• Revenue: $1.1 billion for full year 2024, a 4.9% increase from 2023.
• Adjusted EBITDA Margin: Approximately 50% for full year 2024.
• Fourth Quarter Revenue: Declined 6.5% to $290 million compared to Q4 2023.
• Fourth Quarter Adjusted EBITDA: Declined 8.3% to $153 million.
• Fourth Quarter Adjusted EBITDA Margin: 52.7%.
• Fourth Quarter Net Income: $12 million or $0.04 per diluted share.
• Fourth Quarter Adjusted EPS: $0.21, a decrease of $0.02 from Q4 2023.
• Sterigenics Revenue Growth: 4.2% to $179 million in Q4 2024.
• Nordion Revenue Decline: 29% to $57 million in Q4 2024.
• Nelson Labs Revenue Decline: 7.3% to $54 million in Q4 2024.
• Full Year Adjusted EPS: $0.70 per share, a decrease of $0.02 from 2023.
• Operating Cash Flow: Nearly $225 million generated in 2024.
• Capital Expenditures: $179 million for 2024.
• Net Leverage Ratio: Improved to 3.7 times by year-end 2024.

• Warning! GuruFocus has detected 2 Warning Sign with SHC.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sotera Health Co (NASDAQ:SHC) reported its 19th consecutive year of annual revenue growth, highlighting the resilience of its business model.
• The company achieved $1.1 billion in revenue for 2024 with approximately 50% adjusted EBITDA margins.
• Customer satisfaction rates remained high, exceeding 80%, reflecting strong customer service.
• Sotera Health Co (NASDAQ:SHC) successfully refinanced its capital structure, extending maturities to 2031, and maintained strong liquidity.
• The company made significant progress in its strategic priorities, including capacity expansion in its Sterigenics business and enhancements in its US EO facilities.

Negative Points

• Fourth quarter revenue declined by 6.5% and adjusted EBITDA decreased by 8.3% compared to the same period in 2023.
• Nordion's fourth quarter revenue decreased by 29% due to unfavorable volume mix and foreign currency exchange rates.
• Nelson Labs experienced a 7.3% decline in revenue for the fourth quarter, driven by unfavorable volume mix.
• Adjusted EPS for the fourth quarter was $0.21, a decrease from the previous year.
• The company faces potential headwinds from foreign exchange rates and tariffs, which could impact future financial performance.

Q & A Highlights

Q: Can you discuss the overall volume backdrop and how it relates to your guidance for 2025, particularly for Sterigenics and Nelson? A: Michael Petras, CEO: The year 2024 played out as expected with gradual improvement. We anticipate continued volume improvement in 2025, with no significant destocking issues. A few customers had challenges in Q4, which might affect Sterigenics in Q1, but overall, we expect volume growth as the year progresses.

Q: How should we think about margin progression through 2025, and what are the pricing assumptions in the guidance? A: Jonathan Lyons, CFO: We expect solid margin improvement on a constant currency basis, with EBITDA growing faster than revenue. Q1 is typically the lowest quarter for both revenue and margins. Nelson Labs is expected to show sequential margin improvement throughout the year.

Q: Can you provide more detail on the improvements at Nelson Labs and how they will impact margins? A: Michael Petras, CEO: Improvements in labor productivity and consolidation of a smaller lab have set us up well for 2025. The focus is on aligning labor needs with order patterns, which has already resulted in record service performance.

Q: How is the cross-selling initiative between Sterigenics and Nelson Labs progressing, and is it included in the 2025 guidance? A: Michael Petras, CEO: The cross-selling initiative is going well, with Embedded Labs showing continued growth. This benefit is included in the 2025 guidance.

Q: What are the biggest swing factors for achieving the higher end of the 4% to 6% constant currency growth range in 2025? A: Michael Petras, CEO: Volume is the key factor. If volume comes in strong, particularly in the med device sector, we will be well-positioned to achieve higher growth in both Nelson and Sterigenics.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.