Sotera Health Company (SHC) Q3 2024 earnings summary

Executive summary

• Q3 2024 net revenues rose 8.5% year-over-year to $285 million, with net income of $17 million, reversing a prior-year loss, and Adjusted EBITDA up 9% to $146 million; all segments contributed to growth.

• Adjusted EPS for Q3 2024 was $0.17, up from $0.16, and Adjusted EBITDA margin reached 51.3%.

• Nine-month 2024 net revenues were $810 million, up 9.6% year-over-year, with net income of $32 million and Adjusted EBITDA of $396 million.

• Strong liquidity position with over $700 million in cash and revolver capacity, and no outstanding borrowings on the revolving credit facility.

• Major refinancing in May 2024 issued $1.5 billion in term loans and $750 million in secured notes, both maturing in 2031.

Financial highlights

• Q3 2024 net revenues: $285.5 million (+8.5% YoY); Adjusted EBITDA: $146.4 million (+9.0% YoY); net income: $17 million (vs. $14 million loss YoY).

• Adjusted EBITDA margin was 51.3% for Q3 2024, up 23 bps year-over-year.

• Gross profit margin for Q3 2024 was 55.3%; operating income was $81 million, up from $76 million.

• Adjusted EPS was $0.17 for Q3 2024; for the first nine months, Adjusted EPS was $0.49, flat year-over-year.

• Cash and cash equivalents at September 30, 2024 were $307 million; capital expenditures for the nine months were $113 million.

Outlook and guidance

• Full-year 2024 net revenues and Adjusted EBITDA expected to grow 4%-6%; Adjusted EBITDA margin expected to approach 50%.

• Adjusted EPS guidance for 2024 is $0.67–$0.75; interest expense expected at $165–$175 million.

• Tax rate on Adjusted Net Income projected at 31.5%–34.5%.

• Capital expenditures guidance lowered to $175–$185 million, with peak CapEx in 2025.

• Net Leverage Ratio expected to decline compared to Q4 2023.