Sotera Health Co

Previous wording

You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2023 10-K. This discussion and analysis contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of various factors, including the factors we describe in the section entitled Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, as well as Part I, Item 1A, “Risk Factors” in our 2023 10-K.

Current wording

You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2024 Form 10-K. This discussion and analysis contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of various factors, including the factors we describe in the section entitled Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, as well as Part I, Item 1A, “Risk Factors” in our 2024 Form 10-K.

Previous wording

We are a leading global provider of mission-critical end-to-end sterilization solutions, lab testing and advisory services for the healthcare industry. We are driven by our mission: Safeguarding Global Health®. We provide end-to-end sterilization as well as microbiological and analytical lab testing and advisory services to help ensure that medical, pharmaceutical and food products are safe for healthcare practitioners, patients and consumers in the United States and around the world. Our services are an essential aspect of our customers’ manufacturing process and supply chains, helping to ensure sterilized medical products reach healthcare practitioners and patients. Most of these services are necessary for our customers to satisfy applicable government requirements.

Current wording

We are a leading global provider of mission-critical end-to-end sterilization solutions, lab testing and advisory services for the healthcare industry. We are driven by our mission: Safeguarding Global Health®. We provide end-to-end sterilization as well as microbiological and analytical lab testing and advisory services to help ensure that medical, pharmaceutical and food products are safe for healthcare practitioners, patients and consumers in the United States and around the world. Our services are an essential aspect of our customers’ manufacturing processes and supply chains, helping to ensure sterilized medical products reach healthcare practitioners and patients. Most of these services are necessary for our customers to satisfy applicable government requirements.

Previous wording

We serve our customers throughout their product lifecycles, from product design to manufacturing and delivery, helping to ensure the sterility, effectiveness and safety of their products for the end user. We operate across two core businesses: sterilization services and lab services. The combination of Sterigenics, our terminal sterilization business, and Nordion, our Co-60 supply business, makes us the only vertically integrated global gamma sterilization provider in the sterilization industry. For financial reporting purposes, our sterilization services business consists of two reportable segments, Sterigenics and Nordion, and our lab services business consists of one reportable segment, Nelson Labs.

Current wording

We serve our customers throughout their product lifecycles, from product design to manufacturing and delivery, helping to ensure the sterility, effectiveness and safety of their products for the end user. We operate across two core businesses: sterilization services and lab services. Each of our businesses has a longstanding record and is a leader in its respective market, supported and connected by our core capabilities including deep end market, regulatory, technical and logistics expertise. The combination of Sterigenics, our terminal sterilization business, and Nordion, our Co-60 supply business, makes us the only vertically integrated global gamma sterilization provider in the sterilization industry. This provides us with additional insights and allows us to better serve our customers. For financial reporting purposes, our sterilization services business is comprised of two reportable segments, Sterigenics and Nordion, and our lab services business constitutes a third reportable segment, Nelson Labs.

Previous wording

For the three and nine months ended September 30, 2024, respectively, we recorded net revenues of $285.5 million and $810.2 million, net income of $17.0 million and $32.1 million, Adjusted Net Income of $48.9 million and $139.8 million, and Adjusted EBITDA of $146.4 million and $395.6 million. For the definition of Adjusted Net Income and Adjusted EBITDA and the reconciliation of these non-GAAP measures from net income (loss), please see “Non-GAAP Financial Measures.”

Current wording

For the three months ended March 31, 2025, we recorded net revenues of $254.5 million, net loss of $13.3 million, Adjusted Net Income of $39.0 million and Adjusted EBITDA of $121.8 million. Adjusted Net Income and Adjusted EBITDA are financial measures not based on any standardized methodology prescribed by U.S. Generally Accepted Accounting Principles (“GAAP”). For the definition of Adjusted Net Income and Adjusted EBITDA and the reconciliation of these non-GAAP measures from net income (loss), please see “Non-GAAP Financial Measures.”

Previous wording

(a)Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. For more information regarding our calculation of Adjusted Net Income and Adjusted EBITDA, including information about their limitations as tools for analysis and a reconciliation of net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Net Income and Adjusted EBITDA, please see the reconciliation included below in “Non-GAAP Financial Measures.”

Current wording

(a)Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. For more information regarding our calculation of Adjusted Net Income and Adjusted EBITDA, including information about their limitations as tools for analysis and a reconciliation of net (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Net Income and Adjusted EBITDA, please see the reconciliation included below in “Non-GAAP Financial Measures.”

Previous wording

Net revenues were $285.5 million in the three months ended September 30, 2024, an increase of $22.3 million, or 8.5%, as compared with the three months ended September 30, 2023. Excluding the impact of foreign currency exchange rates, net revenues in the three months ended September 30, 2024 increased approximately 8.9% compared with the three months ended September 30, 2023.

Current wording

Net revenues were $254.5 million in the three months ended March 31, 2025, an increase of $6.3 million, or 2.6%, as compared with the three months ended March 31, 2024. Excluding the impact of foreign currency exchange rates, net revenues in the three months ended March 31, 2025 increased approximately 4.4% compared with the three months ended March 31, 2024.

Previous wording

Total cost of revenues accounted for approximately 44.6% and 44.5% of our consolidated net revenues for the three months ended September 30, 2024 and 2023, respectively.

Current wording

Total cost of revenues accounted for approximately 46.8% and 48.8% of our consolidated net revenues for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Cost of product revenues increased $2.8 million, or 20.2%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was primarily a result of higher volumes of Co-60 shipments, which resulted in increases in direct material and transportation costs of $2.5 million.

Current wording

Cost of product revenues increased $1.3 million, or 12.3%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The increase was primarily a result of higher volumes of Co-60 shipments, which resulted in increases in direct material and material transportation costs of $2.2 million. This was partially offset by a $1.0 million decrease in amortization of intangible assets that were fully amortized as of December 31, 2024. Changes in foreign currency exchange rates had a $0.5 million favorable impact to cost of product revenues in the three months ended March 31, 2025 compared to the same period in the prior year.

Previous wording

Amortization of intangible assets decreased $0.3 million, or 1.7%, to $15.5 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 due mainly to changes in foreign currency exchange rates.

Current wording

Amortization of intangible assets decreased $0.4 million, or 2.6% for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 due mainly to changes in foreign currency exchange rates.

Previous wording

Foreign exchange gain was $1.1 million for the three months ended September 30, 2024 as compared to a gain of $0.4 million in the three months ended September 30, 2023. The change in foreign exchange gain in our Consolidated Statements of Operations and Comprehensive Income (Loss) mainly relates to short-term gains and losses on transactions denominated in currencies other than the functional currency of our operating entities. As described in Note 15, “Financial Instruments and Financial Risk” to our consolidated financial statements, we enter into monthly U.S. dollar-denominated foreign currency forward contracts to manage foreign currency exchange rate risk related to our international subsidiaries.

Current wording

Foreign exchange loss was $0.3 million for the three months ended March 31, 2025 compared to a gain of $0.6 million for the three months ended March 31, 2024. The change in foreign exchange loss (gain) mainly relates to short-term gains and losses on transactions denominated in currencies other than the functional currency of our operating entities. As described in Note 15, “Financial Instruments and Financial Risk,” we enter into monthly U.S. dollar-denominated foreign currency forward contracts to manage foreign currency exchange rate risk related to our international subsidiaries.

Previous wording

Provision for income taxes for the nine months ended September 30, 2024 differed from the statutory rate primarily due to a net increase in the valuation allowance attributable to the limitation on the deductibility of interest expense, the foreign rate differential and GILTI, partially offset by a benefit for state income taxes. Provision for income taxes for the nine months ended September 30, 2023 differed from the statutory rate primarily due to a net increase in the valuation allowance attributable to the limitation on the deductibility of interest expense and the foreign rate differential, partially offset by a benefit for state income taxes.

Current wording

Benefit for income taxes for the three months ended March 31, 2025 differed from the statutory rate primarily due to current year permanent differences, partially offset by the valuation allowance attributable to the limitation on the deductibility of interest expense and the impact of the foreign rate differential. Provision for income taxes for the three months ended March 31, 2024 differed from the statutory rate primarily due to an increase in the valuation allowance against our excess interest expense carryforward balance and the impact of the foreign rate differential, partially offset by a benefit for state income taxes.

Previous wording

Net Income, Adjusted Net Income and Adjusted EBITDA

Current wording

Net Loss/Income, Adjusted Net Income and Adjusted EBITDA

Previous wording

Net income for the three months ended September 30, 2024 was $17.0 million, as compared to a net loss of $13.7 million for the three months ended September 30, 2023 due to the factors described above. Adjusted Net Income was $48.9 million for the three months ended September 30, 2024, as compared to $46.6 million for the three months ended September 30, 2023. Adjusted EBITDA was $146.4 million for the three months ended September 30, 2024, as compared to $134.3 million for the three months ended September 30, 2023. Please see “Non-GAAP Financial Measures” below for a reconciliation of Adjusted Net Income and Adjusted EBITDA to their most directly comparable financial measure calculated and presented in accordance with GAAP.

Current wording

Net loss for the three months ended March 31, 2025 was $13.3 million, as compared to net income of $6.3 million for the three months ended March 31, 2024. Adjusted Net Income was $39.0 million for the three months ended March 31, 2025, as compared to $35.6 million for the three months ended March 31, 2024, due to the factors described above. Adjusted EBITDA was $121.8 million for the three months ended March 31, 2025, as compared to $111.9 million for the three months ended March 31, 2024, due to the factors described above. Please see “Non-GAAP Financial Measures” below for a reconciliation of

Previous wording

We use Adjusted Net Income and Adjusted EBITDA, non-GAAP financial measures, as the principal measures of our operating performance. Management believes Adjusted Net Income and Adjusted EBITDA are useful because they allow management to more effectively evaluate our operating performance and compare the results of our operations from period to period without the impact of certain non-cash items and non-routine items that we do not expect to continue at the same level in the future and other items that are not core to our operations. We believe that these measures are useful to our investors because they provide a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. In addition, we believe Adjusted Net Income and Adjusted EBITDA will assist investors in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented. Our management also uses Adjusted Net Income and Adjusted EBITDA in their financial analysis and operational decision-making, and Adjusted EBITDA serves as the basis for the metric we utilize to determine attainment of our primary annual incentive program. Adjusted Net Income and Adjusted EBITDA may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

Current wording

We use Adjusted Net Income and Adjusted EBITDA, non-GAAP financial measures, as the principal measures of our operating performance. Management believes Adjusted Net Income and Adjusted EBITDA are useful because they allow management to more effectively evaluate our operating performance and compare the results of our operations from period to period without the impact of certain non-cash items and non-routine items that we do not expect to continue at the same level in the future and other items that are not core to our operations. We believe that these measures are useful to our investors because they provide a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. In addition, we believe Adjusted Net Income and Adjusted EBITDA will assist investors in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented. Our management also uses Adjusted Net Income and Adjusted EBITDA in its financial analysis and operational decision-making, and Adjusted EBITDA serves as the basis for the metric we utilize to determine attainment of our primary annual incentive program. Adjusted Net Income and Adjusted EBITDA may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

Previous wording

Adjusted Net Income and Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted Net Income and Adjusted EBITDA rather than net income, the nearest GAAP equivalent. For example, Adjusted Net Income and Adjusted EBITDA primarily exclude:

Current wording

Adjusted Net Income and Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted Net Income and Adjusted EBITDA rather than net income (loss), the nearest GAAP equivalent. For example, Adjusted Net Income and Adjusted EBITDA primarily exclude:

Previous wording

•certain recurring non-cash charges such as depreciation of fixed assets, although these assets may have to be replaced in the future, as well as amortization of acquired intangible assets and asset retirement obligations;

Current wording

•certain recurring non-cash charges such as depreciation of fixed assets, although these assets may have to be replaced in the future, as well as amortization of acquired intangible assets and asset retirement obligations (“ARO”);

Previous wording

•expenses incurred in connection with the secondary offering of our common stock;

Current wording

•expenses incurred in connection with the secondary offering of our common stock and other shareholder activities;

Previous wording

•expenses and charges related to the litigation, settlement agreements, and other activities associated with our EO sterilization facilities, including those related to Willowbrook, Illinois, Atlanta, Georgia, Santa Teresa, New Mexico and Los Angeles, California, even though that litigation remains ongoing;

Current wording

•expenses and charges related to the litigation, settlement agreements, and other activities associated with our EO sterilization facilities, including those related to Willowbrook, Illinois, Atlanta, Georgia, Santa Teresa, New Mexico and Vernon, California;

Previous wording

In evaluating Adjusted Net Income and Adjusted EBITDA, you should be aware that in the future, we will incur expenses similar to the adjustments in the table below. Our presentations of Adjusted Net Income and Adjusted EBITDA should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider Adjusted Net Income and Adjusted EBITDA alongside other financial performance measures, including our net income (loss) and other GAAP measures.

Current wording

In evaluating Adjusted Net Income and Adjusted EBITDA, you should be aware that in the future, we will incur expenses similar to the adjustments in this presentation. Our presentations of Adjusted Net Income and Adjusted EBITDA should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider Adjusted Net Income and Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP measures.

Previous wording

The following table presents a reconciliation of net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP to Adjusted Net Income and Adjusted EBITDA, for each of the periods indicated:

Current wording

The following table presents a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP to Adjusted Net Income and Adjusted EBITDA, for each of the periods indicated:

Previous wording

(c)Represents the effects of (i) fluctuations in foreign currency exchange rates and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion.

Current wording

(b)Represents the effects of (i) fluctuations in foreign currency exchange rates and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion.

Previous wording

(d) Represents (i) certain costs related to acquisitions and the integration of recent acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in 2018, (iv) professional fees and other costs associated with business optimization, cost saving and other process enhancement projects, and (v) professional fees, payroll costs, and other costs, including ongoing lease and utility expenses associated with the closure of the Willowbrook, Illinois facility. The nine months ended September 30, 2023 includes a $1.0 million cancellation fee received from a tenant in connection with the termination of an office space lease at the Nordion facility.

Current wording

(c) Represents certain costs related to divestitures, acquisitions and the integration of recent acquisitions, as well as professional fees and other costs associated with business optimization, cost saving and other process enhancement projects.

Previous wording

(g)Represents expenses incurred in connection with secondary offerings of our common stock that closed on March 4, 2024 and September 6, 2024, respectively.

Current wording

(d) The three months ended March 31, 2024 includes $1.1 million of expenses incurred in connection with the secondary offering of our common stock that closed on March 4, 2024 and write-off of unamortized debt issuance costs in connection with Amendment No. 3 to the Revolving Credit Facility.

Previous wording

(e)Represents litigation and other professional fees associated with our EO sterilization facilities. Amounts presented for the three and nine months ended September 30, 2023 have been adjusted to exclude interest expense, net associated with Term Loan B due 2026 attributable to the loan proceeds that were used to fund a $408.0 million Illinois EO litigation settlement.

Current wording

(e)Represents litigation and other professional fees associated with our EO sterilization facilities.

Previous wording

(f)Represents the cost to settle 79 pending EO claims in Georgia under a settlement term sheet entered into on December 21, 2023.

Current wording

(f) Represents the cost to settle 97 pending and threatened EO claims against Sterigenics in Illinois pursuant to the Term Sheet entered into on April 3, 2025. See Note 14, “Commitments and Contingencies.”

Previous wording

(h)Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities and are accreted over the life of the asset.

Current wording

(g)Represents non-cash accretion of ARO related to Co-60 gamma and EO processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities and are accreted over the life of the asset.

Previous wording

(i)Represents the income tax impact of adjustments calculated based on the tax rate applicable to each item. We eliminate the effect of tax rate changes as applied to tax assets and liabilities and unusual items from our presentation of adjusted net income.

Current wording

(h) Represents the income tax impact of adjustments calculated based on the tax rate applicable to each item. We eliminate the effect of tax rate changes as applied to tax assets and liabilities and unusual items from our presentation of adjusted net income.

Previous wording

(k) Includes depreciation of Co-60 held at gamma irradiation sites. The three and nine months ended September 30, 2024 excludes accelerated depreciation associated with business optimization activities.

Current wording

(i)Includes depreciation of Co-60 held at gamma irradiation sites. The three months ended March 31, 2025 excludes accelerated depreciation associated with business optimization activities.

Previous wording

(l) Represents the difference between the income tax provision as determined under U.S. GAAP and the income tax benefit associated with pre-tax adjustments described in footnote (i).

Current wording

(j) Represents the difference between the income tax provision as determined under U.S. GAAP and the income tax provision or benefit associated with pre-tax adjustments described in footnote (h).

Previous wording

(m) $25.8 million and $22.4 million of the adjustments for the three months ended September 30, 2024 and 2023, respectively, and $73.0 million and $69.7 million of the adjustments for the nine months ended September 30, 2024 and 2023, respectively, are included in cost of revenues, primarily consisting of amortization of intangible assets, depreciation, and accretion of asset retirement obligations.

Current wording

(k) $24.2 million and $23.8 million of the adjustments for the three months ended March 31, 2025 and 2024, respectively, are included in cost of revenues, primarily consisting of amortization of intangible assets, depreciation, and accretion of asset retirement obligations.

Previous wording

We have three reportable segments: Sterigenics, Nordion and Nelson Labs. Our chief operating decision maker evaluates performance and allocates resources within our business based on Segment Income, which excludes certain items which are included in income before tax as determined in our Consolidated Statements of Operations and Comprehensive Income (Loss). The accounting policies for our reportable segments are the same as those for the consolidated Company.

Current wording

We have three reportable segments: Sterigenics, Nordion and Nelson Labs. Our chief operating decision maker evaluates performance and allocates resources within our business based on segment income, which excludes certain items which are included in income (loss) before tax as determined in our Consolidated Statements of Operations and Comprehensive Income (Loss). The accounting policies for our reportable segments are the same as those for the consolidated Company.

Previous wording

Nordion is a leading global provider of Co-60 used in the sterilization and irradiation processes for the medical device, pharmaceutical, food safety, and high-performance materials industries, as well as in the treatment of cancer. In addition, Nordion is a leading global provider of gamma irradiation systems.

Current wording

Our Nordion business is a leading global provider of Co-60 used in the sterilization and irradiation processes for the medical device, pharmaceutical, food safety, and high-performance materials industries, as well as in the treatment of cancer. In addition, Nordion is a leading global provider of gamma irradiation systems.

Previous wording

As a result of the time required to meet regulatory and logistics requirements for delivery of radioactive products, combined with accommodations made to our customers to minimize disruptions to their operations during the installation of Co-60, Nordion sales patterns can often vary significantly from one quarter to the next. However, timing-related impacts on our sales performance tend to be resolved within several quarters, resulting in more consistent performance over longer periods of time. In addition, sales of gamma irradiation systems occur infrequently and tend to be for larger amounts.

Current wording

As a result of the time required to meet regulatory and logistics requirements for delivery of radioactive products, combined with accommodations that we make to our customers to minimize disruptions to their operations during the installation of Co-60, Nordion sales patterns can often vary significantly from one quarter to the next. In most cases, however, timing-related impacts on our sales performance tend to be resolved within several quarters, resulting in more consistent performance over longer periods of time. In addition, sales of gamma irradiation systems occur infrequently and tend to be for larger amounts. Nordion’s results of operations are also impacted by Co-60 harvest schedules.

Previous wording

Nelson Labs provides outsourced microbiological and analytical chemistry testing and advisory services for the medical device and pharmaceutical industries.

Current wording

Our Nelson Labs business provides outsourced microbiological and analytical chemistry testing and advisory services for the medical device and pharmaceutical industries.

Previous wording

Nelson Labs net revenues were $58.6 million for the three months ended September 30, 2024, an increase of $3.8 million, or 7.0%, as compared to the three months ended September 30, 2023. The increase was attributable to favorable changes in volume and mix of 3.7% and a favorable impact from pricing of 3.1%.

Current wording

Nelson Labs segment income was $16.4 million for the three months ended March 31, 2025, an increase of $1.1 million, or 7.0%, as compared to the three months ended March 31, 2024. The increase in segment income and segment income margin was attributable to favorable pricing and volume/mix improvements in core lab testing services coupled with lab optimization, partially offset by lower volume/mix in expert advisory services.

Previous wording

The primary sources of liquidity for our business are cash flows from operations and borrowings under our credit facilities. As of September 30, 2024, we had $306.7 million of unrestricted cash and cash equivalents. This isa decrease of$10.3 million from the balance at December 31, 2023. The decrease in unrestricted cash and cash equivalents was a result of $113.2 million in cash paid for capital expenditures, $44.0 million in cash used in financing activities, partially offset by $168.4 million of cash flows provided by operating activities, which includes a $35.0 million payment of the Georgia EO litigation settlement in January 2024. Our foreign subsidiaries held cash of approximately $297.8 million at September 30, 2024 and $224.1 million at December 31, 2023. No material restrictions exist to accessing cash held by our foreign subsidiaries notwithstanding any potential tax consequences.

Current wording

The primary sources of liquidity for our business are cash flows from operations and borrowings under our credit facilities. As of March 31, 2025, we had $304.4 million of cash and cash equivalents. This is an increase of $27.1 million from the balance at December 31, 2024. The increase in cash and cash equivalents was attributable to $55.5 million of cash provided by operating activities, partially offset by $19.9 million of cash paid for purchases of property, plant and equipment and $8.1 million of cash used in financing activities. Our foreign subsidiaries held cash of approximately $291.6 million at March 31, 2025 and $259.8 million at December 31, 2024. No material restrictions exist to accessing cash held by our foreign subsidiaries notwithstanding any potential tax consequences.

Previous wording

We expect that cash on hand, operating cash flows and amounts available under our credit facilities will provide sufficient working capital to operate our business, meet foreseeable liquidity requirements (inclusive of debt service on our long-term debt), make expected capital expenditures including investments in fixed assets to build and/or expand existing facilities, and meet litigation costs that we expect to continue to incur for at least the next twelve months and the foreseeable future thereafter. Our primary long-term liquidity requirements beyond the next twelve months will be to service our debt, make capital expenditures, and fund suitable business acquisitions. As of September 30, 2024, there were no outstanding borrowings on the Revolving Credit Facility. We expect any excess cash provided by operations will be allocated to fund capital expenditures, potential acquisitions, or for other general corporate purposes. Our ability to meet future working capital, capital expenditures and debt service requirements will depend on our future financial performance, which will be affected by a range of macroeconomic, competitive and business factors, including interest rate changes and changes in our industry, many of which are outside of our control. As of September 30, 2024, our interest rate derivatives limit our cash flow exposure of our variable rate borrowings under the Term Loans. Refer to Note 15, “Financial Instruments and Financial Risk”, “Derivative Instruments” to our consolidated financial statements for additional information about changes in interest rate risk.

Current wording

We expect that cash on hand, operating cash flows and amounts available under our credit facilities will provide sufficient working capital to operate our business, meet foreseeable liquidity requirements (inclusive of debt service on our long-term debt), make expected capital expenditures including investments in fixed assets to build and/or expand existing facilities, and meet litigation costs that we expect to continue to incur for at least the next twelve months and the foreseeable future thereafter. Our primary long-term liquidity requirements beyond the next 12 months will be to service our debt, make capital expenditures, and fund suitable business acquisitions. As of March 31, 2025, there were no outstanding borrowings on the Revolving Credit Facility. We expect any excess cash provided by operations will be allocated to fund capital expenditures, potential acquisitions, or for other general corporate purposes. Our ability to meet future working capital, capital expenditures and debt service requirements will depend on our future financial performance, which will be affected by a range of macroeconomic, competitive and business factors, including interest rate changes and changes in our industry, many of which are outside of our control. As of March 31, 2025, our interest rate derivatives limit our cash flow exposure of our variable rate borrowings under the Term Loans. Refer to Note 15, “Financial Instruments and Financial Risk,” “Derivative Instruments” for additional information about changes in interest rate risk.

Previous wording

Our capital expenditure program is a component of our long-term strategy. This program includes, among other things, investments in new and existing facilities, business expansion projects, Co-60 used by Sterigenics at its gamma irradiation facilities, cobalt development projects and information technology enhancements. During the nine months ended September 30, 2024, our capital expenditures amounted to $113.2 million, compared to $150.1 million for the nine months ended September 30, 2023.

Current wording

Our capital expenditure program is a component of our long-term strategy. This program includes, among other things, investments in new and existing facilities, business expansion projects, Co-60 used by Sterigenics at its gamma irradiation facilities, cobalt development projects and information technology enhancements. During the three months ended March 31, 2025, our capital expenditures amounted to $19.9 million, compared to $34.9 million for the three months ended March 31, 2024.

Previous wording

Cash flows from operating activities increased $429.3 million to net cash provided of $168.4 million in the nine months ended September 30, 2024 compared to net cash used of $260.9 million for the nine months ended September 30, 2023. The increase in cash flows from operating activities in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to the timing of the settlement fund release of approximately$408.0 million on June 30, 2023 in connection with the settlements of the Illinois EO claims and an increase in operating income of $37.8 million in the nine months ended September 30, 2024 compared to the same period in the prior year.

Current wording

Cash flows provided by operating activities increased $45.8 million to net cash provided of $55.5 million for the three months ended March 31, 2025 compared to $9.7 million for the three months ended March 31, 2024. The increase in cash flows from operating activities in the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was driven primarily by the $35.0 million payment of the Georgia EO litigation settlement in the three months ended March 31, 2024.

Previous wording

Cash used by investing activities decreased $37.0 million to net cash used of $113.1 million in the nine months ended September 30, 2024 compared to $150.1 million for the nine months ended September 30, 2023. The variance was primarily driven by a decrease in cash paid for capital expenditures of $36.9 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Current wording

Cash used in investing activities decreased $15.0 million to net cash used of $19.9 million for the three months ended March 31, 2025 compared to $34.9 million for the three months ended March 31, 2024. The variance was driven by a decrease in capital expenditures of $15.0 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.