Sotera Health Company

Good morning. My name is Denise and I will be your conference call operator today. At this time, I would like to welcome everyone to the Sotera Health Q3 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remark, there will be a question and answer session. If you would like to ask a question during that time, please press star one one on your telephone and wait for your name to be announced. I will now and the call over to Jason Peterson, Vice President and Treasurer.

Good morning and thank you. Welcome to Cetera Health's third quarter 2022 results call. You can find today's press release and accompanying supplemental slides in the investor section of our website at ceterahealth.com. This webcast is being recorded and a replay will be available in the investor section of the Cetera Health website. On the call with me today are Chairman and Chief Executive Officer Michael Petras and Interim Chief Financial Officer Michael Biel. During the call, some of the statements the company makes may be considered forward-looking statements. The matters addressed in these statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Please refer to the TerraHealth SEC filings in the forward-looking statement slide at the beginning of its presentation for description of these risks and uncertainties. The company assumes no obligation to update any such forward-looking statements. Please note that during the discussion today, the company will present both GAAP and non-GAAP financial measures, including a just EBITDA, a just EPS, net debt, net leverage ratio, and constant currency comparisons. A reconciliation of GAAP to non-GAAP measures for all relevant periods may be found in the schedules attached to the company's press release and in supplemental slides. The operator will be assisting with the Q&A portion of the call today. Please limit yourself to one question and one follow-up so that we can try and give everyone an opportunity to ask questions. I will now turn the call over to Sotero Health Chairman and CEO, Michael Petras.

Good morning, everyone, and welcome to Sotero Health's third quarter 2022 earnings call. I'm pleased this morning to be reporting another quarter of year-over-year top and bottom line growth This marks the eighth consecutive quarter of top and bottom line growth since we began reporting as a public company. Our team has done a good job executing considering the macroeconomic environment that we're experiencing. Although we see some improvement in certain areas of the broader macro environment, other areas remain choppy, which makes delivering consistent growth that much more of a challenge and an accomplishment. I would like to thank the Satara Health team for living our values each and every day. As long as we focus on executing against our strategy, serving our customers, and remaining committed to our values, I am confident that we will continue to perform. Michael Beal will provide more detail on our financial results in a moment, but first I want to highlight a few items from our third quarter results. We reported total revenue growth of 10% and adjusted EBITDA growth of 7.3% compared to the third quarter of 2021. On a constant currency basis, revenue grew by 13.2% as FX continues to remain a significant headwind. We delivered adjusted EPS of 23 cents for the quarter, which is a 2 cent increase over the same period last year. Compared to the first nine months of 2021, year-to-date revenue grew by 9%, which equates to 11.3% growth on a constant currency basis. Let me now shift to cover what we're experiencing across the businesses. Sterigenics, our largest reporting segment, operationally delivered in another strong quarter as the team continues to work to offset inflation pressures being felt around the globe. The segment is seeing solid demand across all major modalities in both medical device and bioprocessing products. On a year-to-date basis, Sterigenics has delivered both top and bottom line double-digit growth which is a testament to the strength of the business model. Sterigenics continues to make progress on its capacity expansion programs and facility enhancements. We have now completed three expansions in 2022, including our recent move to a state-of-the-art EO facility in Canada to help meet growing customer demand. The remaining seven active capacity expansions which includes two green fields, are expected to come online at various points over the next 24 months or so. We also continue to make solid progress on the EO emission control enhancements we're making across our U.S. network. An additional facility was completed during the quarter. These industry-leading investments mark our ongoing commitment to maintain best-in-class operations for our employees, customers, and the communities in which we operate. norian our other reporting segment within the sterilization services business continues to have a strong year as demonstrated by double digit top and bottom line growth in both the third quarter and on a year-to-date basis as i've highlighted throughout the year the norian team has done an exceptional job successfully navigating a difficult geopolitical environment to mitigate the risk of cobalt 60 shipments in 2022 at this point in the year we have completely de-risked any disruption of Russian supply for 2022. As we have mentioned in the past, the timing of Norion's revenues are lumpy due to the timing of nuclear reactor supply schedules. Although we expect the remainder of 2022 to play out as previously communicated, we expect to see continued lumpiness in the future during 2023. Nelson Labs, our lab testing advisory service business, grew revenue by over 7% versus the third quarter of 21. Although we are pleased with the Nelson Labs growth compared to their prior year quarter, the demand recovery for certain testing services has been slower than expected. We have seen some areas of testing perform well, while others have not ramped up as quickly. Over the past two quarters, Nelson Labs increased staffing in anticipation of incremental volumes. Unfortunately, we have not seen a strong increase in demand for certain testing services, which has resulted in some pressure on margins. However, the more stabilized staffing levels have resulted in improved customer service metrics and overall customer satisfaction scores. I also want to note that experts required for this type of work are challenging to find, and we are fortunate at Nelson Labs that we've been able to retain our high-caliber talent. We feel confident Nelson Labs is positioned well to take on incremental demand as customers continue to work through the macroeconomic headwinds that exist. Today, with three quarters of the year complete and good visibility in the year end, we're adjusting our full year 2022 outlook, taking into consideration the macroeconomic pressures I've mentioned, as well as the solar recovery at Nelson Labs. Therefore, we expect our full-year net revenue growth to be 7% to 8%, while our full-year adjusted EBITDA to grow 4% to 6%. We have also narrowed our capital expenditures range to $150 million to $170 million for the year. We continue to feel very good about the growth prospects of Cetera Health. Our strategy has not changed, and we are executing for growth over the long term. We play a critical role in safeguarding global health in our service Our services are necessities for many healthcare companies. Before I turn the call over to Michael Beale, I want to highlight some recent examples of how we deliver on our mission, safeguarding global health. One area of testing I'd like to highlight is our extractables and leachables testing, referred to as ENL testing. This testing is required for both medical device and pharma products. Nelson Labs has a leading position in this growing test segment. This mission-critical analytical chemistry testing identifies the presence of potentially harmful compounds that could be present in drug delivery in container closure systems. The medical device extractables testing is evaluating the potential biological hazards that a patient could experience with use of the product. One example of this testing is the toxological evaluations of feeding tubes used for neonatal patients. Nelson Labs performs these evaluations to identify compounds that would be at unsafe levels for babies. The Nelson Labs team then works with the customer to remediate any issues to ensure safe uses in the future. The E&L testing is largely done in our Leuven, Belgium location, serving global customers. This is just another example of how Nelson Labs is working to better service our customers and safeguarding global health. At Sterigenics, one of our EO facilities sterilizes the only approved interventional cardiac replacement system for patients with a severe dual diagnosis of aortic stenosis and aortic regurgitation. The U.S. FDA and the Canadian Ministry of Health are using these medical devices through their humanitarian assistance programs to save patients' lives. We are proud to once again share these examples of how our Satara Health team is working to ensure healthcare is consistently, reliably, and safely delivered every day. Now, Michael will be able to take us through the financials in more depth. Thank you, Michael.