Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 03, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-39729 | |
Entity Registrant Name | SOTERA HEALTH COMPANY | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-3531161 | |
Entity Address, Address Line One | 9100 South Hills Blvd | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Broadview Heights | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 44147 | |
City Area Code | 440 | |
Local Phone Number | 262-1410 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | SHC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 282,916,909 | |
Entity Central Index Key | 0001822479 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 114,912 | $ 102,447 |
Restricted cash short-term | 7 | 7 |
Accounts receivable, net of allowance for uncollectible accounts of $957 and $708, respectively | 96,094 | 91,735 |
Inventories, net | 37,496 | 34,093 |
Prepaid expenses and other current assets | 67,707 | 64,964 |
Income taxes receivable | 21,089 | 21,769 |
Total current assets | 337,305 | 315,015 |
Property, plant, and equipment, net | 624,341 | 609,814 |
Operating lease assets | 42,682 | 45,963 |
Deferred income taxes | 8,015 | 8,424 |
Investment in unconsolidated affiliate | 9,396 | 13,457 |
Other assets | 9,211 | 9,304 |
Other intangible assets, net | 608,641 | 643,366 |
Goodwill | 1,103,148 | 1,115,936 |
Total assets | 2,742,739 | 2,761,279 |
Current liabilities: | ||
Accounts payable | 51,814 | 52,400 |
Accrued liabilities | 54,497 | 60,518 |
Deferred revenue | 4,866 | 6,056 |
Current portion of finance lease obligations | 1,339 | 1,173 |
Current portion of operating lease obligations | 9,546 | 9,383 |
Current portion of asset retirement obligations | 630 | 620 |
Income taxes payable | 10,914 | 10,448 |
Total current liabilities | 133,606 | 140,598 |
Long-term debt | 1,742,578 | 1,824,789 |
Finance lease obligations, less current portion | 38,014 | 34,939 |
Operating lease obligations, less current portion | 35,378 | 38,941 |
Noncurrent asset retirement obligations | 46,117 | 45,013 |
Deferred lease income | 20,871 | 21,255 |
Post-retirement obligations | 42,544 | 48,223 |
Mandatorily redeemable noncontrolling interest | 0 | 13,625 |
Noncurrent liabilities | 19,300 | 17,506 |
Deferred income taxes | 138,562 | 121,816 |
Total liabilities | 2,216,970 | 2,306,705 |
See Commitments and contingencies note | ||
Equity: | ||
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at September 30, 2021 and 285,990 at December 31, 2020 | 2,860 | 2,860 |
Preferred stock, with $0.01 par value, 120,000 authorized; no shares issued at September 30, 2021 and December 31, 2020, respectively | 0 | 0 |
Treasury stock, at cost (3,120 and 2,742 shares at September 30, 2021 and December 31, 2020, respectively) | (34,000) | (34,000) |
Additional paid-in capital | 1,171,104 | 1,166,412 |
Retained deficit | (508,243) | (589,128) |
Accumulated other comprehensive loss | (105,952) | (93,842) |
Total equity attributable to Sotera Health Company | 525,769 | 452,302 |
Noncontrolling interests | 0 | 2,272 |
Total equity | 525,769 | 454,574 |
Total liabilities and equity | $ 2,742,739 | $ 2,761,279 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for uncollectible accounts | $ 957 | $ 708 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,200,000,000 | 1,200,000,000 |
Common stock, shares issued (in shares) | 286,037,000 | 285,990,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 120,000,000 | 120,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Treasury stock (in shares) | 3,120,000 | 2,742,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenues: | ||||
Total net revenues | $ 226,164 | $ 200,028 | $ 690,229 | $ 601,313 |
Cost of revenues: | ||||
Total cost of revenues | 100,578 | 92,517 | 305,510 | 278,318 |
Gross profit | 125,586 | 107,511 | 384,719 | 322,995 |
Operating expenses: | ||||
Selling, general and administrative expenses | 44,038 | 45,632 | 146,331 | 125,369 |
Amortization of intangible assets | 15,877 | 14,849 | 48,081 | 43,989 |
Total operating expenses | 59,915 | 60,481 | 194,412 | 169,358 |
Operating income | 65,671 | 47,030 | 190,307 | 153,637 |
Interest expense, net | 18,140 | 55,330 | 58,585 | 167,142 |
Loss on extinguishment of debt | 6,365 | 0 | 20,677 | 0 |
Foreign exchange loss (gain) | 756 | (4,571) | 1,410 | (5,370) |
Other income, net | (693) | (3,145) | (7,347) | (4,353) |
Income (loss) before income taxes | 41,103 | (584) | 116,982 | (3,782) |
Provision (benefit) for income taxes | 13,659 | (1,213) | 35,858 | (9,677) |
Net income | 27,444 | 629 | 81,124 | 5,895 |
Less: Net income attributable to noncontrolling interests | 0 | 619 | 239 | 832 |
Net income attributable to Sotera Health Company | 27,444 | 10 | 80,885 | 5,063 |
Other comprehensive (loss) income net of tax: | ||||
Pension and post-retirement benefits (net of taxes of $466, $(182), $240, and $236, respectively) | 1,383 | (540) | 713 | 700 |
Interest rate swaps (net of taxes of $0, $661, $0 and $(63), respectively) | 0 | 1,835 | 0 | (179) |
Foreign currency translation | (29,867) | 17,223 | (12,528) | (31,304) |
Comprehensive income (loss) | (1,040) | 19,147 | 69,309 | (24,888) |
Less: comprehensive income attributable to noncontrolling interests | 0 | 620 | 534 | 832 |
Comprehensive income (loss) attributable to Sotera Health Company | $ (1,040) | $ 18,527 | $ 68,775 | $ (25,720) |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.10 | $ 0 | $ 0.29 | $ 0.02 |
Diluted (in dollars per share) | $ 0.10 | $ 0 | $ 0.29 | $ 0.02 |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 279,381 | 232,400 | 279,097 | 232,400 |
Diluted (in shares) | 279,560 | 232,400 | 279,253 | 232,400 |
Service | ||||
Revenues: | ||||
Total net revenues | $ 200,499 | $ 182,176 | $ 597,907 | $ 524,025 |
Cost of revenues: | ||||
Total cost of revenues | 88,349 | 83,697 | 264,776 | 247,386 |
Product | ||||
Revenues: | ||||
Total net revenues | 25,665 | 17,852 | 92,322 | 77,288 |
Cost of revenues: | ||||
Total cost of revenues | $ 12,229 | $ 8,820 | $ 40,734 | $ 30,932 |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Pension and post-retirement benefits, tax | $ 466 | $ (182) | $ 240 | $ 236 |
Interest rate swaps, tax | $ 0 | $ 661 | $ 0 | $ (63) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Operating activities: | ||
Net income | $ 81,124 | $ 5,895 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 47,457 | 47,334 |
Amortization of intangible assets | 65,299 | 59,824 |
Loss on extinguishment of debt | 20,677 | 0 |
Deferred income taxes | 8,131 | (178) |
Share-based compensation expense | 10,489 | 4,019 |
Accretion of asset retirement obligations | 1,751 | 1,502 |
Unrealized foreign exchange losses / (gains) | 715 | (10,006) |
Unrealized (gain) / loss on embedded derivative instruments | (424) | 579 |
Amortization of debt issuance costs | 4,789 | 8,828 |
Other | (6,174) | (5,096) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,901) | 4,533 |
Inventories | (3,429) | 7,175 |
Other current assets | 2,225 | (2,697) |
Accounts payable | (291) | (7,848) |
Accrued liabilities | (7,985) | 3,030 |
Income taxes payable / receivable | (3,620) | (20,057) |
Other liabilities | (290) | 412 |
Other long-term assets | (349) | 1,491 |
Net cash provided by operating activities | 215,194 | 98,740 |
Investing activities: | ||
Purchases of property, plant and equipment | (60,898) | (33,640) |
Purchase of mandatorily redeemable noncontrolling interest in Nelson Laboratories Fairfield, Inc. | (12,425) | 0 |
Purchase of BioScience Laboratories, LLC, net of cash acquired | (13,530) | 0 |
Purchase of Iotron Industries Canada, Inc., net of cash acquired | 0 | (106,280) |
Other investing activities | (717) | 0 |
Net cash used in investing activities | (87,570) | (139,920) |
Financing activities: | ||
Proceeds from borrowings | 0 | 150,000 |
Purchase of noncontrolling interests in China subsidiaries | (8,418) | 0 |
Payments of debt issuance costs and prepayment premium | (6,718) | (3,898) |
Payments on debt | (100,000) | (61,025) |
Other | (368) | (1,116) |
Net cash (used in) provided by financing activities | (115,504) | 83,961 |
Effect of exchange rate changes on cash and cash equivalents | 345 | 2,639 |
Net increase in cash and cash equivalents, including restricted cash | 12,465 | 45,420 |
Cash and cash equivalents, including restricted cash, at beginning of period | 102,454 | 63,025 |
Cash and cash equivalents, including restricted cash, at end of period | 114,919 | 108,445 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for interest | 53,726 | 163,965 |
Cash paid during the period for income taxes, net of tax refunds received | 31,922 | 9,650 |
Equipment purchases included in accounts payable | $ 14,527 | $ 8,494 |
Consolidated Statements of Equi
Consolidated Statements of Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings / (Accumulated Deficit) | Accumulated Other Comprehensive (Loss) Income | Noncontrolling Interests |
Balance (in shares) at Dec. 31, 2019 | 232,400 | ||||||
Balance at Dec. 31, 2019 | $ (641,132) | $ 2,324 | $ 0 | $ (550,511) | $ (94,387) | $ 1,442 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share-based compensation plans | 4,019 | 4,019 | |||||
Comprehensive income (loss): | |||||||
Pension and post-retirement plan adjustments, net of tax | 700 | 700 | |||||
Foreign currency translation | (31,304) | (30,887) | (417) | ||||
Interest rate swaps | (179) | (179) | |||||
Net income | 5,895 | 5,063 | 832 | ||||
Balance (in shares) at Sep. 30, 2020 | 232,400 | ||||||
Balance at Sep. 30, 2020 | (662,001) | $ 2,324 | 4,019 | (545,448) | (124,753) | 1,857 | |
Balance (in shares) at Jun. 30, 2020 | 232,400 | ||||||
Balance at Jun. 30, 2020 | (682,050) | $ 2,324 | 3,118 | (545,458) | (143,688) | 1,654 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share-based compensation plans | 901 | 901 | |||||
Comprehensive income (loss): | |||||||
Pension and post-retirement plan adjustments, net of tax | (540) | (540) | |||||
Foreign currency translation | 17,223 | 17,640 | (417) | ||||
Interest rate swaps | 1,835 | 1,835 | |||||
Net income | 629 | 10 | 619 | ||||
Balance (in shares) at Sep. 30, 2020 | 232,400 | ||||||
Balance at Sep. 30, 2020 | (662,001) | $ 2,324 | 4,019 | (545,448) | (124,753) | 1,857 | |
Balance (in shares) at Dec. 31, 2020 | 283,248 | ||||||
Balance at Dec. 31, 2020 | 454,574 | $ 2,860 | $ (34,000) | 1,166,412 | (589,128) | (93,842) | 2,272 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Acquisition of noncontrolling interests | (8,578) | (5,772) | (2,806) | ||||
Issuance of shares (in shares) | 47 | ||||||
Issuance of shares | 1,080 | 1,080 | |||||
Share-based compensation plans (in shares) | $ (378) | ||||||
Share-based compensation plans | 9,384 | 9,384 | |||||
Comprehensive income (loss): | |||||||
Pension and post-retirement plan adjustments, net of tax | 713 | 713 | |||||
Foreign currency translation | (12,528) | (12,823) | 295 | ||||
Interest rate swaps | 0 | ||||||
Net income | 81,124 | 80,885 | 239 | ||||
Balance (in shares) at Sep. 30, 2021 | 282,917 | ||||||
Balance at Sep. 30, 2021 | 525,769 | $ 2,860 | (34,000) | 1,171,104 | (508,243) | (105,952) | 0 |
Balance (in shares) at Jun. 30, 2021 | 282,917 | ||||||
Balance at Jun. 30, 2021 | 523,271 | $ 2,860 | (34,000) | 1,167,566 | (535,687) | (77,468) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share-based compensation plans (in shares) | $ 0 | ||||||
Share-based compensation plans | 3,538 | 3,538 | |||||
Comprehensive income (loss): | |||||||
Pension and post-retirement plan adjustments, net of tax | 1,383 | 1,383 | |||||
Foreign currency translation | (29,867) | (29,867) | 0 | ||||
Interest rate swaps | 0 | ||||||
Net income | 27,444 | 27,444 | 0 | ||||
Balance (in shares) at Sep. 30, 2021 | 282,917 | ||||||
Balance at Sep. 30, 2021 | $ 525,769 | $ 2,860 | $ (34,000) | $ 1,171,104 | $ (508,243) | $ (105,952) | $ 0 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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, Sterigenics, Nordion and Nelson Labs. We describe our reportable segments in Note 18, “Segment Information”. All significant intercompany balances and transactions have been eliminated in consolidation. Noncontrolling interests represent the noncontrolling stockholders’ proportionate share of the total equity in the Company’s consolidated subsidiaries. We consolidate the results of operations of these subsidiaries with our results of operations. In the second quarter of 2021, we purchased the outstanding noncontrolling interests of 15% and 33% of our two China subsidiaries. Refer to Note 4, “Acquisitions” for additional details. We reflect the noncontrolling interests in our two China subsidiaries for all periods presented prior to this purchase transaction on our Consolidated Statements of Operations and Comprehensive Income (Loss) as “Net income attributable to noncontrolling interests.” On March 11, 2021, we purchased the 15% noncontrolling interest that remained from the August 2018 acquisition of Nelson Laboratories Fairfield, Inc. (“Nelson Labs Fairfield”). As the purchase of this noncontrolling interest was mandatorily redeemable, no earnings were allocated to this noncontrolling interest. See Note 4, “Acquisitions” for additional details. 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”). Refer to Note 4, “Acquisitions” for additional information. We have determined this to be an investment in a variable interest entity (“VIE”). The investment is not consolidated as the Company has concluded that we are not the primary beneficiary of the VIE. The Company accounts for the joint venture using the equity method. The investment is reflected within “Investment in unconsolidated affiliates” on the Consolidated Balance Sheets. 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 on Form 10-K for the year ended December 31, 2020. |
Recent Accounting Standards
Recent Accounting Standards | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Standards | Recent Accounting Standards ASUs Issued But Not Yet Adopted Under the Jumpstart Our Business Startups Act of 2012, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. As an emerging growth company, we have elected to take advantage of the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies or at which time we conclude it is appropriate to avail ourselves of early adoption provisions of applicable standards. As a result, our results of operations and financial statements may not be comparable to the results of operations and financial statements of other companies who have adopted the new or revised accounting standards. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”): Measurement of Credit Losses on Financial Instruments, and subsequently issued additional guidance that modified ASU 2016-13. The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. We intend to adopt the standard as of January 1, 2022. We are currently assessing the effect that ASU 2016-13 will have on our financial position, results of operations, and disclosures. In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . The standard simplifies the accounting for income taxes and makes a number of changes meant to add or clarify guidance on accounting for income taxes. This update is effective for annual financial statement periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted in any interim period for which financial statements have not yet been filed. We are currently assessing the effect that ASU 2019-12 will have on our financial position, results of operations, and disclosures. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 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 nine months ended September 30, 2021 and 2020: (thousands of U.S. dollars) Three Months Ended September 30, 2021 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 145,314 $ 28,768 $ — $ 174,082 Over time — — 52,082 52,082 Total $ 145,314 $ 28,768 $ 52,082 $ 226,164 (thousands of U.S. dollars) Three Months Ended September 30, 2020 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 126,303 $ 20,268 $ — $ 146,571 Over time — — 53,457 53,457 Total $ 126,303 $ 20,268 $ 53,457 $ 200,028 (thousands of U.S. dollars) Nine Months Ended September 30, 2021 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 421,647 $ 102,439 $ — $ 524,086 Over time — 1,372 164,771 166,143 Total $ 421,647 $ 103,811 $ 164,771 $ 690,229 (thousands of U.S. dollars) Nine Months Ended September 30, 2020 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 363,955 $ 86,034 $ — $ 449,989 Over time — — 151,324 151,324 Total $ 363,955 $ 86,034 $ 151,324 $ 601,313 Contract Balances As of September 30, 2021, and December 31, 2020, contract assets included in “Prepaid expenses and other current assets” on the Consolidated Balance Sheets totaled approximately $14.7 million and $12.7 million, respectively, resulting from revenue recognized over time in excess of the amount billed to the customer. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Acquisition of Noncontrolling Interests in China Subsidiaries On May 18, 2021, the Company acquired the remaining 15% and 33% noncontrolling interests associated with our two subsidiaries located in China. As a result, both entities are now 100% owned by the Company. The purchase price of the remaining equity interests was approximately $8.6 million, net of the cancellation of an $0.8 million demand note. The Company paid 90% of the cash consideration on the acquisition date. The remaining amounts were partially settled in post-closing payments in the third quarter of 2021; $0.2 million of the post-closing payment remains outstanding as of September 30, 2021 subject to the terms of the equity transfer agreements. As a result of the transactions, we continue to consolidate both of these subsidiaries, however, as of May 18, 2021, we no longer record noncontrolling interests in the consolidated financial statements as these subsidiaries are fully owned by the Company. The purchases were accounted for as equity transactions. As a result of these transactions, noncontrolling interests were reduced by $2.8 million reflecting the carrying value of the interest with $5.8 million of the difference charged to additional paid-in capital. Acquisition of BioScience Laboratories, LLC On March 8, 2021, we acquired BioScience Laboratories, LLC (“BioScience Labs”) for approximately $13.5 million, net of $0.2 million of cash acquired plus the contemporaneous repayment of BioScience Labs’ outstanding debt of $1.9 million. BioScience is a provider of outsourced topical antimicrobial product testing in the pharmaceutical, medical device, and consumer products industries with one location in Bozeman, Montana. The purchase price of BioScience Labs was allocated to the underlying assets acquired and liabilities assumed based upon management's estimated fair values at the date of acquisition. Changes to the allocation of the purchase price may occur as these measurements are completed. Approximately $10.6 million of goodwill was recorded related to the BioScience Labs acquisition, representing the excess of the purchase price over the preliminary estimated fair values of all the assets acquired and liabilities assumed. The Company funded this acquisition using available cash. The acquisition price and the results of operations for this acquired entity are not material in relation to the Company's consolidated financial statements. Acquisition of Mandatorily Redeemable Noncontrolling Interest - Nelson Labs Fairfield On March 11, 2021, we completed the acquisition of the remaining 15% ownership of Nelson Labs Fairfield for $12.4 million, resulting in a gain of $1.2 million included in “Other expense (income), net” in the Consolidated Statements of Operations and Comprehensive Income (Loss) relative to the $13.6 million previously accrued. Pursuant to the terms of the August 2018 acquisition, we initially acquired 85% of the equity interests of Nelson Labs Fairfield in August 2018 and were obligated to acquire the remaining 15% noncontrolling interest within three years from the date of the acquisition. Acquisition of Iotron Industries Canada, Inc. On July 31, 2020, we acquired Iotron for approximately $105.2 million. Iotron was an independent contact sterilizer with two North American locations in Vancouver, Canada, and Columbia City, Indiana. Each location uses proprietary high energy electron beam technology to process products for orthopedic, medical device, plastics, and agricultural businesses. The acquisition was financed by the issuance of $100.0 million of First Lien Notes due 2026. Refer to Note 9, “Long-Term Debt” for additional details. As part of this acquisition, we also acquired Iotron’s 60% equity ownership interest in a joint venture to construct an E-beam facility in Alberta, Canada. The joint venture is accounted for using the equity method. The estimated fair value of the underlying acquired assets and assumed liabilities of the Iotron acquisition and the measurement period adjustments recognized during the nine months ended September 30, 2021, were as follows: (thousands of U.S. dollars) Allocation of purchase price to the fair value of net assets acquired (net of cash acquired): Amount recognized as of December 31, 2020 Measurement Period Adjustments Amount recognized as of September 30, 2021 Goodwill $ 69,046 $ (19,447) $ 49,599 Intangibles 16,427 26,273 42,700 Property, plant, and equipment 13,812 4,346 18,158 Working capital, net 1,115 2 1,117 Investment in unconsolidated affiliate 12,881 (4,181) 8,700 Assumed long-term liabilities (2,248) — (2,248) Other assets/liabilities, net (5,846) (6,993) (12,839) Total purchase price $ 105,187 $ — $ 105,187 Approximately $49.6 million of goodwill was recorded related to the Iotron acquisition, representing the excess of the purchase price over the estimated fair values of all the assets acquired and liabilities assumed. The fair value allocated to goodwill and tangible and intangible assets are deductible for tax purposes. The qualitative elements of goodwill primarily represent the expanded future growth opportunities for the combined company and the addition of Iotron’s highly skilled workforce. The Company recorded $39.1 million and $3.6 million for intangible assets as part of the acquisition related to customer relationships and employee non-compete agreements, respectively. The estimated useful lives of the identifiable finite-lived intangible assets range from 5 to 15 years. Iotron’s results of operations are included in our consolidated financial statements from the date of the transaction within the Sterigenics segment. The unaudited pro forma consolidated results for the three and nine months ended September 30, 2020, are reflected in the pro forma table below had the transaction occurred on January 1, 2020. The following unaudited supplemental pro forma financial information is based on our historical consolidated financial statements and Iotron’s historical consolidated financial statements, as adjusted for amortization of acquired intangible assets, an increase in interest expense resulting from interest on the First Lien Notes to finance the acquisition, and to reflect the change in the estimated income tax rate for federal and state purposes. Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2020 2020 Net revenues $ 202,166 $ 616,144 Net income 575 7,737 In connection with the Iotron acquisition, we incurred approximately $0.4 million and $2.8 million in transaction costs for the three and nine months ended September 30, 2020, respectively, which were included in “Selling, general and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income (Loss). |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted primarily of the following: (thousands of U.S. dollars) September 30, 2021 December 31, 2020 Raw materials and supplies $ 33,437 $ 29,114 Work-in-process 1,282 846 Finished goods 2,900 4,256 37,619 34,216 Reserve for excess and obsolete inventory (123) (123) Inventories, net $ 37,496 $ 34,093 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted primarily of the following: (thousands of U.S. dollars) September 30, 2021 December 31, 2020 Prepaid taxes $ 27,878 $ 22,883 Prepaid business insurance 2,249 10,403 Prepaid rent 1,151 1,170 Customer contract assets 14,651 12,670 Insurance and indemnification receivables 3,006 2,751 Current deposits 1,018 673 Prepaid maintenance contracts 363 404 Value added tax receivable 1,614 2,094 Prepaid software licensing 1,655 1,181 Stock supplies 3,322 2,715 Other 10,800 8,020 Prepaid expenses and other current assets $ 67,707 $ 64,964 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Changes to goodwill during the nine months ended September 30, 2021 were as follows: (thousands of U.S. dollars) Sterigenics Nordion Nelson Labs Total Goodwill at December 31, 2020 $ 683,481 $ 287,932 $ 144,523 $ 1,115,936 BioScience Labs acquisition — — 10,573 10,573 Iotron acquisition measurement period adjustments (19,447) — — (19,447) Changes due to foreign currency exchange rates (2,536) 705 (2,083) (3,914) Goodwill at September 30, 2021 $ 661,498 $ 288,637 $ 153,013 $ 1,103,148 Other intangible assets consisted of the following: (thousands of U.S. dollars) Gross Carrying Amount Accumulated Amortization As of September 30, 2021 Finite-lived intangible assets Customer relationships $ 659,267 $ 352,052 Proprietary technology 89,121 43,174 Trade names 149 114 Land-use rights 9,599 1,503 Sealed source and supply agreements 241,386 105,598 Other 5,459 1,839 Total finite-lived intangible assets 1,004,981 504,280 Indefinite-lived intangible assets Regulatory licenses and other (a) 82,033 — Trade names / trademarks 25,907 — Total indefinite-lived intangible assets 107,940 — Total $ 1,112,921 $ 504,280 As of December 31, 2020 Gross Carrying Amount Accumulated Amortization Finite-lived intangible assets Customer relationships $ 634,454 $ 309,428 Proprietary technology 90,964 38,075 Trade names 156 105 Land-use rights 9,489 1,311 Sealed source and supply agreements 240,791 92,953 Other 1,937 519 Total finite-lived intangible assets 977,791 442,391 Indefinite-lived intangible assets Regulatory licenses and other (a) 81,832 — Trade names / trademarks 26,134 — Total indefinite-lived intangible assets 107,966 — Total $ 1,085,757 $ 442,391 (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 years 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 $21.2 million ($5.3 million is included in “Cost of revenues” and $15.9 million in “Selling, general and administrative expenses”) and $65.3 million ($17.2 million is included in “Cost of revenues” and $48.1 million in “Selling, general and administrative expenses”) in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2021, respectively. Amortization expense for other intangible assets was $20.2 million ($5.4 million is included in “Cost of revenues” and $14.8 million in “Selling, general and administrative expenses”) and $59.8 million ($15.8 million is included in “Cost of revenues” and $44.0 million in “Selling, general and administrative expenses”) in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2020, respectively. 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) For the remainder of 2021 $ 20,062 2022 81,182 2023 80,763 2024 79,986 2025 42,190 Thereafter 196,518 Total $ 500,701 The weighted-average remaining useful life of the finite-lived intangible assets was approximately 10 years as of September 30, 2021. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following: (thousands of U.S. dollars) September 30, 2021 December 31, 2020 Accrued employee compensation $ 31,989 $ 34,760 Legal reserves 2,751 2,751 Accrued interest expense 720 186 Embedded derivatives 281 670 Professional fees 5,638 12,686 Accrued utilities 1,845 1,864 Insurance accrual 2,022 1,255 Accrued taxes 3,750 2,599 Other 5,501 3,747 Accrued liabilities $ 54,497 $ 60,518 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following: (thousands of U.S. dollars) September 30, 2021 December 31, 2020 Term loan, due 2026 $ 1,763,100 $ 1,763,100 Senior notes, due 2026 — 100,000 Other long-term debt 450 450 Total long-term debt 1,763,550 1,863,550 Less unamortized debt issuance costs and debt discounts (20,972) (38,761) Total long-term debt, less debt issuance costs and debt discounts $ 1,742,578 $ 1,824,789 Debt Facilities Senior Secured Credit Facilities On December 13, 2019, Sotera Health Holdings, LLC (“SHH”), our wholly 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 December 13, 2026, and the Revolving Credit Facility's original maturity date was December 13, 2024. On December 17, 2020, we increased the capacity of our Revolving Credit Facility from $190.0 million to $347.5 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 September 30, 2021 and December 31, 2020, total borrowings under the Term Loan were $1,763.1 million in each period, respectively, and there were no borrowings outstanding on the Revolving Credit Facility. The weighted average interest rate on borrowings under the Term Loan for the three months ended September 30, 2021 and September 30, 2020 was 3.25% and 5.50%, respectively, and 3.51% and 5.73% for the nine months ended September 30, 2021 and September 30, 2020, respectively. On January 20, 2021, we closed on an amendment repricing our Term Loan. The interest rate spread over the London Interbank Offered Rate (“LIBOR”) on the facility was reduced from 450 basis points to 275 basis points, and the facility’s LIBOR floor was reduced from 100 basis points to 50 basis points. The changes result in an effective reduction in current interest rates of 2.25%. In connection with this amendment, we wrote off $11.3 million of unamortized debt issuance and discount costs and incurred an additional $2.9 million of expense related to debt issuance costs attributable to the refinancing. These costs were recorded to “Loss on extinguishment of debt” in our Consolidated Statements of Operations and Comprehensive Income (Loss). As of September 30, 2021 and December 31, 2020, capitalized debt issuance costs totaled $2.8 million and $3.4 million, respectively, and debt discounts totaled $18.2 million and $31.6 million, respectively, related to the Senior Secured Credit Facilities. Such costs are recorded as a reduction of debt on our Consolidated Balance Sheets and amortized as a component of interest expense over the term of the debt agreement. On March 26, 2021, we amended the Revolving Credit Facility, to (i) decrease the Applicable Rate (as defined in the Credit Agreement) related to any Revolving Loans (as defined in the Credit Agreement) from a rate per annum that ranged from an alternative base rate (“ABR”) plus 2.50% to ABR plus 3.00% depending on SHH’s Senior Secured First Lien Net Leverage Ratio to ABR plus 1.75%; and in the case of Eurodollar Loans (as defined in the Credit Agreement) from a rate per annum which ranged from the Adjusted LIBOR plus 3.50% to the Adjusted LIBOR plus 4.00% depending on SHH’s Senior Secured First Lien Net Leverage Ratio (as defined in the Credit Agreement), to the Adjusted LIBOR (as defined in the Credit Agreement) plus 2.75%, and (ii) extend the maturity date of the Revolving Facility from December 13, 2024 to June 13, 2026. The other material terms of the Credit Agreement are unchanged and the amendment does not change the capacity of our Revolving Credit Facility, which is $347.5 million. No unamortized debt issuance costs associated with the Revolving Credit Facility were written off and direct fees and costs incurred in connection with the amendment were immaterial. As of September 30, 2021 and December 31, 2020, there were no borrowings on the Revolving Credit Facility. SHH borrowed $50.0 million on the Revolving Credit Facility during the first quarter of 2020 which was repaid in the second quarter of 2020. The interest rate on the borrowings under the Revolving Credit Facility during 2020 averaged approximately 5.0%. All of SHH’s obligations under the Senior Secured Credit Facilities 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 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. 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 September 30, 2021, the Company had $67.6 million of letters of credit issued against the Revolving Credit Facility, resulting in total availability under the Revolving Credit Facility of $279.9 million. First Lien Notes On July 31, 2020, SHH issued $100.0 million aggregate principal amount of senior secured first lien notes due 2026 (the “First Lien Notes”), which were scheduled to mature on December 13, 2026. On August 27, 2021 SHH redeemed in full the $100.0 million aggregate principal amount of the First Lien Notes. In connection with this redemption, the Company paid a $3.0 million early redemption premium, in accordance with the terms of the First Lien Notes Indenture, and wrote off $3.4 million of debt issuance and discount costs. The Company recognized these expenses within “Loss on extinguishment of debt” in our Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2021. Prior to the redemption, the First Lien Notes bore interest at a rate equal to LIBOR subject to a 1.00% floor plus 6.00% per annum. Interest was payable on a quarterly basis with no principal due until maturity. The weighted average interest rate on the First Lien Notes during 2021 up to the August 27, 2021 redemption date was 7.00%. 2020 Debt Repayments On November 24, 2020, we closed our initial public offering (the “IPO”), in which we sold 53,590,000 shares of our common stock at a price of $23.00 per share, which included the full exercise by the underwriters of their option to purchase up to an additional 6,990,000 shares of common stock. We raised approximately $1.2 billion in net proceeds after deducting underwriters’ discounts and commissions. We used the net proceeds received by us from the IPO to (i) redeem $770.0 million in aggregate principal amount of the Second Lien Senior Secured Notes with an original maturity date of December 13, 2027 (the “Second Lien Notes”), plus accrued and unpaid interest thereon and $15.4 million of redemption premium, (ii) repurchase 1,568,445 shares of our common stock from certain of our executive officers at a purchase price per share equal to the IPO price per share of our common stock less an amount equal to the underwriting discounts and commissions payable thereon and (iii) repay $341.0 million of the outstanding indebtedness under the Term Loan, plus accrued and unpaid interest thereon. In connection with the debt repayments, we wrote off $28.9 million of debt issuance and discount costs and recognized $15.4 million in premiums paid for the early extinguishment of the Second Lien Notes. We recognized these costs within “Loss on extinguishment of debt” in our Consolidated Statements of Operations and Comprehensive Income (Loss) in the fourth quarter of 2020. Aggregate Maturities Aggregate maturities of the Company’s long-term debt, excluding debt discounts, as of September 30, 2021, are as follows: (thousands of U.S. dollars) 2021 $ — 2022 — 2023 450 2024 — 2025 — Thereafter 1,763,100 Total $ 1,763,550 As referenced above, the Company utilized its IPO proceeds toward prepaying the Second Lien Notes in full as well as prepaying a portion of the Term Loan. The Term Loan prepayment amount eliminated all subsequent scheduled and outstanding repayments of the term borrowings resulting in no remaining short-term commitments. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 33.2 % and 30.7% for the three and nine months ended September 30, 2021, respectively, compared to (207.7)% and (255.9)% for the three and nine months ended September 30, 2020, respectively. Income tax expense for the three months ended September 30, 2021 differed from the statutory rate primarily due to the impact of the foreign rate differential, global intangible low-tax income (“GILTI”) and a net increase in the interest expense valuation allowance. Provision for income taxes for the three months ended September 30, 2020 differed from the statutory rate primarily due to the foreign rate differential, GILTI, non-deductible expenses as well as the impact of the 2020 Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which increased the limitation on interest expense deductions and resulted in a valuation allowance reversal. Income tax expense for the nine months ended September 30, 2021 differed from the statutory rate primarily due to the impact of the foreign rate differential, GILTI, a net increase in the interest expense valuation allowance, and a discrete item pertaining to an income tax rate change in the United Kingdom. This was partially offset by an additional discrete item in the first quarter of 2021, which reversed the valuation allowance on deferred tax assets related to certain asset retirement obligations. |
Employee Benefits
Employee Benefits | 9 Months Ended |
Sep. 30, 2021 | |
Postemployment Benefits [Abstract] | |
Employee Benefits | Employee BenefitsThe 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 interest cost and expected return on plan assets are recorded in “Other 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 cost for the defined benefit plans for the three and nine months ended September 30, 2021 and 2020 were as follows: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2021 2020 2021 2020 Service cost $ 300 $ 278 $ 905 $ 821 Interest cost 1,622 2,024 4,897 5,974 Expected return on plan assets (3,577) (3,629) (10,799) (10,712) Amortization of net actuarial loss 269 200 811 588 Net periodic benefit $ (1,386) $ (1,127) $ (4,186) $ (3,329) Other benefit plans Other benefit plans 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. All but one, non-pension post-employment benefit plans are unfunded. The components of net periodic pension cost for the other benefit plans for the three and nine months ended September 30, 2021 and 2020 were as follows: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2021 2020 2021 2020 Service cost $ 7 $ 7 $ 21 $ 21 Interest cost 59 74 179 218 Amortization of net actuarial loss 9 13 26 39 Net periodic benefit cost $ 75 $ 94 $ 226 $ 278 We currently expect funding requirements of approximately $2.8 million in each of the next five years to fund the regulatory solvency deficit, as defined by Canadian federal regulation, which require solvency testing on defined benefit pension plans. |
Related Parties
Related Parties | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Parties | Related PartiesWe do business with a number of companies affiliated with Warburg Pincus and GTCR, which we refer to collectively as the “Sponsors,” who continue to have substantial control over us. All transactions with these companies have been conducted in the ordinary course of our business and are not material to our operations. |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Other Comprehensive Income (Loss) | 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 Swaps Total Beginning balance – July 1, 2021 $ (44,813) $ (32,655) $ — $ (77,468) Other comprehensive income (loss) before reclassifications 1,105 (29,867) — (28,762) Amounts reclassified from accumulated other comprehensive income (loss) 278 (a) — — 278 Net current-period other comprehensive income (loss) 1,383 (29,867) — (28,484) Ending balance – September 30, 2021 $ (43,430) $ (62,522) $ — $ (105,952) Beginning balance – January 1, 2021 $ (44,143) $ (49,699) $ — (93,842) Other comprehensive income (loss) before reclassifications (124) (12,823) — (12,947) Amounts reclassified from accumulated other comprehensive income (loss) 837 (a) — — 837 Net current-period other comprehensive income (loss) 713 (12,823) — (12,110) Ending balance – September 30, 2021 $ (43,430) $ (62,522) $ — $ (105,952) (thousands of U.S. dollars) Defined Benefit Plans Foreign Currency Translation Interest Rate Swaps Total Beginning balance – July 1, 2020 $ (25,873) $ (115,980) $ (1,835) $ (143,688) Other comprehensive income (loss) before reclassifications (540) 17,640 (644) 16,456 Amounts reclassified from accumulated other comprehensive income (loss) — — 2,479 (b) 2,479 Net current-period other comprehensive income (loss) (540) 17,640 1,835 18,935 Ending balance – September 30, 2020 $ (26,413) $ (98,340) $ — $ (124,753) Beginning balance – January 1, 2020 $ (27,113) $ (67,453) $ 179 $ (94,387) Other comprehensive income (loss) before reclassifications 700 (30,887) (5,234) (35,421) Amounts reclassified from accumulated other comprehensive income (loss) — — 5,055 (b) 5,055 Net current-period other comprehensive income (loss) 700 (30,887) (179) (30,366) Ending balance – September 30, 2020 $ (26,413) $ (98,340) $ — $ (124,753) (a) For defined benefit pension plans, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Other income, net” within the Consolidated Statements of Operations and Comprehensive Income (Loss). (b) For interest rate swaps, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Interest expense, net” within the Consolidated Statements of Operations and Comprehensive Income (Loss). |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | 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 of the Company, all then outstanding unvested shares of our common stock distributed in respect of Class B-1 Units will become vested 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 satisfaction of certain thresholds. These units generally vest as of 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 twenty percent, subject to such grantee’s continued services through such date. In the event of a change in control of the Company, any outstanding shares of our common stock distributed in respect of Class B-2 Units that remain unvested immediately following the consummation of such a change in control of the Company shall be immediately canceled and forfeited without compensation. 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 September 30, 2021, these awards remain unvested. We recognized $0.7 million and $0.9 million of share-based compensation expense related to the pre-IPO Class B-1 awards for the three months ended September 30, 2021 and 2020, and $2.0 million and $4.0 million for the nine months ended September 30, 2021 and 2020, respectively. A summary of the activity for the nine months ended September 30, 2021 related to the restricted stock awards distributed to the Company service providers 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, 2020 2,201,239 2,323,333 Forfeited (43,361) (284,850) Vested (757,636) — Unvested at September 30, 2021 1,400,242 2,038,483 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 $2.9 million ($1.3 million for stock options and $1.6 million for RSUs) of share-based compensation expense for these awards for the three months ended September 30, 2021, and $8.5 million ($3.9 million for stock options and $4.6 million for RSUs) for the nine months ended September 30, 2021 in our Consolidated Statements of Operations and Comprehensive Income (Loss), in “Selling, general and administrative expenses.” Stock Options Stock options have a four Number of Shares Weighted- average Exercise Price At December 31, 2020 2,389,258 $ 23.00 Granted 38,176 24.70 Forfeited (24,678) 23.15 Exercised — — At September 30, 2021 2,402,756 $ 23.03 As of September 30, 2021, there were no stock options vested or exercisable. RSUs RSUs generally vest ratably over a period of one Number of Shares Weighted- average Grant Date Fair Value Unvested at December 31, 2020 771,276 $ 23.00 Granted 108,255 24.17 Forfeited (18,798) 23.13 Vested (46,952) 23.00 Unvested at September 30, 2021 813,781 $ 23.15 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 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. 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. In periods in which the Company has a net loss, the two-class method is not applicable because the pre-IPO Class B-1 and B-2 restricted stock awards do not participate in losses. Our basic and diluted earnings per common share are calculated as follows: Three Months Ended Nine Months Ended in thousands of U.S. dollars and share amounts (except per share amounts) September 30, September 30, September 30, September 30, Earnings: Net income $ 27,444 $ 629 $ 81,124 $ 5,895 Less: Net income attributable to noncontrolling interests — 619 239 832 Less: Allocation to participating securities 343 — 1,089 — Net income attributable to Sotera Health Company common shareholders $ 27,101 $ 10 $ 79,796 $ 5,063 Weighted Average Common Shares: Weighted-average common shares outstanding - basic 279,381 232,400 279,097 232,400 Dilutive effect of potential common shares 179 — 156 — Weighted-average common shares outstanding - diluted (a) 279,560 232,400 279,253 232,400 Earnings per Common Share: Net income per common share attributable to Sotera Health Company common shareholders - basic $ 0.10 $ — $ 0.29 $ 0.02 Net income per common share attributable to Sotera Health Company common shareholders - diluted 0.10 — 0.29 0.02 (a) A n additional 2,402,798 and 4,713 equivalent shares related to stock options and RSUs, respectively, issued in connection with the 2020 Omnibus Incentive Plan were excluded from the calculation of diluted weighted average common shares outstanding for the three months ended September 30, 2021 and 2,399,054 and 6,749 for the nine months ended September 30, 2021, as they were anti-dilutive . For the three and nine months ended September 30, 2020, there were no potentially dilutive common shares outstanding. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 establish reserves for specific liabilities in connection with regulatory and legal actions that we determine to be both probable and reasonably estimable. No material amounts have been accrued in our consolidated financial statements with respect to any loss contingencies. In certain of the matters described below, we are not able to make a reasonable estimate of any liability because of the uncertainties related to the outcome and/or the amount or range of loss. While it is not possible to determine the ultimate disposition of each of these matters, we do not expect that the ultimate resolution of pending regulatory and legal matters in future periods, including the matters described below, will have a material effect on our financial condition or results of operations. Despite the above, the Company may incur material defense and settlement costs, diversion of management resources and other adverse effects on our business, financial condition, or results of operations. FM Global Business Interruption Claim (NRU Outage) Nordion, due to the shutdown of AECL’s NRU reactor in 2009, suffered a cessation of supply of radioisotopes and business interruption loss. Nordion, by Statement of Claim dated October 22, 2010, issued in Ontario Superior Court an action against the insurer, Factory Mutual Insurance Company (FM Global), claiming $25.0 million USD in losses resulting from the shutdown of AECL’s reactor and its inability to supply radioisotopes through the specified period of approximately 15 months. FM Global objected to Nordion’s claim. On March 30, 2020, Nordion received a favorable judgment in the amount of $25.0 million USD, plus pre-judgment interest, for a total judgment value of $39.8 million USD, or $56.4 million CAD based on exchange rates approved by the trial court. In addition, costs and disbursements were assessed and awarded by the trial court in favor of Nordion in the approximate amount of $1.3 million CAD ($1.0 million USD). FM Global appealed the judgment. On September 3, 2021 the Court of Appeal ruled in favor of FM Global, setting aside the trial court decision, denying insurance coverage to Nordion, and awarding costs and disbursements to FM Global (which remain under assessment by the court). In addition, the Court of Appeal set aside the costs and disbursements previously awarded to Nordion by the trial court. On October 21, 2021 Nordion filed an Application for Leave to Appeal in the Supreme Court of Canada. Ethylene Oxide Tort Litigation - Illinois Sotera Health LLC, Sterigenics U.S., LLC, GTCR, LLC and other parties are defending personal injury lawsuits related to Sterigenics’ Willowbrook, Illinois operations. Specifically, approximately 770 plaintiffs allege that they suffered personal injuries including cancer and other diseases, or wrongful death, resulting from purported emissions and releases of ethylene oxide (“EO”) from the Willowbrook facility. Additional derivative claims are alleged on behalf of other individuals related to these personal injury plaintiffs. Plaintiffs seek damages in an amount to be determined by the trier of fact. Sterigenics denies these allegations and intends to vigorously defend against these claims. These personal injury lawsuits began to be filed in September 2018, and most of the pending cases were filed before August 21, 2020, the second anniversary of the publication of governmental reports alleging health risks related to the Willowbrook facility. In October 2019 the lawsuits were consolidated for pre-trial purposes by the Cook County Circuit Court, Illinois (the “Consolidated Case”). All plaintiffs in the Consolidated Case filed an Amended Master Complaint on April 16, 2021, including claims against Griffith Foods International, Inc. (“Griffith”). Griffith filed a motion to dismiss and all other defendants filed answers to the Complaint. The answer of Sterigenics included counterclaims for contribution against Griffith. Plaintiffs have not yet made any specific damages claims. Written and deposition fact discovery in the Consolidated Case is scheduled to conclude by February 1, 2022. Trials in three of the individual cases included in the Consolidated Case have been scheduled for July 18, 2022, September 12, 2022 and November 7, 2022. Ethylene Oxide Tort Litigation – Georgia Sotera Health LLC, Sterigenics U.S., LLC and other parties are being defended and indemnified in a lawsuit filed on May 19, 2020 in the State Court of Cobb County, Georgia by 53 employees of a contract sterilization customer of Sterigenics (“Indemnitor”). Plaintiffs claim personal injuries resulting from alleged exposure to residual EO while working at the Indemnitor’s distribution center in Lithia Springs, Georgia, allege they were unaware that they were being exposed to EO in Indemnitor’s workplace and seek damages. Discovery is stayed until motions to dismiss the operative complaint are decided. In May 2020, the Cobb County, Georgia Board of Tax Assessors reduced certain residential property value assessments around the Sterigenics Atlanta facility by 10% citing an “Epd-identified environmental issue,” without supporting market data. On August 14, 2020, Sterigenics U.S., LLC filed a lawsuit against members of the Cobb County Board of Tax Assessors in the U.S. District Court for the Northern District of Georgia, seeking a declaration that the reduction in property value assessments is arbitrary and unlawful and is causing Sterigenics reputational and imminent economic harm. On February 5, 2021 the Court issued an order finding that Sterigenics lacks standing to obtain the relief sought and dismissed the case. Sterigenics has appealed that decision to the 11th Circuit Court of Appeals. Since August 17, 2020, 41 plaintiffs have filed lawsuits against Sotera Health LLC, Sterigenics U.S., LLC and other parties in the State Court of Cobb County, Georgia and the State Court of Gwinnett County, Georgia alleging that they suffered personal injuries resulting from emissions and releases of EO from Sterigenics’ Atlanta facility. Additional derivative claims are alleged on behalf of other individuals related to these personal injury plaintiffs. Our subsidiaries are also defendants in two lawsuits alleging that the Atlanta facility has devalued and harmed plaintiffs’ use of real properties they own in Smyrna, Georgia and caused other damages. These personal injury and property devaluation Plaintiffs seek various forms of relief including damages. Ten of the personal injury lawsuits pending in Cobb County have been consolidated for pretrial purposes, governed by a phased case management order pursuant to which general causation issues are scheduled to be determined by November 15, 2022, specific causation issues are scheduled to be determined by March 20, 2023, and one case is scheduled to be trial-ready by July 2023. The remaining personal injury and property devaluation cases are in various early stages of pleadings and motions practice and fact discovery. Additional lawsuits relating to Sterigenics’ Atlanta facility are expected to be filed during November 2021. Consent Order Allowing Georgia Facility’s Normal Operations & Related Litigation On August 7, 2019, Sterigenics U.S., LLC entered into a voluntary Consent Order with the Georgia Environmental Protection Division (“EPD”) under which Sterigenics agreed to install emissions reduction enhancements at its Atlanta facility to further reduce the facility’s EO emissions below already permitted levels. Sterigenics voluntarily suspended operations at the facility in early September 2019 to expedite completion of the enhancements. Installation of these enhancements is complete and Sterigenics successfully tested the enhanced emissions controls in cooperation with EPD during the second quarter of 2020 while the facility was in operation. In October 2019, while Sterigenics had voluntarily suspended the facility’s operations, Cobb County, Georgia officials asserted that the facility had an incorrect “certificate of occupancy” and could not resume operations without obtaining a new certificate of occupancy after a third-party code compliance review they required. After the Cobb County officials would not allow Sterigenics to resume operations, on March 30, 2020, Sterigenics U.S., LLC filed a lawsuit in the United States District Court for the Northern District of Georgia against Cobb County, Georgia and Cobb County officials Nicholas Dawe and Kevin Gobble. In the lawsuit, Sterigenics sought immediate injunctive relief and permanent declaratory relief to resume normal operations of the Atlanta facility in the interest of public health and on the basis that the positions asserted by Cobb County were unfounded. On April 1, 2020 the Court entered a Temporary Restraining Order prohibiting Cobb County officials from precluding or interfering with the facility’s normal operations. On April 8, 2020, the Court entered a Consent Order extending the Temporary Restraining Order and allowing the facility to continue normal operations until entry of a final judgment in the case. Defendants filed a motion to dismiss the claims. On November 9, 2020, the Court held a hearing and denied the motion to dismiss. The parties are conducting discovery, which is scheduled to end in April 2022. A settlement conference is scheduled to be held by April 27, 2022. Ethylene Oxide Litigation – New Mexico On December 22, 2020, the New Mexico Attorney General filed a lawsuit in the Third Judicial District Court, Doña Ana County, New Mexico (the “Third Judicial District”) against the Company, Sterigenics U.S., LLC and other subsidiaries alleging that emissions of EO from Sterigenics’ sterilization facility in Santa Teresa, New Mexico constitute a public nuisance and 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 a request for a temporary restraining order and preliminary injunctive relief. On June 29, 2021, the Court entered an Order Granting Preliminary Injunction (the “Order”). The Order does not require closure of the facility, but prohibits Sterigenics from allowing any uncontrolled emission or release of EO from the facility, including prohibitions on leaving doors open when not in use and allowing EO to escape through point sources prior to filtration or processing through emission controls. Sterigenics promptly took steps to monitor its compliance with the Order. The Order instructed the parties to discuss a protocol to monitor Sterigenics’ compliance and, if agreement could not be reached, to request a hearing so the Court can determine a monitoring protocol and how the costs of monitoring will be paid. In July 2021, the parties conferred but could not reach agreement. On October 28, 2021 the Court held a hearing on the parties’ positions on an appropriate protocol to monitor Sterigenics’ compliance with the Order and how the costs of monitoring will be paid. A ruling is expected before January 2022. A motion challenging the Court’s jurisdiction over the Company and certain other defendants has been held in abeyance until the completion of jurisdictional discovery, and all other motions to dismiss have been denied. The parties are conducting fact discovery. Before this lawsuit was filed, Sterigenics was working to implement additional emission control enhancements at the Santa Teresa facility to further reduce EO emissions beyond permitted levels. Sterigenics has received the necessary permits from the New Mexico Environment Department and Doña Ana County for implementation of these additional emission control enhancements. * * * Our insurance for litigation related to alleged environmental liabilities, like the litigation pending in Illinois, Georgia and New Mexico described above has limits of $10.0 million per occurrence and $20.0 million in the aggregate. The per occurrence limit related to the Willowbrook, Illinois litigation was fully utilized by June 30, 2020. The remaining $10.0 million limit is currently being utilized for occurrences related to the EO litigation in Georgia and New Mexico described above. As of September 30, 2021, we have utilized approximately $2.2 million of the remaining $10.0 million limit. Our insurance for future alleged environmental liabilities excludes coverage for EO claims. Additional personal injury, property devaluation or other lawsuits may be filed in the future against us or our subsidiaries relating to Sterigenics’ Willowbrook, Atlanta, Santa Teresa or other EO sterilization facilities. The Company, Sterigenics U.S., LLC and other Company subsidiaries intend to defend themselves vigorously in all such current or future EO litigation. While an adverse outcome in one or more of the proceedings could have a material adverse effect on our business, financial condition and results of operations, no contingency reserve has been reflected in our consolidated financial statements as a loss is not deemed probable or a loss or range of losses is not reasonably estimable at this time. |
Financial Instruments and Finan
Financial Instruments and Financial Risk | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments and Financial Risk | 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 During the third quarter of 2019, we entered into two interest rate swap agreements to hedge our exposure to interest rate movements and to manage interest expense related to our then outstanding variable-rate debt. The notional amount of the interest rate swap agreements totaled $1,000.0 million. These swaps were designated as cash flow hedges and were designed to hedge the variability of cash flows attributable to changes in LIBOR, the benchmark interest rate being hedged. We received interest at one-month LIBOR and paid a fixed interest rate under the terms of the swap agreement. The swap agreements terminated on August 31, 2020. Derivatives Not Designated in Hedge Relationships In October 2017, we entered into two interest rate cap agreements with a total notional amount of $400.0 million for a total option premium of $0.6 million; these agreements terminated on September 30, 2020. The interest rate caps limited the Company’s cash flow exposure related to LIBOR under the variable rate Term Loan borrowings to 3.0%. In June 2020, SHH entered into two interest rate cap agreements with notional amounts of $1,000.0 million and $500.0 million, respectively, for a total option premium of $0.3 million. These instruments were initially scheduled to terminate on August 31, 2021 and February 28, 2022, respectively. The interest rate caps limit our cash flow exposure related to the LIBOR base rate under a portion of our variable rate borrowings to 1.0%. In February 2021, we amended the two interest rate cap agreements referenced above to reduce the strike rate from 1.0% to 0.5%, and extend the termination date of the $1,000.0 million notional cap to September 30, 2021. Premiums paid to amend the interest rate caps were immaterial. We also entered into two additional interest rate cap agreements in February 2021 with a combined notional amount of $1,000.0 million, for a total option premium of $0.4 million. These instruments are effective September 30, 2021, and will terminate on December 31, 2022. The amended and new interest rate caps limit our cash flow exposure related to LIBOR under a portion of our variable rate borrowings to 0.5%. The interest rate caps were entered into to manage economic risks associated with our variable rate borrowings, but were not designated in hedge relationships. These instruments are recorded at fair value on the Consolidated Balance Sheets, with any changes in the value being recorded in “Interest expense, net” in the Consolidated Statements of Operations and Comprehensive Income (Loss). The Company also entered into foreign currency forward contracts to manage foreign currency exchange rate risk of our intercompany loans in certain of our international subsidiaries. The foreign currency forward contracts expire on a monthly basis. The fair value of the outstanding foreign currency forward contracts was zero as of September 30, 2021 and December 31, 2020, respectively. 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 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: September 30, 2021 December 31, 2020 (in U.S. Dollars; notional in millions, fair value in thousands) Fair Value Fair Value Notional Derivative Derivative Notional Derivative Derivative Derivatives not designated as hedging instruments: Interest rate caps $ 2,500.0 (a) $ 201 $ — $ 1,500.0 $ 7 $ — Embedded derivatives 77.9 (b) — 281 83.3 — 670 Total $ 2,577.9 $ 201 $ 281 $ 1,583.3 $ 7 $ 670 (a) $1,000.0 million notional amount of interest rate caps terminated on September 30, 2021. (b) Represents the total notional amounts for certain of the Company’s supply and sales contracts accounted for as embedded derivatives. The interest rate caps and embedded derivative assets are included in “Prepaid expenses and other current assets” or “Other assets” on the Consolidated Balance Sheets depending upon their respective maturity dates. Embedded derivative liabilities are included in “Accrued liabilities” on the Consolidated Balance Sheets. 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 September 30, 2021 2020 Unrealized (gain) loss on interest rate caps recorded in interest expense, net $ (116) $ 58 Unrealized (gain) loss on embedded derivatives recorded in other income, net 1,189 (1,464) Realized loss on interest rate swap recorded in interest expense, net — 2,479 Realized (gain) loss on foreign currency forward contracts recorded in foreign exchange loss (gain) 762 — (thousands of U.S. dollars) Nine Months Ended September 30, 2021 2020 Unrealized loss on interest rate caps recorded in interest expense, net $ 267 $ 230 Unrealized (gain) loss on embedded derivatives recorded in other income, net (424) 579 Realized loss on interest rate swap recorded in interest expense, net — 5,055 Realized (gain) loss on foreign currency forward contracts recorded in foreign exchange loss (gain) (1,381) — In addition, during the three and nine months ended September 30, 2020, we recognized $1.8 million of gains and $0.2 million of losses, net of tax, in accumulated other comprehensive income (loss) related to the change in fair value of the interest rate swaps. 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 September 30, 2021 and December 31, 2020, accounts receivable was net of an allowance for uncollectible accounts of $1.0 million and $0.7 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. 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. The following table discloses the fair value of our financial assets and liabilities: As of September 30, 2021 Fair Value (thousands of U.S. dollars) Carrying Level 1 Level 2 Level 3 Derivatives not designated as hedging instruments (a) Interest rate caps $ 201 $ — $ 201 $ — Embedded derivative liabilities (281) — (281) — Long-Term Debt (b) Term loan, due 2026 1,742,134 — 1,758,692 — Other long-term debt 444 — 444 — Finance Lease Obligations (with current portion) (c) 39,353 — 39,353 — As of December 31, 2020 Fair Value (thousands of U.S. dollars) Carrying Level 1 Level 2 Level 3 Derivatives not designated as hedging instruments (a) Interest rate caps $ 7 $ — $ 7 $ — Embedded derivative liabilities (670) — (670) — Long-Term Debt (b) Term loan, due 2026 1,728,018 — 1,772,180 — Senior notes, due 2026 96,329 — 99,863 — Other long-term debt 442 — 442 — Finance Lease Obligations (with current portion) (c) 36,112 — 36,112 — (a) 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). Interest rate caps are valued using pricing models that incorporate observable market inputs including interest rate and yield curves. Embedded derivatives are valued using internally developed models that rely on observable market inputs including foreign currency forward curves. (b) Carrying amounts of long-term debt instruments are reported net of discounts and debt issuance costs. The estimated fair value of these instruments is based on information provided by the agent under the Company’s senior secured credit facility. Fair value approximates carrying value for “Other long-term debt.” (c) Fair value approximates carrying value. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | 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 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 our 2020 Form 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 September 30, 2021, four customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 20.4%, 12.8%, 12.8%, and 10.3% of the total segment’s external net revenues for the three months ended September 30, 2021. For the three months ended September 30, 2020, four customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 23.7%, 18.6%, 18.5%, and 12.4% of the total segment’s external net revenues for the three months ended September 30, 2020. For the nine months ended September 30, 2021, five customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 13.2%, 12.8%, 12.6%, 12.3%, and 10.5% of the total segment’s external net revenues for the nine months ended September 30, 2021. For the nine months ended September 30, 2020, five customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 15.5%, 14.5%, 11.4%, 11.2%, and 10.3% of the total segment's external net revenues for the nine months ended September 30, 2020. Financial information for each of our segments is presented in the following table: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2021 2020 2021 2020 Segment revenues (a) Sterigenics $ 145,314 $ 126,302 $ 421,647 $ 363,954 Nordion 28,768 20,268 103,811 86,034 Nelson Labs 52,082 53,458 164,771 151,325 Total net revenues $ 226,164 $ 200,028 $ 690,229 $ 601,313 Segment income (b) Sterigenics $ 79,344 $ 66,682 $ 227,374 $ 192,803 Nordion 16,331 10,261 61,285 50,692 Nelson Labs 20,999 23,542 67,895 63,302 Total segment income $ 116,674 $ 100,485 $ 356,554 $ 306,797 (a) Revenues are reported net of intersegment sales. Our Nordion segment recognized $3.7 million and $3.0 million in revenues from sales to our Sterigenics segment for the three months ended September 30, 2021 and 2020, and $21.2 million and $22.9 million in revenues from sales to our Sterigenics segment for the nine months ended September 30, 2021 and 2020, respectively, that is not reflected in net revenues in the table above. Intersegment sales for Sterigenics and Nelson Labs are immaterial for these periods. (b) Segment income is only provided on a net basis to the chief operating decision maker and is reported net of intersegment profits. Corporate operating expenses for executive management, accounting, information technology, legal, human resources, treasury, corporate development, tax, purchasing, and marketing not directly incurred by a segment are allocated to the segments based on total revenue. Corporate operating expenses that are directly incurred by a segment are reflected in each segment’s income. Capital expenditures by segment for the nine months ended September 30, 2021 and 2020 were as follows: Nine Months Ended September 30, (thousands of U.S. dollars) 2021 2020 Sterigenics $ 48,552 $ 29,090 Nordion 7,531 1,809 Nelson Labs 4,815 2,741 Total capital expenditures $ 60,898 $ 33,640 Total assets and depreciation and amortization expense by segment are not readily available and are not reported separately to the chief operating decision maker. A reconciliation of segment income to consolidated income (loss) before taxes is as follows: (thousands of U.S. dollars) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Segment income $ 116,674 $ 100,485 $ 356,554 $ 306,797 Less adjustments: Interest expense, net 18,140 55,330 58,585 167,142 Depreciation and amortization (a) 37,634 36,101 112,756 107,158 Share-based compensation (b) 3,547 901 10,489 4,019 (Gain) loss on foreign currency and embedded derivatives (c) 1,881 (6,035) 885 (4,791) Acquisition and divestiture related charges, net (d) (2,662) 681 (2,003) 2,970 Business optimization project expenses (e) 244 685 780 2,484 Plant closure expenses (f) 266 1,166 1,564 2,388 Loss on extinguishment of debt (g) 6,365 — 20,677 — Professional services relating to EO sterilization facilities (h) 9,449 11,730 33,492 25,370 Accretion of asset retirement obligation (i) 598 494 1,751 1,476 COVID-19 expenses (j) 109 16 596 2,363 Consolidated income (loss) before taxes $ 41,103 $ (584) $ 116,982 $ (3,782) (a) Includes depreciation of Co-60 held at gamma irradiation sites. (b) Represents non-cash share-based compensation expense. (c) Represents the effects of (i) fluctuations in foreign currency exchange rates, primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies, and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion. (d) Represents (i) certain direct and incremental costs related to the acquisitions of the noncontrolling interests in our China subsidiaries and BioScience Labs in 2021, Iotron in July 2020, and Nelson Labs Fairfield in 2018 (including the first quarter 2021 gain on the mandatorily redeemable noncontrolling interest as described in Note 4, “Acquisitions”), and certain related integration efforts as a result of those acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in 2018, and (iv) a $3.4 million gain recognized in the third quarter of 2021 related to the settlement of an insurance claim for Nordion that existed at the time of our acquisition of the business in 2014. (e) Represents professional fees, contract termination and exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of recent acquisitions, the Sotera Health rebranding, operating structure realignment and other process enhancement projects. (f) Represents professional fees, severance and other payroll costs, and other costs including ongoing lease and utility expenses associated with the closure of the Willowbrook, Illinois facility. (g) Represents expenses incurred in connection with the repricing of our Term Loan in January 2021 and full redemption of the First Lien Notes in August 2021 including a prepayment premium and accelerated amortization of prior debt issuance and discount costs. (h) Represents professional fees related to litigation associated with our EO sterilization facilities and other related professional fees. See Note 16, “Commitments and Contingencies” . (i) Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities (without regard for whether the decommissioning services would be performed by employees of Nordion, instead of by a third party) and are accreted over the life of the asset. (j) Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures. For the nine months ended September 30, 2020, costs also included donations to related charitable causes, and special bonuses for front-line personnel working on-site during lockdown periods. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Use of Estimates | 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. |
ASU’s Issued But Not Yet Adopted | ASUs Issued But Not Yet Adopted Under the Jumpstart Our Business Startups Act of 2012, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. As an emerging growth company, we have elected to take advantage of the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies or at which time we conclude it is appropriate to avail ourselves of early adoption provisions of applicable standards. As a result, our results of operations and financial statements may not be comparable to the results of operations and financial statements of other companies who have adopted the new or revised accounting standards. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”): Measurement of Credit Losses on Financial Instruments, and subsequently issued additional guidance that modified ASU 2016-13. The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. We intend to adopt the standard as of January 1, 2022. We are currently assessing the effect that ASU 2016-13 will have on our financial position, results of operations, and disclosures. In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . The standard simplifies the accounting for income taxes and makes a number of changes meant to add or clarify guidance on accounting for income taxes. This update is effective for annual financial statement periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted in any interim period for which financial statements have not yet been filed. We are currently assessing the effect that ASU 2019-12 will have on our financial position, results of operations, and disclosures. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table shows disaggregated net revenues from contracts with external customers by timing of revenue and by segment for the three and nine months ended September 30, 2021 and 2020: (thousands of U.S. dollars) Three Months Ended September 30, 2021 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 145,314 $ 28,768 $ — $ 174,082 Over time — — 52,082 52,082 Total $ 145,314 $ 28,768 $ 52,082 $ 226,164 (thousands of U.S. dollars) Three Months Ended September 30, 2020 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 126,303 $ 20,268 $ — $ 146,571 Over time — — 53,457 53,457 Total $ 126,303 $ 20,268 $ 53,457 $ 200,028 (thousands of U.S. dollars) Nine Months Ended September 30, 2021 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 421,647 $ 102,439 $ — $ 524,086 Over time — 1,372 164,771 166,143 Total $ 421,647 $ 103,811 $ 164,771 $ 690,229 (thousands of U.S. dollars) Nine Months Ended September 30, 2020 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 363,955 $ 86,034 $ — $ 449,989 Over time — — 151,324 151,324 Total $ 363,955 $ 86,034 $ 151,324 $ 601,313 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The estimated fair value of the underlying acquired assets and assumed liabilities of the Iotron acquisition and the measurement period adjustments recognized during the nine months ended September 30, 2021, were as follows: (thousands of U.S. dollars) Allocation of purchase price to the fair value of net assets acquired (net of cash acquired): Amount recognized as of December 31, 2020 Measurement Period Adjustments Amount recognized as of September 30, 2021 Goodwill $ 69,046 $ (19,447) $ 49,599 Intangibles 16,427 26,273 42,700 Property, plant, and equipment 13,812 4,346 18,158 Working capital, net 1,115 2 1,117 Investment in unconsolidated affiliate 12,881 (4,181) 8,700 Assumed long-term liabilities (2,248) — (2,248) Other assets/liabilities, net (5,846) (6,993) (12,839) Total purchase price $ 105,187 $ — $ 105,187 |
Business Acquisition, Pro Forma Information | Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2020 2020 Net revenues $ 202,166 $ 616,144 Net income 575 7,737 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted primarily of the following: (thousands of U.S. dollars) September 30, 2021 December 31, 2020 Raw materials and supplies $ 33,437 $ 29,114 Work-in-process 1,282 846 Finished goods 2,900 4,256 37,619 34,216 Reserve for excess and obsolete inventory (123) (123) Inventories, net $ 37,496 $ 34,093 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Deferred Costs, Capitalized, Prepaid, and Other Assets | Prepaid expenses and other current assets consisted primarily of the following: (thousands of U.S. dollars) September 30, 2021 December 31, 2020 Prepaid taxes $ 27,878 $ 22,883 Prepaid business insurance 2,249 10,403 Prepaid rent 1,151 1,170 Customer contract assets 14,651 12,670 Insurance and indemnification receivables 3,006 2,751 Current deposits 1,018 673 Prepaid maintenance contracts 363 404 Value added tax receivable 1,614 2,094 Prepaid software licensing 1,655 1,181 Stock supplies 3,322 2,715 Other 10,800 8,020 Prepaid expenses and other current assets $ 67,707 $ 64,964 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes to goodwill during the nine months ended September 30, 2021 were as follows: (thousands of U.S. dollars) Sterigenics Nordion Nelson Labs Total Goodwill at December 31, 2020 $ 683,481 $ 287,932 $ 144,523 $ 1,115,936 BioScience Labs acquisition — — 10,573 10,573 Iotron acquisition measurement period adjustments (19,447) — — (19,447) Changes due to foreign currency exchange rates (2,536) 705 (2,083) (3,914) Goodwill at September 30, 2021 $ 661,498 $ 288,637 $ 153,013 $ 1,103,148 |
Schedule of Acquired Finite-Lived Intangible Assets | Other intangible assets consisted of the following: (thousands of U.S. dollars) Gross Carrying Amount Accumulated Amortization As of September 30, 2021 Finite-lived intangible assets Customer relationships $ 659,267 $ 352,052 Proprietary technology 89,121 43,174 Trade names 149 114 Land-use rights 9,599 1,503 Sealed source and supply agreements 241,386 105,598 Other 5,459 1,839 Total finite-lived intangible assets 1,004,981 504,280 Indefinite-lived intangible assets Regulatory licenses and other (a) 82,033 — Trade names / trademarks 25,907 — Total indefinite-lived intangible assets 107,940 — Total $ 1,112,921 $ 504,280 As of December 31, 2020 Gross Carrying Amount Accumulated Amortization Finite-lived intangible assets Customer relationships $ 634,454 $ 309,428 Proprietary technology 90,964 38,075 Trade names 156 105 Land-use rights 9,489 1,311 Sealed source and supply agreements 240,791 92,953 Other 1,937 519 Total finite-lived intangible assets 977,791 442,391 Indefinite-lived intangible assets Regulatory licenses and other (a) 81,832 — Trade names / trademarks 26,134 — Total indefinite-lived intangible assets 107,966 — Total $ 1,085,757 $ 442,391 (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 years license period as Nordion has demonstrated over its 75 years of history. |
Schedule of Acquired Indefinite-lived Intangible Assets | Other intangible assets consisted of the following: (thousands of U.S. dollars) Gross Carrying Amount Accumulated Amortization As of September 30, 2021 Finite-lived intangible assets Customer relationships $ 659,267 $ 352,052 Proprietary technology 89,121 43,174 Trade names 149 114 Land-use rights 9,599 1,503 Sealed source and supply agreements 241,386 105,598 Other 5,459 1,839 Total finite-lived intangible assets 1,004,981 504,280 Indefinite-lived intangible assets Regulatory licenses and other (a) 82,033 — Trade names / trademarks 25,907 — Total indefinite-lived intangible assets 107,940 — Total $ 1,112,921 $ 504,280 As of December 31, 2020 Gross Carrying Amount Accumulated Amortization Finite-lived intangible assets Customer relationships $ 634,454 $ 309,428 Proprietary technology 90,964 38,075 Trade names 156 105 Land-use rights 9,489 1,311 Sealed source and supply agreements 240,791 92,953 Other 1,937 519 Total finite-lived intangible assets 977,791 442,391 Indefinite-lived intangible assets Regulatory licenses and other (a) 81,832 — Trade names / trademarks 26,134 — Total indefinite-lived intangible assets 107,966 — Total $ 1,085,757 $ 442,391 (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 years license period as Nordion has demonstrated over its 75 years of history. |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | 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) For the remainder of 2021 $ 20,062 2022 81,182 2023 80,763 2024 79,986 2025 42,190 Thereafter 196,518 Total $ 500,701 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consisted of the following: (thousands of U.S. dollars) September 30, 2021 December 31, 2020 Accrued employee compensation $ 31,989 $ 34,760 Legal reserves 2,751 2,751 Accrued interest expense 720 186 Embedded derivatives 281 670 Professional fees 5,638 12,686 Accrued utilities 1,845 1,864 Insurance accrual 2,022 1,255 Accrued taxes 3,750 2,599 Other 5,501 3,747 Accrued liabilities $ 54,497 $ 60,518 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following: (thousands of U.S. dollars) September 30, 2021 December 31, 2020 Term loan, due 2026 $ 1,763,100 $ 1,763,100 Senior notes, due 2026 — 100,000 Other long-term debt 450 450 Total long-term debt 1,763,550 1,863,550 Less unamortized debt issuance costs and debt discounts (20,972) (38,761) Total long-term debt, less debt issuance costs and debt discounts $ 1,742,578 $ 1,824,789 |
Schedule of Maturities of Long-term Debt | Aggregate maturities of the Company’s long-term debt, excluding debt discounts, as of September 30, 2021, are as follows: (thousands of U.S. dollars) 2021 $ — 2022 — 2023 450 2024 — 2025 — Thereafter 1,763,100 Total $ 1,763,550 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Postemployment Benefits [Abstract] | |
Schedule of Net Benefit Costs | The components of net periodic pension cost for the defined benefit plans for the three and nine months ended September 30, 2021 and 2020 were as follows: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2021 2020 2021 2020 Service cost $ 300 $ 278 $ 905 $ 821 Interest cost 1,622 2,024 4,897 5,974 Expected return on plan assets (3,577) (3,629) (10,799) (10,712) Amortization of net actuarial loss 269 200 811 588 Net periodic benefit $ (1,386) $ (1,127) $ (4,186) $ (3,329) Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2021 2020 2021 2020 Service cost $ 7 $ 7 $ 21 $ 21 Interest cost 59 74 179 218 Amortization of net actuarial loss 9 13 26 39 Net periodic benefit cost $ 75 $ 94 $ 226 $ 278 |
Other Comprehensive Income (L_2
Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | 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 Swaps Total Beginning balance – July 1, 2021 $ (44,813) $ (32,655) $ — $ (77,468) Other comprehensive income (loss) before reclassifications 1,105 (29,867) — (28,762) Amounts reclassified from accumulated other comprehensive income (loss) 278 (a) — — 278 Net current-period other comprehensive income (loss) 1,383 (29,867) — (28,484) Ending balance – September 30, 2021 $ (43,430) $ (62,522) $ — $ (105,952) Beginning balance – January 1, 2021 $ (44,143) $ (49,699) $ — (93,842) Other comprehensive income (loss) before reclassifications (124) (12,823) — (12,947) Amounts reclassified from accumulated other comprehensive income (loss) 837 (a) — — 837 Net current-period other comprehensive income (loss) 713 (12,823) — (12,110) Ending balance – September 30, 2021 $ (43,430) $ (62,522) $ — $ (105,952) (thousands of U.S. dollars) Defined Benefit Plans Foreign Currency Translation Interest Rate Swaps Total Beginning balance – July 1, 2020 $ (25,873) $ (115,980) $ (1,835) $ (143,688) Other comprehensive income (loss) before reclassifications (540) 17,640 (644) 16,456 Amounts reclassified from accumulated other comprehensive income (loss) — — 2,479 (b) 2,479 Net current-period other comprehensive income (loss) (540) 17,640 1,835 18,935 Ending balance – September 30, 2020 $ (26,413) $ (98,340) $ — $ (124,753) Beginning balance – January 1, 2020 $ (27,113) $ (67,453) $ 179 $ (94,387) Other comprehensive income (loss) before reclassifications 700 (30,887) (5,234) (35,421) Amounts reclassified from accumulated other comprehensive income (loss) — — 5,055 (b) 5,055 Net current-period other comprehensive income (loss) 700 (30,887) (179) (30,366) Ending balance – September 30, 2020 $ (26,413) $ (98,340) $ — $ (124,753) (a) For defined benefit pension plans, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Other income, net” within the Consolidated Statements of Operations and Comprehensive Income (Loss). (b) For interest rate swaps, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Interest expense, net” within the Consolidated Statements of Operations and Comprehensive Income (Loss). |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Restricted Stock Activity | A summary of the activity for the nine months ended September 30, 2021 related to the restricted stock awards distributed to the Company service providers 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, 2020 2,201,239 2,323,333 Forfeited (43,361) (284,850) Vested (757,636) — Unvested at September 30, 2021 1,400,242 2,038,483 Number of Shares Weighted- average Grant Date Fair Value Unvested at December 31, 2020 771,276 $ 23.00 Granted 108,255 24.17 Forfeited (18,798) 23.13 Vested (46,952) 23.00 Unvested at September 30, 2021 813,781 $ 23.15 |
Schedule of Stock Option Activity | The following table summarizes our stock option activity for the nine months ended September 30, 2021: Number of Shares Weighted- average Exercise Price At December 31, 2020 2,389,258 $ 23.00 Granted 38,176 24.70 Forfeited (24,678) 23.15 Exercised — — At September 30, 2021 2,402,756 $ 23.03 As of September 30, 2021, there were no stock options vested or exercisable. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Our basic and diluted earnings per common share are calculated as follows: Three Months Ended Nine Months Ended in thousands of U.S. dollars and share amounts (except per share amounts) September 30, September 30, September 30, September 30, Earnings: Net income $ 27,444 $ 629 $ 81,124 $ 5,895 Less: Net income attributable to noncontrolling interests — 619 239 832 Less: Allocation to participating securities 343 — 1,089 — Net income attributable to Sotera Health Company common shareholders $ 27,101 $ 10 $ 79,796 $ 5,063 Weighted Average Common Shares: Weighted-average common shares outstanding - basic 279,381 232,400 279,097 232,400 Dilutive effect of potential common shares 179 — 156 — Weighted-average common shares outstanding - diluted (a) 279,560 232,400 279,253 232,400 Earnings per Common Share: Net income per common share attributable to Sotera Health Company common shareholders - basic $ 0.10 $ — $ 0.29 $ 0.02 Net income per common share attributable to Sotera Health Company common shareholders - diluted 0.10 — 0.29 0.02 (a) A n additional 2,402,798 and 4,713 equivalent shares related to stock options and RSUs, respectively, issued in connection with the 2020 Omnibus Incentive Plan were excluded from the calculation of diluted weighted average common shares outstanding for the three months ended September 30, 2021 and 2,399,054 and 6,749 for the nine months ended September 30, 2021, as they were anti-dilutive . For the three and nine months ended September 30, 2020, there were no potentially dilutive common shares outstanding. |
Financial Instruments and Fin_2
Financial Instruments and Financial Risk (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table provides a summary of the notional and fair values of our derivative instruments: September 30, 2021 December 31, 2020 (in U.S. Dollars; notional in millions, fair value in thousands) Fair Value Fair Value Notional Derivative Derivative Notional Derivative Derivative Derivatives not designated as hedging instruments: Interest rate caps $ 2,500.0 (a) $ 201 $ — $ 1,500.0 $ 7 $ — Embedded derivatives 77.9 (b) — 281 83.3 — 670 Total $ 2,577.9 $ 201 $ 281 $ 1,583.3 $ 7 $ 670 (a) $1,000.0 million notional amount of interest rate caps terminated on September 30, 2021. (b) Represents the total notional amounts for certain of the Company’s supply and sales contracts accounted for as embedded derivatives. |
Schedule of Derivative Instruments, Gain (Loss) | 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 September 30, 2021 2020 Unrealized (gain) loss on interest rate caps recorded in interest expense, net $ (116) $ 58 Unrealized (gain) loss on embedded derivatives recorded in other income, net 1,189 (1,464) Realized loss on interest rate swap recorded in interest expense, net — 2,479 Realized (gain) loss on foreign currency forward contracts recorded in foreign exchange loss (gain) 762 — (thousands of U.S. dollars) Nine Months Ended September 30, 2021 2020 Unrealized loss on interest rate caps recorded in interest expense, net $ 267 $ 230 Unrealized (gain) loss on embedded derivatives recorded in other income, net (424) 579 Realized loss on interest rate swap recorded in interest expense, net — 5,055 Realized (gain) loss on foreign currency forward contracts recorded in foreign exchange loss (gain) (1,381) — |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table discloses the fair value of our financial assets and liabilities: As of September 30, 2021 Fair Value (thousands of U.S. dollars) Carrying Level 1 Level 2 Level 3 Derivatives not designated as hedging instruments (a) Interest rate caps $ 201 $ — $ 201 $ — Embedded derivative liabilities (281) — (281) — Long-Term Debt (b) Term loan, due 2026 1,742,134 — 1,758,692 — Other long-term debt 444 — 444 — Finance Lease Obligations (with current portion) (c) 39,353 — 39,353 — As of December 31, 2020 Fair Value (thousands of U.S. dollars) Carrying Level 1 Level 2 Level 3 Derivatives not designated as hedging instruments (a) Interest rate caps $ 7 $ — $ 7 $ — Embedded derivative liabilities (670) — (670) — Long-Term Debt (b) Term loan, due 2026 1,728,018 — 1,772,180 — Senior notes, due 2026 96,329 — 99,863 — Other long-term debt 442 — 442 — Finance Lease Obligations (with current portion) (c) 36,112 — 36,112 — (a) 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). Interest rate caps are valued using pricing models that incorporate observable market inputs including interest rate and yield curves. Embedded derivatives are valued using internally developed models that rely on observable market inputs including foreign currency forward curves. (b) Carrying amounts of long-term debt instruments are reported net of discounts and debt issuance costs. The estimated fair value of these instruments is based on information provided by the agent under the Company’s senior secured credit facility. Fair value approximates carrying value for “Other long-term debt.” (c) Fair value approximates carrying value. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Financial information for each of our segments is presented in the following table: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2021 2020 2021 2020 Segment revenues (a) Sterigenics $ 145,314 $ 126,302 $ 421,647 $ 363,954 Nordion 28,768 20,268 103,811 86,034 Nelson Labs 52,082 53,458 164,771 151,325 Total net revenues $ 226,164 $ 200,028 $ 690,229 $ 601,313 Segment income (b) Sterigenics $ 79,344 $ 66,682 $ 227,374 $ 192,803 Nordion 16,331 10,261 61,285 50,692 Nelson Labs 20,999 23,542 67,895 63,302 Total segment income $ 116,674 $ 100,485 $ 356,554 $ 306,797 (a) Revenues are reported net of intersegment sales. Our Nordion segment recognized $3.7 million and $3.0 million in revenues from sales to our Sterigenics segment for the three months ended September 30, 2021 and 2020, and $21.2 million and $22.9 million in revenues from sales to our Sterigenics segment for the nine months ended September 30, 2021 and 2020, respectively, that is not reflected in net revenues in the table above. Intersegment sales for Sterigenics and Nelson Labs are immaterial for these periods. (b) Segment income is only provided on a net basis to the chief operating decision maker and is reported net of intersegment profits. Capital expenditures by segment for the nine months ended September 30, 2021 and 2020 were as follows: Nine Months Ended September 30, (thousands of U.S. dollars) 2021 2020 Sterigenics $ 48,552 $ 29,090 Nordion 7,531 1,809 Nelson Labs 4,815 2,741 Total capital expenditures $ 60,898 $ 33,640 |
Schedule of Reconciliation of Operating Profit (Loss) from Segments to Consolidated | A reconciliation of segment income to consolidated income (loss) before taxes is as follows: (thousands of U.S. dollars) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Segment income $ 116,674 $ 100,485 $ 356,554 $ 306,797 Less adjustments: Interest expense, net 18,140 55,330 58,585 167,142 Depreciation and amortization (a) 37,634 36,101 112,756 107,158 Share-based compensation (b) 3,547 901 10,489 4,019 (Gain) loss on foreign currency and embedded derivatives (c) 1,881 (6,035) 885 (4,791) Acquisition and divestiture related charges, net (d) (2,662) 681 (2,003) 2,970 Business optimization project expenses (e) 244 685 780 2,484 Plant closure expenses (f) 266 1,166 1,564 2,388 Loss on extinguishment of debt (g) 6,365 — 20,677 — Professional services relating to EO sterilization facilities (h) 9,449 11,730 33,492 25,370 Accretion of asset retirement obligation (i) 598 494 1,751 1,476 COVID-19 expenses (j) 109 16 596 2,363 Consolidated income (loss) before taxes $ 41,103 $ (584) $ 116,982 $ (3,782) (a) Includes depreciation of Co-60 held at gamma irradiation sites. (b) Represents non-cash share-based compensation expense. (c) Represents the effects of (i) fluctuations in foreign currency exchange rates, primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies, and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion. (d) Represents (i) certain direct and incremental costs related to the acquisitions of the noncontrolling interests in our China subsidiaries and BioScience Labs in 2021, Iotron in July 2020, and Nelson Labs Fairfield in 2018 (including the first quarter 2021 gain on the mandatorily redeemable noncontrolling interest as described in Note 4, “Acquisitions”), and certain related integration efforts as a result of those acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in 2018, and (iv) a $3.4 million gain recognized in the third quarter of 2021 related to the settlement of an insurance claim for Nordion that existed at the time of our acquisition of the business in 2014. (e) Represents professional fees, contract termination and exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of recent acquisitions, the Sotera Health rebranding, operating structure realignment and other process enhancement projects. (f) Represents professional fees, severance and other payroll costs, and other costs including ongoing lease and utility expenses associated with the closure of the Willowbrook, Illinois facility. (g) Represents expenses incurred in connection with the repricing of our Term Loan in January 2021 and full redemption of the First Lien Notes in August 2021 including a prepayment premium and accelerated amortization of prior debt issuance and discount costs. (h) Represents professional fees related to litigation associated with our EO sterilization facilities and other related professional fees. See Note 16, “Commitments and Contingencies” . (i) Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities (without regard for whether the decommissioning services would be performed by employees of Nordion, instead of by a third party) and are accreted over the life of the asset. (j) Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures. For the nine months ended September 30, 2020, costs also included donations to related charitable causes, and special bonuses for front-line personnel working on-site during lockdown periods. |
Basis of Presentation (Details)
Basis of Presentation (Details) | May 18, 2021subsidiary | Mar. 11, 2021 | Aug. 31, 2018 | Jun. 30, 2021subsidiary | Sep. 30, 2021segment | Jul. 31, 2020 |
Accounting Policies [Abstract] | ||||||
Number of operating segments | 3 | |||||
Number of reportable segments | 3 | |||||
Unnamed E-Beam Joint Venture | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Ownership percentage | 60.00% | |||||
Nelson Fairfield | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Percent of purchase of interest | 15.00% | 85.00% | ||||
China | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Number of subsidiaries with non-controlling interest | subsidiary | 2 | 2 | ||||
China | Subsidiary One | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Percent of purchase of interest | 15.00% | 15.00% | ||||
China | Subsidiary Two | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Percent of purchase of interest | 33.00% | 33.00% |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | $ 226,164 | $ 200,028 | $ 690,229 | $ 601,313 | |
Customer contract assets | 14,651 | 14,651 | $ 12,670 | ||
Deferred revenue | 4,866 | 4,866 | $ 6,056 | ||
Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 174,082 | 146,571 | 524,086 | 449,989 | |
Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 52,082 | 53,457 | 166,143 | 151,324 | |
Sterigenics | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 145,314 | 126,303 | 421,647 | 363,955 | |
Sterigenics | Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 145,314 | 126,303 | 421,647 | 363,955 | |
Sterigenics | Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 0 | 0 | 0 | 0 | |
Nordion | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 28,768 | 20,268 | 103,811 | 86,034 | |
Nordion | Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 28,768 | 20,268 | 102,439 | 86,034 | |
Nordion | Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 0 | 0 | 1,372 | 0 | |
Nelson Labs | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 52,082 | 53,457 | 164,771 | 151,324 | |
Nelson Labs | Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 0 | 0 | 0 | 0 | |
Nelson Labs | Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | $ 52,082 | $ 53,457 | $ 164,771 | $ 151,324 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) $ in Thousands | May 18, 2021USD ($)subsidiary | Mar. 11, 2021USD ($) | Mar. 08, 2021USD ($) | Jul. 31, 2020USD ($) | Aug. 31, 2018 | Jun. 30, 2021subsidiary | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Business Acquisition [Line Items] | |||||||||||
Decrease from redemptions or purchase of interests | $ 2,800 | $ 8,578 | |||||||||
Payments to acquire businesses, net of cash acquired | 13,530 | $ 0 | |||||||||
Goodwill | 1,103,148 | 1,103,148 | $ 1,115,936 | ||||||||
Unnamed E-Beam Joint Venture | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Ownership percentage | 60.00% | ||||||||||
Additional Paid-In Capital | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Decrease from redemptions or purchase of interests | 5,800 | 5,772 | |||||||||
Nelson Fairfield | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Percent of purchase of interest | 15.00% | 85.00% | |||||||||
China | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Number of subsidiaries with non-controlling interest | subsidiary | 2 | 2 | |||||||||
Purchase price | $ 8,600 | ||||||||||
Amount of demand note cancelled | $ 800 | ||||||||||
Percent of consideration transferred on acquisition date | 90.00% | ||||||||||
Post-closing payment outstanding | 200 | 200 | |||||||||
China | China Subsidiaries | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Ownership percentage by parent | 100.00% | ||||||||||
China | Subsidiary One | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Percent of purchase of interest | 15.00% | 15.00% | |||||||||
China | Subsidiary Two | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Percent of purchase of interest | 33.00% | 33.00% | |||||||||
BioScience | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Payments to acquire businesses, net of cash acquired | $ 13,500 | ||||||||||
Cash acquired | 200 | ||||||||||
Liabilities incurred | $ 1,900 | ||||||||||
Goodwill | 10,600 | 10,600 | |||||||||
Nelson Fairfield | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Purchase price | $ 12,400 | ||||||||||
Step acquisition, gain | $ 1,200 | ||||||||||
Mandatorily redeemable noncontrolling interest | 13,600 | ||||||||||
Iotron | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Goodwill | $ 49,599 | $ 49,599 | $ 69,046 | ||||||||
Purchase price | $ 105,200 | ||||||||||
Goodwill acquired | 49,600 | ||||||||||
Goodwill deductible amount | $ 49,600 | ||||||||||
Acquisition related costs | $ 400 | $ 2,800 | |||||||||
Iotron | Minimum | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Estimated useful life | 5 years | ||||||||||
Iotron | Maximum | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Estimated useful life | 15 years | ||||||||||
Iotron | First Lien Notes due 2026 | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Proceeds from issuance of debt | $ 100,000 | ||||||||||
Iotron | Customer relationships | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Finite-lived intangibles | 39,100 | ||||||||||
Iotron | Employee Non-compete Agreements | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Finite-lived intangibles | $ 3,600 |
Acquisitions - Purchase Price A
Acquisitions - Purchase Price Allocation (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Business Acquisition [Line Items] | ||
Goodwill | $ 1,103,148 | $ 1,115,936 |
Iotron | ||
Business Acquisition [Line Items] | ||
Goodwill | 49,599 | 69,046 |
Intangibles | 42,700 | 16,427 |
Property, plant, and equipment | 18,158 | 13,812 |
Working capital, net | 1,117 | 1,115 |
Investment in unconsolidated affiliate | 8,700 | 12,881 |
Assumed long-term liabilities | (2,248) | (2,248) |
Other assets/liabilities, net | (12,839) | (5,846) |
Total purchase price | 105,187 | $ 105,187 |
Measurement Period Adjustments | ||
Goodwill | (19,447) | |
Intangibles | 26,273 | |
Property, plant, and equipment | 4,346 | |
Working capital, net | 2 | |
Investment in unconsolidated affiliate | (4,181) | |
Assumed long-term liabilities | 0 | |
Other assets/liabilities, net | (6,993) | |
Total purchase price | $ 0 |
Acquisitions - Pro Forma Inform
Acquisitions - Pro Forma Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Business Combination and Asset Acquisition [Abstract] | ||
Net revenues | $ 202,166 | $ 616,144 |
Net income | $ 575 | $ 7,737 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 33,437 | $ 29,114 |
Work-in-process | 1,282 | 846 |
Finished goods | 2,900 | 4,256 |
Inventories, gross | 37,619 | 34,216 |
Reserve for excess and obsolete inventory | (123) | (123) |
Inventories, net | $ 37,496 | $ 34,093 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid taxes | $ 27,878 | $ 22,883 |
Prepaid business insurance | 2,249 | 10,403 |
Prepaid rent | 1,151 | 1,170 |
Customer contract assets | 14,651 | 12,670 |
Insurance and indemnification receivables | 3,006 | 2,751 |
Current deposits | 1,018 | 673 |
Prepaid maintenance contracts | 363 | 404 |
Value added tax receivable | 1,614 | 2,094 |
Prepaid software licensing | 1,655 | 1,181 |
Stock supplies | 3,322 | 2,715 |
Other | 10,800 | 8,020 |
Prepaid expenses and other current assets | $ 67,707 | $ 64,964 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 1,115,936 |
Changes due to foreign currency exchange rates | (3,914) |
Ending balance | 1,103,148 |
BioScience | |
Goodwill [Roll Forward] | |
Adjustments | 10,573 |
Ending balance | 10,600 |
Iotron | |
Goodwill [Roll Forward] | |
Beginning balance | 69,046 |
Adjustments | (19,447) |
Ending balance | 49,599 |
Sterigenics | |
Goodwill [Roll Forward] | |
Beginning balance | 683,481 |
Changes due to foreign currency exchange rates | (2,536) |
Ending balance | 661,498 |
Sterigenics | BioScience | |
Goodwill [Roll Forward] | |
Adjustments | 0 |
Sterigenics | Iotron | |
Goodwill [Roll Forward] | |
Adjustments | (19,447) |
Nordion | |
Goodwill [Roll Forward] | |
Beginning balance | 287,932 |
Changes due to foreign currency exchange rates | 705 |
Ending balance | 288,637 |
Nordion | BioScience | |
Goodwill [Roll Forward] | |
Adjustments | 0 |
Nordion | Iotron | |
Goodwill [Roll Forward] | |
Adjustments | 0 |
Nelson Labs | |
Goodwill [Roll Forward] | |
Beginning balance | 144,523 |
Changes due to foreign currency exchange rates | (2,083) |
Ending balance | 153,013 |
Nelson Labs | BioScience | |
Goodwill [Roll Forward] | |
Adjustments | 10,573 |
Nelson Labs | Iotron | |
Goodwill [Roll Forward] | |
Adjustments | $ 0 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangibles (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,004,981 | $ 977,791 |
Accumulated Amortization | 504,280 | 442,391 |
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 107,940 | 107,966 |
Total | 1,112,921 | 1,085,757 |
Regulatory licenses and other | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 82,033 | 81,832 |
Renewal term | 10 years | |
Trade names / trademarks | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 25,907 | 26,134 |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 659,267 | 634,454 |
Accumulated Amortization | 352,052 | 309,428 |
Proprietary technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 89,121 | 90,964 |
Accumulated Amortization | 43,174 | 38,075 |
Trade names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 149 | 156 |
Accumulated Amortization | 114 | 105 |
Land-use rights | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 9,599 | 9,489 |
Accumulated Amortization | 1,503 | 1,311 |
Sealed source and supply agreements | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 241,386 | 240,791 |
Accumulated Amortization | 105,598 | 92,953 |
Other | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,459 | 1,937 |
Accumulated Amortization | $ 1,839 | $ 519 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 65,299 | $ 59,824 | ||
Finite-lived intangible assets, remaining amortization period | 10 years | |||
Other | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 21,200 | $ 20,200 | $ 65,300 | 59,800 |
Other | Cost of Revenue | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | 5,300 | 5,400 | 17,200 | 15,800 |
Other | Selling, General and Administrative Expenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 15,900 | $ 14,800 | $ 48,100 | $ 44,000 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Future Amortization Expense (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
For the remainder of 2021 | $ 20,062 |
2022 | 81,182 |
2023 | 80,763 |
2024 | 79,986 |
2025 | 42,190 |
Thereafter | 196,518 |
Total | $ 500,701 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 |
Payables and Accruals [Abstract] | |||
Accrued employee compensation | $ 31,989 | $ 34,760 | |
Legal reserves | 2,751 | 2,751 | |
Accrued interest expense | 720 | 186 | |
Embedded derivatives | 281 | 670 | |
Professional fees | 5,638 | 12,686 | |
Accrued utilities | 1,845 | 1,864 | |
Insurance accrual | 2,022 | 1,255 | |
Accrued taxes | 3,750 | 2,599 | |
Other | 5,501 | 3,747 | |
Accrued liabilities | $ 54,497 | $ 60,518 | $ 60,518 |
Long-Term Debt - Schedule of De
Long-Term Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 1,763,550 | $ 1,863,550 |
Less unamortized debt issuance costs and debt discounts | (20,972) | (38,761) |
Total | 1,742,578 | 1,824,789 |
Term Loan | Term loan, due 2026 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 1,763,100 | 1,763,100 |
Senior Notes | Senior notes, due 2026 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 0 | 100,000 |
Other long-term debt | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 450 | $ 450 |
Long-Term Debt - Senior Secured
Long-Term Debt - Senior Secured Credit Facilities (Details) - USD ($) | Mar. 26, 2021 | Jan. 20, 2021 | Jan. 19, 2021 | Nov. 24, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 17, 2020 | Dec. 16, 2020 | Jul. 31, 2020 | Mar. 31, 2020 |
Debt Instrument [Line Items] | ||||||||||||||
Total long-term debt | $ 1,763,550,000 | $ 1,763,550,000 | $ 1,863,550,000 | |||||||||||
Senior Secured Credit Facilities | Term Loan | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt issuance costs | 2,800,000 | 2,800,000 | 3,400,000 | |||||||||||
Debt discount | 18,200,000 | 18,200,000 | 31,600,000 | |||||||||||
Term loan, due 2026 | Term Loan | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Total long-term debt | $ 1,763,100,000 | $ 1,763,100,000 | 1,763,100,000 | |||||||||||
Weighted average interest rate | 3.25% | 5.50% | 3.51% | 5.73% | ||||||||||
Effective reduction in current interest rates | 2.25% | |||||||||||||
Extinguishment of debt | $ 341,000,000 | |||||||||||||
Term loan, due 2026 | Term Loan | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 2.75% | 4.50% | ||||||||||||
LIBOR floor | 0.50% | 1.00% | ||||||||||||
Write-off of unamortized debt issuance costs and debt discounts | $ 11,300,000 | |||||||||||||
Additional expense | $ 2,900,000 | |||||||||||||
First Lien Notes due 2026 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt discount | $ 3,400,000 | $ 3,400,000 | ||||||||||||
Capitalized debt issuance costs | 3,000,000 | $ 3,000,000 | ||||||||||||
First Lien Notes due 2026 | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Weighted average interest rate | 7.00% | |||||||||||||
LIBOR floor | 1.00% | |||||||||||||
First Lien Notes due 2026 | Secured Debt | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 2.75% | 6.00% | ||||||||||||
First Lien Notes due 2026 | Secured Debt | Alternative Base Rate | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 1.75% | |||||||||||||
First Lien Notes due 2026 | Secured Debt | Eurodollar | Minimum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 3.50% | |||||||||||||
First Lien Notes due 2026 | Secured Debt | Eurodollar | Maximum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 4.00% | |||||||||||||
Revolving Credit Facility | Senior Secured Credit Facilities | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 347,500,000 | $ 190,000,000 | ||||||||||||
Total long-term debt | 0 | $ 0 | $ 0 | $ 50,000,000 | ||||||||||
Weighted average interest rate | 5.00% | |||||||||||||
Capitalized debt issuance costs | $ 0 | |||||||||||||
Extinguishment of debt | $ 50,000,000 | |||||||||||||
Letters of credit outstanding, amount | 67,600,000 | 67,600,000 | ||||||||||||
Unused borrowing capacity | $ 279,900,000 | $ 279,900,000 | ||||||||||||
Revolving Credit Facility | Senior Secured Credit Facilities | Alternative Base Rate | Minimum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 2.50% | |||||||||||||
Revolving Credit Facility | Senior Secured Credit Facilities | Alternative Base Rate | Maximum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 3.00% |
Long-Term Debt - First Lien Not
Long-Term Debt - First Lien Notes (Details) - First Lien Notes due 2026 - USD ($) | Mar. 26, 2021 | Sep. 30, 2021 | Jul. 31, 2020 |
Debt Instrument [Line Items] | |||
Capitalized debt issuance costs | $ 3,000,000 | ||
Debt discount | $ 3,400,000 | ||
Secured Debt | |||
Debt Instrument [Line Items] | |||
Face amount | $ 100,000,000 | ||
LIBOR floor | 1.00% | ||
Weighted average interest rate | 7.00% | ||
Secured Debt | LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.75% | 6.00% |
Long-Term Debt - Repayments of
Long-Term Debt - Repayments of Debt (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 24, 2020 | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||
Unamortized debt issuance costs and debt discounts | $ 20,972 | $ 38,761 | |
Second Lien Notes | |||
Debt Instrument [Line Items] | |||
Write-off of debt premium | $ 15,400 | ||
Term Loan and Second Lien Notes | |||
Debt Instrument [Line Items] | |||
Unamortized debt issuance costs and debt discounts | 28,900 | ||
Term Loan | Second Lien Notes | |||
Debt Instrument [Line Items] | |||
Extinguishment of debt | 770,000 | ||
Term Loan | Term loan, due 2026 | |||
Debt Instrument [Line Items] | |||
Extinguishment of debt | $ 341,000 | ||
Common Stock | Officer | |||
Debt Instrument [Line Items] | |||
Stock Repurchased During Period, Shares | 1,568,445 | ||
IPO | Common Stock | |||
Debt Instrument [Line Items] | |||
Number of shares sold (in shares) | 53,590,000 | ||
Sale of stock (in dollars per share) | $ 23 | ||
Number of additional shares to be repurchased (in shares) | 6,990,000 | ||
Consideration received | $ 1,200,000 |
Long-Term Debt - Aggregate Matu
Long-Term Debt - Aggregate Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
2021 | $ 0 | |
2022 | 0 | |
2023 | 450 | |
2024 | 0 | |
2025 | 0 | |
Thereafter | 1,763,100 | |
Total | $ 1,763,550 | $ 1,863,550 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||||||
Effective income tax rate | 33.20% | (207.70%) | 30.70% | (255.90%) | ||
Limitation on deductibility of interest expense | 50.00% | 30.00% | ||||
Current income tax benefit | $ 8,700 | |||||
Reversal of valuation allowance | $ 5,600 |
Employee Benefits - Net Periodi
Employee Benefits - Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Defined benefit pension plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 300 | $ 278 | $ 905 | $ 821 |
Interest cost | 1,622 | 2,024 | 4,897 | 5,974 |
Expected return on plan assets | (3,577) | (3,629) | (10,799) | (10,712) |
Amortization of net actuarial loss | 269 | 200 | 811 | 588 |
Net periodic benefit cost | (1,386) | (1,127) | (4,186) | (3,329) |
Other benefits plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 7 | 7 | 21 | 21 |
Interest cost | 59 | 74 | 179 | 218 |
Amortization of net actuarial loss | 9 | 13 | 26 | 39 |
Net periodic benefit cost | $ 75 | $ 94 | $ 226 | $ 278 |
Employee Benefits - Additional
Employee Benefits - Additional Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Postemployment Benefits [Abstract] | ||
Expect funding requirements in each of the next five years | $ 2,800 | |
Defined benefit pension plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Letters of credit outstanding, amount | $ 44,500 | $ 41,300 |
Defined benefit pension plan | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Solvency payment as percent of market value | 15.00% |
Other Comprehensive Income (L_3
Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | $ 523,271 | $ (682,050) | $ 454,574 | $ (641,132) |
Balance | 525,769 | (662,001) | 525,769 | (662,001) |
AOCI Attributable to Parent | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (77,468) | (143,688) | (93,842) | (94,387) |
Other comprehensive income (loss) before reclassifications | (28,762) | 16,456 | (12,947) | (35,421) |
Amounts reclassified from accumulated other comprehensive income (loss) | 278 | 2,479 | 837 | 5,055 |
Net current-period other comprehensive income (loss) | (28,484) | 18,935 | (12,110) | (30,366) |
Balance | (105,952) | (124,753) | (105,952) | (124,753) |
Defined Benefit Plans | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (44,813) | (25,873) | (44,143) | (27,113) |
Other comprehensive income (loss) before reclassifications | 1,105 | (540) | (124) | 700 |
Amounts reclassified from accumulated other comprehensive income (loss) | 278 | 0 | 837 | 0 |
Net current-period other comprehensive income (loss) | 1,383 | (540) | 713 | 700 |
Balance | (43,430) | (26,413) | (43,430) | (26,413) |
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (32,655) | (115,980) | (49,699) | (67,453) |
Other comprehensive income (loss) before reclassifications | (29,867) | 17,640 | (12,823) | (30,887) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Net current-period other comprehensive income (loss) | (29,867) | 17,640 | (12,823) | (30,887) |
Balance | (62,522) | (98,340) | (62,522) | (98,340) |
Interest Rate Swaps | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | 0 | (1,835) | 0 | 179 |
Other comprehensive income (loss) before reclassifications | 0 | (644) | 0 | (5,234) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 2,479 | 0 | 5,055 |
Net current-period other comprehensive income (loss) | 0 | 1,835 | 0 | (179) |
Balance | $ 0 | $ 0 | $ 0 | $ 0 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
2020 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 2,900 | $ 8,500 | ||
Restricted Stock | Pre-IPO B-1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 5 years | |||
Share-based compensation expense | $ 700 | $ 900 | $ 2,000 | $ 4,000 |
Restricted Stock | Pre-IPO B-1 | Year One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20.00% | |||
Restricted Stock | Pre-IPO B-1 | Year Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20.00% | |||
Restricted Stock | Pre-IPO B-1 | Year Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20.00% | |||
Restricted Stock | Pre-IPO B-1 | Year Four | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20.00% | |||
Restricted Stock | Pre-IPO B-1 | Year Five | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20.00% | |||
Restricted Stock | Pre-IPO B-2 | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash proceeds to sponsors, ratio to invested capital | 250.00% | 250.00% | ||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
Contractual term | 10 years | |||
Stock Options | 2020 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 1,300 | $ 3,900 | ||
RSUs | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
RSUs | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
RSUs | 2020 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 1,600 | $ 4,600 |
Share-Based Compensation - Pre-
Share-Based Compensation - Pre-IPO Awards (Class B-1 and B-2) (Details) - Restricted Stock | 9 Months Ended |
Sep. 30, 2021shares | |
Pre-IPO B-1 | |
Number of Shares | |
Beginning balance (in shares) | 2,201,239 |
Forfeited (in shares) | (43,361) |
Vested (in shares) | (757,636) |
Ending balance (in shares) | 1,400,242 |
Pre-IPO B-2 | |
Number of Shares | |
Beginning balance (in shares) | 2,323,333 |
Forfeited (in shares) | (284,850) |
Vested (in shares) | 0 |
Ending balance (in shares) | 2,038,483 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Options (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of Shares | |
Beginning balance (in shares) | 2,389,258 |
Granted (in shares) | 38,176 |
Forfeited (in shares) | (24,678) |
Exercised (in shares) | 0 |
Ending balance (in shares) | 2,402,756 |
Weighted- average Exercise Price | |
Beginning balance (in shares) | $ / shares | $ 23 |
Granted (in dollars per share) | $ / shares | 24.70 |
Forfeited (in dollars per share) | $ / shares | 23.15 |
Exercised (in dollars per share) | $ / shares | 0 |
Ending balance (in shares) | $ / shares | $ 23.03 |
Options vested (in shares) | 0 |
Share-Based Compensation - RSUs
Share-Based Compensation - RSUs (Details) - RSUs | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of Shares | |
Beginning balance (in shares) | shares | 771,276 |
Granted (in shares) | shares | 108,255 |
Forfeited (in shares) | shares | (18,798) |
Vested (in shares) | shares | (46,952) |
Ending balance (in shares) | shares | 813,781 |
Weighted- average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 23 |
Granted (in dollars per share) | $ / shares | 24.17 |
Forfeited (in dollars per share) | $ / shares | 23.13 |
Vested (in dollars per share) | $ / shares | 23 |
Ending balance (in dollars per share) | $ / shares | $ 23.15 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Earnings: | ||||
Net income | $ 27,444 | $ 629 | $ 81,124 | $ 5,895 |
Less: Net income attributable to noncontrolling interests | 0 | 619 | 239 | 832 |
Less: Allocation to participating securities | 343 | 0 | 1,089 | 0 |
Less: Allocation to participating securities | 343 | 0 | 1,089 | 0 |
Net income attributable to Sotera Health Company common shareholders | 27,101 | 10 | 79,796 | 5,063 |
Net income attributable to Sotera Health Company common shareholders | $ 27,101 | $ 10 | $ 79,796 | $ 5,063 |
Weighted Average Common Shares: | ||||
Weighted-average common shares outstanding - basic (in shares) | 279,381,000 | 232,400,000 | 279,097,000 | 232,400,000 |
Dilutive effect of potential common shares (in shares) | 179,000 | 0 | 156,000 | 0 |
Weighted-average common shares outstanding - diluted (in shares) | 279,560,000 | 232,400,000 | 279,253,000 | 232,400,000 |
Earnings per Common Share: | ||||
Net income per common share attributable to Sotera Health Company common shareholders - basic (in dollars per share) | $ 0.10 | $ 0 | $ 0.29 | $ 0.02 |
Net income per common share attributable to Sotera Health Company common shareholders - diluted (in dollars per share) | $ 0.10 | $ 0 | $ 0.29 | $ 0.02 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 | ||
Stock Options | 2020 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,402,798 | 2,399,054 | ||
RSUs | 2020 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4,713 | 6,749 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Aug. 21, 2020plaintiff | Aug. 17, 2020claimplaintiff | May 19, 2020plaintiff | Mar. 30, 2020USD ($) | Mar. 30, 2020CAD ($) | Oct. 22, 2010USD ($) | May 31, 2020 | Sep. 30, 2021USD ($)segment |
Gain Contingencies [Line Items] | ||||||||
Number of claims with re-set trials | segment | 3 | |||||||
Loss contingency, insurance limits per occurrence | $ 10,000,000 | |||||||
Loss contingency, insurance limits | 20,000,000 | |||||||
Nordion v Factory Mutual Insurance Company, 2010 Business Interruption Loss | Positive Outcome of Litigation | ||||||||
Gain Contingencies [Line Items] | ||||||||
Damages sought, value | $ 25,000,000 | |||||||
Period of inability | 15 months | |||||||
Amount awarded from other party, before pre-judgment interest | $ 25,000,000 | |||||||
Amount awarded from other party | 39,800,000 | $ 56.4 | ||||||
Costs assessed and awarded in favor | $ 1,000,000 | $ 1.3 | ||||||
Ethylene Oxide Tort Litigation - Illinois | Pending Litigation | ||||||||
Gain Contingencies [Line Items] | ||||||||
Number of plaintiffs | plaintiff | 770 | |||||||
Ethylene Oxide Tort Litigation – Georgia | Pending Litigation | ||||||||
Gain Contingencies [Line Items] | ||||||||
Number of plaintiffs | plaintiff | 41 | 53 | ||||||
Percent of reduction in residential property value assessment | 10.00% | |||||||
Loss contingency, insurance limits | 10,000,000 | |||||||
Loss contingency, utilized limits | $ 2,200,000 | |||||||
Ethylene Oxide Tort Litigation – Georgia | Pending Litigation | Subsidiaries | ||||||||
Gain Contingencies [Line Items] | ||||||||
Number of new claims filed | claim | 2 |
Financial Instruments and Fin_3
Financial Instruments and Financial Risk - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Feb. 28, 2021USD ($)instrument | Dec. 31, 2020USD ($) | Jun. 30, 2020USD ($)instrument | Sep. 30, 2019USD ($)instrument | Oct. 31, 2017USD ($)instrument | |
Derivative [Line Items] | |||||||||
Derivative loss, net of tax recognized in accumulated other comprehensive income (loss) | $ 0 | $ (1,835,000) | $ 0 | $ 179,000 | |||||
Allowance for uncollectible accounts | 957,000 | 957,000 | $ 708,000 | ||||||
Interest Rate Swap | |||||||||
Derivative [Line Items] | |||||||||
Derivative loss, net of tax recognized in accumulated other comprehensive income (loss) | $ 1,800,000 | $ (200,000) | |||||||
Foreign Currency Forward Contracts | |||||||||
Derivative [Line Items] | |||||||||
Fair value of outstanding contracts | 0 | 0 | 0 | ||||||
Derivatives Designated in Hedge Relationships | Interest Rate Swap | |||||||||
Derivative [Line Items] | |||||||||
Number of instruments held | instrument | 2 | ||||||||
Derivatives Not Designated in Hedge Relationships | |||||||||
Derivative [Line Items] | |||||||||
Notional amount | 2,577,900 | 2,577,900 | 1,583,300 | ||||||
Derivatives Not Designated in Hedge Relationships | Interest Rate Swap | |||||||||
Derivative [Line Items] | |||||||||
Notional amount | $ 1,000,000,000 | ||||||||
Derivatives Not Designated in Hedge Relationships | Interest Rate Cap | |||||||||
Derivative [Line Items] | |||||||||
Number of instruments held | instrument | 2 | ||||||||
Notional amount | $ 2,500,000 | $ 2,500,000 | $ 1,000,000,000 | $ 1,500,000 | $ 1,000,000,000 | $ 400,000,000 | |||
Option premium | $ 400,000 | $ 300,000 | $ 600,000 | ||||||
Percent of borrowing limitation due to cash flow exposure | 3.00% | ||||||||
Derivatives Not Designated in Hedge Relationships | Interest Rate Cap | LIBOR | |||||||||
Derivative [Line Items] | |||||||||
Variable rate | 0.50% | 0.50% | 0.50% | 1.00% | |||||
Derivatives Not Designated in Hedge Relationships | Interest Rate Cap October 2017 | |||||||||
Derivative [Line Items] | |||||||||
Number of instruments held | instrument | 2 | ||||||||
Derivatives Not Designated in Hedge Relationships | Interest Rate Cap June 2020 | |||||||||
Derivative [Line Items] | |||||||||
Number of instruments held | instrument | 2 | ||||||||
Derivatives Not Designated in Hedge Relationships | Interest Rate Cap | |||||||||
Derivative [Line Items] | |||||||||
Notional amount | $ 500,000,000 | ||||||||
Derivatives Not Designated in Hedge Relationships | Interest Rate Cap February 2021 | |||||||||
Derivative [Line Items] | |||||||||
Number of instruments amended | instrument | 2 |
Financial Instruments and Fin_4
Financial Instruments and Financial Risk - Derivative Instruments (Details) - Derivatives Not Designated in Hedge Relationships - USD ($) | Sep. 30, 2021 | Feb. 28, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Oct. 31, 2017 |
Derivative [Line Items] | ||||||
Notional Amount | $ 2,577,900 | $ 1,583,300 | ||||
Fair Value, Derivative Asset | 201,000 | 7,000 | ||||
Fair Value, Derivative Liabilities | 281,000 | 670,000 | ||||
Interest Rate Cap | ||||||
Derivative [Line Items] | ||||||
Notional Amount | 2,500,000 | $ 1,000,000,000 | 1,500,000 | $ 1,000,000,000 | $ 400,000,000 | |
Fair Value, Derivative Asset | 201,000 | 7,000 | ||||
Fair Value, Derivative Liabilities | 0 | 0 | ||||
Embedded Derivative | ||||||
Derivative [Line Items] | ||||||
Notional Amount | 77,900 | 83,300 | ||||
Fair Value, Derivative Asset | 0 | 0 | ||||
Fair Value, Derivative Liabilities | $ 281,000 | $ 670,000 | ||||
Interest Rate Swap | ||||||
Derivative [Line Items] | ||||||
Notional Amount | $ 1,000,000,000 |
Financial Instruments and Fin_5
Financial Instruments and Financial Risk - Activities of Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Interest Rate Cap | Interest Expense, Net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized loss (gain) | $ (116) | $ 58 | $ 267 | $ 230 |
Embedded Derivative | Other Income, Net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized loss (gain) | 1,189 | (1,464) | (424) | 579 |
Interest Rate Swap | Interest Expense, Net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized loss | 0 | 2,479 | 0 | 5,055 |
Foreign Currency Forward Contracts | Foreign Exchange (Gain) Loss | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized loss | $ 762 | $ 0 | $ (1,381) | $ 0 |
Financial Instruments and Fin_6
Financial Instruments and Financial Risk - Assets and Liabilities Measured on Recurring Basis (Details) - Derivatives Not Designated in Hedge Relationships - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Derivative [Line Items] | ||
Derivative asset | $ 201 | $ 7 |
Derivative liabilities | (281) | (670) |
Term loan, due 2026 | Fair Value, Level 1 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | 0 |
Term loan, due 2026 | Fair Value, Level 2 | ||
Derivative [Line Items] | ||
Long-term debt | 1,758,692 | 1,772,180 |
Term loan, due 2026 | Fair Value, Level 3 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | 0 |
Senior notes, due 2027 | Fair Value, Level 1 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | |
Senior notes, due 2027 | Fair Value, Level 2 | ||
Derivative [Line Items] | ||
Long-term debt | 99,863 | |
Senior notes, due 2027 | Fair Value, Level 3 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | |
Other long-term debt | Fair Value, Level 1 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | 0 |
Other long-term debt | Fair Value, Level 2 | ||
Derivative [Line Items] | ||
Long-term debt | 444 | 442 |
Other long-term debt | Fair Value, Level 3 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | 0 |
Finance Lease Obligations (with current portion) | Fair Value, Level 1 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | 0 |
Finance Lease Obligations (with current portion) | Fair Value, Level 2 | ||
Derivative [Line Items] | ||
Long-term debt | 39,353 | 36,112 |
Finance Lease Obligations (with current portion) | Fair Value, Level 3 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | 0 |
Interest Rate Cap | ||
Derivative [Line Items] | ||
Derivative asset | 201 | 7 |
Derivative liabilities | 0 | 0 |
Interest Rate Cap | Fair Value, Level 1 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | 0 |
Interest Rate Cap | Fair Value, Level 2 | ||
Derivative [Line Items] | ||
Derivative asset | 201 | 7 |
Interest Rate Cap | Fair Value, Level 3 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | 0 |
Embedded Derivative | ||
Derivative [Line Items] | ||
Derivative asset | 0 | 0 |
Derivative liabilities | (281) | (670) |
Embedded Derivative | Fair Value, Level 1 | ||
Derivative [Line Items] | ||
Derivative liabilities | 0 | 0 |
Embedded Derivative | Fair Value, Level 2 | ||
Derivative [Line Items] | ||
Derivative liabilities | (281) | (670) |
Embedded Derivative | Fair Value, Level 3 | ||
Derivative [Line Items] | ||
Derivative liabilities | 0 | 0 |
Carrying Amount | Term loan, due 2026 | ||
Derivative [Line Items] | ||
Long-term debt | 1,742,134 | 1,728,018 |
Carrying Amount | Senior notes, due 2027 | ||
Derivative [Line Items] | ||
Long-term debt | 96,329 | |
Carrying Amount | Other long-term debt | ||
Derivative [Line Items] | ||
Long-term debt | 444 | 442 |
Carrying Amount | Finance Lease Obligations (with current portion) | ||
Derivative [Line Items] | ||
Long-term debt | 39,353 | 36,112 |
Carrying Amount | Interest Rate Cap | ||
Derivative [Line Items] | ||
Derivative asset | 201 | 7 |
Carrying Amount | Embedded Derivative | ||
Derivative [Line Items] | ||
Derivative liabilities | $ (281) | $ (670) |
Segment Information - Additiona
Segment Information - Additional Information (Details) - segment | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting [Abstract] | ||||
Number of operating segments | 3 | |||
Number of reportable segments | 3 | |||
Operating Segments | Nordion | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer One | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 20.40% | 23.70% | 13.20% | 15.50% |
Operating Segments | Nordion | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Two | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 12.80% | 18.60% | 12.80% | 14.50% |
Operating Segments | Nordion | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Three | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 12.80% | 18.50% | 12.60% | 11.40% |
Operating Segments | Nordion | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Four | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 10.30% | 12.40% | 12.30% | 11.20% |
Operating Segments | Nordion | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Five | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 10.50% | 10.30% |
Segment Information - Segment O
Segment Information - Segment Operating Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Net revenues | $ 226,164 | $ 200,028 | $ 690,229 | $ 601,313 |
Total capital expenditures | 60,898 | 33,640 | ||
Sterigenics | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 145,314 | 126,303 | 421,647 | 363,955 |
Total capital expenditures | 48,552 | 29,090 | ||
Nordion | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 28,768 | 20,268 | 103,811 | 86,034 |
Total capital expenditures | 7,531 | 1,809 | ||
Nelson Labs | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 52,082 | 53,457 | 164,771 | 151,324 |
Total capital expenditures | 4,815 | 2,741 | ||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 226,164 | 200,028 | 690,229 | 601,313 |
Segment income | 116,674 | 100,485 | 356,554 | 306,797 |
Operating Segments | Sterigenics | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 145,314 | 126,302 | 421,647 | 363,954 |
Segment income | 79,344 | 66,682 | 227,374 | 192,803 |
Operating Segments | Nordion | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 28,768 | 20,268 | 103,811 | 86,034 |
Segment income | 16,331 | 10,261 | 61,285 | 50,692 |
Operating Segments | Nelson Labs | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 52,082 | 53,458 | 164,771 | 151,325 |
Segment income | 20,999 | 23,542 | 67,895 | 63,302 |
Intersegment | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | $ (3,700) | $ (3,000) | $ (21,200) | $ (22,900) |
Segment Information - Reconcili
Segment Information - Reconciliation of Reportable Segment Amounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Share-based compensation expense | $ 10,489 | $ 4,019 | ||
Loss on extinguishment of debt | $ 6,365 | $ 0 | 20,677 | 0 |
Accretion of asset retirement obligations | 1,751 | 1,502 | ||
Net income attributable to Sotera Health Company | 27,444 | 10 | 80,885 | 5,063 |
Nordion | ||||
Segment Reporting Information [Line Items] | ||||
Proceeds from insurance settlement | 3,400 | |||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment income | 116,674 | 100,485 | 356,554 | 306,797 |
Operating Segments | Nordion | ||||
Segment Reporting Information [Line Items] | ||||
Segment income | 16,331 | 10,261 | 61,285 | 50,692 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Interest expense, net | 18,140 | 55,330 | 58,585 | 167,142 |
Depreciation and amortization | 37,634 | 36,101 | 112,756 | 107,158 |
Share-based compensation expense | 3,547 | 901 | 10,489 | 4,019 |
(Gain) loss on foreign currency and embedded derivatives | 1,881 | (6,035) | 885 | (4,791) |
Acquisition and divestiture related charges, net | (2,662) | 681 | (2,003) | 2,970 |
Business optimization project expenses | 244 | 685 | 780 | 2,484 |
Plant closure expenses | 266 | 1,166 | 1,564 | 2,388 |
Loss on extinguishment of debt | 6,365 | 0 | 20,677 | 0 |
Professional services relating to EO sterilization facilities | 9,449 | 11,730 | 33,492 | 25,370 |
Accretion of asset retirement obligations | 598 | 494 | 1,751 | 1,476 |
COVID-19 expenses | 109 | 16 | 596 | 2,363 |
Net income attributable to Sotera Health Company | $ 41,103 | $ (584) | $ 116,982 | $ (3,782) |