Sotera Health Company

Good morning and welcome to the Sotera Health first quarter 2023 conference call. All participants will be in a listen-only mode. And should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw from the question queue, please press star, then two. Please note 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. Welcome to Zotero Health's first quarter 2023 results call. You can find today's press release and accompanying supplemental slides on the investor section of our website at ZoteroHealth.com. This webcast is being recorded and a replay will be available in the investor section of the Zotero Health website. On the call with me today are Chairman and Chief Executive Officer Michael Petras and Interim Chief Financial Officer Michael Beals. During the call, some of our comments 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 Sotero Health SEC filings in the forward-looking statement slide at the beginning of this presentation for description of these risks and uncertainties. The company assumes no obligation to update any such forward-looking statement. Please note that during the discussion today, the company will present both GAAP and non-GAAP financial measures, including adjusted net income, adjusted EBITDA, adjusted EPS, net debt, adjusted EBITDA margin, and net leverage ratio, in addition to 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 the supplemental slides to this presentation. 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 give everyone an opportunity to ask questions. As always, if you have any questions post-call, please feel free to reach out to me and the investor relations team. I will now turn the call over to Sotera Health Chairman and CEO, Michael Petras.

Good morning, everyone, and thank you for joining Sotera Health's first quarter 2023 earnings call. Consistent with the commentary made during our fourth quarter 2022 earnings call, first quarter 2023 revenues and adjusted EBITDA declined over the prior year, driven by the anticipated timing of Nordian Cobalt 60 supply harvest schedules and lower volumes at Nelson Labs and Sterigenics. The lower volumes are typical for the first quarter of the year, although Sterigenics volumes increased over the first quarter of 2020-22. Michael Beal will provide more detail on our financial results in a moment, but first I want to highlight a few items from our first quarter results. Total company revenues declined 6.8% and adjusted EBITDA declined 14.6% compared to the first quarter of 2022. We delivered adjusted EPS of 13 cents for the quarter, which is a nine cent decrease from the same period last year. Sterigenics, our largest reporting segment, delivered 7% top line growth for the quarter as the business unit saw growth across all major modalities in what is typically a lighter quarter for the segment. The Sterigenics team continues to work through inflation headwinds and some customer supply chain challenges. We continue to invest in additional capacity with six active expansion projects at Sterigenics and are also making progress on our EO facility enhancements in North America. These industry-leading enhancements underscore our unwavering commitment to ensure best-in-class emission controls for our employees, customers, and communities in which we operate. Minority on, our other reporting segment within the sterilization services business experienced an anticipated 75% year-over-year revenue decline due to the timing of Cobalt 60 harvest delivery schedules. As we've consistently stated, the timing of Norion's revenue is tied to the harvest schedules from our Cobalt 60 suppliers, which are large utilities. Since we have good visibility into these harvest schedules, we are confident in our 2023 revenue forecast, even though the timing of Norion's revenue will be especially irregular this year with approximately 75% of the revenue expected to occur in the back half of the year. As many of you know, Norion sources a portion of its Cobalt-60 supply from Russia. Previously, we stated that a total disruption of supply from Russia could potentially result in 0% to 3% impact on total 2023 Cetera Health revenues. With a quarter complete, we now estimate the potential Russian Cobalt-60 supply disruption risk to be 0% to 2.5% impact on total Sotero Health revenues. Even more importantly, ensuring uninterrupted supply of Cobalt-60 is crucial to the global healthcare community because Cobalt-60 is used to sterilize approximately 30% of the world's single-use medical devices. I am proud of the continued efforts by our Nordion team in this area. This is a great example how we live our mission of safeguarding global health. Nelson Labs, Our lab testing and advisory service business experienced lower volumes in the first quarter as revenue declined 2.3% compared to the prior year. The first quarter of the year is typically softer for Nelson Labs, but we also have not seen a full recovery of certain types of testing to pre-pandemic levels. We are encouraged by some recent order trends and are operationally positioned for return to pre-pandemic volume levels. As communicated during our last earnings call, Sotero Health closed on an issuance of a $500 million term loan B during the first quarter. Our net leverage ratio for the first quarter of 2023 was 3.4 times. Based on where we are positioned after the first quarter, we feel comfortable reaffirming the outlook that we communicated on our last earnings call. As a reminder, our 2023 Outlook calls for both revenue and adjusted EBITDA growth in the range of 5% to 9% versus 2022. Michael Beal will recap the details of our Outlook in a few minutes. Although challenges still exist with inflation, labor, and customer supply chains, we are seeing some stabilization in these areas. Our teams remain committed to delivering growth and profitability for our shareholders. I would like to reinforce our mission safeguarding global health which is at the heart of our work across the company. Our products and services serve broad human health and well-being needs. Whether we are providing critical scientific expertise and regulatory consulting to solve our customers' toughest sterility challenges, preventing infection across a broad range of medical and pharmaceutical products, or verifying the accuracy of a product's performance, we help to ensure the safety of healthcare and we protect the lives of millions around the world. Now, Michael Buehl will take us through the financials in more detail.