Sotera Health Company (SHC) Q1 2025 earnings summary

Executive summary

• Q1 2025 net revenues rose 2.6% to $255M (4.4% constant currency) year-over-year, with Adjusted EBITDA up 8.8% to $122M (11.2% constant currency), and margin expansion across all segments.

• Net loss of $13M (or $0.05/share) in Q1 2025, compared to net income of $6M in Q1 2024, primarily due to a $31M EO litigation settlement.

• Over 70% of revenue is tied to multi-year contracts, with a diversified customer base and global presence.

• Completed a $176M upsize of the revolving credit facility and signed a $31M term sheet to settle 97 EO cases in Illinois.

• Reaffirmed full-year 2025 outlook for 4.0%-6.0% net revenue growth and 4.5%-6.5% Adjusted EBITDA growth (constant currency).

Financial highlights

• Q1 2025 revenue was $255M, up 2.6% year-over-year; Adjusted EBITDA rose 8.8% to $122M; Adjusted EBITDA margin expanded 276bps to 47.9%.

• Adjusted EPS improved to $0.14, up $0.01 year-over-year.

• Gross profit for Q1 2025 was $135.4M, up from $127.1M in Q1 2024.

• Net leverage ratio improved to 3.6x from 3.7x at year-end 2024.

• Liquidity at quarter-end was $715M, including $300M in cash and $410M in revolver capacity.

Outlook and guidance

• 2025 net revenue growth expected at 4.0%-6.0% (constant currency); Adjusted EBITDA growth at 4.5%-6.5% (constant currency); FX headwinds of ~1.25% on revenue and ~1.5% on Adjusted EBITDA.

• Adjusted EPS guidance for 2025 is $0.70-$0.76; effective tax rate projected at 33%-35%.

• Capital expenditures expected at $190M-$210M for 2025, decreasing to ~$110M by 2027.

• Free cash flow target of $500M-$600M over the next three years.

• Management expects sufficient liquidity from cash, operations, and credit facilities to meet obligations and fund growth for at least the next twelve months.