Sotera Health Company

Good morning, and welcome to the Cetera Health fourth quarter and full year 2023 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 your question, 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, Mr. Jason Peterson. Please go ahead.

Thank you. Good morning and welcome to today's call. You can find today's press release and accompanying supplemental slides on the investor section of our website at soterrahealth.com. This webcast is being recorded and a replay will be available in the investor section of the Soterra Health website. On the call with me today are Chairman and Chief Executive Officer Michael Petras and Chief Financial Officer John Lyons. 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 that differ materially from those projected or implied. Please refer to Sotera Health's SEC filings in the forward-looking statement slide at the beginning of the presentation for a 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 adjusted EBITDA, adjusted net income, tax rate applicable to adjusted net income, adjusted EPS, adjusted EBITDA margin, segment income margin, net debt, and net leverage ratio, as well as constant currency comparisons. 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 try and 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'll now turn the call over to Sotero Health Chairman and CEO, Michael Petras.

Good morning, everyone, and welcome to today's call. This morning, we reported both top and bottom line growth for the quarter and the full year while delivering 50% plus adjusted EBITDA margins. 2023 presented many challenges, including macroeconomic and customer supply chain pressures, a shifting regulatory landscape, and a lumpy Cobalt 60 harvest schedule at Nordian. Throughout the years, the Cetera Health team demonstrated resiliency, adaptability, and unwavering commitment to the company's core values in the face of these challenges. In addition to the growth we delivered, we were successful in achieving a number of operational goals. At Sterigenics, we completed four capacity expenses and made significant progress on our U.S. EO facility enhancements. The Nordion team secured Cobalt 60 supply and successfully delivered 50% of its full year revenue in the fourth quarter. The team also made good progress on the long-term Cobalt 60 development programs. Nelson Labs achieved significant growth in its technical advisory services areas throughout the year. RCA, a business we acquired in 2021, continues to deliver strong revenue growth as RCA supports customers in their interactions with regulatory agencies such as the FDA. We also resolved a substantial amount of ethylene oxide litigation in 2023 with the Illinois settlement of 880 claimants, as well as the recent settlement of approximately 25% of the personal injury claims in Georgia. We finished 2023 and a strong liquidity position with approximately $700 million in liquidity, which is an increase of over $200 million from the end of 2022. John will provide more detail on our financial results in a moment, but first I want to highlight a few items from our fourth quarter in full year 2023 results. We reported total revenue growth of 23.3% and adjusted EBITDA growth of 28.7% compared to the fourth quarter of 2022. For a full year 2023, revenue grew by 4.5 percent and adjusted EBITDA grew by 4.3 percent compared to 2022. 2023 marks another year in which we continue our streak of annual revenue growth, which we've achieved every single year since 2005. With respect to the business units, Sterigenics delivered 6.5 percent top-line growth for both the quarter and the full year. As we've discussed previously, Sterigenics, our largest reporting segment, has delivered consistent growth throughout its history. Serving its customer base through a comprehensive global network of 48 facilities, this segment has delivered a compound annual growth rate of 10% on its top line and 11% on its bottom line since becoming a public company. These growth rates speak to the durability of the business model as Sterigenics provide critical often government-mandated services, which represents a fraction of the overall product cost for our customers. Nordian, our other business within the sterilization services segment, delivered 134.2% revenue growth per quarter. This performance was expected and was driven by the timing of Cobalt 60 harvest schedules. As we've consistently messaged, Nordian's revenues tied to the harvest schedule are Cobalt 60 suppliers, which results in irregular revenue patterns on a quarter-to-quarter basis. The team has unique expertise in navigating the complex Cobalt 60 supply chain, and as I've stated earlier, the Notre Dame team did a fantastic job delivering 50% of its full year revenues in the fourth quarter. On a full year basis, Notre Dame revenues were up 4.4%. Revenue in Nelson Labs, our lab testing and advisory services business, grew 4.3% in the quarter versus the fourth quarter of 2022. Full year 2023, revenue was down approximately 1% versus the prior year. Nelson Labs continues to face the same headwinds we referenced on our third quarter 2023 call, including the extension of compliance deadlines for European Union medical device regulations, the decline in funding for startups and smaller companies, and lastly, softened demand for routine lot release testing tied to the slowdown of sterilization volumes. 2023 was a good year for Sotero Health, considering the uncertainty driven by macroeconomic pressures, customer inventory destocking, and geopolitical events. I also want to take a moment to highlight the progress we made on our corporate responsibility initiatives. I am proud of our team's accomplishments since the IPO in 2020. As part of our IPO, the Board established ESG oversight within our Nominating and Corporate Governance Committee. We also established an internal cross-functional committee, which reports into me and we appointed two seasoned senior executives as co-chairs to lead the identification and implementation of initiatives consistent with our overall business strategy. During 2023, we built on the initiatives begun in 2021 and 2022. Some of the highlights of our accomplishments include, in the environmental area, we have been working with a third-party software solution to establish and, for the first time, publish baseline environmental metrics. As previously mentioned, we continue our investment in industry-leading, state-of-the-art emission controls at our yield facilities. We also published our first environmental management statement in our 2023 Corporate Responsibility Report. With respect to human capital, culture, and communities, we published our formal human rights statement and disclosed initial human capital data. We completed a global employee engagement survey with 83% participation rate. Our Stratera Health Women's Network held an interactive session for our leaders with our board director, Ann Clee. We are proud to announce that in 2023, women represented more than 40% of our global leadership promotions. On the governance side, we welcome Karen Flynn to our board. Karen brings board independence to 91%, and she adds valuable commercial experience in the pharma services space, which is an important aspect of our long-term strategy. We also launched a formal enterprise risk management process with results that led us to prioritize six initial areas. These six areas are highlighted in our 2023 Corporate Responsibility Report. And finally, our team completed outreach to institutions holding 60% of the company's public stock float in 2023, and we held meetings on ESG topics with institutions holding approximately 40% of the public float. We greatly value these discussions and share the feedback regularly with our board directors, including this past week. We look forward to continue to share our corporate responsibility accomplishments in the future. Earlier today, we provided our initial 2024 outlook. For the full year 2024, we expect to deliver another year of top and bottom line growth with total revenues and adjusted EBITDA growth expected to be in the range of 4% to 6% when compared to 2023. The variability within our full-year revenue range will be largely driven by the timing and magnitude of the market recovery in both Sterigenics and Nelson Labs. Now, John will take us through the financials in more depth. Thank you, Michael.