- Q2 2021 net revenues of
$252 million increased approximately 18%, compared to Q2 2020 - Q2 2021 net income of
$43 million or$0.15 per diluted share, compared to net income of$7 million or$0.03 per diluted share in Q2 2020 - Q2 2021 Adjusted EBITDA of
$135 million increased approximately 18%, compared to Q2 2020 - Q2 2021 Adjusted EPS of
$0.26 improved$0.12 compared to Q2 2020 Adjusted EPS of$0.14 June 30, 2021 total debt of$1.9 billion and net debt of$1.7 billion ; net leverage ratio improved to 3.8x- Increasing full-year 2021 revenue growth outlook from 9%-12% to 12%-15% and increasing full-year 2021 Adjusted EBITDA growth outlook from 11%-16% to 13%-17%
- Full redemption of
$100M Senior Secured First-Lien Notes due 2026 scheduled for Q3 2021
Second-quarter 2021 net revenues increased 18.2% to
For the first six months of 2021, net revenues increased 15.6% to $464 million, compared to $401 million for the same period in 2020. Net income was
“Today, we are reporting another quarter of double-digit top-line and earnings growth, while continuing to make meaningful progress on strategic priorities and deleveraging,” said Chairman and Chief Executive Officer,
Petras continued, “As a result of our strong financial performance during the first half of the year combined with our momentum going into the second half, we are pleased to increase our Company’s revenue and earnings outlook for 2021. We see continued improvement in the demand for our products and services. During what remains an unsettled time for the world, our focus continues to be on supporting our employees while providing the highest quality service for our customers and driving our mission,
Second-Quarter and First-Half 2021 Highlights by Business Segment
Sterigenics
For the second quarter of 2021, Sterigenics net revenues were
Revenue and segment income growth for the second quarter of 2021 were driven by organic and inorganic sales growth, pricing, as well as a favorable impact from foreign exchange rates.
For the second quarter of 2021,
Revenue and segment income growth for the second quarter of 2021 were driven by a favorable impact from foreign exchange rates as well as favorable pricing.
For the second quarter of 2021,
Revenue and segment income growth for the second quarter of 2021 were driven by inorganic growth, non-personal protective equipment related volume growth and favorable pricing, partially offset by a decline in personal protective equipment testing volumes.
Balance Sheet and Liquidity
As of
On
2021 Outlook Update
Today,
- Net revenues increased from the prior range of
$890 million -$920 million to the new range of$920 million -$940 million , representing growth of approximately 12% - 15%, compared to the prior year, - Adjusted EBITDA increased from the prior range of
$465 million -$485 million to the new range of$475 million -$490 million , representing growth of approximately 13% - 17%, compared to the prior year, - Tax rate applicable to Adjusted Net Income of approximately 28% remains the same,
- Adjusted EPS increased from the prior range of
$0.78 -$0.86 to the new range of$0.87 -$0.91 , - Fully diluted share count decreased from the prior range of 281 million - 283 million to the new range of 279 million - 281 million shares on a weighted-average basis,
- Capital expenditures in the range of
$100 million to$110 million remains the same, and - Net leverage reduction of approximately 3⁄4 of a turn remains the same.
The outlook provided above 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
Baird Global Healthcare Conference at10:15 a.m. Eastern Time ,September 14, 2021 .- J.P. Morgan 12th Annual
U.S. All Stars Conference at8:00 a.m. Eastern Time ,September 21, 2021 .
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 other matters that may be relevant to investors, including updates on recent developments with respect to ethylene oxide and how they may affect our facilities, may be found from time to time on the Special Notices section of the Company’s Investor Relations website at https://investors.soterahealth.com/special-notices.
Forward-Looking Statements
This release contains forward-looking statements that reflect management’s expectations about future events and the Company’s operating plans and performance and speak only as of the date hereof. You can identify these forward-looking statements by the use of forward-looking words such as “will,” “may,” “plan,” “estimate,” “project,” “believe,” “anticipate,” “expect,” “intend,” “should,” “would,” “could,” “target,” “goal,” “continue to,” “positioned to,” “are confident” or the negative version of those words or other comparable words. Any forward-looking statements contained in this release are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. These forward-looking statements are subject to various risks, uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. These risks and uncertainties include, without limitation, any disruption in the availability or supply of ethylene oxide (“EO”) or cobalt-60 (“Co-60”); changes in industry trends, environmental, health and safety regulations or preferences; the impact of current and future legal proceedings and liability claims, including litigation related to purported exposure to emissions of EO from our facilities in
The outlook provided within this earnings release contains a number of assumptions, including, among others, the Company’s current expectations regarding the impact of the COVID-19 pandemic, including the rate of recoveries of elective procedures and new product development testing, and exchange rates. The Company does not provide a reconciliation of the forward-looking Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS 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.
Non-GAAP Financial Measures
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 the trailing twelve-months of 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 metric we utilize to determine 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 | |
IR Advisory Solutions | |
IR@soterahealth.com | IR@soterahealth.com |
MEDIA CONTACT | |
Chief Marketing Officer, | |
kgibbs@soterahealth.com |
Source:
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenues: | |||||||||||||||
Service | $ | 208,710 | $ | 174,444 | $ | 397,408 | $ | 341,849 | |||||||
Product | 43,207 | 38,641 | 66,657 | 59,436 | |||||||||||
Total net revenues | 251,917 | 213,085 | 464,065 | 401,285 | |||||||||||
Cost of revenues: | |||||||||||||||
Service | 91,391 | 80,620 | 176,427 | 163,689 | |||||||||||
Product | 16,765 | 13,498 | 28,505 | 22,112 | |||||||||||
Total cost of revenues | 108,156 | 94,118 | 204,932 | 185,801 | |||||||||||
Gross profit | 143,761 | 118,967 | 259,133 | 215,484 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative expenses | 49,828 | 42,684 | 102,293 | 79,737 | |||||||||||
Amortization of intangible assets | 15,661 | 14,541 | 32,204 | 29,140 | |||||||||||
Total operating expenses | 65,489 | 57,225 | 134,497 | 108,877 | |||||||||||
Operating income | 78,272 | 61,742 | 124,636 | 106,607 | |||||||||||
Interest expense, net | 19,163 | 55,250 | 40,445 | 111,812 | |||||||||||
Loss on extinguishment of debt | — | — | 14,312 | — | |||||||||||
Foreign exchange loss (gain) | 76 | (172 | ) | 654 | (799 | ) | |||||||||
Other income, net | (2,764 | ) | (4,358 | ) | (6,654 | ) | (1,208 | ) | |||||||
Income (loss) before income taxes | 61,797 | 11,022 | 75,879 | (3,198 | ) | ||||||||||
Provision (benefit) for income taxes | 19,182 | 3,770 | 22,199 | (8,464 | ) | ||||||||||
Net income | 42,615 | 7,252 | 53,680 | 5,266 | |||||||||||
Less: Net income attributable to noncontrolling interests | 16 | 235 | 239 | 213 | |||||||||||
Net income attributable to | $ | 42,599 | $ | 7,017 | $ | 53,441 | $ | 5,053 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.15 | $ | 0.03 | $ | 0.19 | $ | 0.02 | |||||||
Diluted | 0.15 | 0.03 | 0.19 | 0.02 | |||||||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 279,078 | 232,400 | 278,953 | 232,400 | |||||||||||
Diluted | 279,214 | 232,400 | 279,078 | 232,400 |
Segment Data
(in thousands)
(unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Segment revenues: | |||||||||||||||
Sterigenics | $ | 145,182 | $ | 120,372 | $ | 276,333 | $ | 237,652 | |||||||
49,125 | 42,141 | 75,043 | 65,766 | ||||||||||||
57,610 | 50,572 | 112,689 | 97,867 | ||||||||||||
Total net revenues | $ | 251,917 | $ | 213,085 | $ | 464,065 | $ | 401,285 | |||||||
Segment income: | |||||||||||||||
Sterigenics | $ | 79,569 | $ | 65,030 | $ | 148,030 | $ | 126,121 | |||||||
31,168 | 27,409 | 44,954 | 40,431 | ||||||||||||
23,826 | 21,990 | 46,896 | 39,760 | ||||||||||||
Total segment income | 134,563 | 114,429 | 239,880 | 206,312 | |||||||||||
Less adjustments: | |||||||||||||||
Interest expense, net | 19,163 | 55,250 | 40,445 | 111,812 | |||||||||||
Depreciation and amortization(a) | 37,461 | 35,034 | 75,122 | 71,057 | |||||||||||
Share-based compensation(b) | 3,493 | 1,393 | 6,942 | 3,118 | |||||||||||
Loss (gain) on foreign currency and embedded derivatives(c) | (660 | ) | (3,023 | ) | (996 | ) | 1,244 | ||||||||
Acquisition and divestiture related charges, net(d) | 844 | 1,295 | 659 | 2,289 | |||||||||||
Business optimization project expenses(e) | 275 | 750 | 536 | 1,799 | |||||||||||
Plant closure expenses(f) | 756 | 451 | 1,298 | 1,222 | |||||||||||
Loss on extinguishment of debt(g) | — | — | 14,312 | — | |||||||||||
Professional services relating to EO sterilization facilities(h) | 10,644 | 9,494 | 24,043 | 13,640 | |||||||||||
Accretion of asset retirement obligation(i) | 602 | 492 | 1,153 | 982 | |||||||||||
COVID-19 expenses(j) | 188 | 2,271 | 487 | 2,347 | |||||||||||
Consolidated income (loss) before income taxes | $ | 61,797 | $ | 11,022 | $ | 75,879 | $ | (3,198 | ) |
- Includes depreciation of Co-60 held at gamma irradiation sites.
- Represents non-cash share-based compensation expense.
- Represents the effects of (i) fluctuations in foreign currency exchange rates, primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies, and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at
Nordion . - Represents (i) certain direct and incremental costs related to the acquisitions of the noncontrolling interests in our
China subsidiaries andBioScience Laboratories in 2021,Iotron Industries inJuly 2020 andNelson Labs Fairfield in 2018 (including the first quarter 2021 gain on the mandatorily redeemable noncontrolling interest), and certain related integration efforts as a result of those acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, and (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in 2018. - Represents professional fees, contract termination and exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of recent acquisitions, the
Sotera Health rebranding, operating structure realignment and other process enhancement projects. - Represents professional fees, severance and other payroll costs, and other costs including ongoing lease and utility expenses associated with the closure of the
Willowbrook, Illinois facility. - Represents expenses incurred in connection with the repricing of our Term Loan in
January 2021 including accelerated amortization of prior debt issuance and discount costs. - Represents professional fees related to litigation associated with our EO sterilization facilities and other related professional fees.
- Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities (without regard for whether the decommissioning services would be performed by employees of
Nordion , instead of by a third party) and are accreted over the life of the asset. - Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures. For the three and six months ended
June 30, 2020 , costs also included donations to related charitable causes and special bonuses for front-line personnel working on-site during lockdown periods.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
As of | As of | ||||||
2021 | 2020 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 156,224 | $ | 102,454 | |||
Accounts receivable, net | 118,405 | 91,735 | |||||
Inventories, net | 35,721 | 34,093 | |||||
Other current assets | 90,755 | 86,733 | |||||
Total current assets | 401,105 | 315,015 | |||||
Property, plant, and equipment, net | 623,513 | 609,814 | |||||
Operating lease assets | 45,147 | 45,963 | |||||
Other intangible assets, net | 640,787 | 643,366 | |||||
1,114,176 | 1,115,936 | ||||||
Other assets | 26,401 | 31,185 | |||||
Total assets | $ | 2,851,129 | $ | 2,761,279 | |||
Liabilities and equity | |||||||
Total current liabilities | $ | 148,792 | $ | 140,598 | |||
Long-term debt, less current portion | 1,838,133 | 1,824,789 | |||||
Other noncurrent liabilities | 203,301 | 219,502 | |||||
Deferred income taxes | 137,632 | 121,816 | |||||
Total liabilities | 2,327,858 | 2,306,705 | |||||
Total equity | 523,271 | 454,574 | |||||
Total liabilities and equity | $ | 2,851,129 | $ | 2,761,279 |
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended | |||||||
2021 | 2020 | ||||||
Operating activities: | |||||||
Net income | $ | 53,680 | $ | 5,266 | |||
Non-cash items | 99,520 | 66,217 | |||||
Changes in operating assets and liabilities | (18,944 | ) | (18,796 | ) | |||
Net cash provided by operating activities | 134,256 | 52,687 | |||||
Investing activities: | |||||||
Purchases of property, plant and equipment | (44,789 | ) | (23,438 | ) | |||
Purchase of mandatorily redeemable noncontrolling interest in | (12,425 | ) | — | ||||
Purchase of | (13,760 | ) | — | ||||
Net cash used in investing activities | (70,974 | ) | (23,438 | ) | |||
Financing activities: | |||||||
Proceeds from revolving credit facility | — | 50,000 | |||||
Purchase of noncontrolling interests in | (7,720 | ) | — | ||||
Payments of debt issuance costs and prepayment premium | (3,661 | ) | (142 | ) | |||
Payments on long-term borrowings | — | (55,725 | ) | ||||
Other | (709 | ) | (651 | ) | |||
Net cash used in financing activities | (12,090 | ) | (6,518 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 2,578 | 601 | |||||
Net increase in cash and cash equivalents, including restricted cash | 53,770 | 23,332 | |||||
Cash and cash equivalents, including restricted cash, at beginning of period | 102,454 | 63,025 | |||||
Cash and cash equivalents, including restricted cash, at end of period | $ | 156,224 | $ | 86,357 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid during the period for interest | $ | 36,615 | $ | 112,725 | |||
Cash paid during the period for income taxes, net of tax refunds received | 22,785 | 3,332 | |||||
Equipment purchases included in accounts payable | 9,670 | 7,141 |
Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||
Net income | $ | 42,615 | $ | 7,252 | $ | 53,680 | $ | 5,266 | |||||||||||
Amortization of intangibles | 21,778 | 19,711 | 44,060 | 39,624 | |||||||||||||||
Share-based compensation(a) | 3,493 | 1,393 | 6,942 | 3,118 | |||||||||||||||
(Gain) loss on foreign currency and embedded derivatives(b) | (660 | ) | (3,023 | ) | (996 | ) | 1,244 | ||||||||||||
Acquisition and divestiture related charges, net(c) | 844 | 1,295 | 659 | 2,289 | |||||||||||||||
Business optimization project expenses(d) | 275 | 750 | 536 | 1,799 | |||||||||||||||
Plant closure expenses(e) | 756 | 451 | 1,298 | 1,222 | |||||||||||||||
Loss on extinguishment of debt(f) | — | — | 14,312 | — | |||||||||||||||
Professional services relating to EO sterilization facilities(g) | 10,644 | 9,494 | 24,043 | 13,640 | |||||||||||||||
Accretion of asset retirement obligation(h) | 602 | 492 | 1,153 | 982 | |||||||||||||||
COVID-19 expenses(i) | 188 | 2,271 | 487 | 2,347 | |||||||||||||||
Income tax benefit associated with pre-tax adjustments(j) | (8,863 | ) | (8,653 | ) | (22,996 | ) | (16,360 | ) | |||||||||||
Adjusted Net Income | 71,672 | 31,433 | 123,178 | 55,171 | |||||||||||||||
Interest expense, net | 19,163 | 55,250 | 40,445 | 111,812 | |||||||||||||||
Depreciation(k) | 15,683 | 15,323 | 31,062 | 31,433 | |||||||||||||||
Income tax provision applicable to Adjusted Net Income(l) | 28,045 | 12,423 | 45,195 | 7,896 | |||||||||||||||
Adjusted EBITDA(m) | $ | 134,563 | $ | 114,429 | $ | 239,880 | $ | 206,312 | |||||||||||
Net Revenues | $ | 251,917 | $ | 213,085 | $ | 464,065 | $ | 401,285 | |||||||||||
Adjusted EBITDA Margin | 53.4 | % | 53.7 | % | 51.7 | % | 51.4 | % | |||||||||||
Weighted average number of shares outstanding: | |||||||||||||||||||
Basic | 279,078 | 232,400 | 278,953 | 232,400 | |||||||||||||||
Diluted | 279,214 | 232,400 | 279,078 | 232,400 | |||||||||||||||
Earnings per share: | |||||||||||||||||||
Basic | $ | 0.15 | $ | 0.03 | $ | 0.19 | $ | 0.02 | |||||||||||
Diluted | 0.15 | 0.03 | 0.19 | 0.02 | |||||||||||||||
Adjusted earnings per share: | |||||||||||||||||||
Basic | $ | 0.26 | $ | 0.14 | $ | 0.44 | $ | 0.24 | |||||||||||
Diluted | 0.26 | 0.14 | 0.44 | 0.24 |
- Represents non-cash share-based compensation expense.
- Represents the effects of (i) fluctuations in foreign currency exchange rates, primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies, and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at
Nordion . - Represents (i) certain direct and incremental costs related to the acquisitions of the noncontrolling interests in our
China subsidiaries andBioScience Laboratories in 2021,Iotron Industries inJuly 2020 andNelson Labs Fairfield in 2018 (including the first quarter 2021 gain on the mandatorily redeemable noncontrolling interest), and certain related integration efforts as a result of those acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, and (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in 2018. - Represents professional fees, contract termination and exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of recent acquisitions, the
Sotera Health rebranding, operating structure realignment and other process enhancement projects. - Represents professional fees, severance and other payroll costs, and other costs including ongoing lease and utility expenses associated with the closure of the
Willowbrook, Illinois facility. - Represents expenses incurred in connection with the repricing of our Term Loan in
January 2021 including accelerated amortization of prior debt issuance and discount costs. - Represents professional fees related to litigation associated with our EO sterilization facilities and other related professional fees.
- Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities (without regard for whether the decommissioning services would be performed by employees of
Nordion , instead of by a third party) and are accreted over the life of the asset. - Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures. For the three and six months ended
June 30, 2020 , costs also included donations to related charitable causes, and special bonuses for front-line personnel working on-site during lockdown periods. - Represents the tax benefit or provision associated with the reconciling items between net income (loss) and Adjusted Net Income. To determine the aggregate tax effect of the reconciling items, we utilized statutory income tax rates ranging from 0% to 35%, depending upon the applicable jurisdictions of each adjustment.
- Includes depreciation of Co-60 held at gamma irradiation sites.
- Represents the difference between income tax expense or benefit as determined under
U.S. GAAP and the income tax benefit associated with pre-tax adjustments described in footnote (j). $21.8 million and$19.7 million of the adjustments for the three months endedJune 30, 2021 and 2020, respectively, and$42.5 million and$40.7 million of the adjustments for the six months endedJune 30, 2021 and 2020, respectively, are included in cost of revenues, primarily consisting of amortization of intangibles, depreciation, and accretion of asset retirement obligations.
Non-GAAP Financial Measures
($’s in thousands)
(unaudited)
As of | As of | ||||||
2021 | 2020 | ||||||
Long-term debt | $ | 1,838,133 | $ | 1,824,789 | |||
Current portion of finance leases | 1,103 | 1,173 | |||||
Finance leases less current portion | 33,446 | 34,939 | |||||
Total Debt | 1,872,682 | 1,860,901 | |||||
Add: unamortized debt issuance costs and debt discounts | 25,417 | 38,761 | |||||
Less: cash and cash equivalents | (156,224 | ) | (102,454 | ) | |||
Total Net Debt | $ | 1,741,875 | $ | 1,797,208 | |||
Adjusted EBITDA | $ | 453,431 | $ | 419,859 | |||
Net Leverage | 3.8 | x | 4.3 | x |
Non-GAAP Financial Measures
(in thousands)
(unaudited)
Twelve Months Ended | Twelve Months Ended | ||||||
2021 | 2020 | ||||||
Net income (loss) | $ | 10,922 | $ | (37,491 | ) | ||
Amortization of intangibles | 84,691 | 80,255 | |||||
Share-based compensation(a) | 14,811 | 10,987 | |||||
Capital restructuring bonuses(b) | 2,702 | 2,702 | |||||
Gain on foreign currency and embedded derivatives(c) | (10,632 | ) | (8,454 | ) | |||
Acquisition and divestiture related charges, net(d) | 2,240 | 3,932 | |||||
Business optimization project expenses(e) | 1,265 | 2,524 | |||||
Plant closure expenses(f) | 2,724 | 2,649 | |||||
Loss on extinguishment of debt(g) | 58,575 | 44,262 | |||||
Professional services relating to EO sterilization facilities(h) | 47,076 | 36,671 | |||||
Accretion of asset retirement obligation(i) | 2,117 | 1,946 | |||||
COVID-19 expenses(j) | 815 | 2,677 | |||||
Income tax benefit associated with pre-tax adjustments(k) | (50,172 | ) | (43,536 | ) | |||
Adjusted Net Income | 167,134 | 99,124 | |||||
Interest expense, net | 143,892 | 215,259 | |||||
Depreciation(l) | 62,938 | 63,309 | |||||
Income tax provision applicable to Adjusted Net Income(m) | 79,467 | 42,167 | |||||
Adjusted EBITDA(n) | $ | 453,431 | $ | 419,859 |
- Includes non-cash share-based compensation expense.
- Represents cash bonuses for members of management primarily relating to the
November 2020 IPO. - Represents the effects of (i) fluctuations in foreign currency exchange rates, primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies, and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at
Nordion . - Represents (i) certain direct and incremental costs related to the acquisitions of the noncontrolling interests in our
China subsidiaries andBioScience Laboratories in 2021,Iotron Industries inJuly 2020 andNelson Labs Fairfield in 2018 (including the first quarter 2021 gain on the mandatorily redeemable noncontrolling interest), and certain related integration efforts as a result of those acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, and (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in 2018. - Represents professional fees, contract termination and exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of recent acquisitions, the
Sotera Health rebranding, operating structure realignment and other process enhancement projects. - Represents professional fees, severance and other payroll costs, and other costs including ongoing lease and utility expenses associated with the closure of the
Willowbrook, Illinois facility. - Represents expenses incurred in connection with the repricing of our Term Loan in
January 2021 and paydown of debt following theNovember 2020 IPO, including accelerated amortization of prior debt issuance and discount costs, and premiums paid in connection with early extinguishment. - Represents professional fees related to litigation associated with our EO sterilization facilities and other related professional fees.
- Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities (without regard for whether the decommissioning services would be performed by employees of
Nordion , instead of by a third party) and are accreted over the life of the asset. - Represents non-recurring costs associated with the COVID-19 pandemic, including donations to related charitable causes, special bonuses for front-line personnel working on-site during lockdown periods and incremental costs to implement workplace health and safety measures.
- Represents the tax benefit or provision associated with the reconciling items between net income (loss) and Adjusted Net Income. To determine the aggregate tax effect of the reconciling items, we utilized statutory income tax rates ranging from 0% to 35%, depending upon the applicable jurisdictions of each adjustment.
- Includes depreciation of Co-60 held at gamma irradiation sites.
- Represents the difference between income tax expense or benefit as determined under
U.S. GAAP and the income tax benefit associated with pre-tax adjustments described in footnote (k). $84.5 million and$82.6 million of the adjustments for the twelve months endedJune 30, 2021 andDecember 31, 2020 , respectively, are included in cost of revenues, primarily consisting of amortization of intangibles, depreciation, and accretion of asset retirement obligations.
Source:
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