward contracts to manage foreign currency exchange rate risk related to our international subsidiaries.
Other Expense (Income), Net
Other income, net was $3.7 million for the six months ended June 30, 2023 compared to $2.5 million for the six months ended June 30, 2022. The majority of the variance stemmed from an increase in the fair value of Nordion’s embedded derivatives in the six months ended June 30, 2023, resulting in an increase in other income of $2.2 million compared to the same the period in the prior year.
Provision for Income Taxes
Provision for income taxes decreased $18.8 million to a net provision of $13.5 million for the six months ended June 30, 2023 as compared to $32.3 million in the six months ended June 30, 2022. The change was primarily attributable to lower pre-tax income for the six months ended June 30, 2023 compared to the six months ended June 30, 2022, partially offset by an increase in the the foreign rate differential and valuation allowance against our excess interest expense carryforward balance. The increase in the valuation allowance was a direct result of the $408.0 million Illinois EO litigation settlement, as described in Note 15, “Commitments and Contingencies”. This expense will eliminate a current deduction of 2023 U.S. interest and increases the valuation allowance against our excess interest expense carryforward balance.
Provision for income taxes for the six months ended June 30, 2023 differed from the statutory rate due to the impact of the foreign rate differential, the valuation allowance attributable to the limitation on the deductibility of interest expense and global GILTI, partially offset by a benefit for state income taxes. Provision for income taxes for the six months ended June 30, 2022 differed from the statutory rate primarily due to a net increase in the foreign differential, and GILTI.
Net Income, Adjusted Net Income and Adjusted EBITDA
Net income for the six months ended June 30, 2023 was $26.4 million, as compared to net income of $61.1 million for the six months ended June 30, 2022 due to the factors described above. Adjusted Net Income was $97.3 million for the six months ended June 30, 2023, as compared to $136.1 million for the six months ended June 30, 2022, and Adjusted EBITDA was $227.0 million for the six months ended June 30, 2023, as compared to $251.5 million for the six months ended June 30, 2022. Please see “Non-GAAP Financial Measures” below for a reconciliation of Adjusted Net Income and Adjusted EBITDA to their most directly comparable financial measure calculated and presented in accordance with GAAP.
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SEGMENT RESULTS OF OPERATIONS
We have three reportable segments: Sterigenics, Nordion and Nelson Labs. Our chief operating decision maker evaluates performance and allocates resources within our business based on Segment Income, which excludes certain items which are included in income before tax as determined in our Consolidated Statements of Operations and Comprehensive Income (Loss). The accounting policies for our reportable segments are the same as those for the consolidated Company.
Our Segments
Sterigenics
Our Sterigenics business provides outsourced terminal sterilization and irradiation services for the medical device, pharmaceutical, food safety and advanced applications markets using three major technologies: gamma irradiation, EO processing and E-beam irradiation.
Nordion
Nordion is a leading global provider of Co-60 used in the sterilization and irradiation processes for the medical device, pharmaceutical, food safety, and high-performance materials industries, as well as in the treatment of cancer. In addition, Nordion is a leading global provider of gamma irradiation systems.
As a result of the time required to meet regulatory and logistics requirements for delivery of radioactive products, combined with accommodations made to our customers to minimize disruptions to their operations during the installation of Co-60, Nordion sales patterns can often vary significantly from one quarter to the next. However, timing-related impacts on our sales performance tend to be resolved within several quarters, resulting in more consistent performance over longer periods of time. In addition, sales of gamma irradiation systems occur infrequently and tend to be for larger amounts.
Results for our Nordion segment are also impacted by Co-60 mix, harvest schedules, as well as customer, product and service mix.
Nelson Labs
Our Nelson Labs business provides outsourced microbiological and analytical chemistry testing and advisory services for the medical device and pharmaceutical industries.
For more information regarding our reportable segments please refer to Note 17, “Segment Information” to our consolidated financial statements.
Segment Results for the Three Months Ended June 30, 2023 and 2022
The following tables compare segment net revenue and segment income for the three months ended June 30, 2023 to the three months ended June 30, 2022:
 Three Months Ended June 30, 
(thousands of U.S. dollars)20232022$ Change% Change
Net Revenues
Sterigenics$166,590$157,792$8,798 5.6 %
Nordion31,97550,478(18,503)(36.7 %)
Nelson Labs56,71758,369(1,652)(2.8)%
Segment Income
Sterigenics$91,450$85,098$6,352 7.5 %
Nordion17,78429,982(12,198)(40.7)%
Nelson Labs19,25121,055(1,804)(8.6)%
Segment Income margin
Sterigenics54.9 %53.9 %
Nordion55.6 %59.4 %
Nelson Labs33.9 %36.1 %
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Net Revenues by Segment
Sterigenics net revenues were $166.6 million for the three months ended June 30, 2023, an increase of $8.8 million, or 5.6%, as compared to the three months ended June 30, 2022. The increase reflects favorable impacts from pricing of 6.7% as well as favorable changes in foreign currency exchange rates. The increase in segment revenue was partially offset by an unfavorable impact from volume and change in mix compared to the same period in the prior year.
Nordion net revenues were $32.0 million for the three months ended June 30, 2023, a decrease of $18.5 million, or 36.7%, as compared to the three months ended June 30, 2022. The decrease was driven by an expected volume decline and change in mix of 38.8%, due mainly to Co-60 harvest schedule timing, and an unfavorable impact of 3.6% from changes in foreign currency exchange rates. Partially offsetting this decrease was a favorable impact from pricing of 5.7%.
Nelson Labs net revenues were $56.7 million for the three months ended June 30, 2023, a decrease of $1.7 million, or 2.8%, as compared to the three months ended June 30, 2022. The decrease was attributable to volume decline and change in mix of 6.9%. Partially offsetting this decline was a favorable impact from pricing and foreign currency exchange rates of 3.6% and 0.5%, respectively.
Segment Income
Sterigenics segment income was $91.5 million for the three months ended June 30, 2023, an increase of $6.4 million, or 7.5%, as compared to the three months ended June 30, 2022. The increase in segment income and segment income margin was primarily a result of favorable customer pricing, partially offset by unfavorable volume and change in mix, as well as inflation.
Nordion segment income was $17.8 million for the three months ended June 30, 2023, a decrease of $12.2 million, or 40.7%, as compared to the three months ended June 30, 2022. The decrease in segment income and segment income margin was driven by expected volume decline and change in mix stemming from Co-60 harvest schedule timing, partially offset by favorable pricing.
Nelson Labs segment income was $19.3 million for the three months ended June 30, 2023, a decrease of $1.8 million, or 8.6%, as compared to the three months ended June 30, 2022. The decrease in segment income and segment income margin was primarily a result of volume decline and change in mix as well as inflation, partially offset by favorable pricing, as referenced above.
Segment Results for the Six Months Ended June 30, 2023 and 2022
The following tables compare segment net revenue and segment income for the six months ended June 30, 2023 to the six months ended June 30, 2022:
 Six Months Ended June 30, 
(thousands of U.S. dollars)20232022$ Change% Change
Net Revenues
Sterigenics$326,587$307,254$19,333 6.3 %
Nordion40,52684,480(43,954)(52.0 %)
Nelson Labs108,759111,659(2,900)(2.6)%
Segment Income
Sterigenics$174,290$164,501$9,789 6.0 %
Nordion19,31048,885(29,575)(60.5)%
Nelson Labs33,35338,098(4,745)(12.5)%
Segment Income margin
Sterigenics53.4 %53.5 %
Nordion47.6 %57.9 %
Nelson Labs30.7 %34.1 %
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Net Revenues by Segment
Sterigenics net revenues were $326.6 million for the six months ended June 30, 2023, an increase of $19.3 million, or 6.3%, as compared to the six months ended June 30, 2022. The increase was primarily attributable to the favorable impacts from pricing of 6.4%, partially offset by unfavorable impacts from changes in foreign currency exchange rates of 0.2%.
Nordion net revenues were $40.5 million for the six months ended June 30, 2023, a decrease of $44.0 million, or 52.0%, as compared to the six months ended June 30, 2022. The decrease was driven by an expected volume decline and change in mix of 51.6% due to Co-60 harvest schedule timing, and an unfavorable impact of 3.8% from changes in foreign exchange rates. Partially offsetting this decrease was a favorable impact from pricing of 3.4%.
Nelson Labs net revenues were $108.8 million for the six months ended June 30, 2023, a decrease of $2.9 million, or 2.6%, as compared to the six months ended June 30, 2022. The decrease was attributable to volume decline and change in mix of 6.2% coupled with a 0.2% impact from changes in foreign currency exchanges rates. Partially offsetting this decline was a favorable impact from pricing of 3.8%.
Segment Income
Sterigenics segment income was $174.3 million for the six months ended June 30, 2023, an increase of $9.8 million, or 6.0%, as compared to the six months ended June 30, 2022. The increase in segment income was fueled mainly by favorable customer pricing, as referenced above, partially offset by unfavorable volume and change in mix, as well as inflation.
Nordion segment income was $19.3 million for the six months ended June 30, 2023, a decrease of $29.6 million, or 60.5%, as compared to the six months ended June 30, 2022. The decrease in segment income and segment income margin was driven by expected volume decline and change in mix stemming from Co-60 harvest schedule timing, as referenced above.
Nelson Labs segment income was $33.4 million for the six months ended June 30, 2023, a decrease of $4.7 million, or 12.5%, as compared to the six months ended June 30, 2022. The decrease in segment income and segment income margin was primarily a result of volume decline and change in mix as well as inflation, partially offset by favorable pricing, as referenced above.
NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements presented in accordance with GAAP, we consider Adjusted Net Income and Adjusted EBITDA, financial measures that are not based on any standardized methodology prescribed by GAAP.
We define Adjusted Net Income as net income before amortization and certain other adjustments that we do not consider in our evaluation of our ongoing operating performance from period to period as discussed further below. 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.
We use Adjusted Net Income and Adjusted EBITDA, non-GAAP financial measures, as the principal measures of our operating performance. Management believes Adjusted Net Income and Adjusted EBITDA 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 Adjusted Net Income and Adjusted EBITDA 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 Adjusted Net Income and Adjusted EBITDA in theirits financial analysis and operational decision-making, and Adjusted EBITDA serves as the basis for the metric we utilize to determine attainment of our primary annual incentive program. Adjusted Net Income and Adjusted EBITDA may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.
Adjusted Net Income and Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted Net Income
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and Adjusted EBITDA rather than net income, the nearest GAAP equivalent. For example, Adjusted Net Income and Adjusted EBITDA primarily exclude:
certain recurring non-cash charges such as depreciation of fixed assets, although these assets may have to be replaced in the future, as well as amortization of acquired intangible assets and asset retirement obligations;
costs of acquiring and integrating businesses, which will continue to be a part of our growth strategy;
33


non-cash gains or losses from fluctuations in foreign currency exchange rates and the mark-to-fair value of derivatives not designated as hedging instruments, which includes the embedded derivatives relating to certain customer and supply contracts at Nordion;
impairment charges on long-lived assets, intangible assets and investments accounted for under the equity method;
refinancing costs and loss on extinguishment of debt incurred in connection with refinancing or early extinguishment of long-term debt;
expenses and charges related to the litigation, settlement agreements, and other activities associated with our EO sterilization facilities, including those inrelated to Willowbrook, Illinois, Atlanta, Georgia, and Santa Teresa, New Mexico and Los Angeles, California, even though that litigation remains ongoing;
in the case of Adjusted EBITDA, interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness; and
share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense and an important part of our compensation strategy.
In evaluating Adjusted Net Income and Adjusted EBITDA, you should be aware that in the future, we will incur expenses similar to the adjustments in the table below. Our presentations of Adjusted Net Income and Adjusted EBITDA should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider Adjusted Net Income and Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP measures.
The following table presents a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP to Adjusted Net Income and Adjusted EBITDA, for each of the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
(thousands of U.S. dollars)2023202220232022
Net income$23,513 $30,418 $26,355 $61,059 
Amortization of intangibles20,502 21,195 41,109 41,377 
Share-based compensation(a)
8,409 5,801 15,757 10,339 
Loss (gain) on foreign currency and derivatives not designated as hedging instruments, net(b)
(409)(1,430)126 (7,982)
Acquisition and divestiture related charges, net(c)
153 691 745 531 
Business optimization project expenses(d)
3,322 470 5,856 574 
Plant closure expenses(e)
129 478 (766)1,149 
Impairment of investment in unconsolidated affiliate(f)
 9,613  9,613 
Professional services and other expenses relating to EO sterilization facilities(g)
17,080 17,678 33,382 35,737 
Accretion of asset retirement obligations(h)
555 598 1,127 1,118 
COVID-19 expenses(i)
 45  148 
Income tax benefit associated with pre-tax adjustments(j)
(13,959)(9,732)(26,351)(17,584)
Adjusted Net Income59,295 75,825 97,340 136,079 
Interest expense, net(k)
25,271 17,144 51,811 33,894 
Depreciation(l)
18,988 15,744 37,919 31,611 
Income tax provision applicable to Adjusted Net Income(m)
24,931 27,422 39,883 49,900 
Adjusted EBITDA(n)
$128,485 $136,135 $226,953 $251,484 
Three Months Ended March 31,
(thousands of U.S. dollars)20242023
Net income$6,323 $2,842 
Amortization of intangible assets20,124 20,607 
Share-based compensation(a)
8,657 7,348 
Loss on foreign currency and derivatives not designated as hedging instruments, net(b)
1,230 535 
Business optimization expenses(c)
54 2,231 
Refinancing and secondary offering costs(d)
1,807 — 
Professional services relating to EO sterilization facilities(e)
6,339 13,972 
Accretion of asset retirement obligations(f)
642 572 
Income tax benefit associated with pre-tax adjustments(g)
(9,546)(12,250)
Adjusted Net Income35,630 35,857 
Interest expense, net(h)
41,771 28,870 
Depreciation(i)
20,306 18,931 
Income tax provision applicable to Adjusted Net Income(j)
14,237 14,810 
Adjusted EBITDA(k)
$111,944 $98,468 
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(a)    Represents share-based compensation expense to employees and non-employee directors.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 customer and supply contracts at Nordion, and (iii) unrealized gains on interest rate caps not designated as hedging instruments.Nordion.
(c)     Represents (i) certain direct and incremental costs related to acquisitions and the acquisitionsintegration of RCA and BioScience Labs and certain related integration efforts as a result of thoserecent 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)    Represents2018, (iv) professional fees 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 realignmentsaving and other process enhancement projects.
(e)    Representsprojects, and (v) 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 sixthree months ended June 30,March 31, 2023 also 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. Refer to Note 1, “Basis of Presentation”.
(g)    (d)    The three months ended March 31, 2024 includes $1.1 million of expenses incurred in connection with the secondary offering of our common stock that closed on March 4, 2024 and write-off of unamortized debt issuance costs in connection with Amendment No. 3 to the Revolving Credit Facility.
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(e)    Represents litigation and other professional fees associated with our EO sterilization facilities. This includes $5.5 million and $7.8 million ofAmounts presented for the three months ended March 31, 2023 have been adjusted to exclude interest expense, net for the three and six months ended June 30, 2023, respectively, associated with Term Loan B attributable to the loan proceeds that was issuedwere used to financefund the $408.0$408.0 million cost to settle approximately 880 pending and threatened Illinois EO claims against the Settling Defendants in Illinois under Settlement Agreements entered into on March 28, 2023. See Note 15, “Commitments and Contingencies.”litigation settlement.
(h)    (f)    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.
(i)    Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures.
(j)(g)    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.
(k)(h)    TheInterest expense, net presented in this reconciliation for the three and six months ended June 30,March 31, 2023 exclude $5.5 million and $7.8 million, respectively, ofhas been adjusted to conform to the current year presentation to include interest expense, net on Term Loan B attributable to the loan proceeds that were used to fund the $408.0$408.0 million Illinois EO litigation settlement. The three and six months ended June 30, 2022 exclude $3.1 million and $9.4 million, respectively, of unrealized gains on interest rate derivatives not designated as hedging instruments.
(l)    (i)    Includes depreciation of Co-60 held at gamma irradiation sites.
(m)(j)    Represents the difference between the 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 (j)(g).
(n)    $24.4(k)    $23.8 million and $20.9$22.9 million of the adjustments for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, and $47.2 million and $40.7 million of the adjustments for the six months ended June 30, 2023 and 2022, respectively, are included in cost of revenues, primarily consisting of amortization of intangible assets, depreciation, and accretion of asset retirement obligations.
SEGMENT RESULTS OF OPERATIONS
We have three reportable segments: Sterigenics, Nordion and Nelson Labs. Our chief operating decision-maker evaluates performance and allocates resources within our business based on segment income, which excludes certain items which are included in income before tax as determined in our Consolidated Statements of Operations and Comprehensive Income (Loss). The accounting policies for our reportable segments are the same as those for the consolidated Company.
Our Segments
Sterigenics
Sterigenics provides outsourced terminal sterilization and irradiation services for the medical device, pharmaceutical, food safety and advanced applications markets using three major technologies: gamma irradiation, EO processing and E-beam irradiation.
Nordion
Nordion is a leading global provider of Co-60 used in the sterilization and irradiation processes for the medical device, pharmaceutical, food safety, and high-performance materials industries, as well as in the treatment of cancer. In addition, Nordion is a leading global provider of gamma irradiation systems.
As a result of the time required to meet regulatory and logistics requirements for delivery of radioactive products, combined with accommodations made to our customers to minimize disruptions to their operations during the installation of Co-60, Nordion sales patterns can often vary significantly from one quarter to the next. However, timing-related impacts on our sales performance tend to be resolved within several quarters, resulting in more consistent performance over longer periods of time. In addition, sales of gamma irradiation systems occur infrequently and tend to be for larger amounts.
Results for our Nordion segment are also impacted by Co-60 mix, harvest schedules, as well as customer, product and service mix.
Nelson Labs
Nelson Labs provides outsourced microbiological and analytical chemistry testing and advisory services for the medical device and pharmaceutical industries.
For more information regarding our reportable segments, please refer to Note 16, “Segment Information” to our consolidated financial statements.
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Segment Results for the Three Months Ended March 31, 2024 and 2023
The following tables compare segment net revenue and segment income for the three months ended March 31, 2024 to the three months ended March 31, 2023:
 Three Months Ended March 31, 
(thousands of U.S. dollars)20242023$ Change% Change
Net Revenues
Sterigenics$166,497$159,997$6,500 4.1 %
Nordion24,0078,55115,456 180.8 %
Nelson Labs57,67252,0425,630 10.8 %
Segment Income
Sterigenics$85,818$82,840$2,978 3.6 %
Nordion10,7851,5269,259 606.7 %
Nelson Labs15,34114,1021,239 8.8 %
Segment Income margin
Sterigenics51.5 %51.8 %
Nordion44.9 %17.8 %
Nelson Labs26.6 %27.1 %
Net Revenues by Segment
Sterigenics net revenues were $166.5 million for the three months ended March 31, 2024, an increase of $6.5 million, or 4.1%, as compared to the three months ended March 31, 2023. The increase reflects a benefit from pricing and changes in foreign currency exchange rates of 4.9% and 0.8%, respectively, partially offset by an unfavorable impact from volume and mix of 1.6%.
Nordion net revenues were $24.0 million for the three months ended March 31, 2024, an increase of $15.5 million, or 180.8%, as compared to the three months ended March 31, 2023. Revenue growth was driven almost entirely by volume and mix, which was largely attributable to a more favorable Co-60 harvest schedule timing for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Nelson Labs net revenues were $57.7 million for the three months ended March 31, 2024, an increase of $5.6 million, or 10.8%, as compared to the three months ended March 31, 2023. The increase was primarily driven by volume and mix of 7.4% and a favorable pricing impact of 3.1%.
Segment Income
Sterigenics segment income was $85.8 million for the three months ended March 31, 2024, an increase of $3.0 million, or 3.6%, as compared to the three months ended March 31, 2023. Segment income increased primarily due to the benefit of pricing, partially offset by the impacts of volume/mix and inflation.
Nordion segment income was $10.8 million for the three months ended March 31, 2024, an increase of $9.3 million, or 606.7%, as compared to the three months ended March 31, 2023. The increase in segment income and segment income margin was driven almost entirely by improvements in volume and mix, mainly stemming from favorable Co-60 harvest schedule timing, as referenced above.
Nelson Labs segment income was $15.3 million for the three months ended March 31, 2024, an increase of $1.2 million, or 8.8%, as compared to the three months ended March 31, 2023. The increase in segment income was primarily a result of volume and mix improvements as well as favorable pricing.
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LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash
The primary sources of liquidity for our business are cash flows from operations and borrowings under our credit facilities. As of June 30, 2023,March 31, 2024, we had $270.5$261.1 million of unrestricted cash and cash equivalents. This is a decrease of $125.8$35.3 million from the balance at December 31, 2022.2023. The decrease in cash and cash equivalents was mainly attributable to the release of approximately $408.0$35.0 million to settle the EO claims against the Settling Defendants in Cook County, Illinois and a $200.0 million paydownpayment of the outstanding balance on the Revolving Credit Facility. Partially offsetting this decrease was $500.0 millionAtlanta settlement in proceeds from the issuance of Term Loan B on February 23, 2023.January 2024. Our foreign subsidiaries held cash of approximately $152.8$249.6 million at June 30,
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2023March 31, 2024 and $158.3$224.1 million at December 31, 2022, to meet their liquidity needs.2023. No material restrictions exist to accessing cash held by our foreign subsidiaries notwithstanding any potential tax consequences.
OnAs described in more detail below, on March 1, 2024, the Company and SHH entered into Amendment No. 3 to the Revolving Credit Facility. The Amendment did not materially change to the terms and conditions of the Credit Agreement, including with respect to the amount of commitments under the Revolving Credit Facility, which remains $423.8 million.
As also described in more detail below, on February 23, 2023, we entered into the First Lien2023 Credit Agreement, (the “2023 Credit Agreement”), which provides for, among other things, a new Term Loan B facility in an aggregate principal amount of $500.0 million and bears interest, at the Company’s option, at a variable rate per annum equal to either (x) the Term SOFR Rate (as defined in the 2023 Credit Agreement) plus an applicable margin of 3.75% or (y) an alternative base rate (“ABR”) plus an applicable margin of 2.75%. The 2023 Credit Agreement is secured on a first priority basis on substantially all of our assets and is guaranteed by certain of our subsidiaries. It is prepayable without premium or penalty at any time six months after the closing date. The principal balance shall be paid at 1% of the aggregate principal amount ($5.0 million) per year, with the balance due at the end of 2026.million. The Company used the proceeds of this debt to fund a previously announced $408.0 million EO litigation settlement in Cook County, Illinois on May 1, 2023 and pay down existing borrowings under the Company’s revolving credit facility.Revolving Credit Facility. In addition, the Company plans to useused the remaining proceeds to further enhance liquidity and for other general corporate purposes.

Uses of Cash
We expect that cash on hand, operating cash flows and amounts available under our credit facilities will provide sufficient working capital to operate our business, meet foreseeable liquidity requirements including(inclusive of debt service on our long-term debt,debt), make expected capital expenditures including investments in fixed assets to build and/or expand existing facilities, and meet litigation costs that we expect to continue to incur for at least the next twelve months. Our primary long-term liquidity requirements beyond the next 12 months will be to service our debt, make capital expenditures, and fund suitable business acquisitions. As of June 30, 2023,March 31, 2024, there were no outstanding borrowings on the Revolving Credit Facility. We expect any excess cash provided by operations will be allocated to fund capital expenditures, potential acquisitions, or for other general corporate purposes. Our ability to meet future working capital, capital expenditures and debt service requirements will depend on our future financial performance, which will be affected by a range of macroeconomic, competitive and business factors, including interest rate changes and changes in our industry, many of which are outside of our control. As of June 30, 2023,March 31, 2024, our interest rate caps and swapderivatives limit our cash flow exposure of our variable rate borrowings under the Term Loans. Refer to Note 16,15, “Financial Instruments and Financial Risk”, “Derivative Instruments under the heading “Derivative Instruments” for additional information regarding theabout changes in interest rate caps used to manage economic risks associated with our variable rate borrowings.risk.

Capital Expenditures
Our capital expenditure program is a component of our long-term strategy. This program includes, among other things, investments in new and existing facilities, business expansion projects, Co-60 used by Sterigenics at its gamma irradiation facilities, cobalt development projects and information technology enhancements. During the sixthree months ended June 30, 2023,March 31, 2024, our capital expenditures amounted to $98.1$34.9 million, compared to $71.6$45.0 million for the sixthree months ended June 30, 2022.March 31, 2023.
Cash Flow Information
(thousands of U.S. dollars)Six Months Ended June 30,
20232022
Net Cash Provided by (Used in):
Operating activities$(302,704)$108,256 
Investing activities(98,102)(71,192)
Financing activities273,206 (1,083)
Effect of foreign currency exchange rate changes on cash and cash equivalents1,796 (2,287)
Net increase (decrease) in cash and cash equivalents, including restricted cash$(125,804)$33,694 
Three Months Ended March 31, 2024 compared to the Three Months Ended March 31, 2023
(thousands of U.S. dollars)20242023
Net Cash Provided by (Used in):
Operating activities$9,699 $33,871 
Investing activities(34,853)(44,968)
Financing activities(11,941)273,916 
Effect of foreign currency exchange rate changes on cash and cash equivalents(1,739)1,067 
Net (decrease) increase in cash and cash equivalents, including restricted cash, during the period$(38,834)$263,886 
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Operating activities
Cash flows fromprovided by operating activities decreased $411.0$24.2 million to net cash usedprovided of $302.7$9.7 million infor the sixthree months ended June 30, 2023March 31, 2024 compared to $108.3$33.9 million provided by operating activities for the sixthree months ended June 30, 2022.March 31, 2023. The decrease in cash flows from operating activities in the sixthree months ended June 30, 2023March 31, 2024 compared to the sixthree months ended June 30, 2022March 31, 2023 was driven primarily due toby the release$35.0 million payment of the Atlanta settlement, fundspartially offset by changes in working capital of approximately $408.0 million on June 30, 2023 in connection with the settlements of the EO claims in Cook County, Illinois.
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$12.1 million.
Investing activities
Cash used byin investing activities increased $26.9decreased $10.1 million to net cash used of $98.1 million in the six months ended June 30, 2023 compared to $71.2$34.9 million for the sixthree months ended June 30,March 31, 2024 compared to $45.0 million for the three months ended March 31, 2023. The variance was primarily driven by an increasea decrease in capital expenditures of $26.5$10.1 million in the sixthree months ended June 30, 2023March 31, 2024 compared to the sixthree months ended June 30, 2022.March 31, 2023.
Financing activities
Cash used in financing activities was $11.9 million for the three months ended March 31, 2024 compared to cash provided by financing activities increased $274.3 million to net cash provided of $273.2$273.9 million for the sixthree months ended June 30, 2023 compared to $1.1 million of cash used for financing activities for the six months ended June 30, 2022.March 31, 2023. The difference was mainly attributable to $500.0 million in proceeds from the issuance of Term Loan B on February 23, 2023 partially offset byand the $200.0 million paydown of the outstanding balance on the revolving credit facility andRevolving Credit Facility in February 2023. Additionally, the payment of $24.7Company paid $24.5 million of debt issuance costs incurredduring the three months ended March 31, 2023 in connection with the issuance of Term Loan B andcompared to $1.3 million of issuance costs paid for Amendment No. 3 to the revolving credit facility amendment duringRevolving Credit Facility in the sixthree months ended June 30, 2023,March 31, 2024, as described in “Debt Facilities” below. Financing activities forIn addition, the Company paid $6.7 million in the three months ended June 30, 2022 were insignificant.March 31, 2024 to acquire certain facilities through the settlement of a finance lease.
Debt Facilities
Senior Secured Credit Facilities
On December 13, 2019, Sotera Health Holdings, LLC (“SHH”),SHH, our wholly ownedwholly-owned subsidiary, entered into senior secured first lien credit facilities (the “Senior Secured Credit Facilities”), consisting of both a prepayable senior secured first lien term loan (the “Term Loan”) and a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) pursuant to a first lien credit agreement (the “Credit Agreement”). The Revolving Credit Facility and Term Loan maturematures on June 13, 2026 and December 13, 2026, respectively. After giving effect to the Revolving Credit Facility Amendment (defined below), the2026. The total borrowing capacity under the Revolving Credit Facility is $423.8 million. The Senior Secured Credit Facilities also provide SHH the right at any time and under certain conditions to request incremental term loans or incremental revolving credit commitments based on a formula defined in the Senior Secured Credit Facilities. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, total borrowings under the Term Loan were $1,763.1 million. The weighted average interest rate on borrowings under the Term Loan for the three months ended June 30,March 31, 2024 and March 31, 2023 was 8.26% and June 30, 2022 was 7.89%7.44%, respectively.
On March 1, 2024, the Company and 3.53%SHH entered into Amendment No. 3 (“Amendment No. 3”) to the Revolving Credit Facility. Among other changes, the Amendment provides (i) for new commitments under the existing Revolving Credit Facility to replace existing revolving commitments in an aggregate principal amount of $83.0 million, respectively, and 7.66% and 3.39%(ii) that certain of the lenders providing revolving credit commitments shall also provide additional commitments for the six months ended June 30, 2023issuance of letters of credit under the Revolving Credit Facility in an aggregate principal amount of $37.5 million and June 30, 2022, respectively.(iii) for the extension of the maturity date of the Revolving Credit Facility to the earlier of (a) March 1, 2029, and (b) the date that is 91 days prior to the maturity date of the Company’s existing term loans.
Amendment No. 3 does not give effect to any other material changes to the terms and conditions of the Credit Agreement, including with respect to the amount of commitments under the Revolving Credit Facility, which remains $423.8 million, the representations and warranties, events of default, affirmative or negative covenants.

On February 23, 2023, we entered into the First Lien Credit Agreement (the “2023 Credit Agreement”), which provides for, among other things, a new Term Loan B facility (the “2023 Term Loan”) in an aggregate principal amount of $500.0 million and bears interest, at the Company’s option, at a variable rate per annum equal to either (x) the Term SOFRSecured Overnight Financing Rate (“Term SOFR”) (as defined in the 2023 Credit Agreement) plus an applicable margin of 3.75% or (y) an alternative base rate (“ABR”) plus an applicable margin of 2.75%. The 2023 Credit Agreement is secured on a first priority basis onby substantially all of our assets and is guaranteed by certain of our subsidiaries. It is prepayable without premium or penalty at any time six months after the closing date. The principal balance shall be paid at 1% of the aggregate principal amount ($5.0 million) per year, with the balance due at the end of 2026. The Company used the proceeds of this debtthe 2023 Term Loan to fund a previously announced $408.0 million EO litigation settlement in Cook County, Illinois and pay down the $200.0 million of existing borrowings under the Revolving Credit Facility concurrent with the funding of this loanthe 2023 Term Loan on
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February 23, 2023. In addition, theThe Company plans to useutilized the remaining proceeds to further enhance liquidity and for general corporate purposes. The weighted average interest rate on borrowings under the 2023 Term Loan B for the three months ended June 30,March 31, 2024 and the three months ended March 31, 2023 was 9.09% and 8.82%.
, respectively.
On March 21, 2023, the Company entered into an Incremental Facility Amendment to the First Lien Credit Agreement (“Revolving Credit Facility Amendment,Amendment”), which provides for an increase in the commitments under the existing Revolving Credit Facility in an aggregate principal amount of $76.3 million. In addition, certain of the lenders providing revolving credit commitments have provided additional commitments for the issuance of the letters of credit under the Revolving Credit Facility in an aggregate principal amount of $165.1 million. The Revolving Credit Facility Amendment also provides for the replacement of the LIBOR-based reference interest rate option for revolving loans with a reference rate option based upon the TermRevolving Loans from London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“Term SOFR”) or Daily Simple SOFR (“Daily SOFR”) plus an applicable credit spread adjustment of 0.1%0.10% (subject to a minimum floor of 0.0%0%). After giving effect to the Revolving Credit Facility Amendment, the aggregate amount of the Lenders'lenders' revolving commitments is $423.8 million and the aggregate amount of letter of credit commitments is $361.3 million. Letter of credit commitments are part of and not in addition to the aggregate revolving commitments. The maturity date of the Revolving Credit Facility remains June 13, 2026. As of June 30, 2023March 31, 2024 there were no borrowings outstanding onunder the Revolving Credit Facility. The Company borrowed $200.0 million on the Revolving Credit Facility during the fourth quarter of 2022, which was repaid in the first quarter of 2023, as noted above.
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The Senior Secured Credit Facilities and 2023 Credit Agreement contain additional covenants that, among other things, restrict, subject to certain exceptions, our ability and the ability of our restricted subsidiaries to engage in certain activities, such as incur indebtedness or permit to exist any lien on any property or asset now owned or hereafter acquired, as specified in the Senior Secured Credit Facilities and 2023 Credit Agreement. The Senior Secured Credit Facilities and 2023 Credit Agreement also contain certain customary affirmative covenants and events of default, including upon a change of control. An event of default under the Senior Secured Credit Facilities and 2023 Credit Agreement would occur if the Company or certain of its subsidiaries received one or more enforceable judgments for payment in an aggregate amount in excess of $100.0 million which judgment orand the judgments arewere not stayed or remainremained undischarged for a period of 60sixty consecutive days or if, in order to enforce such a judgment,judgments, a judgment creditor attached or leviedwere to attach liens upon assets that are material to the business and operations taken as a whole, of the Company and certain of its subsidiaries.subsidiaries as a whole. As of June 30, 2023,March 31, 2024, we were in compliance with all of the Senior Secured Credit Facilities and 2023 Credit Agreement covenants.

All of SHH’s obligations under the Senior Secured Credit Facilities and 2023 Credit Agreement are unconditionally guaranteed by the Company and each existing and subsequently acquired or organized direct or indirect wholly-owned domestic restricted subsidiary of the Company, with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in material adverse tax consequences. All obligations under the Senior Secured Credit Facilities and 2023 Credit Agreement, and the guarantees of such obligations, are secured by substantially all assets of the borrower and guarantors, subject to permitted liens and other exceptions and exclusions, as outlined in the Senior Secured Credit Facilities and 2023 Credit Agreement.

Outstanding letters of credit are collateralized by encumbrances against the Revolving Credit Facility and the collateral pledged thereunder, or by cash placed on deposit with the issuing bank. As of June 30, 2023,March 31, 2024, the Company had $51.7$23.7 million of letters of credit issued against the Revolving Credit Facility, resulting in total availability under the Revolving Credit Facility of $372.1$400.1 million.
Term Loan Interest Rate Risk Management
The Company utilizes interest rate derivatives to reduce the variability of cash flows in the interest payments associated with our variable rate debt due to changes in LIBOR (up to June 22, 2023) and SOFR. For additional information on the derivative instruments described above, refer to Note 16, “Financial Instruments and Financial Risk”, “Derivatives Instruments.”
LIBOR Transition
Publication of all U.S. LIBOR tenors ceased after June 30, 2023. To align with the market phaseout of LIBOR, SHH entered into an amendment to the Senior Secured Credit Facilities to replaces the LIBOR-based reference interest rate option under the Term Loan with a reference interest rate option based on Term SOFR plus an applicable credit spread adjustment of 0.11448% (for one-month interest periods), 0.26161% (for three-month interest periods) and 0.42826% (for six-month interest periods) (in all cases, subject to a minimum floor of 0.50%).
In accordance with ASC 848 Reference Rate Reform, we have elected to apply certain optional expedients for contract modifications and hedging relationships for derivative instruments impacted by the benchmark interest rate transition. The optional expedients remove the requirement to remeasure contract modifications or dedesignate hedging relationships impacted by reference rate reform.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make judgments, estimates and assumptions at a specific point in time and in certain circumstances that affect amounts reported in the accompanying consolidated financial statements. In preparing these consolidated financial statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. The application of accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.
A comprehensive discussion of the Company’s critical accounting policies and management estimates made in connection with the preparation of the financial statements is included in Item 7 of 2022our 2023 Form 10-K. There have been no significant changes in critical accounting policies, management estimates or accounting policies since the year ended December 31, 2022.2023.
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NEW ACCOUNTING PRONOUNCEMENTS
For a description of recent accounting pronouncements applicable to our business, see Note 2, “Recent Accounting Standards” to our consolidated financial statements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risks are described within “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our 20222023 Form 10-K. These market risks have not materially changed for the three and six months ended June 30, 2023.March 31, 2024.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (“CEO”("CEO") and Chief Financial Officer (“CFO”("CFO"), has evaluated the effectiveness of the Company’s “disclosure controls and procedures,” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Based upon their evaluation, the CEO and CFO concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control
During the three and six months ended June 30, 2023,March 31, 2024, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be subject to various legal proceedings arising in the ordinary course of our business, including claims relating to personal injury, property damage, workers’ compensation, employee safety, corporate governance and our disclosures as a Nasdaq-listed, publicly-traded company. In addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which we operate. At this time, and except as is noted herein, we are unable to predict the outcome of, and cannot reasonably estimate the impact of, any pending litigation matters, matters concerning allegations of non-compliance with laws or regulations and matters concerning other allegations of other improprieties, or the incidence of any such matters in the future. Information regarding our material legal proceedings is included below.
Legal Proceedings Described in Note 1514 “Commitments and Contingencies” of Our Consolidated Financial Statements
Note 15,14, “Commitments and Contingencies” to our consolidated financial statements for the three and six months ended June 30, 2023March 31, 2024 contained in this Quarterly Report on Form 10-Q includes information on legal proceedings that constitute material contingencies for financial reporting purposes that could have a material effect on our financial condition or results of operations. This item should be read in conjunction with Note 1514 “Commitments and Contingencies” “Commitments and Contingencies” for information regarding the following legal proceedings, which information is incorporated into this item by reference:

Ethylene Oxide Tort Litigation – Illinois, Georgia, California and New Mexico;
Insurance Coverage for Environmental Liabilities; and
Sotera Health Company Securities Litigation and Related Matters.
Legal Proceedings That Are Not Described in Note 1514 “Commitments and Contingencies” to Our Consolidated Financial Statements
In addition to the matters that are identified in Note 1514 “Commitments and Contingencies” to our consolidated financial statements for the three and six months ended June 30, 2023March 31, 2024 contained in this Quarterly Report on Form 10-Q, and incorporated into this item by reference, the following mattermatters also constitutes aconstitute material pending legal proceeding,proceedings, other than ordinary course litigation incidental to our business, to which we are or any of our subsidiaries is a party.
Zoetermeer, Holland Criminal Proceedings SEC regulations require disclosure of environmental proceedings that involve a government authority and Criminal Financial Investigation
In 2010,potential monetary sanctions that the Dutch Public Prosecution Service started criminal proceedings against our subsidiary DEROSS Holding B.V. (“DEROSS”),Company reasonably believes will exceed a specified threshold. Effective January 1, 2024, except for the previously disclosed Notices of Violation issued to Sterigenics’ facilities in relation to alleged environmental permit violations for EO emissions inQueensbury, New York, Los Angeles, California and Ontario, California, the period from 2004 to 2009 at its Zoetermeer processing facility. We agreed to defend and indemnify the two individuals overseeing environmental compliance during the time periodCompany uses a threshold of the alleged claims by the Public Prosecutor. In November 2010, the Public Prosecution Service also started a criminal financial investigation against DEROSS$1 million to determine whether it obtained illegal advantages by committing the alleged criminal offenses noted above.
In February 2018, DEROSS and the two individuals received favorable judgments from the trial court, which did not holddisclosure of any of them responsible for the alleged criminal offenses. In March 2018, the Public Prosecutor filed an appeal against the favorable judgments. In May 2023, the Public Prosecutor agreed to a resolution of thesuch proceedings against DEROSS and the two individuals. Pursuant to this agreed resolution, the Public Prosecutor has withdrawn the appeals against the 2018 judgments in the cases of the two individuals. In addition, the Public Prosecutor has agreed to terminate the proceedings against DEROSS on the condition that DEROSS fulfills its obligations under the agreed resolution, including a contribution of €990,000 to a charity. The resolution of proceedings against DEROSS is further conditioned on approval by the Dutch courts.
An escrow was established in 2011 to satisfy indemnity claims for losses related to this matter. The balance of special escrow funds as of June 30, 2023, was approximately US$1.8 million and the cash collateral held by ABN Amro to provide security for the claims against us was approximately €2.4 million (US$2.6 million) as of June 30, 2023. At this time, there can be no assurance that the agreed resolution of this matter will be completed. If resolution is unsuccessful, we expect that the appeal of this matter could take several years to resolve; however,required because we believe matters under this threshold are not material to the indemnification receivable continues to be recoverable and plan to ensure escrow funds remain in place to cover the agreed resolution described above or outcomes of an appeal.
While we have received letters in past years from a small number of individuals claiming to live or work in the vicinity of the Zoetermeer facility, no civil claims have been filed against DEROSS or us. It is possible that these or other individuals living in
50


the vicinity of the Zoetermeer facility may file civil claims at some time in the future. We have not provided for a contingency reserve in connection with any civil claims as we are unable to determine the probability of an unfavorable outcome and no reasonable estimate of a loss or range of losses, if any, can be made.

Company.
Notice of Violation forat Queensbury, New York Ethylene Oxide Emissions from OurSterilization Facility in Queensbury, New York

In late May 2023, Sterigenics’ Queensbury, NYNew York facility experienced a power outage that resulted in a failure to restart the facility’s scrubber system which is part(part of the facility’s emission control systems.systems). The disruption of the facility’s scrubber lasted for approximately 48 hours. Upon discovering the disruption, the facility restarted the scrubber to control emissions within the system and then ceased operations. Operating without the scrubber resulted in nine intermittent releases of ethylene oxideEO over a period of 48 hours from the 78-foot stack at the facility.

Sterigenics promptly notified the New York State Department of Environmental Conservation (“DEC”) and the US Environmental Protection Agency (“US EPA”)EPA about the failure of the scrubber system and resulting releases of ethylene oxide.EO. Sterigenics implemented remedial measures to prevent a recurrence in the event of future power outages and, with the DEC’s approval, resumed operations at the Queensbury facility 12 days after ceasing operations. In May 2023, Sterigenics received a Notice of Violation (“NOV”) from the DEC. In September 2023, the DEC offered to settle the NOV for an immaterial amount plus proposed requirements to implement additional emissions monitoring and back-up power capabilities at the facility. Settlement negotiations are ongoing.
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Notices of Violation at Vernon and Ontario, California Ethylene Oxide Sterilization Facilities
In 2022, the South Coast Air Quality Management District (“SCAQMD”) in Southern California initiated an investigation into EO sterilization facilities located in the SCAQMD region, including Sterigenics’ facilities in Vernon and Ontario, California. In connection with this investigation, SCAQMD issued NOVs to the Vernon and Ontario facilities alleging violations of SCAQMD operational, maintenance, permitting and reporting requirements and that levels of ambient EO detected by SCAQMD during 2022 caused a public nuisance for off-site workers around the facilities in violation of general prohibitions on May 30, 2023 and expectsemissions. Sterigenics disputes the allegations. Sterigenics has offered to be fined insettle the NOVs for an amount to be determined by the DEC.immaterial amount. Settlement negotiations are ongoing.
Item 1A. Risk Factors.
The risk factor titled “We are subject to extensive regulatory requirements and routine regulatory audits in our operations.operations …” included in Part I, Item 1A, “Risk Factors” of our 2022Annual Report on Form 10-K for the year ended December 31, 2022, as amended by our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 is hereby updated by deletingadding at the final paragraph thereof and substitutingend of that risk factor the paragraphparagraphs immediately below in its place.below. Other than such substitution,this addition, the text of the risk factorfactors is unchanged.

In April 2023,On March 14, 2024, the US EPA proposed stricter EO regulations based on the 2016 IRIS Assessment, including (1) a proposed interim decision under FIFRA that sets forth measures designedannounced final NESHAP rules to mitigate EO exposure, in particular for workers exposed to EO in occupational settings, and (2) proposed amendments to the NESHAP governing commercialgovern EO sterilization facilities like ours that would require thesein the United States. The final regulation, which was published in the Federal Register on April 5, 2024, requires EO sterilization facilities to implement additional air pollution control technologies, practices and procedures designed to further reduce EO emissions. For facilities like ours, the final NESHAP regulation imposes new requirements such as higher efficiencies for EO emission controls, implementation of permanent total enclosure capture technology, and use of continuous emissions frommonitoring systems (or, CEMS). Our operations are required to comply with the final NESHAP EO facilities. Thesesterilizer regulation by April 2023 proposals contain a number6, 2026 and to demonstrate compliance within 180 days after that date. The US EPA has not yet issued an ID in the FIFRA re-registration process. The issuance of proposedan ID remains expected by the third quarter of 2024, although US EPA could issue the ID sooner.
We believe that our investments in emission control enhancements at our EO facilities have positioned us to be able to comply with the updated NESHAP requirements that are inconsistent with existing industry practices and set forth proposed implementation timelines that would be difficult to meet at existing facilities for somewithin the timeframes specified by the final rule, but the requirements of the proposed requirements. The public comment period on these proposals closed in late June 2023,final rule represent significant changes from historical requirements and are challenging for existing EO sterilization facilities like ours, and therefore we cannot provide certainty that we will be able to comply with thousandsthe requirements of comments received by the US EPA, which may lead to clarifications and revisions in the final US EPA regulations. Although we have been implementing enhancementsrule at our EO facilities within the time required. The FIFRA ID for EO also will apply to our EO sterilization facilities in the United States, and certain requirements proposed for the ID in 2023 would require practices that we expect will facilitate our ability to meet many of the proposed requirements, certain facets of the proposed requirements areremain untested or not widely adopted at existing EO sterilization facilities.facilities and could be inconsistent with meeting the requirements of the final NESHAP rule. Compliance with the proposals in the form proposed in April 2023 willfinal NESHAP and ID may ultimately require additional facility modifications, as well as added capital expenditures and operational costs and some requirements (if adopted as proposed) could be unachievable at our EO facilities and at existing EO facilities throughoutbeyond what the industry. The US EPA has stated it plans to adopt final requirements by the first half of 2024 and its April 2023 proposals contemplate that existing facilities will be required to comply with many of the requirements as soon as 18 months following adoption.Company is presently anticipating.
Item 5. Other Information.

Rule 10b5-1 Trading Plans

During the three months ended June 30, 2023,March 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as those terms arethat term is defined in Regulation S-K, Item 408).
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Item 6. Exhibits.
The exhibits listed in the following Exhibit Index are filed, furnished, or incorporated by reference as part of this Quarterly Report on Form 10-Q.
Incorporated by Reference
Incorporated by Reference
Exhibit NoExhibit NoDescription of ExhibitsFormFile No.ExhibitFiling DateFurnished/Filed
Herewith
Exhibit NoExhibit NoDescription of ExhibitsFormFile No.ExhibitFiling DateFurnished/Filed
Herewith
31.1
31.1
31.131.1**
31.231.2*31.2*
32.132.1**32.1**
10.110.18-K001-3972910.12023-06-22
10.210.2*
10.3*
10.2
10.2
101.INS
101.INS
101.INS101.INSInline XBRL Instance Document - The XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*Inline XBRL Instance Document - The XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*
101.SCH101.SCHInline XBRL Taxonomy Extension Schema Document*101.SCHInline XBRL Taxonomy Extension Schema Document*
101.CAL101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document*101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB101.LABInline XBRL Taxonomy Label Linkbase Document*101.LABInline XBRL Taxonomy Label Linkbase Document*
101.PRE101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document*101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document*
104104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*
*    Filed Herewith
**    Furnished Herewith
5243


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SOTERA HEALTH COMPANY
By:/s/ Jonathan M. Lyons
Name:Jonathan M. Lyons
Title:Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: August 3, 2023May 2, 2024
5344