Sotera Health (SHC) 28 Feb 232022 Q4 Earnings call transcript

Good morning, and welcome to the Sotera Health Fourth Quarter 2022 Conference Call. [Operator Instructions] Please note that this event is being recorded.

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

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

release supplemental our slides can at find the accompanying press today's of You on and Investors soterahealth.com. website section

replay the This be Sotera and being webcast a is Health website. available section Investors in of the recorded, will

and with Petras; Chief the Officer, call and Executive Michael today me On Financial Chairman Officer, are Chief Michael Interim Biehl.

these in could risks of considered and differ those forward-looking filings actual matters Sotera slide presentation addressed beginning statement During risks and to be statements. to at Health's forward-looking subject that may the of this uncertainties. these our call, a materially are comments for projected of cause Please some results or SEC uncertainties statements refer the the The from and implied. to description

such adjusted no Please leverage debt, adjusted company will of with net assumes obligation statements. during discussion non-GAAP the reconciliation any Instructions] slides. be and EBITDA for constant ratio to including all GAAP and attached schedules release update non-GAAP to GAAP portion financial Q&A today, forward-looking the company measures, and present the currency that comparisons. note net The be company's EPS, measures [Operator may press the in will assisting operator in the the found The and call relevant supplemental today. the of periods to both A

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

This Earnings and morning, we Sotera bottom everyone, XXXX Fourth another Call. growth. morning, Good quarter and to year-over-year line welcome reported Quarter of top Health's

to model. of November of since line the in speaks quarter in a top becoming public bottom and have which resiliency company our strength and both growth achieved We business XXXX, each

in remains we of third call, mission while certain broader Health as environment, Global execute still exist. commentary quarter during macro our our delivering see Consistent headwinds with some areas we on my Safeguarding a the earnings shareholders. But will few detail I want Michael profitability provide a highlight moment. on to year growth our and results. fourth first, results quarter financial Biehl in our full more items and from for improvement the

growth compared X.X% adjusted of revenue a delivered period fourth total quarter X% adjusted and the reported quarter growth of the over EBITDA year. increase for same the is We which $X.XX of last $X.XX of XXXX. EPS We to

full tracking by EBITDA by annual of growth, prior X.X% X.X% grew we've we year, XXXX streak the For our it. revenue which adjusted year. to grew the proud since am we have and started compared I when achieved extended that revenue

major the Let our line of cover top revenue results. all shift strategy, me modalities delivered delivered segment X.X% growth. saw for and unit solid with across demand across significant business X.X% growth capacity with we investments our X global progressing are each capacity quarter. in Consistent expansions the network. our Currently, for to Sterigenics additional now is full Sterigenics Sterigenics reporting making modalities. The segment, Sterigenics, largest across geographies year, the all

We employees, control across are ensure which the we also for customers to American underscore These ongoing and communities North operate. operations best-in-class commitment advancing enhancements our industry-leading emission facilities. enhancements our our in our EO

the potential risk in a Nordion had I business in X% year. to X% up geopolitical and Sotera this a supplied of say exceptional of impact an we cobalt-XX. on that from services total done sterilization the Russian pleased am XXXX, good supply indicated from Health the result within revenue to disruption could the an navigating risk revenues. that segment has reporting cobalt-XX other Russia job At our Nordion, beginning XXXX team total avoided

due revenues Nordion's message, to the harvest schedules. timing As are of supply we cobalt-XX lumpy consistently

timing As cobalt-XX of driven expected X.X%, for was quarter, schedules. the Nordion's declined which by the revenue harvest by

consistent. revenue stream longer-term on viewed a basis, when Nordion's is However, very

the X.X%. year, revenues Nordion's For were up

compared and quarter currency labor supply for year-over-year pleased navigate XXXX. challenging a XXXX a approximately the the chain with service constant period Fourth X.X% and same grew I testing or with while prior revenues almost business. X% our they X% year team lab challenges year advisory through as basis. in the on am in by Labs, Nelson was revenue XXXX grew Nelson

a considering the geopolitical pressures XXXX Health uncertainty year in for Overall, driven good Sotera macroeconomic was by events.

As projected, the across excellence level company's deployed in the amount capacity commitment growth. of the fund capital of we in to business. EO, company's enhancements various to expansions, emission This speaks operational history cobalt development, investment greatest projects the control each

leverage a X strong Additionally, of at our long-term sheet ended within Xx. the balance net well X.Xx, finishing position in range year with to the

$XXX settlement the off As used oxide litigation The paying general and credit communicated along borrowings fund Loan facility County, a hand, on of issuance cash closed further in other the with incremental the the in of release Health enhance under this on financing, corporate B. will Sotera $XXX proceeds Term million our week, liquidity Illinois, million be last ethylene press to Cook purposes. for revolving existing to debt

puts issuance from and position strong in this that market forward. positive interest very such We liquidity received the us a moving are pleased

Although borrowing increase we by will net within Xx end XXXX. of the net to target above slightly leverage expect X ratio our Xx, our to this settle new long-term initially leverage range of

early As or late for to committee plaintiff EO the the Illinois determined process is April rates track executive the be on settlement, for May. that reports the participation by

eligible August. cases to subject escrow X to settled and are July on all by late account the expect early or scheduled completed we fund to be for the be dismissed an substantially the in by the May claimants, We to participation settlement settlement

I a also want year. moment highlight the to made initiatives on ESG take progress our past to this

I accomplishments. in the how on far of am proud While team's our I come year, past reflect we've

which nominating of our executives established seasoned into an corporate the our the our cross-functional initiatives lead reports internal ESG ESG and oversight Board established consistent governance with part appointed overall committee, and committee. business as of help X identification, me to ESG IPO, We implementation with co-chairs strategy. As senior

safety established global businesses. metrics. specific the environment solution In incremental establishing metrics a engaged and we to of achieved XXXX, numerous assist in a few new the and I our software accomplishments. launched to added policy activities. we area, want During across EHS a health We leadership global baseline third-party EHS environmental corporate responsibility EHS highlight consistent

In addition, in our continue controls facilities. at we emission investment state-of-the-art our EO

With culture our survey expanding company. we our We annual in XX% employee on Women's and completed the Network, Nelson the women's participation. communities, human engagement Health the Sotera across done launched respect with Labs leadership capital, global development at to its impact leveraging work

Future a website leadership ESG new completed For activities. Additionally, the career Program, we team Development our focused developed project Leading had which Our and on

first and XXXX, In we launched our published corporate report. also corporate responsibility website responsibility new a

make operational year for future busy reporting initiatives team. and to ESG to In very in progress addition We the an ESG impressive and performance, financial forward the to look our our calls. combined on

our investing focus development to investing As we XXXX, to infrastructure in these for forward programs. which includes growth, our are priorities. will of few we cobalt enhancing A look and adding organic continue on capacity,

upgrades service to continue involves our EO will emission control our across focus committed in invest operational remain excellence, We to improving American which We systems. our businesses. customer North on to

continue of to be disciplined with while the will the sheet We capital course balance deleveraging year. our during

our for Today, XXXX. outlook initial we also provided

of to XXXX, increased to the of in to resulting the million revenues billion, which by approximately XX% of expect tax year representing $X.XXX billion X%. expense a full of growth range X% total range $XXX range the represents growth decline XX%, $X.XX to of approximately of million, $X.XX, in $XXX X% and EPS net in rate. to adjusted to is the adjusted EBITDA in For expected we Adjusted X%. $X.XXX income our driven interest which And increase in

financials in the through us take will more Biehl Michael Now depth.

then Thank additional conclude you, Michael. fourth details first highlights each around some XXXX some segments, basis the capital on along leverage. I'll cover and the and with deployment outlook. XXXX quarter a I'll of provide consolidated the updates business with on details on

fourth to million. fourth slight a grew XXXX compared basis, consolidated X.X% X% to levels. last basis. million. the growth Adjusted X.X% Adjusted from were grew constant quarter This a currency by a to quarter quarter EBITDA period $XXX margins to On XX.X%, on as total EBITDA equates from the decline representing company by year $XXX fourth XXXX same revenues

$XXX $X.XX quarter $XXX sheet to term million reserve fourth increase $X.XX XXXX. per quarter of share an which quarter This the fourth $X.XX legal EPS or share diluted ethylene of includes adjusted of XXXX. in net the recorded had or diluted the per drove XXXX to to performance compared loss quarter million from a the claims $XX operating binding Fourth net the Illinois. million a related settle income in of legal in County, Our oxide reserve is of Cook $X.XX

the is in reported per which for hedges did certain We've expense our million mark-to-market not hedge accounting. share. that outstanding earnings interest $XX effect on elect loss of of burdened by Our interest rate we loss adjusted removed a

fourth quarter expense interest Excluding $XX this approximately was million. loss,

grew for and X% growth quarter at offset of and constant X.X% delivered look currency of performances. strong foreign quarter, mix year. closer as $XXX drivers growth the revenue pricing partially another favorable Revenue a million fourth unfavorable revenues to favorable million to by fourth the X.X%. with $XX Now quarter in the let's Sterigenics take fourth exchange currency and changes the On last income over segment compared fourth a last year. segment quarter to of growth approximately rates quarter compared XX% of In Sterigenics basis, almost of to included our volume X% X%,

actions XX.X% income basis of inflation. realized versus margins to Sequentially, of the did in to XX pricing segment Compared the driven improve fourth XXXX, each quarter of by XXXX. contracted quarter timing by margins points

in declined exchange pricing to by revenue last Nordion's of Nordion's by million offset versus is more cobalt-XX to change X%, period offset quarter year. is the XXXX which revenue mix. Headwinds associated of $XX On were XXXX margins than currency X% contributions, Nordion's driven of last by X% XXXX, improvement timing constant declined Nordion XX.X%, period by quarter was same by fourth by partially compared declined XXX-basis-point over driven income versus Nordion's the by to the nearly basis, segment with approximately million margin a the of which XX%. driven pricing by decline quarter compared supply to currency favorable revenue foreign volume schedules. a fourth fourth quarter fourth quarter levels, from year. changes fourth XX%. same rates X% $XX

incremental On X% year. compared of constant to compared to Nelson XXXX. the XXXX. of of $XX of to For currency to quarter XXXX was income growth versus margin basis, Nelson fourth a X.X% Labs impacted versus of pricing, foreign headwinds than by last currency of the in Revenue inflation approximately levels. the Segment for less by improvements. with X.X%. associated fourth benefit was in partially Labs, for points Nelson revenue fourth fourth or quarter quarter rates grew by the XXXX contracted improved Labs fourth changes exchange increased was driven million $XX fourth Fourth staffing This margins quarter quarter volume, offset X.X% anticipation quarter XX revenues from of pricing quarter XX.X% XXXX XXXX million by a favorable offset partially X.X% basis decline

decline though nature year to cash there flow on invest providing generation. XXXX. points Due XXXX Prior robust growth. million our the capital operating and highest to compared future was quarter expanded for fund was fourth would highlights the margin to model, allows Even operating and $XXX flow needs critical services of leverage, of versus third the last related margin we a deployment business cash like touch base of strength we cash same as XXX us the generated basis offer quarter margin rate I during to to for the This the the to net year, quarter.

cash our as cash of This off borrowing December B recent credit of X.Xx which quarter borrowed settlement. $XXX $XXX on In from needs, our million had hand fund litigation available November, of As during paid net sheet we the over the we Illinois connection $XXX was liquidity, at which with line leverage cash, of and with the balance EO proceeds financing, to Loan on revolver held million have was adjusted borrowed to Term and first $XXX revolving XXXX, year-end. the XXXX primarily to and in of enhance in on liquidity EBITDA. million fell million XX, we litigation

well for upper CapEx range. million the as XXXX million, drove $XXX the to $XXX respectively. opportunistic $XX above of earmarked quarter Our CapEx as our full XXXX, was facility enhancements investment impacts Both spend guidance our million fourth some for increased levels end investments XXXX and XXXX. and for drove year Inflationary

with to our want around XXXX quantitative our additional I finish summary a outlook. I'll with start Finally, and provide color assumptions.

to representing rate. For $XXX an range the so annual to an be revenues to in full $X.XXX million color some the XX% the to X%. expect in $XXX range income rate provide $X.XXX applicable I billion to total want will year EBITDA due prior the on growth million, XXXX, we to net to of rate of range of of annual billion X%. year Adjusted Effective tax to be XX%, will rate of growth X% compared also in representing to the increase X% adjusted

provided be due of As rate a many along whereby for U.S. provided interest. further nondeductible U.S. the interest limited. allowance interest tax of expense change for deductibility in XXXX you has carryforwards limitations rates, a higher for of higher increasing on to prior valuation resulted reform in tax deductibility will with may effective interest with XXXX. larger recall, a XXXX tax the from large and combined This, reform years,

to in America capacity and well is as million primarily as $X.XX as represents Adjusted enhancements million, million well increased to shares continued average the by basis, at to EPS XXX a $X.XX, the at share elevated on cobalt Nelson invest decline both to development this range count tax XX% representing interest North which Fully emission and to expansions $XXX continue rate. weighted of the projects EO Sterigenics as capital increased as expenditures of range is in be we the to fund expected expense range Nordion. in XXX million in for XX%, driven diluted of Labs a to be of growth $XXX investments in

to back Xx. B, closing Term million expect the X our we of leverage above $XXX By long-term With some target to year-end be a slightly standpoint, From qualitative increase within range will as labor of XXXX, the to stated Loan our are our into inflationary assumptions as we're well as chain supply impact pressures anticipating market follows: and indirect continue range. XXXX, this continued from disruptions.

Nordion Russia to Authorities its continue able face challenges. into that believe second the of as the the minute. supply system. be a Michael world to will to expect the will understand disruption in but with We we around year, the continue the Ukraine more sanctions on heads importance in health in care navigate will cobalt-XX Russia to of touch Russia produced cobalt-XX the global associated risk from war

As I'll the business reporting, cadence at comment on we quarterly each unit. look briefly of

almost cadence, our and Keeping as have the margins we'll business, quarter Sterigenics, for volumes with in harvest the driven Nordion's cobalt-XX. expect the most second by performance be particularly in XXXX consistent and volumes first of financial through the income to part and of and lower in phasing all is realize largest margin large XXXX typical the will and expansion shipment half year. as segment lumpy the and We increased of schedules fourth typical revenues occur will the rest quarter.

of in be While the approximately year. of back segment revenues XX% and Nordion will realized half of the XX% income

to XXXX to Returning through expected first to a pre-pandemic expected in year. quarterly have lower Labs of quarter cadence. margins the and are expand Nelson margins the

standpoint, to continue standpoint, back We foreign the long-term guidance currency our guidance. We remain XXs expect mid- a the any of to prioritize the high assume in balance that in constant year-end for year. and XXXX rate margins the our climb year. do to deployment levels strategic in back half capital run deleveraging From growth normal relatively to sheet acquisitions. our not we initiatives, a From rates acquisitions assumes

now call I'll over turn you, the Michael. to back

devices previously been Thanks, which cobalt-XX to of Michael. question-and-answer topic of to always governments of had from global Russia, I address program has sourcing ensure using discussed. gamma has session, transitioning the in outreach are health to a Nordion and an radiation. like the as Prior would to Nordion understand community the the XX% to of globe care importance approximately sterilized the the produced Russia cobalt-XX regulators around medical

monitoring in cobalt-XX. situation the the protect to geopolitical continue officials and engage with these are of to supply regular carefully dialogue We

present At of that be Russia time, to cobalt-XX and to from continue supply continue from procure to receive the believe cobalt-XX we we'll able Russia.

predict an no was XXXX on X% long which mid will X% is our and cobalt-XX experienced Our previously no Kingdom, we between of and understanding there European the of originally we XXXX [Ventas] XXXX a the revenue. States, said, Union. would guidance is way announced based United Russia provided This identical full is United for unfold supply sanctions If the impact. from Russia, expect That to to Sotera impact guidance how term. there or sanctions current in Canada against total of certainty the short, in what Health of and disruption by

feel and Q&A. for this Before transitioning for Q&A that we the bottom XXXX. Operator, a Overall, to remains about very into session, and Sotera reemphasize let's good future on prospects. the I in At want open top in the the position Health call company's point, current growth both strong line

Capital come [Operator Instructions] Sean from first will RBC question My with Dodge Markets.

Yes.

On Nelson, the I the that Can know that purely unusually there when that more made more through. have But volumes? through second this walk on capacity get just pricing there you point I EBITDA Nordion, the half? the also with opening guess lag that? the Sterigenics expected visibility is that the some on new from harvesting you is year. back half little the taken into you ramping is a Or a Michael, specifically and you've to come have that's you actions will Or guidance, weighted. in will flow through schedules ramp during pretty is

little on heavy second half the what's more [weighted]. driving Just a

Yes.

Great. Okay.

of comments on half, the Just on second was XX% Nordion. our segment XX% relative to Sean, revenue of income and

the consistent see and will for margins. year. Sterigenics will You Volumes strong throughout increase business a steady,

throughout that softer continue As my but in will to in I a first stated the progress the quarter, remarks, little typically, margins year.

and third fourth be the growth question in pricing. is from progresses volumes. But and side, little typically On first quarters quarter you'll getting answer first your good quarter Yes, as the -- on always to to second, good Lab year the Nelson lighter. see a will

during the overall, will at throughout you of Sterigenics, our out course the sure year. of the past, As and as largest roll business, progresses we've growth understand, and make points stated the year, year-over-year roll different want I as in just in steady But the year start to renew contracts we'll some our have well. those through to

a as year? schedule, in Okay. Russia, particularly said of again, is is supply guess to Great. that's whole, come year where have in Nordion, of within the you the pretty over year. harvesting the expected in portion happen? I the that And is the portion Or a on there concentrated? And expected when then half from based to The revenue second the visibility that contribute the pretty quarter Russia the of evenly or you does course X particular concentrated

I exactly recall not your the that, we going but the half big some not on question. by Yes. harvest quarter on can cadence referenced, what's timing. more that's supply driver don't you tell That's question second of schedule a in It's other the I that's if about that based.

question will Citi. with next Patrick Our Donnelly from come

to Michael, on see beyond Illinois. if update settlement of the maybe rest we we the terms make minds on kind how have of the set talk outstanding sure view the to beyond quick this the should of to that, in your one, just a terms changes process other and our just some you litigation. a of about, line? think guess, of the catalyst want I I this litigation. about in time the just then of all kind Nice trying just figure side. just of maybe one the And in litigation in out Can opt-ins there

Yes.

representatives million. So the rate. have committed they would plaintiff that XX.X% The settlement, participation Patrick, for get $XXX on it's Illinois and

about So have the opt to that's ability people math, if the out. you do XX

recently appointed works high how process they a is the So it administrator. claims level,

-- administrator have to the process. claims And days XX and We hire and we plaintiff, April, late come do -- to days probably that I'm money go back after May. the numbers then evaluate initial claims with have us it. plaintiffs have allocates out to to then after the XX early they sorry, the nothing the That's administrator, the plaintiff they to

May. closed to gets able than be this July, to April, come sometime think us will early August. that late late We'll early evaluate We out it. It

May X. into We million count the have to escrow fund on $XXX

they're calling already Fornek and and a have trial So committed plaintiffs, it numbers. works. on Schumacher that's how level, at Kamuda, X, high The their what signed

So that's Illinois.

come a On cases on to to the is extended Mexico, pretty just personal the a And no different you litigation, that Georgia, because injury a New rest in causation. very of saw approach prove do other different clear Georgia Illinois. And in there thing them after causation. Phase that to going have injury time Illinois. will case there's for and be up through in than personal that, be what line X taken Georgia, first they in is Mexico. XXXX, on have approach it specific to was Phase the is II A to goes then I go New general

Understood.

maybe I the It half. been normal the Okay. those talk Is tracking you normalizing? on 'XX. a to get quick then like Can ramp? number run pressures, the couple the quick expense, The here gets And obviously margins get I volumes side. that. second didn't quarters. it then about kind back exact missed interest rate might of a for last have just sounds one What that of margin there? in the the just just just Nelson, one. you staffing And

that if be have So you great. that, would

could questions take on interest. then the I'll address questions Michael and Okay. margin Biehl

volumes how they X the if in over margin mid-XXs, quarter We of on being and Always lowest side, XX%, margin Nelson quarter a So third a have the team bit kind of XX% But up on what feeling of you range. quarter last has little good and fourth good about the the look impact. improvement done. pretty there's homed first seasonality Nelson that of right? because just it, at had quarters the we're fall kind sequentially. ends

Promoter in of went staffing we rates turnaround of Net things is got the key just times. I'm that a progress up, quarterly both there the for well we I the looking last just call past our our turnaround service performance. Nelson week, ahead on Ironically, one reduce scores make to And more then as survey was really is volume, them didn't priorities our one Score satisfaction we anticipating care and both staffed because in time. Remember, bit take our our and of overall over and but very back we were we our strong of customer mentioned little pleased with annual the as sure Sterigenics

what We're on seeing doing confident nice we're there. of I'm some pockets So growth.

But from earlier. mid- margin the but a be as see high perspective, we will referenced lighter, that see we business little the a I first this in had to quarter XXs

Right.

we $XXX Does Now the your question? to answer for range interest expense a basis. million expect XXXX, be that in the on $XXX to million cash

It does.

next Matthew with will Our Mishan question come from KeyBanc.

of you longer-term Where a like of for be a Nelson on are thought when where at outlook driver actually guys. have you business now like and I process a you? we going from be for perspective a we're through just Labs. I on when question and Nelson kind follow-up kind came the was growth double-digit Labs you you from Nelson first going a public, to believe growth think you Labs will --

long over be think we range, digits, double high Matthew, low We that Yes. business digits. will the single think this

our total digits. to long-range digits, mix, high that, you you of top projections lower is get end feel the it about double on X% on that you typically X.X% the company, to remember, X.X% talked about gets we business. Nelson of If price whole the X%. depending confident the across company low about And of that then business. still single on gets We volume

seems you more this some It product it do would holding point? of then like this a through pushing what's think And back that? at And get FDA be to you your from back point? normalized at like when customers

reflect significant 'XX had and mix, staffing PPE -- We in if Yes. -- you know, you we was throughout and of you to a the driver reallocate that volumes, very to good 'XX, our very had into was the accommodate in it, we as customer the then margin kind needs. XXXX, on which growth had high

in right of We that validation saw played and little testing the other in We've see out. bit rebound direction. a started As slowing move to area. the down that kind

validation So most having big I been are that with. say labor would the the the one volume has think in I challenges labs challenges

doing feel customer service work. Joe us the and cost side, I and and price about really The really sat the But it our in telling customers management. there good team what shows what the with are are and

it's are directionally, overall, doing got pockets -- So really outstanding. we've and some that

with improve on So it's momentum. overall, helping I the on customer just validation doing that And and businesses. lot Sterigenics real of turnaround focusing for been helpful times and has think we're assurance both coordination work really got a very

next Luke Sergott will with come question Our from Barclays.

the to X% from Just on guys guide? in that a you guide, sense, X% potential cobalt-XX? the -- couple can a give you me the did include hit the Is on baked your

No, it's not.

personal All And then the Atlanta That's the so Okay. right. on fine. litigation on injury.

of will this the of be the So starts, causation. duration fair it's phases that assume then this a when to different longer on proceedings and especially proof the given

here one XXXX? roll how the timing to in that through 'XX? in get sense others kind this trying starts of And with a of Just then

different I an Yes. I the is cases extended different X XXXX, The general X and future schedule time there'll would as -- XXXX are and referenced. second the Luke, X are the county timing. phases, is mentioned, causation as a October be going specific in be case is the you X current is of causation. Those period first to

So that's more play going to little take time bit out. to a

Okay.

So like... mean I

I I 'XX, think. would mean in 'XX,

for. other longer case That's this probably to X was a lot was looking actually case, then right. [savored] a All fine. And month. that. ones, right. the it's Because assume Okay. than I per All what basically it That's

and reason, jurisdictions, the X counting. Cobb X asking for county case then other question. Luke, different The talked only Thanks ones in There's is that different about you Yes. X are in here. counties involved

for one last Okay. one And side. the me on litigation

any that across other ruled with similar to any or you guys the upcoming outstanding else the facility, there? proceedings Atlanta the anything favorably are just of one that facilities outside on other So got court

No.

you're court there referencing certificate where ruled operate continue that the can is So favor of occupancy our what a facility. in that to we there

are like all And very up and don't -- EO have we've else and So and anything we're the facilities are enhancements performing well. pending. all there, been that no, We facility running. the

Our Casey from next will with Woodring come JPMorgan. question

CapEx. on one Just

another enhancements year's in you will So in NESHAP those? XXXX. of when you and this capacity much thinking to this and how CapEx increased have any now XX% you of Can year And XXXX come will how And CapEx go do should about we out EO elaborate increase on just guiding then be roughly versus guidelines expansion? sense XX% to those development? cobalt

Yes. Casey. Thanks,

Approximately That's So the $XXX we growth directed level, towards CapEx. to year. on put million consistent at CapEx. $XXX last on to XX% saw a what we high million of guide CapEx is our

We have customers. significant opportunities with our

you As with portion on XX% making ground. work have the shovel we our a capacity, know, the sure before put XX%, customers large that we for commitments of in we

we continue move with that. forward to So

EO approximately million, in the neighborhood XXXX. enhancements, that somewhere be $XX in it will $XX million, On

I there several Okay. weekend about being the on of just Got list. And EU the sanction then Russia, you. over subsidiaries Rosatom added one some too, to think was noise

the supply if is can't and overall, your plays conversations in around in that out Russian of how if suppliers a have follow-up, sanctions government case running year? the as Just And a would you're headwind been and worst your just off this XXXX, likelihood year your translate existing to procure this there Russia? the with and U.S. XXXX,

with has Casey, not done that a regulators do as maneuvering the cobalt. team on well ability around The on our world to working those continue job of We to the any supply done review team that. most with our as through the current phenomenal preliminary sanctions, has So challenges a impact that. see

time, not was guidance X% So Health as giving on giving in point this 'XX, time. any an XXXX. we revenue Sotera it my in in here see that of At XX in X% point remarks, there would to impact, sitting XXXX February be prepared any not I we're guidance we're total impact at this of continuing. If stated forward-looking in

next come from question Our Windley with will Jefferies. Dave

side over Labs I I around that prior that years? push mix the business could ahead? that of there's noticed, deck in is you is staffing base. pharma of the on if also part the wondered seen some Michael, the a the that's of a of staffing it whether in the CapEx? just of more And mention And on part Or normal customer comment for Nelson the you've

Pharma hope I as strategic We the well for for priority you're has Thanks, that as David. the last well. years. company whole been several a doing Yes. -- business

has the pharma past is play As years, say I presence, perspective, side. to nice a business particularly CapEx med Nelson that growth up look but growth in you CapEx Yes, of our is a of significant that the most may portion some pharma our staffing seeing the targeted there when that on is the base. a Nelson device, headcount supported large in over that largest of I significantly Labs From customer there pockets on recall, X a the that portion the would of at side. [Lubin] SAM -- it's pharma. we pretty for We're by several X towards is

yes, in continuing make So we're investments and to pharma Nelson.

Okay. That's interesting.

rate other, interest the and of Michael, lack the of deductibility tax For expense.

catch-up of I or it something Your to or an description describe all, Maybe that. deductibility think, that. I there, to include mentioned, appreciate, of element like seemed carryover first you also but

so some the point which to wanted of ask Is than get And 'XX. of at what you rate past kind different there applies level to get normalized I anomalies a that. a to and tax

we to because start in there'll less down. down go couple have of as actual in will expense valuation then pay we too think down. in the it's that interest next on be pay the affect will interest, tax interest and -- expense I go they'll The limit will debt this rate but to be down, going put little And to expense our go to of start because a goes range. deductibility as the we interest years, obviously, that terms Well, won't down

it. Got

capital Michael, you made investments then Is of bolt-on list do times at kind it probably that's as -- have you're capital the And small making? down deployment your terms currently? organic beyond that of paying then strategy. acquisitions, think to in menu I mean, growth still And some in your the priority acquisitions Or you're Okay. are part that, that, first item right CapEx capital, you of growth debt?

Yes.

assumed the capital is part the to in that's $XXX still right guidance There's no $XXX on on M&A or it. of So of around projected deployment. probably is the our organic CapEx guide it's as say, It all million, that revenue place referenced in and growth. our list, million you that you

been would And third the be XXXX. continue into strategic point, to around report, deleveraging, that the be to in guide we this the be would tell I there's for But the second have nothing The area. built pipeline would market organic M&A. you first nothing could growth, at build that tracking are several we and opportunities.

next [Operator Polark from will Instructions] come Wolfe Research. Our Michael with question

and short-term the Thank very bigger all you detail, picture one for then a follow-up. focused

in the there models you be to the pieces say, flat million down quarter help $XXX bit? an aligned first harvest Any up first versus, expected bit, prior year that, would enterprise quarter, the low little moving revenue the to little due target timing, sure helpful. are of a adjusted make can the for with EBITDA On with Nordion, with color just a

first mentioned would quarter. most second I tell fall half, in in is the just Yes. Nordion going that, we revenue you the the as to of

can little or on be comes with appreciation first think the sure seen get the based So guys that, performance dynamics quarter the Mike, you than in of make be sure, an you not will where the going want first We or first a particular, and with slow through want we're get revenue just quarter the start. mentioned, segment lumpiness. to XX% that to that, first specific had And half. this, for income half make to as in quarterly guys understanding going that was to that. you assume the Other of you've as on that, the just quarter. the in we very In Nordion surprised revenue We into Nordion guidance. operating XX% second you approximately don't

is follow-up maybe we little be as bioprocess last move color in era a The is It a volumes a seeing that any kind as remind Sterigenics? bit to you and few Are moderating and you Understood. disposable What on structural seems catalyst I has the space over for Sterigenics. change your other due beyond Can to there? COVID look position forward notable in the a think, been, as both tailwind reasons kind COVID as years. of your trends? exposure world. of And bioprocess you us in a

Yes.

in stated we better bioprocessing they're a But of market years, that and think past, in position, competitors than think do suspicion last because driver our market. I I grown we share we've than that think that's big at faster we As of was our a are. what have participate the have the couple I over

continues Now a as with bit, much, down our isn't as That for not area side of a strategic bioprocessing good slowing little market having right? probably us. share. growth impacted be to much the That's as

to lower there. continue time, probably right relative we isn't see we're growth over the to a like out. getting playing way how marketplace. change. share see benefit just opportunities it, now, bit position We but in That But We're Mike. for to the that, in But a I'd it's others of necessarily little that's that get

over closing to the back to session. I'd remarks. are for appears further Michael questions. conference there no like turn concludes question-and-answer our Petras any It This

end capitalize about have and continue dynamics participating marketplace with team's customer we a proud also Lots labor very proud seeing our base, years. contracts ratings in, the the we're what Great. the XXXX, you, through year. today. satisfaction really in just long-term we in manage what of customers, throughout but in to our consistent on XXXX which I'm Thank solid accomplished prospects We're that been really that litigation have ability growth very strong markets inflation many the of from and we to for you, play accomplished, the the geopolitical, our Andrew. customer stickiness and Thank with high everybody, our of optimistic We're the situation.

support. XXXX, we for optimistic you continued thank we're day. really about Bye-bye. your Thank a great Have you. So and

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

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