Good afternoon. Welcome to the afternoon of day one of the 2025 Wolfe Healthcare Conference. My name is Mike Polark, Medical Device Analyst at Wolfe Research. Pleased to be joined in this session by Sotera Health. With the company, we have Chief Financial Officer Jon Lyons. Jon, welcome to the chat. Thanks a lot, Mike. Good to be here. We're just going to jump straight into Q&A. Start with Sotera Health, your largest business. Call it two-thirds or 70% of earnings. It seems like a good place to start. What stands out about the recent results is the volume acceleration, the recovery in volume growth. If I look at 2024 and the first quarter of this year, volume and mix kind of minus one to plus one. Starting with the second quarter, we got plus 6. Third quarter was, call it plus 5. It is a clear perk up in volume. The opening question is, what's changed? What's going well? What's no longer kind of a pressure? Take us on a tour around the world by customer type, geography, kind of category demand. What are you seeing that's different now versus, just say, a couple of quarters ago? Yeah, thanks a lot, Mike. No, we're really pleased with where Sotera Health is performing. I mean, this is when I joined, this is the business that I thought I was joining, you know, and the one that the folks who've been around the business for a long time have seen perform year after year for decades. We're thrilled that it's getting back to where the knitting where we know it would perform. As we look at the overall business, what we're seeing coming out of this period of whatever it was, destocking and really, I think, a pretty broad turn of impact across segments across the industry is something we're seeing really just consistent performance out of our core med device customers, as well as the uptick in bioprocessing has been helpful, even though that's a smaller portion of our business, it's still meaningful. We look around the globe, it's Europe, it's the U.S.. I mean, these are our strongest beachheads for the company and where we're seeing good consistent performance across the customer base. We are excited for where we are and we think this is back to where the business usually is. There's one call out from, I believe, the first quarter and perhaps one quarter before that as well, customer challenges. There was kind of a specific mention on those calls that it felt like specific logos, maybe one, 2 or 3 of them. Fair to say whatever that was, that's also subsided or those challenges kind of resolved, headwind turned into tailwind and you're seeing better performance out of those items as well. Yeah, no, so actually there are a few customer situations that we were navigating and we got 2,000 customers in Sotera Health. There's always something going on with someone. As we were working through, we saw this kind of pickup in the business going on, but we did see some idiosyncratic customer issues that were providing a bit of a headwind. The good thing is we still have those headwinds are actually still in place and we're outgrowing them right now. The business overall is doing well and we're navigating some of those idiosyncratic things better. The overall strength of the business is helping us compensate. Understood. The other topic on volume that's come up this year is your numbers have improved, your peers' numbers have also improved, is just tariffs. I know it's difficult to pin and I think we're all trying to continue to unpack this in real time. Do you think tariffs are having a positive influence on the volume equation, whether it's customers racing to get stuff across the U.S. border as part of their mitigation plans or just other borders worldwide where barriers have gone up? It feels reasonable to ask the question if that's driving activity. After another quarter of good, reflecting on the last 6 months, yay or nay, tariffs are part of this equation. Yeah, we do detailed operating reviews on a really regular basis. I will tell you, we've not picked up any kind of material trends from tariffs that are tailwinds inside the business, but I think I'd be remiss not to think that there's not something. It's just hard. We're pretty disconnected, not disconnected from our customers, but from the ultimate channel and what's happening all the way downstream. I would suspect that there's a little bit, but there hasn't been a notable trend in our business from what we've picked up. I'm curious internally, what can you look at to try to even attempt to answer that question from a data or anecdote? Yeah, so we spend a lot of time with our sales team who spends a lot of time with their customers. Ask that question, they'd probably tell you, we ask it daily. I think it's more like weekly or monthly. We also try to look at our customer trends. I will tell you, it's also a little bit difficult inside that because as much as I'd love to see the customers, I'm sure they want their supply chains to be a straight line. They're not a straight line on a regular basis anyway, all the time. It's really hard to dissect and pick up any given trends just from order patterns. There hasn't been anything discernible from the order patterns. The other way I want to ask about Sotera Health's volume recovery, it's not a way the company formally talks about things, but I'll ask the question anyway. It's just kind of like same store, new store growth. When I first learned this business, it was described to me, your capacity is like Jell-O. You could always squeeze in a little bit more, your space, whatever it may be. That would be the same store part of this equation. New store is, I know the company's investing growth CapEx, whether it's adding space at existing locations or new locations. As you look at this the last 6 months and then maybe let's roll into 2026, if you were to spike out same store versus new store and the return from basically no volume growth to mid-singles, how do you frame the contributors? Yeah, as I think about it, when we think about the growth capacity that we've put in and that we are putting in, it's really there to support the market growth. We think about what this market should do over the long term. I mean, we think about it in the sense that every incremental investment we look at and say, is it delivering what it was supposed to deliver? So we measure our performance and hold ourselves accountable to that. When we think about the overall growth of the business, we don't think about it in the same store versus new store basis. We did have an incremental expansion go live in 2024. That is performing as we expected. It's part of the growth that we've been delivering. We have 2 greenfields upcoming, one in 2026 and one in 2027. We would expect those both to support the growth going forward, but really in line with the growth algorithm that we have put out of mid to upper single digits for the Sotera Health business. Maybe it is a good spot to ask just a couple of greenfields coming in the couple of years ahead. Kind of the threshold to put shovel in ground and make that investment, kind of what is visible from a volume perspective upfront versus what you have to go fill over time. If memory serves, it is kind of put the shovel in the ground when we think we have half of it filled, give or take. Is that the correct way to describe what is coming? Yeah, I think what Michael's always said and hasn't changed is we look to have about a 40% commitment before we make the commitment to put the shovel in the ground. I would say the first of those is a little bit below that when we decided to put the shovel in the ground a couple of years ago. We feel that we see the pipeline building nicely and it'll be a slower ramp, right, as we come into this in 2026, but it'll start contributing a little bit next year is our expectation. The second one, we have a bit higher commitment than the first. We're feeling good about the overall demand for both of those. Maybe last, well, not last one on Sotera Health, but last one on just like probing on growth. Sorry, no more Sotera Health questions. Yeah, yeah, no, I have a few others, but different kind of threads. Just the stated goal is mid to high single digit growth. I think the volume is mid-singles now. It is just kind of, I'm not asking you to talk up the expectation, but high singles seems very reasonable. Both in the back half of this year and the next couple of years of plan, all things considered, pricing has been durable in kind of the single digit zone. Now the volume's back, you're investing, which will continue to bring volume. The mid-singles just seems like let's not even, don't run this business to grow Sotera Health single digits. No, I agree with you mostly. We think our long-term outlook is for mid to high single digits growth. As you said, I think you said aptly the stated goal. I mean, our goal is to grow this business as fast as we possibly can, if upper single digits to even double digits. That is the objective and the overall goal. We think based on the markets and the market is going to grow low single digits, then go over mid-single digits. I mean, there is some variability depending on who you talk to. We are really reflecting on there is some variability in the overall market through what happened. Our goal is not to grow with the market or if the market is 6 and we deliver 5, that is not good. We need to grow whatever the market is and exceed whatever the market is would be the goal. Let's transition topics still in Sotera Health, but talk about the ethylene oxide topic a little bit. 2-parter, you're modernizing your plants. I'm just curious for a, let's just start there. Progress update on that investment cycle, the dollars per year right now on the CapEx side, how much, what portion complete are you? What's left? When is that cycle over? Yeah, the end of your question is very easy. We expect to be completed by the end of next year. We'll finish these investments in 2026. We're in great shape. We've been at this for a while. Of course, the regulations came out and some modest adjustments to our program from there, but we're in good shape, putting in permanent total enclosure 204, which I'm sure you've heard about a number of times, right? Basically putting a bubble around the facility, enhancing the scrubbing systems inside the facility. Overall program is going to be about $200 million, which we've spoken about before. From start to finish. From start to finish. We're largely complete. We'll complete next year. On the regulatory side, there have been moments when I'm all the way down at the bottom of the ethylene oxide rabbit hole, I would say, as the Trump administration has seemingly poked at the regs again. I'm not all the way there. Can we get a brief update on where compliance deadline sits, enforcement, whether there is enforcement or not? Just my feel is you have decided to skate where the puck may or may not go. You're already there. You're there by the end of next year. It doesn't influence your path, but just what do the regs officially say? Yeah, yeah. I mean, and this has an impact on the overall industry dynamic overall. I mean, listen, we've been at this. We think the improvements are important. We're committed to them. There was an April deadline for having equipment installed of 2026. There was a 2 year extension on top of that for those that applied for it, which the vast majority of the industry applied for it and received. My understanding is that the EPA is considering some adjustments to the rules that were published, but we fully expect that maybe there's some relief on some individual topics or individual items, but that largely the rules that have been published so far are largely what's going to be required. We continue to expect to have those in place next year. Good. I want to stay on this thread, but talk about just the topic of pricing. This was a huge investment cycle for you, for industry, rough cut in the U.S., $200 million over, what, 5 years, 9, call it round up 10 facilities, $20 million plus per facility. And the topic is this price that's reasonable to ask your customers to share in. So walk us through how the company thinks about that. Is it a discussion that's being had now? Is it a discussion for future years? Do you view it as something that could be additive to the stated price contribution for Sotera Health's growth or helps support that mid-single digit dollar? Yeah, so a few things there. Number one, we have a valuable service we provide that's critical to the healthcare system. We think it's really important that we're adequately compensated for the services we provide. These investments were imperative and very expensive. We're going to be working to recover part of that in coordination with our customers from a pricing perspective. The overall company pricing objective is 3-4%. We expect Sotera Health to be at the high end of that range. We expect any pricing that we achieve over the next couple of years associated with this would be incremental to that. We just talked to CapEx dollars of $200 million. That's very clear. These facilities now on a just pro forma operating basis, are they more expensive to maintain? Modestly more expensive. You think you added a bunch of equipment to the facility. There is incremental maintenance dollars. There is incremental utility costs because you are just using more electricity or more natural gas. The operating costs are pretty immaterial. Anything on Sotera Health before we move to Nordion and Nelson that you want to flag that's just misunderstood or the company doesn't think is fully appreciated right now? I mean, Mike, I mean, you followed the company. You've been, I think, an advocate for the quality of the company for a while. This is a gem of a business. I kind of alluded to it earlier, but I mean, the critical role in healthcare in a highly regulated industry, the business company overall, but the company years and years ago was just Sotera Health, has grown every year since 2005. You talk about a business that the volume growth was plus or minus one for a couple of years, still grew mid-single digits, right? That's a great business. We are proud of that team for everything they've been through the last few years. I think we're positioned to keep supporting our customers and a business that we think is a phenomenal business to be part of our portfolio. That's a good wrapper. Let's shift gears. Let's do Nordion. It's one, maybe 2 questions. I know it doesn't get a ton of discussion, but I am curious on a couple of things. Part of the CapEx step up the last couple of years has been kind of the effort to onshore some 60 production with U.S. utility partners. I guess the question, and the global reactor fleet expires, and so naturally you need to backfill supply. Is this investment cycle just that natural backfill, or is there something else that happens to the Nordion business once these volumes come online, whether that's logistics efficiency? It's a true curiosity. What do you think? I’d love to tell you it was something really astounding. You hadn’t thought about it before, but this is fundamentally about ensuring the long-term availability of cobalt supply for the healthcare industry. That is the thrust of these investments. We’ve got the investment in Darlington, which is Ontario Power Generation up in Canada, a long-term partner. That’ll come online with the first harvest in 2028. We have the partnership with Westinghouse in the U.S. to bring cobalt production for the first time in history to the U.S.. That will have a first harvest there late in the decade. We’re excited, but it’s really about making sure the long-term continuity of supply is there. It should be easier if it’s onshore cobalt, easier, but there’s no big shift in the business. My other Nordion question is Russia. This has been a risk. The company has transparently quantified each year, which is super helpful. We know the filing disclosures about how the volume mix can ebb and flow. My question is more like there hasn't been a hiccup despite it being a volatile portion of the world. Has this been easy for the team, like business as usual, or has it been a challenge to harvest? Yeah, I mean, no pun intended with the harvest. Yeah, yeah. The annual cobalt harvest is a little volatile, quarter to quarter. No, I would say a couple of things. I kind of look at it as like the duck swimming on the water, right? Like cobalt just gets to customers and it's pretty seamless. Call Nordion, it comes to your building, gets installed, right? Calm on top and underneath the feeder going. It's not simple, but we've done the right things over the years to make sure that we have relationships in the places in the government that matter and they understand what we do, why we do it, why it's important. As things come up geopolitically or what have you, we're a phone call away from making sure that people remember the situation and the role that Nordion plays in the healthcare system. There is a lot of work that goes underneath, that's churning under the water to make sure that it's seamless for customers in the industry. That is what we're really proud of, the work the team's done, phenomenal relationships they've maintained, and the work they do every day. When you say government, U.S. government, Russian government, both governments, other governments? Everywhere. Everywhere, okay. Good, that's helpful. Is it 0-3% has been the number, I think, last year, this year? Obviously, we haven't. There can be, I think, historically some bigger Russia mix years depending on the harvest schedules. Is 0-3% in 2026 still kind of a good way to early think about this? Yeah, yeah. I mean, that pretty much reflects higher and lower years. That's probably a decent way to think about it going into 2026. Okay. All right, good. Let's transition to Nelson. It's been frustrating. Nordion chops quarter to quarter, but gets there on a full year basis. Derry is finding its way back. Nelson kind of needs to find a way to help itself. The estimates have not proved solid for a bit, but this year, very transparent, it's this advisory services headwind calling out 10 points of drag to the segment from this business within the business this year alone. This subsegment, I think at your investor day, was framed as like 15% of that segment. So like 10 points of drag from something that was 15, it's down a lot. Hard to imagine it gets a ton worse. Meanwhile, the other parts of this unit, the routine testing are starting to return to mid-single digit growth. It's really hard. Growth seems very, very likely next year in Nelson. Do you agree? No, I mean, I think all the logic would point to growth being positive next year. I don't want to be we're not guiding on next year yet, but I think that's our expectation for the business is that we would grow next year. The consulting business, I never thought 2 years ago when I started this job or even a year ago that I'd be spending this much time talking about the consulting business. As I said, it was 15% of the business last year, which was the best year in the history of that business. Now it's in one of the worst years. The business is still, we think, really valuable. It's a great connecting rod between Nelson Labs testing and Sotera Health sterilization to actually send customers back and forth. It's coming off of a period of elevated remediation projects, which are kind of one time. They're pretty valuable or pretty costly from a customer perspective. The good thing, as you mentioned, is the core lab testing is growing. The piece of the business that's related directly to what Sotera Health does day to day is growing at the highest clip, right? People ask us, you know, wait, what's the connection there? Sotera Health is growing 6% or 4.5% the last couple of quarters. We see that happening in the core lab testing associated with the sterilization volumes. The other part of the core lab testing overall, the core lab testing is growing. The other part of it is really driven off new product introductions and off new regulations. We have got pockets of, we got bright spots inside of that, but there is also a cycle where you have got some downsizing in the FDA that not only impacts the consulting business, but impacts how much is coming through the FDA on a day-to-day basis. Is that consulting business levered to drugs or just devices? More devices. Yeah. That is the other side of the testing is the validation. That is a little bit more lumpy than the core sterilization. Again, 40% of Nelson's sterility assurance just very connected to what we do at Sotera Health. Fifteen percent was kind of the best year ever for this consulting business. This year, let's call it, it's going to be 5% of the segment. Split the difference. It should, in theory, be headed back to 10% of the segment, all else equal? Yeah, I mean, I think all else equal. How quickly does that come back? I mean, again, it's driven off the, it's kind of at a base level right now. The question is, how much is it getting kind of those one-time remediation projects? We're in a trough in those right now. I don't know if that comes back next year or year after. I think the important thing, the other thing to remind ourselves on in Nelson is that business has been a lot through COVID. There's a lot of things that have, I think, caused some challenges inside of it. We've got the margins in the right place. The core lab testing business is growing. I think a lot of good has been done in that business. It's doing what it's supposed to connected to the sterilization business. 2 to 5 minutes, I want to go back to, I guess, definitely knock side of Sotera Health and do the litigation, but let's finish on Nelson and tie in the balance sheet. The balance sheet has continued to improve. Very low 3s on net debt to EBITDA. The company's stated target is 2 to 3 times. Say before the last 3, 4 years, the company was acquisitive, had a stated goal of doing some tuck-in M&A. It sounds like maybe you're getting back to that place. Is that correct? And is Nelson a business you think you can help with deals, or is there a bunch of tuck-in work to do in Sotera Health too? Yeah, I would say a couple of things. Listen, Mike, sorry, I think the folks have the questions on M&A, but I got to talk about the balance sheet a little bit. If you look back in the last 2 years, I'd say number one, you just think about our investor base. We've more than doubled public float in the last 2 years. The private equity owners are down to 26% ownership. I think they were 62% when I started. I have nothing to do with the fact that they decided to make sales, but I think that's an important part of our evolution as a public company is to have that public float continue to grow. I think we've made a lot of progress there. As you mentioned, we've improved nearly a turn of EBITDA over the last 2 years. Very recently, we expanded or we lowered our interest rate 75 basis points on our term loan, and we're going to take out about $13 million of annual interest expense. The other side of it, we also have $900 million of liquidity. The balance sheet, I think, is in really, really good shape. I'd just be remiss if I didn't highlight the fact that we've made some, I think, really good evolution in the last 2 years. I think the more salient part of your question is we never intentionally backed away from M&A. We are focused on, I'd say, tuck-in acquisitions across the business. In Sotera Health, we're looking at places where we expand modality and geography. That's the flagship business. We'd love to grow that business. I'd just hearken back to investor day also, as I'm saying that, we're going to be disciplined on these. We got to make sure that the returns are there for, I mean, first for us and then for our shareholders as we look at these acquisitions. In Sotera Health, that's great. Nelson, we expect to continue to look for opportunities to grow. Probably still looking to expand our pharma testing capability. In Nordion, we continue to look. We just got such a tremendous skill set. Finding ways to leverage that outside of the Nordion business, we think there's value there, and we're continuing to challenge ourselves. Is there something for us to do in the radiopharm space, which we've talked about, or along those lines? We think M&A has an important part of our capital deployment going forward, but we really discipline and make sure it creates value. Food for thought there. All right, we're going to wrap on the litigation. I've been an observer of this since it started. You still have risk. However, every new turn of the card seems to be constructive for both the potential size of liability and your ability to manage that again in the future. The Georgia update seemed constructive, both on the general and specific causation. I guess the appeals court threw it back down to the district, the smaller court. In the smaller court, you won on specific causation in 3 instances. Maybe let me ask it this way. As a financial steward of the company, financial leader of the company, do you feel like you're best positioned to manage this risk with all of the things that have turned over? I'm sure there was a learning process for you once upon a time to take all this in. How do you feel about it now? First of all, and I think, Michael, we hate the fact that the company's in this situation because we don't think there's actually grounds for us to be in this situation. We think Georgia is a place where what we say is when we can fully and fairly put on our case, we think that the claims that have been made against us have no merit. We think we're seeing that so far play out in Georgia. Of course, there's more to go there. Sure, I've learned a lot over the last couple of years on this front. I think that as we've seen this develop, I think the company's certainly in a, I think we've demonstrated the ability to navigate a pretty challenging situation, I think about as successfully as we could have. We have a balance sheet to manage through it on a go-forward basis. I think we have had some really good developments in Georgia that should hopefully lead us to an ending of a pretty good spot in Georgia. That's a terrible question, but the playbook has a lot of plays now in it, right? That feels like it's a truth that you've seen some of these things before and you know how to deal with either the courtroom circumstances, the specific claims, and it's promoting more wins. We've got great resources internally and externally supporting us on this. I'm working to support the company financially, and I offer opinions to people who really know what they're talking about on the legal front. We've got great resources who help us navigate. The good thing is the science is in our favor. We've got a lot of things to navigate with different courts, different plaintiffs, different plaintiffs' counsel. The science is in our favor. With that understanding that we do the right things, we support the healthcare industry with our critical service. The science actually supports that we're just doing the right things as a business. We got to keep working through it and hopefully be successful. Yeah, we've navigated a lot of different twists and turns. There'll be more, but we've seen a lot of cards turn, and we kind of know how to react. Good point. We have to leave it there. Jon, thank you for the conversation. That was great. Great. Thanks, Mike. Appreciate it, Adam.