Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to the Sotera Health Second Quarter 2023 Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Vice President and Treasurer, Jason Peterson. ahead. go Please

Jason Peterson

thank XXXX and to Health's Sotera Good Call. you. Quarter Results Second morning Welcome

You press at find will the Investors is can Sotera today's recorded, be section on supplemental being Investors of the available slides Health in our section a website. website and soterahealth.com. the webcast release This replay and of accompanying

Officer, and Michael Petras Officer, the with Jon On Lyons. Executive call me Chief today Chief are Financial Chairman and

these The may the Sotera that in matters obligation call, to slide SEC statements. of for such some beginning those considered During to update could risks refer uncertainties or from projected and the results The addressed comments of statements and any presentation be Health's subject company assumes our and at to actual to forward-looking uncertainties. no are differ these the forward-looking statement materially statements. implied. forward-looking of the risks cause Please description filings a

Please non-GAAP company note EBITDA, net that during margin, comparisons. both debt, in income, and leverage addition adjusted currency measures, segment adjusted ratio adjusted financial GAAP constant to adjusted EPS, net EBITDA the net present will margin including income the discussion today, and

to be and we follow-up attached questions. GAAP that the Please ask limit for today. so of portion give yourself reconciliation opportunity slides call be question The the the periods will of to the one and with operator may one to Q&A measures assisting everyone to A supplemental relevant found the all in company's non-GAAP release schedules in press this presentation. to can an

the reach free the after call, out As feel always, if questions team. any to and me Relations you to Investor have please

Michael Sotera and CEO, over turn Health now Petras. the call to I'll Chairman

Michael Petras

XXXX thank Sotera Good you Earnings for Quarter joining morning, everyone, Call. Second Health's and

career roles. served $XX Prior appointed construction executive Officer, with time Corning, on accounting. experience he at Owens senior brings as materials leader, to a wealth in Chief I his a and so leadership to where public to board. in Lyons. our industry to he beginning health comes from a acumen Health after him Sotera moment served John John Corning, in excited Global Financial positions we're care us as Building billion John financial take newly have Owens to introduce several well various Cardinal Health John's would like and of

take contributions support I leading CFO and as his like for would the you Michael Health. thank also organization. for to year past Michael, to moment the the and a interim company's Biehl your Sotera for thank commitment over finance

XX, claims settlement million the of Illinois against related from ethylene the the $XXX claims were opted prejudice. who of on with escrow dismissed into the the July As previously funds settlement on X, approximately Sterigenics June claimants to oxide communicated were XXX released and

a the month detail. are few review were team, with to Although like XXXX pleased we claims we items I ahead merit, efforts review believe a continue thanks is rate. the schedule, to results without But participation finalized quarter. X second quarter will a our our moment, to legal and from In first, John XX.X% the in of more would these settlement of

$X.XX declined Nordion's lingering second reporting our largest customer XXXX. same and segment continues of X.X% of expected the to the delivered X.X% for adjusted Cobalt-XX chain Total the a harvest EBITDA primarily We driven and global from of top-line even is EPS declined delivered company decrease quarter, X.X% the XXXX, by the the revenues customers challenges challenging growth quarter for of to quarter economic timing and is with which inflation. period adjusted schedules. second inventory outlook compared Sterigenics last year. Sterigenics, supply $X.XX our service though

quarter of margin lighter Sterigenics XXX income basis improvement has which the costs, year. to contributed is are volumes team point this planned, first the managing segment Sterigenics Although a than compared prudently to

our demonstrate the expansion the America. team to best-in-class facility two industry-leading on enhancements in quarter, enhancements progress to our reporting XX% sterilization timing North experienced commitment to our the year-over-year These within the schedules. EO Nordion, we controls and decline the revenue other customers During for continue they in Cobalt-XX business services operate. our which segment projects, make and completed employees, ensure emission due a communities harvest of

We into harvest revenue tied from of timing Cobalt-XX visibility our it's have good suppliers. Nordion's the schedules the as to

expected As to half revenue the fourth the approximately particularly of lumpy XX% the XX% second quarter. revenue the as will previously be XXXX of occur year year's occurring Nordion's conveyed, with approximately of in in the revenue is

chain and a Cobalt-XX the complex how single-use portion one, of X% At to a we a Nordion is critical supply of The and supply play is in efforts our I'm to health impact is example proud Russia. the supply from in year source could availability. by Health result to Health disruption the potentially care role total in a revenues. great the global the continued At supply we zero that Nordion Russia ensure stated are critical does of that to total community. global its start of team revenues. medical Russian devices X% Cobalt-XX a XXXX approximately we continue year, the year, Sotera full sterilize juncture is to of to Cobalt-XX this safeguarding impacting Sotera XX% world's on confident there a total health. risk from XXXX This is used

prior our revenues. below growth XXX margins lab quarter basis which in first experienced sequential were the and the year second advisory and this of year. record of business quarter, Labs, experienced service of approximately Revenues quarter Nelson expanded over X.X% points the had testing XXXX

while of that we to Labs satisfaction. focus team softer-than-expected and to challenging light actively expect outlook. Sterigenics full keeping is managing lab quality business. in our year to volumes, In volumes and are costs the the adjusting the continue XXXX at customer Nelson on softness we be Nelson Labs continue, volume our However, Due

growth and in X% to of X% to to in X% approximately range the X%. be revenue of We the growth range EBITDA now be expect to full year adjusted year net approximately full

range. are into have weaker account that We this confident market in and we other adjusted dynamics taken volumes reflected

to to executing on best our our globe. strategy around the concentrate continue customers will We serve

financials of take Cobalt-XX at Prior to supply a to John our safeguarding every to used professionals us which help for is products cancer. our day. underscore treat heart validation radiation mission medical the through brain the work. We minute to detail, sterilization in more Health, government oncology testing and I'd walking pharmaceutical and for each Global and like We performed mandate

needs. provide we solve to addition, our and product expertise technical critical In development regulatory sterility and customers'

spray is protect our life-saving via Global health we which overdose. of of experiencing The the One a extractable approval performed at our Nelson this of shape chronic market. a FDA Health society. how and including Our using of Labs example caused leachable indispensable of societal use unfortunately, U.S. care our team as problem opioid patients an the drugs, by XXXX, spring the world. treatment patients in fentanyl, single-use is In the opioid and the helped millions of to services impact for providers major received overdoses for product rescue approval such Europe, studies significant nasal remain FDA synthetic around

second sterilization Nelson the on located in Investor our released video example to morning presentation how our around available highlighted our Sterigenics performed quarter are and validation this video Another Safeguarding XXXX through mission fulfilling critical Labs watch work Relations to you is learn Health the encourage I delivery of Global the earnings about in conjunction link ensure on to teams and a of vaccines slide testing world. successful and his website. for our

financials. the through us walk will Jon Now

Jonathan Lyons

Michael. Thank you,

position by begin to future. forward with our saying meeting a care many unique want you I I the supply which how Health, to health also am to of join the talented in and look chain. to I in Sotera global holds team forward near such excited look working

of I will the the covering some outlook. basis on comments begin updated along details then XXXX conclude I on updates some a with on second capital quarter will business deployment highlights XXXX leverage. segments, and provide our additional by and on with consolidated each

company This a a company. period constant on moderating equates quarter basis, to as total second decline to compared year same X.X% by as currency $XXX revenues are On headwinds exchange declined last for million. to the foreign consolidated basis X.X% a the

call, expect tailwind during on foreign back to a half the we quarter and of the become continued the moderation As currency exchange foreign year. of expect headwinds first mentioned

Adjusted by EBITDA Nelson declined the margins from decline X.X% were million. versus Adjusted point representing volumes experienced is Labs XX-basis Nordion compared in The EBITDA and by XX.X%, from to a XXXX $XXX QX decline driven XXXX levels. of the lower second margins quarter XXXX. to quarter second

result of of improvement expense second EBITDA volumes in referenced from EBITDA sequentially as was versus higher margins $X.XX, quarter and QX decrease in as prior Nordion. a EPS Adjusted year. Sterigenics Nelson were Importantly, from on the higher well the Michael XXXX, up of $X.XX that earlier the interest lower and

XXXX $XX million QX $XX was of for per diluted or diluted QX per million $X.XX share in income $X.XX share income XXXX. to or net Net compared

Our last higher period debt incremental increase on million closed is reported rate XXXX year. year. expense as driven The QX for on approximately the interest same million, in $XXX increase second term loan rates variable our interest which of an was $XX that million quarter $XX the as this versus is by of of our well

take Now a performance. at look let's our segment

by favorable driven QX to by growth in Sterigenics to and partially margins pricing volume segment increased favorable compared year year. X%, XX.X%, second quarter, XXXX X.X% inflation. the for foreign exchange and rates $XX almost revenue by XXX QX offset and and X.X% quarter pricing, XXXX as favorable quarter, mix X.X%. mix income of of points changes drivers partially volume growth the to basis to segment offset prior million unfavorable the Revenue For $XXX million delivered included unfavorable and last income to of X.X% Compared increased for by of

second buying which schedules. XX% revenue approximately harvest decline on Cobalt-XX to impact nearly of expected mix impact to of in Nordion's XX% exchange XXXX partially currency based offset changes we a $XX of pricing by rates from unfavorable declined million a almost compared by the QX X%, was timing quarter and Nordion's favorable foreign from driven X.X%. of revenue by

million XXX to income decreased margin and to declined XX.X% to by and unfavorable Segment Segment compared the points margin pricing. to the versus segment income favorable mix volume $XX were quarter year. same income basis approximately XXXX period XX.X% offset due second segment last changes and

the currency impacted declined second For Revenue of pricing X%. mix X.X% in Nelson million foreign from to quarter favorable unfavorable XXXX. compared $XX was X.X% benefit offset Labs, changes by volume by quarter partially almost of revenue X.X%, XXXX and of and a second to by

XXXX. second Nelson volume well income favorable versus Labs by second was mix points as XX.X% contracted quarter by income decreased to unfavorable X.X% decline as XXX segment quarter pricing. basis and and margins offset by inflation to due $XX million This XXXX segment over to partially

leverage. net I capital will cash turn now and to generation, deployment

June of operating When with cash on approximately the earlier, mentioned period XXXX, $XXX adjusting months XX, was ethylene Michael of claims million for million funds of over resulted by year. in were oxide released activities outflow, the in related Illinois million of used $XXX provided was This XXXX, to As line operating the the a net for which million. escrow. settlement source $XXX approximately in from the X first $XXX same last activities cash

of of our million of cash liquidity, available June $XXX As on of in revolving XX, capacity unrestricted million includes $XXX approximately which and $XXX XXXX, had million we line credit. available

at issued our of the X.Xx. with X.Xx was the $XXX the settlement million new loan and from payment. XXXX associated due was in the oxide to $XXX million year-end QX expected, level term XXXX ethylene net This the ratio increase end connection leverage an As of

XXXX year. expenditures last of and capital second facility the increased drove totaled for Our versus investment CapEx Growth $XX the million. QX quarter enhancements

guidance. turning Now to

From approximately X%. revenue total $X.XX billion billion, we quarterly Michael are as expect in perspective, will be billion mentioned, to shape a the occur rate of full anticipate the February. annual that We range outlook of Nordion's We fourth an $X.XXX representing full growth from now half our X% quarter. year range provided in we approximately in of to revenues to adjusting $X.XXX of previous the year billion XXXX $X.XXX to

and flat the throughout remainder relatively sequentially. expect remain Nelson In the to to year Sterigenics addition, of volumes increase Labs we revenue slightly

full $XXX be to $XXX range now tax range EBITDA expected million to diluted to $XXX previous we For XX%. our an $XXX million, $XXX of year, range XX% in the million expect be million average representing X% in annual of remain million The to million is adjusted growth from the a XX% to $XXX shares of of approximately rate XX% from Weighted of the X%. in to the to rate to range. range

million to increased of expenditures range expect remains to $X.XX. the costs. higher $XXX $XXX capitalized interest of range EPS from to $X.XX upper driven the Adjusted million end $XXX the range capital in $XXX primarily million, to by borrowing be the million We of previous of in now at

Lastly, we to expect year or the finish at Xx. net below leverage

back Michael. call the turn I'll to Now

Michael Petras

Thank John. you,

to move At reemphasize executing open this dedicated is we that Global Health. the our As to to our Q&A, strategy on for focusing and Health point, answer. call Safeguarding I mission question let's and operator, Sotera is want of

Operator

Thank you.

We the question with question-and-answer first Patrick will will from [Operator now go the Please Donnelly Instructions] Citi. being And session. ahead. be

Unidentified Analyst

have You on Thank so claimants the to any with idea the the with decided X Illinois, guidance. for wanted timeline actually that to is Patrick. in what out, Brendan much the all the on revised for EO ask forward? clarity settlement I moving opt

Michael Petras

plans. and No, Michael. we We're Brendan. court waiting don't. scheduling morning, timelines tell Good on the to the us It's

but the option all the walk that, very about went three and and ahead around moving feel fact we away deal, reviewed sheet Just forward for the with had settlement the you to so it's on claimants we others, the and with we those and confident clear opt-outs.

Unidentified Analyst

you. should about the Thank the we year volumes? then, think is half a how on in second given second pricing the of Great. follow-up And reduced question

Michael Petras

price. business along is about X.X% said to X% We've this

you looking I be confident ought will to range feel that that it think in forward.

Operator

the go Please Sean will be Capital. ahead. from And Dodge next question RBC from

Sean Dodge

then about that? be Jon. that? have will us than or much adjustments Michael, softer more than you think little there how Good adjustment you morning initially more congratulations, to in bit the we cost short-term Sterigenics improvement you that drove and margins, just the what right-size that Glad to try a can sequential make maybe little for Thanks. bit much volumes to in how through the walk And a contemplated, expectation detail in as maybe structure and here.

Michael Petras

efficient across and the in of as Good destocking be look as operations we within the on as about probably not seen of softening. all levels can structure. our challenges, businesses other you've in continue some those and good inventory X to of that There margin pretty But Sterigenics. customers. get huge areas isn't morning labor our There We've some Sean. feel We'll they're we we operations. operations, as volume flexibility large performance best that aspect had is inventory and heard levels some out cost we consistent but

XXX it's any a like facility. given not XX take If people XX, you facility, in given facility, XXX, there's per

in some is continue done has on really business. operating that. a limitations job team there on But and the nice So leverage, we that to get price

Sterigenics. we margin So within the feel good levels about

Sean Dodge

Okay. rules like? you the there, as from on proposed there been Great. the emissions, have with And or then the and on communication I final more could EPA the And EPA what regulations updates the guess the proposed rule look were the any released? rule in EO thoughts

Michael Petras

Yes.

submitted the probably, comments we something So think and is across comments like XX,XXX there industry. I in total,

Our working expectation consent is the EPA, orders. on they're their

NESHAP by regulators had adoption as have that to expecting them well with a trade inputs We've through aware see of we're the They're we final March groups. of conversations the of current timeline us others. So many XXXX. the from as rules. to type expect different some That's

Operator

And Dave the question Jefferies. next from Windley is from

David Windley

commented -- customers talk taking? side affecting hospitals, we've kind Thanks. about there's about you been on kind you the price medtech that the perhaps if is think what in the industry you're medtech you're seeing. those that softness et wondered are of you make health between sensitivity talked you've is amongst is in any the the what Michael, that pricing about care that past of and experiencing to seeing of that kind seeing could volumes indicators is the are cetera, disconnect the of that volumes to showing and continue of broader industry, and the improvements that that, And ahead and all? going you're comment in I volumes on you kind at

Michael Petras

seeing continue levels and our mentioned we're see Thank the We'll inventory pressure and that customers. that, to do you, as returning probably the been Hospital quarter. rebounding quarter, into we next moving quarter into have forward I pre-pandemic facets see around we're see volumes to We many that last seeing this as David. at well. world,

been on at are look there's that kits people you not seeing are at mean get improvements down, scrambling you to we're lots period. buildup PPE, how thoughtful because when That look on just there's when look particularly devices look cardiac you our like doesn't that, inventory or where that at COVID surgical areas time we it So outlook and It's during we've the or at of totality, side. it in in categories orthopedic.

you we're the across We've want got don't categories that many in thinking it customers walk board. many, I significant to So I referenced. just the customer away growth seeing in

a business mentioned to the and will volume going As it conversation get And as we on to with have confident into because But conversation. customers get far as previously, the we that the was you're quarter we other depending of service and in think, that's forward. criticality somebody factored in continue to or continue have mix just end ability side, in when X% talking softer. great of just services. and always X.X% a quarter our conversation. feel that company price, we a always total nice listen, price, the our asked, bring a of that's the about price But to I delicate little which our outlook. our on a We about thinking Sterigenics

David Windley

Right.

then your maybe relatedly, on Okay. Great. And picture guidance. but bigger

a the implication margin higher, where past. fact, in was than new lot is but it guidance slightly not in in Your the

a further the compromising to or about revenue you're than the decline. able further revenue? where that bit taking So without implicating you're kind talk faster Could in detail areas do of more out little cost you

Michael Petras

do a make margin about that right and around a to to time This we've return there. the a our business, and of this there's does here play. period, if grower. bioprocessing Sterigenics balance as some We for But I going feel the those segment we're continue we as of times, cost us, things it but in sure Nelson. did huge to abnormal in destocking our David, not our are impact you Yes. confident going in this customers. us particularly get When taking challenges in there's single-digit when levels of that with cost and rates, talked here. they total, is many to to organic levels ability as bioprocessing in a historical to feel high through confident look quarter isn't mean well, at the will, bit side out little they're you a the we pretty return we that saw care

ripped low was but not as past, of and in big of is grow out first our costs this business current in. The play. work through machete in quarter what bunch feel messaged I always digits We ability think That's is this this the to the in a confident quarter about. our But you lowest a year. abnormally to want that's we cycle business high-single this to we're continue

we service. think taking let appropriately you that you super address recall, just operating come through because to in just we're those trade particular, But and we that, up bit natural some really a time. that our to head I not Since Nelson in down I costs would efficiency, talent like, side aggressive as So of may late we're our with as And of a potential of a built efficiencies demand working has continue level. as Mike counts, getting We'll demand and strongly if to out. drive be the to within clear we've want on want will, don't last quite on year, you focused bunch David. Joe, come

Operator

The go from Luke Sergott next from question ahead. Please Barclays. is

Luke Sergott

Just a on Windley's follow-up question there.

guys non-devices out you was So that mentioned weakness versus side, on you business Can bioprocessing. break of little the the have? bit volume a kind med the of pharma device you where

Michael Petras

Sterigenics some company. publicly would weeks, mix a in you've of say, volumes. So the It's but on mostly. as just in business the last That I have huge the portion, bioprocessing, to continue industry, a our for see we gone good Luke, not they customers' with seen struggle that forth it's with

seeing tell would that's where we're that So it. you

cycle some food We little the also softer that's current the within cosmetics and been have a and then in medtech. side, also Sterigenics

some particular. pharma lab of device it's side biopharma On the side, in as some the med and well bioprocessing and

Luke Sergott

Okay. the frame how like to are have volumes follow-up then Any bioprocessing quantification Just it a on I down? on and outlook. your

Michael Petras

significant double or digits probably down Yes. XX% Difficulty] They're [Technical so.

Luke Sergott

the can better you sense talked improving And exit of helpful. a give Anything That's how back you you were? just that volumes Can your paced you things and on to in us the out, are that where sequentially. quarter half, about the confidence step Okay. Steri recovery gives start what going up. getting rates say

Michael Petras

cyclicality Yes, this a there bit. little is a in business

you the the fourth will As in gave remarks fourth improvement, the then first slight that we the second quarter, with at we be of of total will the and revenue in the second in quarter second on quarter, third on the XX% you quarter. obviously, Nordion year's quarter. XX% Nelson third quarter. And side, be When will, prepared then revenue look you slight, improvement a to quarter the half again if saw, on if side, Sterigenics, take you we'll look see I'll at slight the versus

a kind it you're we that at that. stick, levels Nelson in figure were growth the at the knew all And when could half the year how hockey significant side, going here from you of quarter. at you not look big which year long. the the of So back It's see second we to

the be that will lighter quarter fourth think than Third about a little when you way. it quarter

Operator

next And Woodring the from from is question JPMorgan. Casey

Casey Woodring

Nelson in like today. with expectations came looks line it point, Nelson revenue the to follow-up a As in,

of through you can are the that Nelson, order just is was thought, new what far here than revised give half guidance recovery you here back trend Or guiding so then, XQ. wondering customers Nelson you a lower slower mainly flat in hearing in just the what in the originally if had sort maybe commentary contemplating from any sequentially? So the guide And Sterigenics revenue volume?

Michael Petras

been Casey, and I into line quarter the see Yes. The have more kind than on the little fourth just you'll in quarter see with with have say you. the third consistent and both little a the made see thank softness of lighter a bit guide, you would I in. Sterigenics factored you'll Nelson comments a second, factored ago, been second.

have you'll of versus flat, second relatively the So a year we where will, second if you finished quarter. half

obsessed a As some we customers, service, of. and in far not that Promoter product made what as or is for really them. got are testing we're we area, from proud the with miss, hear things we that of stability Scores, continue quality improvements one making in Hit sure our Net see new high some have which priority to customers we've

So that have an does impact.

MDR overall, than having little like. the Europe, where And choppier a in of know our that's little in years, we've was has biopharma couple done on Nelson which But a impact. slowed really bit and we'd goes We nice over down job business really we're big a the then a last confident area long-term.

term, mid- consistent the to we've as midterm, here with it expected see be in -- near also in we But at. That's the the first mid-XXs we pretty margin what is when get lowest. in past. to expect to improvement told You longer we where expect at that told the to being those you the in levels term. quarter you you to margin And in second always look step the quarter are saw the we

Casey Woodring

And quick couple of a follow-ups. then Got just it.

important or a should over rising has upgrades facility back for environment? are be paydown here ticking cadence next leverage, on for to the do up then how Thank on think else. year. it's of about further And proposal interest the rate the quarters, anything expectations expense you. that bit particularly we CapEx the debt just And half Curious modeling if then of EPA the should year? given So we the what few following with interest the if something

Jonathan Lyons

Yes.

Let me of those. few a unpack

spent million half got year. our in turn, We've about out was think the solution. going I in a the we've think your question around track. bit I regulations been first $XXX are CapEx. first enhancement through we've think programs on taking the little in Really, I as on EPA of of facility our front, all We're

no and driving what doing there's So improvement our there. our that been executing we've really We're change network. real on plans across

is capitalized company that us The as year. second we top biggest for in rising And and the it's a the changed total interest have you million flavor, have of pretty of programs environment an to CapEx the is end little that's uptick pushing we into some in interest give -- capitalized for north $XX this thing rate extensive this range. a

team evaluating liquidity place the your remember one We head, job last We're I'll position. was our take paydown, second question, loan good. did that by a little debt or to giving my the nice question, failing top around in bit sorry. term The of of a improving the and second right the off actually debt paydown. feel really

liquidity debt year, over back feel look no yet. plans good half we that of at just immediate the about And next and really we're but have. the paydown as considering position we year So we the the

really that think hedges of we February. term environment of loan you the the lastly, first interest have expect do increase that XX% little remaining. increasing have were half. million beginning have number of the expense, And it's uptick advantageous a in that interest than a X on half. in that in at the about rate And driven an second that And rolling was are about just expense expense came in, annual interest hedges in advantageous second We'd notably factors, most couple and $XX about half. months more are we we as some or by then in the then, of the we expect we a full versus the There the a

Operator

KeyBanc. next Matthew And question the from Mishan is from

Matthew Mishan

two softer kind those you term? environment volume the quarter? your expansion of impact near that the Does ability to I guess completed in products build over the

Michael Petras

Matt, you off. trailed that last sorry, I'm didn't hear I part,

Matthew Mishan

over capacity fill to near right. your impacts demand the environment that All -- softer kind the ability extra of that those Does term? fill

Michael Petras

actually Over one the of well. very, very is no, term, those actually, near doing

say So not. I would

Matthew Mishan

then, Labs that I think to almost years of Labs And for a like recurring the Michael, been second negative now. in Nelson personally time half Nelson Okay. in do business? how couple spend plan much has you guess digging theme I on a on

Michael Petras

business to of coming the execute and the labor our that a came I company a just job. the doing got team Lots of presence environment frequently. across big it's things a that But in and say industry I been was that of really performer the pre-pandemic. thought took we really make been I challenging there that of overall, We talked quite that. has spent rates. our great the the and pharma rates drive we work very dig they in understand good in were did volume. one of in job It a consistent significantly volume good. business we've our a to that, good time in satisfaction. but We probably expectations. digesting. would margin business growing in with the bit been mid-XXs I'd out that up a that, against And overall, bolus really, Joe leadership our has continue margin about And customer than able sure higher mix great It PPE was there, bring past,

we're on segment. of doing but That our the in that sort we continue that customers of spend best care and something we've taking it's we work can on so got all volumes to to sure making we'd like though, that time

Operator

Wolfe question Research. go [Operator from The next is ahead. Polark Please Instructions] from Michael

Michael Polark

in calling your Another the who device close now were Michael, were also twist you guidance on earlier this peer your year, ahead that out it. destock credit is customers, of saying saying update. to amongst potential you

the quarter bit. I so look And a you little and missed at Street the

was light Sterigenics us. hit You again, the in us. Street little line a versus with

hadn't pencil If you told straight as half full range. back of I able the getting adjustment me was old year, the your with so have, it previously been face I out kind think, back any the would to to to

change the answer? softer And just if the numerically, was wondering look, so now there's changed. just guidance bring I'm in have of some had that that's to Is John, here. And it challenges. it you're you thematically, of a kind maybe John just you in curious anticipated in these philosophy what it thematically, seem and seat.

on would great. front color any be this So

Michael Petras

talked know talked going -- last don't in the on inventory out. but our really to Thematically, Yes. levels It's we as mixed play exactly know where side, around the time Sterigenics softness, when bag. some Mike, past, customers we a we've saw we how thousands that's time, don't you the and exactly the of about concerns We've got are. customers'

well. call, that doing mentioned that. some there that of As the in just earlier And we've in really some I this categories others then, got aren't are really, are impact

give the I the it. think point, your to seeing. sure thematically, rest guide we as thoughtful we've numerically, based to we're what make of wanted And being seen we're we on year

can John messaging philosophy our just on bullish being still out. year But business we we to responsible you. want It's deliver now, we're make are but to overall ability to this very guidance sure you and to growth significant right -- in give and year in continue to reaction and

Jonathan Lyons

field very we're and out the to My continue and to what it. what Yes. the telling important want us, you to very this. work hit It's our that manner. and numbers see and want timely you see I is we approach We we make aligned at reaction tell much there. down on to We that put look we'll in we are Michael to initial a sure

Michael Polark

Helpful.

refresh XX say, For How live expansion start and are next, in the what you up? to process do on follow-up, capacity going can just you just us months, filling the Sterigenics many over projects? and expect

Michael Petras

Yes.

four One will the following into start late got this them couple rolling then a year year. next and still those out. and year in So and we've process, of

Operator

question-and-answer over this our gentlemen, to like concludes and Michael would session. I for any back conference remarks. turn the to ladies And Petras closing

Michael Petras

Great. Chad. you, for I Thank Thank you, appreciate you. a joining Bye-bye. and great time us ongoing have and Thank day. morning. this support everybody, your

Operator

concluded. today's conference The now has for Thank attending presentation. you

You now may disconnect.

Sotera Health (SHC) 3 Aug 232023 Q2 Earnings call transcript