- Q1 2022 net revenues of
$237 million increased 12%, compared to Q1 2021 - Q1 2022 net income of
$31 million or$0.11 per diluted share, compared to net income of$11 million or$0.04 per diluted share in Q1 2021 - Q1 2022 Adjusted EBITDA of
$115 million increased 10%, compared to Q1 2021 - Q1 2022 Adjusted EPS of
$0.22 improved by$0.04 per diluted share, compared to Q1 2021 March 31, 2022 total debt of$1.79 billion and net leverage ratio improved to 3.4x- Company reaffirms 2022 outlook
First-quarter 2022 net revenues increased 12% to
“We are off to a good start in 2022, delivering another consecutive quarter of double-digit top-line and bottom-line growth as compared to the same prior year quarter,” said Chairman and Chief Executive Officer,
Petras continued, “Given our performance to date, we are reaffirming the 2022 financial outlook that we first provided on
First-Quarter Review by Business Segment
Sterigenics
For first-quarter 2022, Sterigenics net revenues were
Net revenues and segment income growth for the first-quarter 2022 were driven by volume and mix, and pricing.
For first-quarter 2022,
The increases in both net revenues and segment income for the first-quarter 2022 were driven by volume and mix, and pricing.
For first-quarter 2022,
The decline in net revenues for the first-quarter 2022 was driven by decreased demand for pandemic-related testing, partially offset by incremental revenue from recent acquisitions and pricing. Segment income decline was driven by unfavorable mix due to a reduction in pandemic-related testing, labor challenges, which were compounded by the Omicron surge, as well as dilution resulting from Nelson Labs’ acquisitions in 2021.
Balance Sheet and Liquidity
As of
Reaffirming 2022 Outlook
Today,
- Net revenues in the range of
$1.0 billion to$1.03 billion , representing growth of approximately 7% to 11%, compared to the prior year, - Adjusted EBITDA in the range of
$515 million to$535 million , representing growth of approximately 7% to 11%, compared to the prior year, - Tax rate applicable to Adjusted Net Income in the range of 29% to 30%,
- Adjusted EPS in the range of
$0.93 to$0.99 , representing growth of 6% to 13% versus the prior year, - A fully diluted share count in the range of 280 million to 282 million shares on a weighted-average basis,
- Capital expenditures in the range of
$140 million to$170 million , and - Net leverage reduction of approximately 1⁄2 of a turn.
The outlook provided above contains a number of assumptions, including, among others, the Company’s current expectations regarding supply chain continuity, particularly for the supply of ethylene oxide (“EO”) and cobalt-60 (“Co-60”), the impact of inflationary trends including the impact on the supply of labor, the impact of the COVID-19 pandemic including the rate of recoveries of elective procedures and new product development testing, and the expectation that exchange rates as of Q1 2022 remain constant for the remainder of 2022. Our outlook is based on current plans and expectations and is subject to a number of known and unknown risks and uncertainties, including those set forth below under “Forward-Looking Statements.”
Earnings Webcast
Upcoming Investor Events
RBC Capital Markets Global Healthcare Conference at8:30 a.m. Eastern Time ,May 17, 2022 Sotera Health 2022 Annual Meeting of Stockholders at9:00 a.m. Eastern Time ,May 26, 2022 Goldman Sachs Global Healthcare Conference at9:20 a.m. Pacific Time ,June 14, 2022
Live and archived webcasts and presentations associated with the conferences listed above may be accessed on the Investor Relations section of the
https://investors.soterahealth.com/events-and-presentations.
Updates on recent developments in matters relevant to investors can be found on the Investor Relations section of the Company’s website at https://investors.soterahealth.com/special-notices. For developments related to EO, updates can be found at https://investors.soterahealth.com/ethylene-oxide-eo-overview.
Forward-Looking Statements
Unless expressly indicated or the context requires otherwise, the terms “Sotera Health,” “Company,” “we,” “us,” and “our” in this document refer to
Non-GAAP Financial Measures
The Company does not provide a reconciliation of the forward-looking Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Net Leverage Ratio outlook to the most directly comparable GAAP measure, as this cannot be done without unreasonable effort due to the variability and low visibility with respect to certain items, including, among others, uncertainties caused by the global COVID-19 pandemic, changes to the regulatory landscape, restructuring items and certain fair value measurements, all of which are potential adjustments for future earnings. The variability of these items could have a potentially unpredictable, and a potentially significant, impact on our future GAAP results.
To supplement our consolidated financial statements presented in accordance with GAAP, we consider Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio, financial measures that are not based on any standardized methodology prescribed by GAAP.
We define Adjusted Net Income as net income (loss) before amortization and certain other adjustments that we do not consider in our evaluation of our ongoing operating performance from period to period.
We define Adjusted EBITDA as Adjusted Net Income before interest expense, depreciation (including depreciation of Co-60 used in our operations) and income tax provision applicable to Adjusted Net Income. Adjusted EBITDA Margin is equal to Adjusted EBITDA divided by net revenues.
We define Adjusted EPS as Adjusted Net Income divided by the weighted average number of diluted shares outstanding.
Our Net Debt is equal to our total debt, plus unamortized debt issuance costs and debt discounts, less cash and cash equivalents.
Our Net Leverage Ratio is equal to Net Debt divided by Adjusted EBITDA.
We use these non-GAAP financial measures as the principal measures of our operating performance. Management believes these are useful because they allow management to more effectively evaluate our operating performance and compare the results of our operations from period to period without the impact of certain non-cash items and non-routine items that we do not expect to continue at the same level in the future and other items that are not core to our operations. We believe that these measures are useful to our investors because they provide a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. In addition, we believe these measures will assist investors in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented. Our management also uses these measurements in their financial analysis and operational decision-making and Adjusted EBITDA serves as the basis for the attainment of our primary annual incentive program. These measures may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.
About
INVESTOR RELATIONS CONTACTS | |
Jenny Kobin | |
IR Advisory Solutions | |
IR@soterahealth.com | IR@soterahealth.com |
MEDIA CONTACT | |
Chief Marketing Officer, | |
kgibbs@soterahealth.com |
Source:
Sotera Health Company
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | |||||||
2022 | 2021 | ||||||
Revenues: | |||||||
Service | $ | 206,218 | $ | 188,698 | |||
Product | 30,536 | 23,450 | |||||
Total net revenues | 236,754 | 212,148 | |||||
Cost of revenues: | |||||||
Service | 94,576 | 85,036 | |||||
Product | 13,303 | 11,740 | |||||
Total cost of revenues | 107,879 | 96,776 | |||||
Gross profit | 128,875 | 115,372 | |||||
Operating expenses: | |||||||
Selling, general and administrative expenses | 59,542 | 52,465 | |||||
Amortization of intangible assets | 15,841 | 16,543 | |||||
Total operating expenses | 75,383 | 69,008 | |||||
Operating income | 53,492 | 46,364 | |||||
Interest expense, net | 10,404 | 21,282 | |||||
Loss on extinguishment of debt | — | 14,312 | |||||
Foreign exchange loss | 788 | 578 | |||||
Other income, net | (2,967 | ) | (3,890 | ) | |||
Income before income taxes | 45,267 | 14,082 | |||||
Provision for income taxes | 14,626 | 3,017 | |||||
Net income | 30,641 | 11,065 | |||||
Less: Net income attributable to noncontrolling interests | — | 223 | |||||
Net income attributable to | $ | 30,641 | $ | 10,842 | |||
Earnings per share | |||||||
Basic | $ | 0.11 | $ | 0.04 | |||
Diluted | 0.11 | 0.04 | |||||
Weighted average number of common shares outstanding | |||||||
Basic | 279,829 | 278,827 | |||||
Diluted | 279,908 | 278,968 |
Sotera Health Company
Segment Data
(in thousands)
(unaudited)
Three Months Ended | |||||||
2022 | 2021 | ||||||
Segment revenues: | |||||||
Sterigenics | $ | 149,462 | $ | 131,151 | |||
34,002 | 25,918 | ||||||
53,290 | 55,079 | ||||||
Total net revenues | $ | 236,754 | $ | 212,148 | |||
Segment income: | |||||||
Sterigenics | $ | 79,403 | $ | 68,461 | |||
18,903 | 13,786 | ||||||
17,043 | 23,070 | ||||||
Total segment income | 115,349 | 105,317 | |||||
Less adjustments: | |||||||
Interest expense, net(a) | 16,750 | 21,282 | |||||
Depreciation and amortization(b) | 36,049 | 37,661 | |||||
Share-based compensation(c) | 4,538 | 3,449 | |||||
Gain on foreign currency and derivatives not designated as hedging instruments, net(d) | (6,552 | ) | (336 | ) | |||
Acquisition and divestiture related charges, net(e) | (160 | ) | (185 | ) | |||
Business optimization project expenses(f) | 104 | 261 | |||||
Plant closure expenses(g) | 671 | 542 | |||||
Loss on extinguishment of debt(h) | — | 14,312 | |||||
Professional services relating to EO sterilization facilities(i) | 18,059 | 13,399 | |||||
Accretion of asset retirement obligation(j) | 520 | 551 | |||||
COVID-19 expenses(k) | 103 | 299 | |||||
Consolidated income before income taxes | $ | 45,267 | $ | 14,082 |
(a) | The three months ended |
(b) | Includes depreciation of Co-60 held at gamma irradiation sites. |
(c) | Represents non-cash share-based compensation expense. |
(d) | Represents the effects of (i) fluctuations in foreign currency exchange rates, (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at |
(e) | Represents (i) certain direct and incremental costs related to the acquisitions of |
(f) | Represents professional fees, contract termination and exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of acquisitions, operating structure realignment and other process enhancement projects. |
(g) | Represents professional fees, severance and other payroll costs, and other costs including ongoing lease and utility expenses associated with the closure of the |
(h) | Represents expenses incurred in connection with the repricing of our Term Loan in |
(i) | Represents professional fees related to litigation associated with our EO sterilization facilities and other related professional fees. |
(j) | Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities (without regard for whether the decommissioning services would be performed by employees of |
(k) | Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures. |
Sotera Health Company
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
As of | As of | ||||
2022 | 2021 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 121,446 | $ | 106,924 | |
Accounts receivable, net | 114,763 | 108,183 | |||
Inventories, net | 45,701 | 54,288 | |||
Other current assets | 89,650 | 76,566 | |||
Total current assets | 371,560 | 345,961 | |||
Property, plant, and equipment, net | 669,161 | 650,797 | |||
Operating lease assets | 36,984 | 39,946 | |||
Other intangible assets, net | 582,144 | 598,844 | |||
1,125,828 | 1,120,320 | ||||
Other assets | 50,092 | 33,634 | |||
Total assets | $ | 2,835,769 | $ | 2,789,502 | |
Liabilities and equity | |||||
Total current liabilities | $ | 143,851 | $ | 161,161 | |
Long-term debt, less current portion | 1,744,541 | 1,743,534 | |||
Other noncurrent liabilities | 162,786 | 164,210 | |||
Deferred income taxes | 142,461 | 134,501 | |||
Total liabilities | 2,193,639 | 2,203,406 | |||
Total equity | 642,130 | 586,096 | |||
Total liabilities and equity | $ | 2,835,769 | $ | 2,789,502 |
Sotera Health Company
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended | |||||||
2022 | 2021 | ||||||
Operating activities: | |||||||
Net income | $ | 30,641 | $ | 11,065 | |||
Non-cash items | 41,231 | 52,657 | |||||
Changes in operating assets and liabilities | (21,905 | ) | (7,563 | ) | |||
Net cash provided by operating activities | 49,967 | 56,159 | |||||
Investing activities: | |||||||
Purchases of property, plant and equipment | (35,546 | ) | (20,942 | ) | |||
Purchase of mandatorily redeemable noncontrolling interest in | — | (12,425 | ) | ||||
Purchase of | — | (13,152 | ) | ||||
Adjustments to purchase of | 63 | — | |||||
Net cash used in investing activities | (35,483 | ) | (46,519 | ) | |||
Financing activities: | |||||||
Payments of debt issuance costs | (31 | ) | (3,435 | ) | |||
Other financing activities | (418 | ) | (348 | ) | |||
Net cash used in financing activities | (449 | ) | (3,783 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 487 | (295 | ) | ||||
Net increase in cash and cash equivalents, including restricted cash | 14,522 | 5,562 | |||||
Cash and cash equivalents, including restricted cash, at beginning of period | 106,924 | 102,454 | |||||
Cash and cash equivalents, including restricted cash, at end of period | $ | 121,446 | $ | 108,016 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid during the period for interest | $ | 15,809 | $ | 19,745 | |||
Cash paid during the period for income taxes, net of tax refunds received | 13,505 | 11,561 | |||||
Equipment purchases included in accounts payable | 9,508 | 7,389 |
Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | |||||||
2022 | 2021 | ||||||
Net income | $ | 30,641 | $ | 11,065 | |||
Amortization of intangible assets | 20,182 | 22,282 | |||||
Share-based compensation(a) | 4,538 | 3,449 | |||||
Gain on foreign currency and derivatives not designated as hedging instruments, net(b) | (6,552 | ) | (336 | ) | |||
Acquisition and divestiture related charges, net(c) | (160 | ) | (185 | ) | |||
Business optimization project expenses(d) | 104 | 261 | |||||
Plant closure expenses(e) | 671 | 542 | |||||
Loss on extinguishment of debt(f) | — | 14,312 | |||||
Professional services relating to EO sterilization facilities(g) | 18,059 | 13,399 | |||||
Accretion of asset retirement obligation(h) | 520 | 551 | |||||
COVID-19 expenses(i) | 103 | 299 | |||||
Income tax benefit associated with pre-tax adjustments(j) | (7,852 | ) | (14,133 | ) | |||
Adjusted Net Income | 60,254 | 51,506 | |||||
Interest expense, net(k) | 16,750 | 21,282 | |||||
Depreciation(l) | 15,867 | 15,379 | |||||
Income tax provision applicable to Adjusted Net Income(m) | 22,478 | 17,150 | |||||
Adjusted EBITDA(n) | $ | 115,349 | $ | 105,317 | |||
Net Revenues | $ | 236,754 | $ | 212,148 | |||
Adjusted EBITDA Margin | 48.7 | % | 49.6 | % | |||
Weighted average number of shares outstanding | |||||||
Basic | 279,829 | 278,827 | |||||
Diluted | 279,908 | 278,968 | |||||
Earnings per share: | |||||||
Basic | $ | 0.11 | $ | 0.04 | |||
Diluted | 0.11 | 0.04 | |||||
Adjusted earnings per share: | |||||||
Basic | $ | 0.22 | $ | 0.18 | |||
Diluted | 0.22 | 0.18 |
(a) | Represents non-cash share-based compensation expense. |
(b) | Represents the effects of (i) fluctuations in foreign currency exchange rates, (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at |
(c) | Represents (i) certain direct and incremental costs related to the acquisitions of |
(d) | Represents professional fees, contract termination and exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of acquisitions, operating structure realignment and other process enhancement projects. |
(e) | Represents professional fees, severance and other payroll costs, and other costs including ongoing lease and utility expenses associated with the closure of the |
(f) | Represents expenses incurred in connection with the repricing of our Term Loan in |
(g) | Represents professional fees related to litigation associated with our EO sterilization facilities and other related professional fees. |
(h) | Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities (without regard for whether the decommissioning services would be performed by employees of |
(i) | Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures. |
(j) | Represents the income tax impact of adjustments calculated based on the tax rate applicable to each item. We eliminate the effect of tax rate changes as applied to tax assets and liabilities and unusual items from our presentation of adjusted net income. |
(k) | The three months ended |
(l) | Includes depreciation of Co-60 held at gamma irradiation sites. |
(m) | Represents the difference between income tax provision or benefit as determined under |
(n) |
Sotera Health Company
Non-GAAP Financial Measures
(in thousands)
(unaudited)
As of | As of | ||||||
2022 | 2021 | ||||||
Long-term debt | $ | 1,744,541 | $ | 1,743,534 | |||
Current portion of finance leases | 1,342 | 1,160 | |||||
Finance leases less current portion | 40,014 | 40,877 | |||||
Total Debt | 1,785,897 | 1,785,571 | |||||
Add: unamortized debt issuance costs and debt discounts | 19,009 | 20,016 | |||||
Less: cash and cash equivalents | (121,446 | ) | (106,924 | ) | |||
Total Net Debt | $ | 1,683,460 | $ | 1,698,663 | |||
Adjusted EBITDA(a) | $ | 491,261 | $ | 481,229 | |||
Net Leverage | 3.4x | 3.5x |
(a) | Represents Adjusted EBITDA for the twelve months ended |
Sotera Health Company
Non-GAAP Financial Measures
(in thousands)
(unaudited)
Twelve Months Ended | Twelve Months Ended | ||||||
2022 | 2021 | ||||||
Net income | $ | 136,697 | $ | 117,121 | |||
Amortization of intangible assets | 84,642 | 86,742 | |||||
Share-based compensation(a) | 14,959 | 13,870 | |||||
Gain on foreign currency and derivatives not designated as hedging instruments, net(b) | (6,274 | ) | (58 | ) | |||
Acquisition and divestiture related charges, net(c) | (5,993 | ) | (6,018 | ) | |||
Business optimization project expenses(d) | 791 | 948 | |||||
Plant closure expenses(e) | 2,456 | 2,327 | |||||
Loss on extinguishment of debt(f) | 6,369 | 20,681 | |||||
Professional services relating to EO sterilization facilities(g) | 50,316 | 45,656 | |||||
Accretion of asset retirement obligation(h) | 2,221 | 2,252 | |||||
COVID-19 expenses(i) | 565 | 761 | |||||
Income tax benefit associated with pre-tax adjustments(j) | (32,219 | ) | (38,500 | ) | |||
Adjusted Net Income | 254,530 | 245,782 | |||||
Interest expense, net(k) | 69,660 | 74,192 | |||||
Depreciation(l) | 64,648 | 64,160 | |||||
Income tax provision applicable to Adjusted Net Income(m) | 102,423 | 97,095 | |||||
Adjusted EBITDA(n) | $ | 491,261 | $ | 481,229 | |||
Net Revenues | $ | 956,084 | $ | 931,478 | |||
Adjusted EBITDA Margin | 51.4 | % | 51.7 | % |
(a) | Represents non-cash share-based compensation expense. |
(b) | Represents the effects of (i) fluctuations in foreign currency exchange rates, (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at |
(c) | Represents (i) certain direct and incremental costs related to the acquisitions of |
(d) | Represents professional fees, contract termination and exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of acquisitions, operating structure realignment and other process enhancement projects. |
(e) | Represents professional fees, severance and other payroll costs, and other costs including ongoing lease and utility expenses associated with the closure of the |
(f) | Represents expenses incurred in connection with the |
(g) | Represents professional fees related to litigation associated with our EO sterilization facilities and other related professional fees. |
(h) | Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities (without regard for whether the decommissioning services would be performed by employees of |
(i) | Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures. |
(j) | Represents the income tax impact of adjustments calculated based on the tax rate applicable to each item. We eliminate the effect of tax rate changes as applied to tax assets and liabilities and unusual items from our presentation of adjusted net income. |
(k) | The twelve months ended |
(l) | Includes depreciation of Co-60 held at gamma irradiation sites. |
(m) | Represents the difference between income tax provision or benefit as determined under |
(n) |
Source:
2022 GlobeNewswire, Inc., source