Morning. This is Joe, and welcome to Sotera Health's first quarter 2022 results call. You may find today's press release and accompanying supplemental slides in the investor section of the company's website at soterahealth.com. This webcast is being recorded, and a replay will be available in the investor section of the Sotera Health website. On the call today are Michael Petras, Chairman and Chief Executive Officer, and Scott Leffler, Chief Financial Officer. During the call, some of the statements the company makes 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 Sotera Health's SEC filings and 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 EPS, and net leverage ratio. A reconciliation of non-GAAP to GAAP measures for all relevant periods may be found in the schedules attached to the company's press release and in its supplemental slides. There will be an option to ask questions after today's presentation. To ask a question, please press star, then one on your telephone keypad. During the Q&A portion of today's call, please limit yourself to one question and one follow-up so that we can try and give everyone an opportunity to ask questions. This conference is being recorded. I would now like to turn the call over to Sotera Health's Chairman and CEO, Michael Petras. Please go ahead. Good morning, everyone, and thank you for joining us on Sotera Health's first quarter 2022 earnings call. I'm very pleased this morning to be reporting another quarter of double-digit top and bottom-line growth as compared to the same quarter in the prior year. While both the pandemic and the geopolitical landscape have impacted the labor markets and supply chains, the macro environment continues to experience more disruption than many of us have seen in our lifetimes. Despite this backdrop, Sotera Health has continued to deliver growth consistently in each quarter we've reported as a public company and throughout our history. Scott will provide more detail in a moment, but here are some of the highlights of our first quarter performance. We reported total revenue growth of 12% and adjusted EBITDA growth of 10% compared to the first quarter of 2021. Diluted EPS was $0.11, up $0.07 per share, and adjusted EPS was $0.22, which is a 22% increase over last year. Sterigenics had a good year to start, and the business continues to see robust demand across all major modalities of sterilization. Sterigenics has also made meaningful progress in its active capacity expansion programs in EO facility enhancements. Nordion also had a strong quarter, driven by the timing of Cobalt-60 shipments, in addition to the benefit of a favorable comparable in last year's quarter. Our Nordion team deserves tremendous recognition for navigating the current geopolitical environment in order to maintain the Cobalt-60 supply from Russia, despite several complexities in the process. I had mentioned on our March call that a disruption in the supply of Cobalt-60 could potentially result in impact of 0%-3% of Sotera Health's 2022 revenue. To date, there has been no impact on our supply or on Sotera Health's revenue. Based on the deliveries that we have received since our last earnings call, we now estimate the potential impact from a disruption in Russian supply to be reduced to a range of 0%-2% of Sotera Health total revenue in 2022. Again, many thanks to the Nordion team for navigating this environment so well during the quarter. While Sterigenics and Nordion are performing well, Nelson Labs, as we expected and communicated in our last call, has been faced with a more challenging environment. Nelson Labs had weaker performance in the first quarter, which was the last quarter in which Nelson Labs experienced the largest impact from the unwinding of elevated levels of pandemic-related testing. As we had mentioned on our last call, Nelson Labs saw a disproportionate impact in the first quarter from labor-related challenges, including reduced volumes due to Omicron-related absenteeism. We are encouraged to see these various headwinds within Nelson Labs moving in a positive direction, and we expect improvement towards more normalized levels in the second quarter. The impact of Omicron on absenteeism has materially reduced, and the Nelson Labs management team is doing a very good job in managing staffing levels despite the competitive labor market. We continue to manage our balance sheet, achieving net leverage of 3.4x. This is consistent with both our near and longer-term leverage goals. Based on the solid start to 2022, and given that it's still early in the year, we are reaffirming the outlook that we communicated in our last call with revenue and adjusted EBITDA growth in the range of 7%-11% and adjusted EPS growth of 6%-13%. Scott will recap all the details of the outlook in a few minutes. I also wanna highlight some recent examples of how we deliver on our mission of safeguarding global health. With the growth of bioprocessing, Sterigenics is sterilizing single-use kits in bioreactor collection bags used for producing cell therapies to fight cancer. At RCA, our recently acquired expert advisory business, we're working with customers to design effective configurations for secure shipment of gene therapy drugs being used in clinical trials. At our Nelson Labs Europe location, we perform critical testing to ensure the safety of vials and application devices for more than 20 vaccines from COVID-19 to tetanus to hepatitis B and influenza. These examples are just a few of the ways we help ensure healthcare is consistently and reliably safe every day. Overall, I am very proud of the entire Sotera Health team for delivering another good quarter and positioning the company for continued success in 2022. As always, the Sotera Health team maintain their focus on our mission, safeguarding global health while meeting the needs of customers, healthcare workers, and patients in being supportive of one another in the process. Before handing over to Scott, I'd like to comment briefly on the broader markets where we operate. As I had mentioned several times previously, the direct and indirect effects of both the pandemic and the geopolitical landscape continue to be felt throughout the marketplace. Supply chain disruptions, labor market challenges, and inflation are especially impactful now. Thus far, we have been able to mitigate most of the direct impacts and are encouraged by our ability to largely offset inflationary pressures with pricing actions. Even with the macro challenges, the markets we serve have remained resilient, giving us reason to be optimistic regarding the remainder of 2022. Now I'll turn the call over to Scott to cover the first quarter and our reaffirmed 2022 outlook in more detail. Thanks, Michael. I'll first cover the first quarter 2022 highlights on a consolidated basis, and then provide some insight on each of the business segments, along with updates on capital deployment and leverage. I'll end with a reminder of the details of our reaffirmed 2022 outlook. On a consolidated total company basis for the first quarter of 2022, revenue grew by 12% as compared to the first quarter of last year to $237 million. On a constant currency basis, revenue grew by approximately 13%. Adjusted EBITDA grew by 10% from Q1 of 2021 to $115 million. Adjusted EBITDA margins declined 90 basis points compared to Q1 of last year to 48.7%. The decline was driven entirely by margin compression within the Nelson Labs segment, while both Sterigenics and Nordion had margin expansion in the quarter. I will discuss segment margins further in a moment. Our strong operating performance drove adjusted EPS of $0.22 per share, an increase of about 22% from Q1 of 2021. Our reported interest expense of $10 million benefits from a mark-to-market gain on certain outstanding interest rate hedges. We have removed the effect of that gain in our adjusted EPS. Excluding that gain, Q1 interest expense would have been approximately $17 million. Now let's take a closer look at our segment performances. In Q1, Sterigenics delivered 14% revenue growth to $149 million and 16% segment income growth to $79 million as compared to Q1 of last year. Revenue growth drivers for Q1 included volume and mix growth of almost 10% as well as pricing contribution of more than 5%. There was no inorganic contribution for the quarter, and FX was a 1% headwind. Compared to the first quarter of 2021, segment income margins expanded by more than 90 basis points to 53.1%, driven by operating leverage and pricing. We are pleased with the progress Sterigenics has made in driving forward both their active expansion projects and the enhancements at our North American EO facilities. For Nordion, Q1 revenue grew by more than 31% to $34 million compared to Q1 of 2021. Nordion segment income grew by about 37% to $19 million compared to the same period last year. Nordion's revenue growth was driven by over 24% contribution from volume and mix and almost 7% from pricing. FX was relatively flat for the quarter. As Michael mentioned, Nordion's year-over-year comparison is impacted by what was a relatively low revenue quarter in Q1 of 2021. Nordion's margins expanded by approximately 240 basis points to 55.6%, driven by operating leverage on higher sales and pricing. For Nelson Labs, Q1 revenue declined by approximately 3% to $53 million compared to the first quarter of 2021, and segment income declined by approximately 26% to $17 million. Revenue declines of 11% from pandemic-related testing and more than 2% from Omicron-related absenteeism were mostly offset by an 8% benefit from acquisitions and 4% from price. Other core testing volumes in FX also each contributed a decline of about 1%. Q1 2022 margins for Nelson Labs contracted by 990 basis points compared to Q1 of last year to 32%. I wanna highlight that this decline was in line with the expectations that we referenced on our last earnings call. Compared to last year, margin decline was driven primarily by almost 200 basis points of impact from lower mix of PPE testing, over 250 basis points from acquisitions, and about 300 basis points from Omicron's impact on employee absenteeism and testing volumes. We expect to recover the Omicron-related component in Q2 and see improvement in the acquisition-related dilution as synergies ramp up in the second half of the year. Now let me provide some highlights relating to capital deployment and net leverage. Our CapEx for Q1 was $36 million, which is consistent with the increased levels of spend we have planned for 2022. As of March 31, 2022, we had $121 million in cash and maintained a strong liquidity position. Our net leverage declined to 3.4x. Now I'd like to recap our reaffirmed 2022 outlook. For full year 2022, we expect total revenues in the range of $1 billion-$1.03 billion, representing growth of approximately 7%-11%. Adjusted EBITDA in the range of $515 million-$535 million, also representing growth of approximately 7%-11%. Adjusted EPS in the range of $0.93-$0.99, representing growth of 6%-13%. CapEx in the range of $140 million-$170 million for the year. Our program of expansions remains consistent with our comments from the last earnings call, which includes seven capacity expansions at existing facilities and two greenfields for Sterigenics. The other elements of our previously issued outlook remain the same as well. As we look at the cadence of quarterly reporting, I wanna remind you that even for a business segment that often has period-to-period variability and performance, Q2 of 2021 was an outlier for Nordion. Nordion had a particularly high concentration of Cobalt-60 shipments in Q2 of 2021 that we expect will not occur again in any single quarter this year. We expect solid Sterigenics results and improving Nelson Labs performance in the second quarter. Michael, back to you. Thank you, Scott. Before we open it up for question- and- answer, our next earnings call will take place after the first EO trials begin, so I wanna provide a few comments. The first trial is scheduled to begin in Illinois on July 18th and concludes sometime in August. Our team is actively preparing for trial, and although we cannot predict trial outcomes, we are confident in our defenses to these claims and the safety of our operations. We anticipate a number of legal motions and court decisions over the next several months that could impact the trials and draw media attention. At this time, we do not intend to provide statements about pretrial developments nor trial updates. I want to reinforce what we have stated many times, and that is the company intends to vigorously defend itself against these claims. Our company plays a critical role in healthcare, and our employees and facilities operate in a safe and compliant manner. It's our employees' commitments to our company and our mission which results in Sotera Health's consistent and outstanding performance over so many years and gives me so much optimism over our outlook for 2022 and beyond. Finally, I wanna take a moment to introduce a new member of the Sotera Health team. Joe Vitale has joined us as the company's Head of Investor Relations and is with us on the call today. Joe is ramping up quickly, and we're looking forward to him connecting with the investment community and the Sotera Health story. At this point, I'd like to turn it over to our operator, Joe, and open it up for questions and answers. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Sean Dodge with RBC Capital. Please go ahead. Yeah, thanks. Good morning. In Nelson Labs, you pointed to more of a back half weighting there for revenue and EBITDA as the pandemic effects wear off and non-COVID-related activities begin to accelerate. On the latter, can you just give us an update? It sounds like that's still the view there, but what kind of visibility do you have on activity across Nelson beginning to normalize or accelerate as we get to the back half of the year? Good morning, Sean. It's Michael. Thanks for the question. You know, the Nelson team, you know, the visibility isn't to the level you have in the Sterigenics and Nordion, but we still have good visibility there with the team. You know, obviously, we're dependent on some of the testing volumes to continue to rebound, but the team delivered according to the expectations that we had here for the first quarter. We continue to get visibility there. We continue to stabilize the labor force. It's not all perfect yet at this point, but we feel confident on how we're looking at the second half in the second quarter and beyond more broadly. Okay, thanks. Michael, you mentioned securing the Nordion supply from Russia. There's certainly some complexities you're having to navigate over the course of that. Can you give us just a little bit more detail on what those complexities are? You mentioned the potential impact for disruption or from disruption in 2022, but how should we think about that as we look ahead to 2023 and beyond? Yeah. Sean, I would tell you the first thing I wanna make it really clear, we're compliant with all the rules and regs out there on this topic in particular. Cobalt has not been sanctioned by the U.S. government, the Canadian government, or the Russian government. We continue to monitor that. You know, we just have to work through logistics in loading up containers, getting them on vessels, making sure the vessels can leave ports, arrive in ports, get unloaded in the banking. You know, there's just a lot of intricacies, as you know, when you do business on a global basis. That's what, you know, the team, as I referenced in my remarks, has done a really good job staying on top of that, communicating with the regulators, monitoring the, you know, the sanctions that are out there and making sure we're compliant with them. You know, as far as we've given guidance here on 0%-2% of an impact potentially if something were to impact our ability to get cobalt. At this point in time, we've had no impact to our supply. We've been able to get it. We're taking care of our customers. If you talk to our customers, they really haven't noticed that because of the great job the team has done at Nordion. We've received cobalt as early as this, as recent as this week. We'll continue to do that. As far as 2023, we're not in a position to talk about Sotera Health or Nordion or any of the business units for 2023 at this point in time. Okay. Understood. That's helpful. Thanks again. Yep, great. Our next question comes from Amit Hazan with Goldman Sachs. Please go ahead. Hi. Thanks so much. This is Phil on for Amit. Thanks for taking the question. I think trying to parse out guidance, it sounds like Nelson Labs was largely in line with the expectations you set for Sterigenics. Looks to have accelerated basically any way we cut it on a compounded basis or year-over-year. Nordion, obviously a pretty strong quarter in general. Would you say that the business outperformed your expectations coming into 1Q overall? You know, Phil, good morning. This is Michael. I would say in total, yes. I mean, the pieces as we've communicated in the past, Nordion can get lumpy at times, because we're working at harvest schedules from our utilities. As Scott referenced, you know, the first quarter last year was a lower quarter. The second quarter will be a larger quarter last year, right? So there's just some of that lumpiness. I'd say overall, we came in slightly better than expectations, and we're happy with the performance of the business for the first quarter. Yeah. Okay. That's very helpful. Thank you. I guess the second question in line with that reasoning is the conservatism for the remainder of the year to not raise guidance after the quarter. I know you guys provide a reported top-line range. Is there FX headwind that's countervailing there? Or what other factors are you taking into consideration that led to not lifting after such a strong first quarter? Thanks so much. Yeah. I'll let Scott address the FX in a second here, but I would just tell you know, it's one quarter down, we have three more quarters to go. We're optimistic about how 2022 is shaping up, but there's lots of moving parts. Our customers are dealing with challenges of getting materials and supply flowing. You know, we're seeing some variation in that. Obviously there's a lot of moving parts in the business, but we feel good about our reconfirming or reaffirming, if you will, our 2022 guidance, which is really respectable with significant growth for the year. It's just early at this point. We've got one quarter behind us. Yeah. Specifically with respect to FX, when we issued our guidance a couple months ago, we did express in that time that there was an assumption embedded in the guidance that we would have about a 1% FX headwind for the year. We did in fact see a 1% headwind in our Q1 results, as I referenced earlier, and we're still assuming that that scale of headwind relating to FX continues throughout the year. Okay. That's very helpful. Thanks so much, guys. Great. Thanks, Phil. Our next question comes from Luke Sergott with Barclays. Please go ahead. Hey, guys. Thanks for the question here. Can you, just a couple cleanups here for Scott real quick. On the M&A contribution, in the quarter, especially in Nelson, how much of it came from BioScience and then how much from RCA? Just thinking about what's gonna be flowing through the rest of the model for the year. We haven't broken out the specific contribution by acquisition. Just to calibrate, we acquired RCA—I mean, BioScience in March of last year, and you're getting here in Q1 still about 2/3 of an incremental contribution from them. Then you probably recall that it was in November of last quarter that we acquired RCA. You're getting. Really, you're gonna be getting a full quarter's worth of incremental contribution from RCA, at least through the first three quarters of this year, and then a partial in the fourth quarter. All right. Okay. I guess, when you're talking about the pricing at Nelson, do you guys have a lot of master service contracts? You've been able to take it, I guess, across all three of the businesses here. Can you talk about where it would be a little more lumpy versus being able to just pass on elevated costs? I would tell you across all three businesses that we've stated in the past, these businesses are capable of passing on price. We have a very critical service that we bring that is a small portion of the overall cost of our customers' products and services. I would just kind of give you that as an umbrella statement. If you look at the three businesses, Nelson is the one that, you know, was more reliant upon the shorter term on how to get that price because of the fact that it's more transaction-oriented. The contractors are master contracts with releases against that in time versus the Nordion Sterigenics are more longer term in nature. Hopefully that answers your question. I think it just confirms what you were suspecting, though. Yeah, it does. Thank you. Yep. Yep, great. Our next question comes from Matt Miksic with Credit Suisse. Please go ahead. Hi. Thanks for taking the questions. Congrats on another strong quarter. I just wanted to maybe see if you could expand a little bit on the trends in Sterigenics. You know, we've seen in the med device side of our universe this kind of rebound in demand maybe faster than folks were expecting. You know, fundamentals driving those businesses, re-accelerating them a little bit faster. I'm just wondering how we should expect that to translate into Sterigenics trends over the next, you know, three or four quarters. Any color on that would be helpful. I have one follow-up. Yeah. Good morning, Matt. I would tell you we're optimistic. Obviously, Sterigenics had a very strong first quarter, and we're optimistic about the rest of the year outlook. What I will also tell you, there is a lot of variation from customer to customer in geography. You know, Asia, obviously, if I'll start there, and I'll just kind of walk around the world from a Sterigenics perspective, if I could, Matt. If you look at Asia, you know, obviously there's the COVID shutdowns going on within the facilities in the regions there. That has caused some challenges. We're looking to make sure we take care of our customers. Europe has had pretty strong demand and continues to perform pretty well. In the U.S., it's been a mixed bag. We have some customers doing really well, and you see that in some of their earnings. You have others that are feeling a little bit of impact that you see in their announcements as well. We're monitoring that. It's a matter of supply chain challenges they're having in getting components and getting things over some borders in some instances. Then there's still a little bit of labor impact. Obviously, a lot of people had the impact in January with the absenteeism that we referenced in our remarks as well. I'd say overall, we're optimistic about it, but we are cautious as we're seeing some variation from customer to customer. The other backdrop that I would give you from some other places that we have a high visibility around is around hospitals. You know, the hospitals have big backlogs in surgical volumes, but the challenges they're having right now is staffing. So many people have left the healthcare workforce within the provider network that it's been challenging, particularly around nursing care. That's also impacting end user demand. Overall, we feel positive about what the outlook is for Sterigenics, but as well as the Sotera Health in total for 2022. I think you had a second question, Matt. I hope I addressed your first one. Yeah, absolutely. Thanks. That was super helpful. The second is maybe if you could just provide sort of a top-down perspective on how some of the rising input costs that we're seeing across our universe. It's been a big topic, obviously, for the first quarter earnings cycle and outlook for 2022. You know, labor costs, rising energy costs, shipping, things like that. Just wondering if you could give us some perspective on how your sort of three major businesses are affected on a relative basis, based on those kinds of shifting costs. Thanks. Yeah. As we've stated in the past call, didn't get into a ton of details here today thus far other than referencing the inflation pressures that we're seeing. It's around labor and energy utility spend. Those are really the two buckets. On the transportation costs, when you look across our three businesses, we don't have transportation costs within Sterigenics and Nelson. On the Nordion, where we do have transportation costs, it's a pass-through to our customers. On the energy costs, we're seeing it across our businesses, predominantly on the Sterigenics side because they have a larger facility footprint around the world. Then the labor side, again, we see it across the businesses, but I would say it's mostly in the Sterigenics and Nelson side because they have higher labor as a percent of their total cost. That's kind of our overview of where we're seeing the inflation. You know, we don't have the material side. We don't have transportation across the businesses. It's really focused just in energy, utility, and the labor piece. Thanks so much. Great. Our next question comes from Patrick Donnelly with Citi. Please go ahead. Hey, guys. Thanks for taking the questions. Scott, maybe following up on that one in terms of the kind of the different moving pieces on the cost side. Can you just talk about the margin levers as we work our way through the year, maybe touch on pacing as well? Obviously, a lot going on between the Nelson margin pressure, obviously some of the things you just touched on, pricing. Just want to try to get a handle on kind of the puts and takes there and how we should think about it as we progress through the year. Sure. If I go business unit by business unit, you know, Sterigenics, first of all, while there's not a ton of seasonality that impacts Sterigenics, Q1 is the one quarter that does typically have a little bit of seasonality-related pressure. That seasonality impact on the top line typically also translates just because of the operating leverage in the business to really the lowest margin profile of the year. What we would expect for Sterigenics is that as they continue to ramp up the top line throughout the year sequentially, then we would expect the margin profile to improve as well, just again, based on the operating leverage in the business and some amount of incremental pricing that continues to flow into the P&L. For Nelson Labs, obviously their story is significantly impacted by the normalization of these various factors that have impacted their recent results. As we mentioned in our prepared comments in Q2, we expect to see a sequential improvement for Nelson Labs, primarily driven by the normalization of the Omicron-related absenteeism, which we cited as being about a 300 basis point impact in Q1. It's in the second half of the year as Nelson sees the normalization of some of their other revenue streams and margin drivers that you see a more meaningful return to the "normalized levels" from the first half of last year. Then for Nordion, as we've often referenced, Nordion is such a lumpy business, and they have such a high proportion of their cost structure that's fixed, that really at the end of the day, their margin profile from quarter to quarter is just gonna be significantly driven by the harvest schedule, which translates to top line performance. Again, the operating leverage can result in some movement back and forth in their margin profile. Relative to last year's margin profile, we expect Nordion to hold fairly steady. Okay. That's really helpful. Michael, maybe just on the litigation side, you know, helpful to get some framing around that, in the prepared remarks. What's the right way to think about maybe the timeline going forward there? Obviously, you touched a little bit on the start dates, potential resolution. Maybe just at a high level, talk through kind of the catalyst set on that front that we can keep an eye out for. Yeah, I would say let's focus on 2022 and take it in kind of bite size, if you will. 2022, right now, the schedule is three trials. July 18th is the first one, as I mentioned, then September 12th and November 7th. Those are the three dates for 2022 trials in Illinois. Now remember, we don't set those dates. Those are set by the court, so they're subject to change, but we feel pretty confident that it'll adhere to this schedule. We would say that would start in July 18th, and there would probably be a ruling sometime in mid-August to late August. That's our best estimate of how long we think a given trial will last, and then the next one will come right behind that, starting on September 12th. Similar type of time pattern, four to six weeks, for a ruling to be coming out from the jury. Great. Thank you, guys. Thank you. Our next question comes from Matthew Mishan with KeyBanc. Please go ahead. Great, thank you for taking the questions, guys. I just wanted to start off with the capacity expansions that you're making in Sterigenics. One of the difficulties, I guess, in the current environment is getting construction moving forward and on time and just your confidence that those expansions that you're working towards are going through and progressing as scheduled at this point. Yes, they are, but we are seeing challenges, Matt, with construction schedules and timing. You know, right now as we referenced, you know, we continue to feel confident about the expansions we're putting in place, but they're subject to some changing in timing. We don't think it's gonna be a year out or anything like that, but there could be month-to-month, you know, movements based on material and contractor availability, things of that nature. I also should reference, you know, Matt asked a question earlier. I think it was Matt that asked about inflation. This is an area, too, that we got to continue to monitor, too, on inflation on construction materials as well. I referenced labor and energy and utility, but there is also some on the construction side, too, that I should reference. Okay. Yeah, there are a lot of Matts on this phone call. Yeah. Right. There are a lot of Matts. I imagine you guys have probably spent a lot of time talking through the timeline of diversifying the supply of cobalt throughout the last couple of months. Can you just talk about like the long-term investments that you're making? I realize that they're multi-year investments. Kind of any update on how you're thinking about the timeline of additional supply. Yeah. We've got several projects that we've referenced. You know, obviously we've got the work going on in Canada with the expansion of the work with OPG around additional capacity coming on for cobalt development. We also have the work going on with Westinghouse. I've actually spent some time with them in the past quarter, you know, updating with the teams on the projects there with the leadership at Westinghouse. We feel pretty good about those. Those are significant investments. They're very strategic for us, and it's to help diversify and expand capacity for cobalt overall. You know, we buy cobalt from all regions of the world, Canada, Argentina, China, India, Russia, and, you know, we look to continue to expand it. Hopefully, we can get into the United States with the Westinghouse relationship. Overall, we feel very good about it. We're deploying capital about it. Riaz and the team are doing a nice job in working that with our partners. You know, we're optimistic about the results of that in the out years. All right. Thank you very much. Thanks, Matt. Our next question comes from Dave Windley with Jefferies. Please go ahead. Hi, good morning. Thanks for taking my questions. I appreciate the detail around Scott that you gave around the Nelson margin. My question kind of targets, I guess, pricing strategy there. You had given that the Omicron, I guess, was 350 basis points, some labor, some absenteeism, I guess. So the spirit of the question here is pricing strategy and how much are you attempting to cover with price versus how much of the margin recovery is simply labor coming back in and more operational excellence initiatives that drive that margin as you get into the improvement in the acquisitions in the latter part of the year? Oh, well, we mentioned that the Omicron impact on margin profile in Q1 was about 300 basis points, and that was meant to cover basically Omicron-related absenteeism, which not that there isn't continued absenteeism relating to the pandemic, but you know, that real surge that we saw in Q1, we would see as being largely mitigated in Q2. The sequential improvement in margin profile from Q1 to Q2, we expect to be driven by that normalization in terms of absenteeism at the frontline lab technician and microbiologist level, which then of course translates to increased capacity and throughput for the business, which of course translates to improved revenue profile. The incremental improvements that we talk about in subsequent quarters are really driven by, yes, some amount of continued pricing initiatives in response to the inflationary pressures that we're seeing primarily on the labor force. As I think you referenced a second ago, we believe we are seeing good line of sight to realization of some of the synergies associated with recent acquisitions and other operational excellence initiatives that we see manifesting throughout the year. Got it. That's very helpful. I think you, as you guided us to expect, pricing in Nelson is in the mid-three range, and that's what you got last year. Are you able to kind of get more? I think that's the more price sensitive of your businesses. Are you able to get more than that i n a more inflationary environment, or is it still hard to extract that even with those reasons? No, we are able to get more. I think Michael made a couple comments to that effect a couple minutes ago in response to a different question. Also, as we mentioned in our prepared comments, we saw a little bit over 4% contribution from price for Nelson in Q1. That increase versus the recent trends in pricing for Nelson is reflective of their ability to capture price in this inflationary environment. Obviously, Nelson is not the only lab testing business that's impacted in some way by the pandemic. Overall, the marketplace for lab testing services is seeing some amount of these inflationary pressures and other disruptions, and we see overall pricing opportunities continuing there. David, it's Michael. I would just add, our focus right now is stabilizing the staffing and continue to improve turnaround times and taking care of customers' demand as it starts to come in. That's what the team's doing a really nice job, looking at our NPS scores and also our turnaround times. That's really where the team is focused right now, taking care of our customers and as that demand starts to ramp. Got it. I appreciate that. Sorry, I missed the detail in the prepared remarks. Last question, just a clarification. I think we were looking through past releases. I think this unrealized hedging gain was new. You called that out in your remarks, talked about it being excluded from your adjusted EPS. I wondered, am I right that that's new? Maybe you could explain the nature of that, and then also clarify, is it also excluded from adjusted EBITDA? Thank you. Sure. The hedging program itself is not new. What is new is the fact that the program, the risk management program that we have around our variable rate debt has just had a lot more volatility, P&L volatility associated with it, just given what's going on out there in the macro environment as far as interest rates rising. Specifically with respect to your question about adjusted EBITDA, you know, but almost by definition, it has excluded interest rate and any type of interest rate-related derivative is gonna be excluded from adjusted EBITDA. Again, as you, I think, mentioned a second ago, we did exclude it from our adjusted net income number as well for purposes of calculating adjusted EPS. The objective here is just to give people a cleaner view of both our operating results at the adjusted EBITDA and adjusted EPS level without some of the near-term noise associated with the mark-to-market on our hedges. Got it. Appreciate that. Thank you. Sure. Our next question comes from Michael Polark with Wolfe Research. Please go ahead. Good morning. Two for me. I recall last year, a lot of influences at Nelson, all helpful in framing up the puts and takes there. One of the mentions was that, you know, FDA was a constraint for certain customers on, you know, there was a backlog building because the FDA was, you know, folks were waiting for the FDA to provide some guidance on certain product testing requirements. I believe that was related to scopes. In April, I saw a steady stream of communications from FDA and large scope manufacturers that suggested to me that perhaps, this bottleneck is in the process of resolving, which reads for me as potentially something, you know, good on the margin for Nelson into the back half of the year. Am I misremembering one? Two, if not, you know, are you seeing this constraint ease as well? Yeah, yeah, Mike, it's Michael. I would tell you that we referenced in our past comments around some of the regulations around FDA that they're still waiting for clarification. I don't know that we ever got into particulars of it being scopes or whatnot, but I would tell you that it still hasn't completely been resolved. But we are seeing customers in some of those sections start to look at, you know, building out their pipeline with us for testing. But we haven't realized all the benefits of that because there is not absolute clarity yet on the regulatory requirements. Your recollection is right. I'm just not getting specific into what test sections. I would tell you, we still have that uncertainty, but we're confident it's gonna be resolved and it's gonna be helpful for the Nelson Labs business. Okay. Helpful. Thank you. Just capital deployment. Look, you have a lot of moving pieces in the macro this year for most companies. You have historically done a steady stream of tuck-in M&A. I'm curious where that initiative falls in calendar 2022 and just, you know, how the pipeline might look at this point in time. Yeah. We're always gonna deploy capital for growth, and our priority is really internal organic expansion. You know, we've got a healthy diet of that, as you know, with the investments we're making in cobalt as well as our facilities in Nelson and Sterigenics. That's always gonna be a priority. We see good returns on that. We see strong customer demand, and we're making sure we can fill those. That's really our number one priority. We're continuing to look at M&A, and we have a pipeline that we continue to follow and track. We have nothing to tell you of any significance at this point in time. Our strategy hasn't changed in how we look at M&A. Thank you so much. Great. Thank you. Again, if you have a question, please press star, then one. Our next question comes from Casey Woodring with JP Morgan. Please go ahead. Hi, guys. Thanks for taking my questions. In Sterigenics this quarter, price contributed 5% and volume 10%. I know you have capacity expansion projects coming online in the back half of the year, and then you've also talked about price increases flowing through as the year progresses. I just wanna get your thoughts on what price and volume growth contribution will look like for the full year, in this business relative to what we saw in 1Q. Casey, I'll take that. You know, we don't get into specifics on forecast by business unit, but what we have said in the past is these businesses have 3%-5% price. Sterigenics is kind of in the middle of that. You see a little bit of an outperformance there in the quarter. You know, we've been saying that, you know, this business is mid to high single digits in total when you factor in volume and mix. I would tell you to still be thinking along those lines. We're optimistic about what the rest of the year looks like. I would just reiterate what we've told you in the past as far as general guidance around Sotera Health growing, you know, high single digits is where our focus has been, a combination price, volume, and mix. Okay. Just, you know, on the pricing piece, you talked about how, you know, you're gonna realize more pricing benefits in the back half of the year. Just wondering why you couldn't pass price on sooner? You know, is there something structural about the contracts where they're more heavily weighted towards the back half? Thank you. No. In general, we've always talked about the fact that our businesses do have a very generous flexibility in terms of passing through price to the marketplace, but we've never pretended that we have a perfectly dynamic pricing model where, you know, you get an increase in your utility rates on day one, and you increase prices on day two. There is some amount of structural lag in the system, and that's where you do see the inflation impact in a given period takes a quarter or two for us to really roll out in a structured and disciplined manner across our thousands and thousands of customers, the offsetting price increases. It's really just that price lag that results in the effect that you're talking about. Casey, the only other thing I'd add to Scott's comment, you know, we have great businesses that bring significant value to the industry overall. Okay. It's a value proposition. We gotta make sure we continue to get it right with our customers and, you know, they recognize the importance of what we do and us being, you know, a key supplier and high quality supplier to them. There's a balance there. We wanna make sure we're also respectful of as well. It's a critical service that we bring that's often government mandated, and we just gotta do a really good job, and that's where we gotta keep earning our stripes every day with our customers. Okay. Got it. Thank you. This concludes our question- and- answer session. I would like to turn the conference back over to the CEO, Michael Petras, for any closing remarks. Great. Thank you, Joe. Thank you everybody for taking the time this morning. We're proud of how the team has performed here in the first quarter, and we're optimistic about the rest of 2022. Thank you for your ongoing support, and we'll be talking to you here in the near future. Thank you, and have a great day. Bye-bye. The conference has now concluded. 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