Sotera Health (SHC) 15 Nov 212021 Q3 Earnings call transcript

Good morning. This is Twanda and welcome to Sotera Health's third quarter 2021 results call.

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

On the call today are Michael Petras, Chairman and Chief Executive Officer and Scott Leffler, Chief Financial Officer.

of statements. the some be makes call, forward-looking considered the the company statements may During addressed these to matters that those The in or can and to projected cause uncertainties risks actual results implied. differ from statements materially are subject and Sotera the slide the for filings of these of forward-looking a statements Please refer description SEC risks the to presentation Health at beginning and uncertainties. obligation to statements. forward-looking update such no any assumes company The the EBITDA company financial note adjusted will both Please discussion that net non-GAAP adjusted the GAAP the measures, and today, including and during EPS and ratio. present leverage and A reconciliation attached measures of release slides. periods relevant may company's the found non-GAAP and schedules GAAP the for the supplemental all in in press be to [Operator instructions]. now call I turn Health over the Chairman Sotera Michael will to Petras. and CEO, begin. may you Sir,

the was moment over high of impacts. declines than in area Sterigenics but well well mentioned that growth result strong second challenging the in near the industrial-use third XX% record-breaking makes a and public hallmarks the what a their performance, us digit will fourth is as morning of against this consistency in digit during of levels morning they third would closer for public XXXX growth revenue consistency every growth quarter was that delivered you performance. PPE we testing as XX% company going attractive last in reached EBITDA of the quarter $X.XX, quarter baseline, third for faster growth which quarter XXXX should quarter adjusted double a in third even another quarter each detail are quarter originally $X.XX revenue ramp our of second and of in revenue third in especially lingering begins. provide a little has they that EBITDA cobalt. growth Good been tracking growth has in and quarter height EPS where company we long since that what to every faced quarter. XXXX be great total that as of year It on out double We in that of quarter, This and the quarter We since Health's the a be call. recall but in we performed up a adjusted combined Scott report has originally delivering trajectory you with of headwind Many a we driven to demand as a in faster of every be you. increase see I may report little here more that pandemic. bottom the growth quarter. very quarter growth our demand joining play Sotera public company consider Nordion top pre-pandemic fairly quarter the strong of earnings year. a that disclosures compared adjusted knew double highlights levels reporting another of that and digit so delivered Thank XXXX from pandemic Labs last Sterigenics revenue a pre-pandemic We to expected. when followed We some term more special. opportunities this to we everyone and November line XXXX. assumed am Sotera for reported Nelson in past performance we to quarter pleased the settled than thank growth. have with and a XXXX, Health third reported peak remain as

in the last testing, also impact well. We which continued to ramp-up Nelson quarter talked the about medical in device quarter have Labs in as slower the third

term, see near in the headwinds we nature. Nelson in short these Labs-specific challenging as term While

We expect our they before business. them tailwinds for quarters normalize the few become next in to

trends testing encouraged as We in and extractable specific by categories, are testing. leachables such also and antimicrobial

As demand new testing E&L our result Europe rollout EU discussed a the this reliance of as on Regulations globally. the correctly MDR, on testing for with of team in anticipate Medical prior or growing calls, Device broader along

continued environment. result, meeting is delivering healthcare of this workers next needs As the I and a team of the for Sotera demand for to our expected while testing a years. to very another least safe strong work quarter see and at proud maintain entire Overall, several Health the focus category their on for patients continuing customers, strong am

safeguarding to continues team any Health environment. dynamic encounter than mission mission, bigger we one product remains day, while Sotera still service. execute our our health examples on the global or Importantly, Every navigating this that

recently, facilities disinfectants urgently For our save Southeast Labs a an surface heart actively and sterilized Spain and Sterigenics patient. artificial it example, in of shipped the of sanitizers Nelson testing commercial one the hand enhanced to underscore against life day-to-day to to the of -- the safety activities efficacy our and healthcare commitment at their of the many Delta each our experiences day. excellence and every variant. These mission work the business for and heart our integrity, is

am infrastructure, of strategic to include integrating one excellence acquisitions which driving speak strategic further activities continue M&A across growth our deleveraging. priorities, We business our spans operational initiatives to in as about capacity investing our which excited units. Today, adding on and multiple and and such growth I businesses, focus enhancing efficiently

important the environment. Nelson more customers and equity industry. coordinated is our the For leaders thought objectives expand teams. of serve as advisors the have of relationship from in leaders leaders and our conjunction many many our and which Labs our their and thought recently our have with and created our had This in includes a regulatory customers this nearly broadening served benefit to roles announce In Sterigenics services or the in given achieving expert have advisory regulatory and initiative, of with will changing serving also Expert leading to biopharma as closed as Compliance quality recently compliance provide to compliance the outsourced to deepening These years, expertise the is Health acquisition on both more driven of Regulatory well Services our pleased In Sterigenics to and we thought of worldwide. Associates both our customers, Nelson Advisory provider the as regulatory as broadly medical role we order industries. ability complex group needs RCA services critical X,XXX I customers new the am Labs Sotera especially and to arena. access RCA. Group, The device that

testing XXXX, for both and to our fit warm Thus With to want welcome Sterigenics. their several deep to Nelson sterilization in within bench new offer taken advisory enhancing growth the drive services and to well I have services Labs downstream far technical RCA priorities. our we will team, steps experts, expert invest team. in our of a RCA ability

outstanding Fairfield addition We have purchasing at acquisitions sterilization tuck-in the and but minority acquired stakes our in to operations. two Shanghai lab small strategic

We different new seven expansions remain fourth We in sizes have and with Europe. investments of at product EBeam Indiana capacity recently taking in expansion installation also qualification place with two completed growth of Sterigenics expansions other of We quarter. active a terms Labs Sterigenics. the completed active one Nelson in during

beginning online XXXX. later these to and expect throughout come this and We XXXX continuing year

seeing specific market at broader facility in our comment in development out has fairly where we recovery the back year. with what general briefly on in earlier assumptions the manner in we we are the played markets operate. a The while consistent made invest Nordion. to from also a our I three continue term results, step cobalt the advancing enhancements Taking long Sterigenics in we will addition, projects In supply

acceleration However, of there's and supply no impact to doubt both variant that the challenges there's more macro related indirectly Delta the chain as pandemic, shortages, such a a continued recent disruptions. labor from and inflation

also able only all form, a to to manage we of in direct us. have While have modest been with through challenges we encountered impact some these them

some seen We have an own who uncertainty chains. of customers continue our impact and in supply to indirect their experience volatility more to

challenges, I these remain would the but we macro Given to optimistic. environment as cautiously unsettled, be characterize

XXXX. As outlook narrowing the model. that our a range to year of details, I and comment when August XX% at performance a specific to but of based but now our XXXX are some level, total our raised completed know XX% second have expecting guidance. on a to growth want resilience we we Sotera business, we provided growth the what during quarter Scott reporting to high of to three has and into adjusted are make Health's to given encountered EBITDA that challenges the total Nelson you I that in mentioned the business broader for outlook we company call we today, we earlier, is go testament topline XX% XX% will about Labs quarters

a take to and I Scott. the over detail turn third moment I on how quarter Health our will emphasize outlook, it the to turn Sotera over Before now want Scott am to team. I call to the more to comment further I again of entire proud cover in

quarter, Thanks of XXX cover Adjusted compared our On of on Michael. grew expanded XX% $XXX grew by and driven XXXX year, on updates last some I XXXX a third compared pricing to leverage. will currency third as then the On revenue largely basis the insight along Nordion both highlights each from Sterigenics. Adjusted grew to constant business for XX% capital of with updated I million. provide basis both end quarter first detail a $XXX segments, QX EBITDA on million. and revenue leverage to consolidated of a will deployment and QX the also third year points basis at margins basis, quarter company XX%. the with more regarding and last by consolidated by to operating outlook. EBITDA total

in of share, Our $XX with QX strong expense, EPS XXXX. $X.XX a interest of reduction from resulted $X.XX operating up per performance, in million combined adjusted

for by mix than XXX a look closed growth year-over-year closer of in organic contribution margins thus the acquisition from that as to of year. nearly this contributions XX% of comparison. of growth came quarter date X%. basis acquisition in Revenue In well QX from Recall the the lapped take so at much segment by X% than of contribution levels and let's over Essentially, the Sterigenics segment of have remainder points, XXXX delivered included higher QX we the that revenue and a represent The clean expanded and Compared July as segment growth of of XX% QX income pricing. Now we Iotron. pricing smaller of inorganic growth acquisition and combination the is drivers performances. XXXX, of driven recent volume and income third from FX growth in utilization the a more in Iotron QX, year QX will QX XXXX, quarters. last

levels from near their at were QX, they Sterigenics remain mentioned, watermark and As the Michael high when volumes utilization in reached levels XXXX.

expansions the in We continue investments XXXX. Michael capacity and half meaningful Sterigenics' referenced first in to from beginning begin make of seeing contributions that expect to revenue the

to We also on make EO facilities. facility at the progress continue American enhancements our North

Nordion XXXX benefit our driven QX from XXX comp, from Nordion, year, largely and higher grew does relatively top their what to points, driven last million. last nonetheless, their XX% and compared X% QX shipments XX% million into XX% weak by margins of to revenue benefit of FX year. sales $XX Nordion's were growth by and about last to of this segment Nordion's operating strong overall compared of pricing to but year. to and pricing XXXX basis line grew a to from coming remained the Nordion's favorable a QX impact. ahead expectations performance, on the last income same compared by of For mix, timing a year. growth up bottom approximately compared was volume were and overall QX period given leverage $XX X% by year

the approximately and by to revenue compared QX $XX declined to million XX% declined to million. Labs, of income Nelson third by For $XX X.X%, XXXX quarter segment

headwinds was the almost and Nelson headwind. is representing winding X% The business direct quarter, indirect pandemic. QX the than levels last revenue PPE-related of we impacts testing had noticeable down As Michael that from seen more mentioned, one significant unit elevated Labs impact to from a experiencing is relating in

PPE we partly lap offset headwind testing. driven We Bioscience X% see headwind the periods by similar was tailwind Favorable of was by with of a product development when regulatory which and testing was and largely and acquisition the testing tailwinds. pricing expect QX a offset This medical compliance-related from testing device PPE non-PPE the Labs. by through XXXX ramp-up deferrals in slower volume declines, to

does currently it it's regarding delayed to While of the and give any quarters, see activity disappointing more future testing a our that for XXXX optimism experiencing impact term is us into short we negative effect. pipeline are

E&L as last PPE by away in encouraged favorable we from each shift acquisition categories, antimicrobial. for and Nelson about testing also layering of XXX some points higher contracted As headwinds. to created momentum basis QX are Labs year. the The Michael in compared Labs QX mentioned, such testing and mix margins Bioscience XXXX by margin margin

have our acquisitions profile, to We given that dilutive, term. previously margin at tend strong the in least be mentioned margin near

that begin QX. term will now up We effect announced we Bioscience to in the shorter effects from margin We while dilution see also from some these as some scale of seeing are beginning we acquisition view and the businesses. RCA newly

me turn Let capital to some highlights deployment leverage. relating to and

Our spend million. our bringing million, total QX $XX in CapEx was $XX to year-to-date

continues spending Nordion focused be growth cobalt supply enhancements initiatives, on facility Our and projects. to

during funding and $XXX $XXX September million million cash XX, the XXXX position, lien QX. strong our notes in had of we of a even As maintain prepayment after liquidity first

pre-IPO seven leverage. repricing of paydowns in compared in XXXX interest to of January million, now has of last our loan interest resulted $XX have from our levels term leverage expense combination the net The X.X recent of above year. million QX materially debt times, net to down $XX in times of and Our QX declined expense

Our interest run projected $XX annual expense recent debt million $XXX interest in our million, expense of XXXX. also around to to compared new most reduces paydown rate

range the mentioned, comfortable the Recall well for ranges narrowing to Michael of increases of of months communicated our the will full as initial in performance as As August. most increased businesses. range meaningful that each trends consideration the March. our we we nine compared Overall, recent fall guidance, made company's within outlook financials remain reported year we taking in as outlook to into are August our in our that

of We but are really end the Sterigenics in that as range pleased Labs and Nelson both the of guidance we with result the trending of we trends the business. Nordion, top a seeing are reducing are

what next are quarters year. remains comfortable headwinds we earlier, of but become few not to in tailwinds little mentioned will the expect of we normalization this many do As those that within occur

of For full Adjusted year to to the growth XX% range compared in total XX% growth And From acquisitions. deployment and to $XXX capital adjusted to the year of range in to $XXX revenues XXXX, EPS in $X.XX. XXXX. will strategic million of million $XXX of to million, of we representing to initiatives, XXXX prioritize a growth standpoint, compared full representing range $XXX million, expect for XX% repayment continue to XX% we the $X.XX XXXX. debt EBITDA

small indicated, have but closed already Michael we RCA, tuck-in strategic another As on acquisition.

for million our updated of CapEx now Our guidance is strategy XXXX range deployment not a capital $XX Overall, changed. to $XXX has million.

previously our underlying guidance remain assumptions same. other the The communicated

line team Before call I earlier Michael wrap delivering comments quarter back of to the digit his to we and to entire how turn are wanted about another proud to echo double the I for top Michael, of yet up, bottom growth. back things you.

Scott. you Thank

Investor added and to the Before the to intended and the we I Sotera resource provide wrap EO-related you to Health to website. to we the new and aware of the a of to This research facts want up have is our section background its I Relations stakeholders, encourage content. importance site visit make review recognize EO topic of everyone

we provide answers. on forward, open EO point, and be on be investors and plan posted that materials questions updates there. to for to EO Going let's may matters At will call the relevant operator, this educational

Suisse. the [Operator Credit from with Miksic line instructions] Matt first Our comes of question

open. is line Your

expected of to these even to And of for comments what Thanks then you walk to of guess third with in maybe PPE all are how affected you surges. in year another are Thanks. in quarter. understand congrats I Hi. about Labs the and changed just taking and half we what It types through, strong happen follow-up. made dynamics? and I back now testing businesses by one the the And different Could or PPE like Nelson the on had the the some all trying seems have quarter. I question you have still the COVID wanted perhaps quarter? explore sort

Yes. Michael. for question. Good morning the It's Matt. Thanks

in forecast stated, we over PPE XXXX are testing. how forecasts if masks things start And increase as it Remember, levels. protective here that weren't into than always above PPEs, as barriers would and down had thought. we gowns you the during bit so and saw numbers And continue faster to out. we exactly prior the quickly testing that and significantly drapes to play nature. XXXX. saw to just level, We that of doing but sure of that it close down we we a would It's projected COVID, We XXXX went in and how the had growth, we that to a would and On COVID the trying were testing lot exactly down slow we came little slow pandemic. still here, to that get numbers we of XXXX it climb will we

other And some have pretty It's just little testing margin mix overall, or But we the rates. a barrier up high ramp going shift. positive there's is on. to slower. stated in the just margin And the testing PPE some areas of XXXX that really that been the so impacted expected has also we protective before, as

to and It to very normal the on still testing just protective the was would how our little how us our go So ramp quickly down. ability forecast That would for a overall, part the during sitting this the other fundamentals PPE testing, Nelson. forecast. or were of tough pandemic positive here that quickly barriers was just back was the up

pace happened, both a what faster directions. we at So but in expected happened little just it

far so PPE. to add XX% think sequencing everyone that year, that, quarter, tailwind the just of this how we how XX% if have out from second the played about then in been the story about QX will sales you Nelson I Matt, remind has that Labs And PPE In to tailwind reported a for the a from gyrations became X% headwind. And just significant quarter-to-quarter.

gyrations from then a downtick anticipated. deterioration of a X% faster bit a X% to headwind in headwind little QX had in now there clearly And we almost so just the was than are and huge QX,

customers But pivoting service credit job care can pandemic also I of really to PPE other the expected. out Yes. protective then want the They was employees. it of a call and pivoted happening, us this the doing Labs. whatever Matt, now because this the lot of on to take Nelson were to back give barrier I by team really in testing, good to customers that none of Joe some in and dynamic. Things they on

I color. the again margins. And Absolutely. then on just appreciate

think a I to guess, Nordion this bit effect kind fair your you different profitability should of sort touched the we the had say similar on bit call relative in upside also mix? of sort and But in little about is the that I know, it a on of of businesses. a

fallen in well. We volume very Nordion, P&L. the this. through it's The the really business performing is saw

expectations. quarter the line We in expect fourth be to with our

we So overall, have in year a they had margins business. that expect as in good

enough. Fair Okay.

Thanks All right. Matt.

you. Thank

line Tycho Our next Peterson the question from JPMorgan. with comes of

open. is line Your

you to Mike, those maybe you am pressures up the to just where going labor talk bit Hi. I the how you pick on Thanks. thinking in about Can have environment? costs, chain. little addressing you a about inflationary current thinking left just in about supply are margins, higher

do on progressed rest bit on direct labor, and Predominately and we labor of that side, materials, we Good we able are some have side. utility inflation, little been to year be throughout this through seeing in fundamentally Tycho. and morning utility expect into a the Sterigenics. it. increases areas to those the we have on costs And the push able are seeing But XXXX. and material some impacts as Yes. to the the Where are we

of issues supply no flag sourcing, terms right? to And Okay. in chain

supplies No. right. just to is we relying prepared in customers we where the to team the like we our Tycho, team, remarks, even see on over Nelson the us as get said Sterigenics our supply chain the or are

to past. having of our there's like picked be customers are the little of good cases up customer are are customer the visibility samples the those we we the we issues an issue truck seeing. to slower But in something in to meet delays Nordion getting are are getting stated the overall, or problems got testing seeing. work are Those a with chain our through sometimes or have us with supply we deal because logistics So But pretty this have at the Nelson, that. Sterigenics have to the where in feel a the about businesses, continues those examples that needs. lows as kind we are to they

will And to recovery know Labs. a Nelson couple of it quarters the take normalize. said I in you then

business said think are a You like how about and better. come But back? antimicrobials you demand as E&L that do bit areas pent-up to little starts

It's different is, if talking know at XX, break one Yes. look sections just very about referenced feel see about will. areas is down wind the When good well. unwind, many have up We sections. we we that to will we doing other about. it, We PPE we to tests. some overall. talking XXX we what headwind That's really several are the ramping the continue But are you there. very about the we that got the, PPE up. XX are we There's still sections of There's

anything that. reducing bunch teams. a we or We are not like are of costs It's like building

We that see starting we come orders teams backlog to in. are continuing the we build know out are is because to our

there's As uncertainty are requirements there's and test on right are of previous Tycho, I particular to of what couple on mentioned some to FDA, have. tied a our going the now regulatory calls, one that sections by in they particularly

and what's we a for So with that off which on to FDA. from us, customers some backlog required little the starting final just of normal, is see higher the sign than protocols waiting build

then projects. capacity expansion the last on And one Okay.

were on like. think you to for the you the track, end year have I XX% around by sounds where talked six I can Those of still quarter been for about all quarter. are utilization? last slated that Sterigenics? you it update online you just last us think come said on are And you

Yes.

got of couple still are capacity as we in a on online XX%. this neighborhood have the referenced, came programs, we year. that The We

fourth several I then good pretty actually coming flipped the have overall shape. a first the quarter, we beginning perspective. quarter into of in the first We timing and those quarter But got from are on believe one

more them got that in process. And have with then We teams that have work behind the couple too. will seven we we of a got

Okay. Thank you.

Thank you.

Thank you.

next the of question Citi. Our comes from line with Patrick Donnelly

Your open. line is

guys. the Hi Maybe Scott. follow-up question. be Tycho's one for It taking a on Thanks questions. for margin might

inflation, contracts? as to along as of the margin customers In about you given pass and think had are kind the get again terms you, algorithm. Just you out to about into of against a PPE and feel how comes headwind the the talk that coming that to go margins, a you kind of inflation have maybe trying for the labor into PPE the tailwinds moving able written wage we should we acting How even out. pieces about on just and side well margins XQ talk as you Can much XXXX? as on

on general, if not been are or am Sure. our to certainly asking specifically the overall in the But we price don't cost or general form ability businesses just market across in customers. And that I have interfere I in sorry, that. environment do passing would we am company. And increases Labs sure successful with the Nelson environment see always anything to very of in demand in think the you about

budgeting our actually those through contemplating annual some we In are as we now, cycle, go of fact exercises. right

to wouldn't big we pressure relating overall, expect margin any that. so And

can that them look we in margin past. you in build as to our profile the on at we the margin when those here levels we longer each QX, just think expressed reported continue we maintain and term that have I businesses the over comfortable are of of overall

prepared they in I in and is Labs by the And least high are driven effect, various that primarily least is downtick Nelson businesses, up given a then them at associated before my comments, PPE talked I made tuck-in we how near in dilutive to the testing. the term implement our margin mix that this scale the to do seeing when now adverse regarding somewhat periods have compression effect to effect that the with also relative prior that we that, about the at think profile margins mix in earlier acquisitions, comment past they margin something is generally acquisitions, initiatives. OpEx we for are their

Labs a new so see compression you maybe And Labs earlier little Nelson this Bioscience of at relating of acquisition acquisition margin bit the well. just as more and we will the that year because to some amount reported

But overall, talking margins, business are Nelson right. EBITDA we Labs to still Patrick, as XX%

the business, to job value lab in customers. a really has good a For our bringing team

on appetite Or we is for Obviously, have of touched to guys. then you you had one And Yes. other? the should And the just And large you about mentioned that expect there. a size. go? Can How then bolt-ons. focus Absolutely. of talk still Thank to across guys the continue in the bit How couple done of little appetite? we leverage. above three should down? businesses? get leverage again terms the M&A priorities turns you you X.X Any a to the you about think funnel you

about we capital talk first deployment, when priority. our is Yes, continue to organic for thing That's mean to deploy first our the I capital growth.

look will and strategic We at deleveraging M&A also opportunities.

that tucked toward a robust of a are three on going aligns the lot it of RCA. businesses, we Nelson really to with side, and company. leverage fits we that as culturally size and around across we strategically important us. we have Bioscience with We the the that list are sure that we labs that have what weighted are here got it how making pipeline across synergies teams. not And trying size our as them but the to well a heavily more say side, to done have it's again to From Nelson. it's for drive That's us, on have continue exclusively probably track what's do, would in perspective, I we plans with all

how we are to around we say quarter I how doing are it, would don't we a billion not thinking up as M&A as are and deploy tell in right. call growth. well next you very thoughtful But about $X we expect capital being That's So organic you us acquisition.

Thank guys. helpful. That's you

you. Thank

question from RBC next Markets. Dodge Sean Our of the Capital with comes line

is open. line Your

Hi. growth of about just the on is Thomas you Sterigenics, questions. This does shifting the on Good weakness Maybe And the morning. Kelliher how can over impact talk bit Thanks little have testing much any volumes? for more a on sterilization side of continuation for the of kind Sean. visibility lab you to a there? taking

Michael. it's Thomas, Yes.

have pretty on We good visibility side. the Sterigenics

with our long We customers. contracts are into term

high pretty across very across the we business, just what we our that good we do utilization as We are about feel at like Nordion business rates are where in and facilities now. in part well And what lab We second to your are lab the sterilization won't across the piece? those understand the relates businesses. in question, sorry. it And how Thomas? total You of I solutions am piece? was two right

the have Yes. get? testing is say, kind impact like lab to I might there of side. you any that in got weakness sterilization interaction, volumes that Does any

plants of are there's from often you is that come and where the also, I taking product sterility we customers waiting assurance, two businesses. just the to help comes play business sterility in some into that remember I about validating No. do for validations Labs XX% across Nelson sterilizers mean that validations tell new would work.

that new And there then might there that might as a told ramping directly tied causing we the in be a regulatory you are some where a pain terminal tie that a slower aren't impacting pipeline is So there's on a that's cause. little little and of other delays sterilization It's directly side, there. up development product bit but seeing not on Nelson we Sterigenics. couple that sections to

bit us how more I potential RCA helpful. a what about tells can Okay. type should of that you brings then growth? little sort think about revenue Advisory and the And Service Thanks. Organization, any guess, contribution Expert including That's or we and of

expert end-to-end want quite got, This the They advice We for for something that They of we customers. together. organization people really set in Yes. to the have quarter we earlier had it actually, team put us of it helps organizations Sterigenics. time these our under together pulled actually knew within a give within within our is We and quarter, some was this. Nelson. within had leaders our have asked we us one that to have and up

years, about with in this as work So that high feedback It's thought survey to there's our several the pretty the our ability drive we work. over last has done leadership. been all clear value customers have

the in will we with to see more they help come people in continue the we on to have and that upcoming in how this from that space knowledge us. You all in us months the marketplace as push

focus another going equation that piece us it in area. bring to team what them easier just services for and biopharma capability. the We is are device, us make is And consulting for med there in for They of quality affairs and and regulatory to strategic heavy on have and is this RCA long term. on got to very valuable. compliance us that very which interact they

we So it. are optimistic about

me. Great. That's Thanks for guys. all right. All

Great. Thanks Thomas.

Thank you.

next from the comes Jefferies. question Our Dave of with line Windley

open. Your line is

would of couple I to I morning. Thanks maybe One ask wanted taking that's are you acquisition. a closed. be questions. this my Hi. on RCA believe for saying granular fairly ones. Good

of is balance wondered the guidance so the contributing for And to that year. the much I how

Minimal.

the expert of little it in First services. it acquisition. It's us small obviously advisory all, gives a million price but our is initiative accelerate around $XX very purchase opportunity a to over

So longer say, about that about term acquisition, contribution less more impact. I the immediate would the was and

difference last that year. I not months our at And having any as couple certainly wouldn't in look guidance in our, of of so the terms the meaningful

is this David, And Michael.

customers expert That's opportunities. an besides or the cycle, out us thought like testing downstream the for our is then really of product the to where more involved big get value asset on One development benefits sterilization this building leads leadership. and with advisory which of is the this ability early other services to

that And into will it. Got fold Nelson Sterigenics? or

Nelson.

to then next those then you okay. longer when speak, give expect about have next you clients this on term then headwind pickup, going to so fairly the the trajectory product months to for some grow would How substantial normalize that as quarter it been Nelson, quarter to that? visibility of And the of you or like things Do and you the and for the testing couple expect next within PPE like notice Nelson, much from slow advance XQ a you pick things as do new of of as business pressure into items and kind from standpoint. kind have talk to land? are that up but of to year, and sounds

product a Nelson sample as It we in. if some and been to cycles, Nelson, or We the some then It's leachables have less visibility. release. got don't areas. variation varies as some would But category. by pretty extractable typical as are or do on other we it's something do lab notice come on products depending and longer say short the But I release. got it's sterilized. much visibility, there's a quick over That's that's we there's They obviously, within Nordion Sterigenics. in in where involved us have development business

that We pipeline, more a visibility little have to earlier.

cycle. the we say about business kind of and validation about XX% would term XX% I So is routine got of like have longer is

a terms order is sense customer-specific pace Where the year. we those for are necessarily have future to then roll up which new book updates that various out, for they of into around gives when is around next given testing a some and those with us waiting for to to revenue going better are tests because deferred we compliance have that the that going regulations. little bit pick regs and intimacy understanding granular optimism but in not periods our visibility are more Then of being

a Yes. Scott, good that's point.

to met sections the David, with lab in point, delayed like I leaders the of the they the for. with So are the that point, Scott's backlog projects this around because book I in saw that week and and I the was of last out I in to are of there. some key regulatory wandering out different was signoffs And waiting teams with particular

kind visibility some into. go validation in So that are would I those that referenced That we of group sections earlier. have

And term into power and plants Great. term you. plans China that fairly any it your nuclear not picture. But some in longer term create substantial near wondered investment Got plant in China nuclear for then process, supply notice thought bigger that you? a out investment relevant that We laid it. to opportunities happen for cobalt Nordion makes for maybe long just I does admittedly particularly maybe over a

China, complications, know. buy market of the our property doing bring we fit That enable will then the world, to like we world David, world. evaluate we to have around a from help the is It the that for other that nuclear reactor cobalt. all advantage of technology it the it amounts it's and not bring we continue I to and can moving a if all relationship and us. parts something minimal today make utilities where has. you the And is, depends Even do to some to of Remember, we that market. from intellectual cobalt of on look Westinghouse at in if the that just told are lot like competitive as you to Nordion with trying that's cobalt there's getting and really

those we options. into when consideration all supply global factors are take So we evaluate

answers. the for Thanks it. Got

David. Thanks

Thank you.

KeyBanc. line of comes from Matt Mishan with the Our question next

Your open. line is

Hi. Good morning guys.

you to into next get few and are I appreciate Just data one websites from of a your think for be just the year? you want be website. able going what the are where will the the next a on potentially that you some timing the transparency to the on rulemaking more NESHAP providing points thoughts updates I sense updated provide would updates proposed you guys to to to first EO. and

of Yes. bit populated it several for said on Matt, We a little easier this EO. had a get quite investors We us information just that Michael. make to information. is

So the community. do you populate opposed As very our us research, that was good to feedback can to somewhere? having from investment

recently. what out So we rolled that's

new enhancements I execute to the are mentioned. we look have points, like we have you So ability going our facility on When to data continue at to see that.

are that as and rules us exceed as quarter we said early expectations. as target. it fourth right? year. and know was some It's want year, regs little a year Tell this as the We beginning sure out people a we But bad well. XXXX next bit rolling we as happen as NESHAP, year and going into as probably next throughout into and them I anybody, far moving to rules make this will

then going I is, XXXX. ultimately Then that, to roll will a think there's it's some days That echos. happen timing and it's first. go be a comment and become there our new then OMB out go the got to public It's what will it this XX public could take beyond come and comment to reg. into then got is, personal to will opinion period. Remember period is

sooner. on again, half it think I I going predicting the could But latter year. new at it's hope do regulations. the government's So next terrible be the am to we what

model to there enough. Nordion. the then Fair in an last in Okay. upside switching two And over Nordion, was our quarters versus

with said XQ had that paying year? fourth or be revenue line looks Nordion in pull into XQ attention You some into from that But some to quarter through next harvesting early it's like of there should we or coming the in was forward expectations. pull

we But we when quarter. QX for in record-breaking about for cited sales I and They to solid that here there you last fourth very had that year. at having outstanding effect QX, saw quarter that the of QX. the had will No. not There's like quarter quarter, million are we that we year nothing $X was remind that in here Nordion, they reported type They just a an a QX solid a results. are of that was in contemplated just pointed in pretty overall. previously there very, time

they coming out. Yes. a quarter last point this, And, Matt, low build really would quarter that Nordion for off was are the I third of other year

consistent. of. So they had were is low off business pretty they a That working comp

no the very into third this consistent But along. some lumpiness said over the there from business very a haul. and There's quarter-to-quarter. overall, have was the well pull-in We long business all quarter. performed It's

guess, upfront Labs, that validation then between Europe the difference the routine a split? expectations where do and Okay. results? I did is And start on you one testing testing there you at that with in Nelson to that impact just last when facility in in XX/XX And then are more

customer we doing Excellence PPE Center Wiesbaden of outstanding of That previous job some well. to development that. was The That's doing and That's can job of Yes, for validation a how thought. and executing, been Really the that quickly are Matt. great done product referenced the a Europe, efforts faster than that and to responding an That's down slower. well came expected. In up. chain they that slower ramp little little has very we really and the question development. Michel new product So that's say a of very what a on than I testing supply thanks, slower the our over would ramp calls, there. referenced. doing yes, have our proud we part the are That's the team team's I customers

questions. the for thanks So

Thank you.

question Goldman next Hazan from Our comes Amit the with line of Sachs.

Your line open. is

Thanks. Hi. takes Good and all morning. take on I puts kind the to the call. of want

it that won't kind Labs. suggests we, company XXXX? believe growth Just that in double for for a XXXX, Nelson topline you topline had growth reason which Is call, of of the obviously there digit continues. And double happen also any us to whole question but digit the about goes us a that on you the bottomline pre-IPO have lot ask and model given had

PPE, expected those year? double are to grow reason any to was If you also not believe there next that it Is achievable digits. exclude

be optimistic at this all fundamentals operational Amit, all tell mix, are I and potential. about discussions place continue the markets we are those and utilization, to point. in announce are get growth is you to the But first The end quarter, Yes. in we or place. volume, the will are going we optimistic excellence, the company's are we things to in future. about year it. XXXX strong price, obviously When would not get first total quarter we What even

be first give of guidance to in quarter in the year. able XXXX will next We

to coming just utilization Sterigenics the on Okay. back And side. then

all U.S. a all slowdown reporting it's XQ. think medical so this they XQ whether in about If reported whether quarter, the it's or device hospitals, you versus companies far

XQ. And it I was am everybody they us if the all I you same so slowdown? seeing Why kind heard or reported? if consistent level running business works said Maybe is you think your results correct else if how XQ, just kind I how as saw at are reconcile utilization But me wrong. fairly you XQ is right, versus help of not, of a to from that where your it capacity

don't right. we that. have it's timing customer's depending on are, the and into visibility great Amit, And Yes. inventories where

got doing have some segments We very, very within Sterigenics. that are well

the about their the us and they have companies some breadth of little the little customer depth, a the softness last well. two-thirds stated and in base of softness, pharma diversity from got get gives food, you of that is But with that Sterigenics us other, several Some stable here we as have a the a device business demand got have is at and good and we med a us there, seeing through when are growth look the where portfolio for rest pattern that helps quarters. overall,

the last going with facility cetera? or on New updates what's your Any me, the discussions there general, on the Mexico. attorney et just And Okay. one with for

on Amit, for question Yes. Mexico. that New thanks

provided the a with So a and at proposal. We the for. in parties asked of improvements for local both where the waiting us plan we The for end have that which we that AG monitoring the October us development are positive both the the has provided theirs hearing you EO the million granted forward monitoring permits had go day. in our have decisions came in permitting tell approved regulators, putting permits, well the that what plan where other that permits permits. air those to those exactly like. construction to NMED, looks been as the sterilized also products means the would of very fully anticipate good, two operate authorities key providing the on about I on these both devices both rule per to we We judge continuing that environmental we have facility, the are the make tune that and judges facilities, been groups as is got which well as as very that signed off the we

forward moving are we So that in construction facility. with

have improvements discharge. plan important. we negative very are and double the we what industry improvements that's something about good matter we other leading places the consistent in proven pressure, are also No like, the feel was that that very with So central they that looks monitoring with are that scrub putting

that we as optimistic are So aspect well. on

Thanks so much.

Thank you.

comes question Barclays. next from line with of Our the Luke Sergott

Your line is open.

guys. Hi me squeezing for Thanks in.

kind guidance really are about going you the question go XXXX. Amit's to right thing give any is not I of now. only to this wanted But back So know there. are I on caring investors

through So X% of that And like so headwind? headwind, if rolls COVID as it X% maybe we to at overall looking annualized to that take like assume to an next headwind safe is year? XQ your kind

specifics into We what are not is to mentioned the PPE. on going XXXX but get Scott

the are Sterigenics. have Nelson. But the will for works off where in a Nordion couple overall, both We growth of and about quarters Nelson, PPE optimistic we

to Thanks. the contribution expectations Okay. that the year? And Bioscience this to business? Any I changes your update for Any then expected Labs on guess acquisition.

going the they was I you but So in here they QX, QX run under rate. an is think contributed about earlier bit in little Nelson's contributed a representative forward tests pipeline. here that's is had But think And They of than we X% mentioned what we that first saw overall, third what what to current in quarter of going are as just it quarter. topline extraordinary see that more well. our I to some really I think representative ownership, large in that given their the

all. All That was right. Thanks.

ones. couple a Just house you. of Thank cleaning

Luke. Thanks Yes.

you. Thank

from comes the question of line Our next Baird. with Polark Michael

see to Check are on you open. is line if Your mute.

you I hear Good here. am morning. me? Can

you, can Good Mike. We morning.

Thanks.

run Regulatory Windley's you just helpful. like willing million deal exactly that, I price. revenue. then point million, had finer to question be buy And $X for other $XX on, of number business would a Associate, purchase I to on month? color closed, put a what that rate Any Dave Following would Would heard I be of when million $XX Compliance rate so over on revenue? guess, run one, If or something

Yes.

the to contribution. these again, But obviously, of the the a the fairly occurred the or necessarily think, of the in earnings to incremental are the far explaining the earlier, acquisitions, Michael it But with services. And I here downstream lab of respect providing acceleration literally as are capabilities where breakdown purchase, So testing to terms as are revenue the reach particularly acquired, longer of was what's week space activity. about just term advisory revenue in more business. we the timing towards expert the to of for smaller going immaterial an we important we talking have prize as amounts not of looking we are ago. sterilization But be scale and overall are and in this habit more that the is real accelerate terms

the in proceedings first developments if much. I Illinois for next an timing other Thank scheduled the believe update for mention? Curious The Is summer. to intact? EO, that worth may. still still to recent Any you follow-up, trial on related just very

Yes. I the I are key trials, three trials, XX, and you guess, trials, tell would for November Mike, set XX the three September first July XX.

closes and deposition from We now and are all and management the that happy out. pieces courts discovery that actually clarity case we like have the different when and

clear both are in we So timelines that start have to expect we and parties to the July. adhering trials

So Thanks most that's current. the question. for your basically

over I questions would further you. showing Thank to the am Michael remarks. for closing back turn to now any call like not queue. the I in

am year our mission company. great all as It's their and Great. and support growth be honored during consistent since that Twanda. to a our first all while investors thank I fulfilling global been company leading for of our to such strong a year and safeguarding Thanks nearly public want organization IPO and a we delivers analysts health. our

a have and Bye-bye. day. you great thank So

participation. gentlemen, for Ladies your you concludes this and today's conference Thank call.

You may now disconnect.