Sotera Health Company

Good morning and welcome to the Sotera Health second quarter 2024 conference call. All participants will be in listen-only mode. Should you need 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 Sotero Health second quarter 2024 results call. You can find today's press release and accompanying supplemental slides on the investor section of our website at soterohealth.com. This webcast is being recorded and a replay will be available in the investor section of the Sotero 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 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 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 net income, adjusted EBITDA, adjusted EPS, adjusted EBITDA margin, segment income margin, and net leverage ratio, in addition to constant currency comparisons. A reconciliation of certain non-GAAP measures to the most directly comparable GAAP financial 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 after the 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 thank you for joining Sotero Health's second quarter 2024 earnings call. Today, we announced both revenue and adjusted EBITDA growth compared to the second quarter of 2023, driven by volume growth in each of our three business segments. Compared to the second quarter of 2023, total company revenues increased 8.3% or 8.8% on a constant currency basis, and adjusted EBITDA increased 6.9%. We delivered adjusted EPS of 19 cents for the quarter, which is slightly down versus the second quarter of 2023, driven by higher interest expense. Sterigenics, our large reporting segment, grew the top line by 5.9% versus the same period in the prior year, delivering positive volume growth for the first time in several quarters. We continue to expect slight volume and mix growth in the second half of 2024 versus 2023. Nordean, our other reporting segment within the sterilization services business, increased revenues by 29% versus the second quarter of 2023. The timing of reactor harvest schedules resulted in the favorable volume and mix increase, which was the primary driver for the growth. Nelson Labs. Our lab testing advisory service business delivered its third consecutive quarter of top line growth as second quarter revenue increased 4% compared to the second quarter of 2023. We are pleased to see volume improvement within our core validation testing area while core routine lot release testing remains soft versus the second quarter of 2023. Our expert advisory services business continued its strong performance in the quarter. With the first half of the year completed, we are reaffirming our full year 2024 outlook. As a reminder, our 2024 outlook calls for both revenue and adjusted EBITDA growth in the range of 4% to 6% versus 2023. John will go through our 2024 outlook in more detail in a few minutes, but first, I'd like to highlight an example of how Cetera Health plays a crucial role in safeguarding global health. Our Nelson Labs business plays a critical role in testing medical devices to ensure the safety of these devices for use in patients. Recently, the team at Nelson Labs performed a lab testing on the Audis valve, which is the first ever expandable pediatric heart valve, and is highlighting the second quarter earnings presentation posted to the investor section of our website. Children with pulmonary valve disease experience valve replacement surgery at least five to six times throughout their young lives. This innovative heart valve can be implanted into pediatric patients and expands with the child's growth, which is expected to reduce the number of heart surgeries needed during their childhood. Nelson Labs worked with both the customer and the FDA to perform biocompatibility testing and evaluations to help ensure safe interaction between the medical device and body systems of the child for the duration of its intended use. These tests and evaluations were the last critical step for approval into a clinical trial. This is just another great example of how we play a critical role in safeguarding global health at Satara Health. Now, John will walk us through the financials.