Good morning, everybody. Hi, I'm Dave Windling with Jeffries Healthcare Equity Research. Appreciate your interest and attendance in Jeffries' 2026 Global Healthcare Equity Conference. Also very pleased and appreciative of Sotera Health's attendance and participation. Michael Petras, the company's CEO, outgoing CEO, has joined us. Michael, thanks for being here, and I was going to start there. So you did make a leadership change announcement. Tell us about what makes now the right time. Why are you comfortable in handing the reins over, and what brought the company to this decision?

Yeah, so great, David. Thanks for having us here. Before I start, obviously we'll make it forward-looking statements. We refer to our SEC filings for descriptions and details, you know reconciliation of some of the adjusted EBITDA and some of the other numbers in terms that we may have you could refer to our filings but again thanks for having us here today as david mentioned on our last earnings call we mentioned transition that i would be moving over to the executive chairman job and alton shader will be taking over as the ceo alton is here today in the crowd he's been he's been on the job a little over a week uh so alton's going to be having a chance to meet with a bunch of our investors today so we're thrilled to have him here and you know this is something i've been talking about with the board for quite some time david i i you know my personal opinion is eight years two terms is kind of the right term for ceo and just bring fresh eyes and perspective to the business and so you know we had talked about that in 24 and some things happened you know the board and i decided to defer that discussion and then later in 25 we started to pick it up again and uh and ernst and trying to get to a place we are today We're really thrilled with Alton as the leader. Alton's got 20-plus years in health care med tech experience. He comes from Viant Medical, which is a contract manufacturer. Just about every customer that he has is a customer of Sotera Health today. And just really thrilled with having him on board, his match with the culture of the organization, his commercial skill set, his growth mindset. Those are all big factors that the board and I looked at in evaluating and bringing Alton on. So Alton started last Tuesday, and I'm moving to executive chair role. I'm still heavily involved. As you know, I'm a large shareholder of the company still, and this company's got great prospects. We've grown 20 straight years, and we don't see that stopping anytime soon.

Got it. So most people in your position would have savored the opportunity to divorce yourselves of having to deal with guys like me. So Alton, sorry about that. From a strategy standpoint, you touched on this a little bit, Michael, in those last comments, but are you foreseeing any changes or alterations in the strategic focus, strategic outlook for the company with the change in leadership, or is it pretty much all systems same and go?

Yeah, I mean, listen, we've got a strategy. We go through a strategic planning process every year. it actually is starting now, Alton's going to have a chance to spend, he's been spending time with the team already, but he's going to spend time, concentrate efforts around the three-year strap plan, and this all comes together then for a board discussion we'll have with our board every August. Listen, we have a pretty solid strategy that doesn't mean you can't get better, it can't be accelerated, and you know, we expect Alton to bring value add to it and figure out a way to just enhance that over time, but we don't see wholesale changes in the strategy from where we sit today.

Okay. In terms of recent performance moving to the business, in Steri and I think in Sterigenics and I think Nelson, January and February, you described as being a little lighter with some acceleration in March.

Perhaps talk about the progression of activity and momentum in the business as we move into the middle of the year. yeah so we're sitting here coming off the last earnings call we said that you know we gave the guidance we gave around was around Nordian we'd said about 40 45 percent of the revenue would happen in the first half we said that in the second quarter that Nelson would have slight growth over a prior year and we said sterigenics would have similar growth on a currency basis to what they had in the first quarter and I could tell you you know a lot of investors asking me the question today there's a lots of noise around med tech and healthcare i can tell you today we're we're very confident in what we communicated just several weeks ago in the quarter and the total year outlook um so we you know we're we're seeing continued progress in the business and you know particularly with nelson some of the things going on and the validation testing area that we signaled in our last call that we're seeing women around so i would just tell you overall reaffirming where we were you know uh several weeks back uh what we're seeing for the second quarter in the total year we're in a pretty darn good spot okay fantastic so Alton's not going to screw that up we've already had that conversation multiple times right right um here are the keys don't wreck the car um exactly the the first quarter there was some call out on on weather related activity in the industry um you know again you you had I think

talked about January and February being a little slower should relative to your comments that you just made about med device should we think about the issues being like the weather impact being customers having difficulty getting volumes to you or is it more at the kind of their pull through demand level that procedures didn't happen therefore you know the system didn't need their product yeah it was a combination of both i mean it started with it started with the customer and markets you know the procedural volumes were a little softer in january february because of because of the weather.

You heard that from many providers out there, which then flow downstream into some of our customers, being able to get product to us as well. We see that coming. We'll recover that volume over time, most of it, we think. But overall, we're not seeing that kind of noise, if you will, in the second quarter.

Okay. On the flip side, are you seeing, you kind of alluded to this, but are you seeing that volume come back to you in the second quarter, or is that something you expect to be stretched over more time?

Stretch over multiple times, particularly the sterigenics business is where we felt most of that impact. And as I just stated, you know, we see consistent with what we talked about several weeks ago with the revenue guide and constant currency basis being consistent with what we saw the first quarter. Focusing on sterigenics and thinking about that end market, again, you've already referenced the noise a couple of times. apart from seasonality how do you think about the longer term medium to longer term outlook for commercial activity with your sterilization clients yeah so if we kind of step back and look at our three businesses we got nordians the cobalt business we got sterigenics our largest division which is sterilization we have nelson labs which is our our testing in analytical chemistry i'd say we have the least visibility on the Nelson side, we have the most visibility on Nordea because you're out working with nuclear utilities and you know when the cobalt's going to be harvested and you've got a plan for that delivery to our customers. And then Sterigenics has some visibility, you know, several weeks and quarters out. And when we, you know, one of the things that we talked about the last earnings call, people wanted to know, just like last year, People said, hey, we're not sure you're going to be able to deliver a back-end loaded plant. Well, we did it last year, and we're telling you we're going to do it again this year. And some things that we gave some sound bites to to make sure that investors understood, there's a couple factors that are going into our confidence. One, we're having conversations with our customers in some of the demands that they have on truckloads and things that they need the back half of the year based on what they're seeing has been pretty consistent with us. We've got an x-ray facility, which will have a small contribution in the second half that'll start to contribute we've got one customer that had large in-house ethylene oxide sterilization they decide to outsource that we'll start to see a little bit of the impact from that late in the year and then the fourth thing is you know we had several days out in the first half of the year for maintenance improvements and facility enhancements that'll be less of a drag in the second half year so those are the four things that I would tell you that should give you some confidence around what we're seeing in sterigenics for the rest of the year interesting so on the that's helpful um good list the the customers that are pointing to that second half i guess a couple of questions follow up on that one is is is it your

sense that any of that is uh will pivot or toggle on the underlying environment you know you like lower volumes do their volumes come back in terms of surgical volumes at the at the end market would that move those you know those those customers off of that inflection in the second half second part of that question would be to what extent do you have firm order on that or kind of take or pay type protection on on that volume so you know if the man were to fall off dramatically yes we'd feel that impact right you know customers aren't going to just finally ship us product without their end demand but we don't we don't see that happening we feel pretty comfortable in what we've signaled and the answer your other part of your question about take your

pay. There's a significant portion of customer base within Sterigenics that does have take care pay. We haven't disclosed exactly what that number is, but that does give us some confidence as well as we move throughout the year. I mean, listen, we provide a critical service.

Our customers need our capacity to be able to provide the safety that's needed to patients in their care, and we provide that that safety net for them in a more general sense you mentioned your x-ray facility you're investing i think still bringing on a second green field you are working in kind of the nordion business with expanded partners that you could harvest cobalt from how do you think about the longer-term landscape of, I'll call it modality mix, in sterilization? Is there a change or not a change?

There'll be, you know, changes. I would just tell you, overall, the common theme to what you just described, the investments we're making, is growth. Business has grown 20 consecutive years, and we see that growth continue in the future, and that's what we're planning for. As far as modality, you know, across all three businesses, right, the testing, the sterilization, as well as the cobalt supply, As far as the modality shifts, you'll see some shifts over time, but we don't see dramatic shifts. And we're making sure that we're a full provider across all modalities to our customer base and making sure we're able to hit their needs. At the same time, we're making small R&D investments around some new evolving technologies that are less mature but more niche-oriented. But we're also going to make sure that we have those options over the years to come for our customers as well.

Okay. In Nordian, I want to kind of understand the supply-demand equilibrium and how your investments with, I think, the Westinghouse reactors would relatively affect that. Like, is demand far outstripping supply currently?

Yeah. So demand is not outstripping supply currently. So thanks for that question because I think there's a lot of misinformation out there. We're in a pretty darn good spot for the last several quarters where we've been able to supply all the demand for cobalt. And we anticipate being able to do that for the rest of the year. Now let me step back a little bit and address a couple of words you threw in there and what we're doing. So we've got, you know, when we look at supply chain planning and capacity planning, you know, remember what happens in this business we rely on nuclear utilities that primary purpose in life is to generate electricity okay and in that what they do is they also make cobalt for us and we pull the cobalt out at the point of when they're doing refurbishments or maintenance of their facilities that's when we pull out the cobalt we've got a global base of supply so canada's our largest base and our most tenured supply base, we buy it from Russia, we buy it from India, China, Argentina. And when we look at the time horizon in that business, we're making decisions seven, ten years out based on what we know reactor life cycles are, when the utilities are going to be taking them out. So, you know, we know that one of the utilities, OPG in Canada, one of our largest, most stable suppliers, great partner to us they've got a reactor called pickering that's going to go out of commission here in the short term and we have now worked with them to develop darlington which is a reactor that will now start to make cobalt okay that that was part of the strategy and then the second one that you referenced is westinghouse westinghouse gets us opportunity longer term so today there's a limited number of utility reactors that can make cobalt around the world and westinghouse gives us access to a new platform using our technology in conjunction with Westinghouse to go to utilities to make cobalt in PWR reactors, pressurized water reactors. That would be a new reactor platform, an existing reactor platform that has not made cobalt before. And again, we've started to ramp that up. We haven't got any production out of it today. It'll be closer to 2030 when we get it. But again, we're sitting here in 26. We've been planning for this for several years. And the intent there is to make sure we have supply long-term to meet the growing demand for cobalt in the sterilization. Because about 30% to 40% of sterilization within the Sterigenics business is cobalt-related, which is so critical coming out of Nordeon. Sorry, David, I said a lot there.

But hopefully that's helpful. I think this is an interesting topic. I'm going to pause on it for a second. So can you give us a sense of, like, how many Westinghouse reactors are out there operating, installed, and how does it compare to the current base that you're fishing in?

Yeah, so today, let's just say there's less than 30 reactors around the world that are making cobalt, and the Westinghouse has a much larger installed base of hundreds of reactors. Now, it's not just simple, like, here's a battery. Go plug it in this reactor. It's going to start making cobalt. it's a pretty long development cycle we've got the technology proven out with westinghouse now we go to utility and the utility has to go for a license amendment request with the u.s nuclear regulatory commission and they're basically saying hey i've got a safety protocol in my reactors that makes that makes generate electricity today we want to now insert cobalt in here start making a byproduct here all right so this isn't something that once it's proven out you just go plug it in all over we will control the ramp of that it's got to be something that works for us Westinghouse and the utility so right now we literally have

one utility that we're working with that has one reactor to start with it's gone for a license amendment request in that over time as we see demand we will engage additional utilities and reactors got it so it gives you a long target list exactly um does that also in the long run in in so much as it really hasn't and you you assured me of this early on but like the russian russia ukraine conflict hasn't proven to be anything that really clipped your supply but to the extent that not only does westinghouse give you opportunity for additional supply is there also a risk protection risk mitigation element to

that opened avenue yeah yeah obviously we're in a geopolitical landscape that we play in we buy cobalt from russia india china argentina canada that's something that we always think about when we look at diversification of our supply base you know when i first joined the company in 16 it was pretty much canada little russia today we've got other bases that we we looked at to diversify the company and we'll continue to do that this this happens to be one opportunity to do that you know But we've done a phenomenal job. I give credit to the Nordeon team and the work that they've done to work through and make sure we're compliant with all the rules and regs on this critical isotope.

Let's move on to Nelson. We did some back-of-the-envelope math and I think we arrived. I actually arrived at a different number, and Jason corrected me.

So I think this is a good one, that your core lab business in Nelson was about a mid-single-digit grower in 25. in 26 you're looking for i think somewhere in the two and a half to three percent neighborhood growth is that is there a decel in there and and what are the the various factors influencing that that outlook yeah um so let's let's step back what really drives that business is you know routine sterilization volume new product spend venture capital spend and new regulation those are the things that really drive that business and you know nelson's able to to work through and and help customers get you know products and make sure they're safe and meet the regulatory requirements so when you step back and look at you know we see this business slight growth um here in the in the upcoming quarter the quarter we're in today second quarter and then you know we see growth throughout the rest of the year so we can get to the low single digit numbers that you're referencing overall we feel pretty darn good about where we're at because of you know some of these tests are more short term in nature just routine lot release and then there's more complex testing and validation tests that that are you know based on new regulatory changes or things of that nature that the customer needs help with you know you know i was telling one of the investors this morning and i had a call you know not too short time ago a customer called said hey we got an fda issue here and we need we need you and we need nelson labs to help get our products to market

that's what we're great at we're really good at helping solve those problems and those are the of things that customers come to us for and when we look at the long range of that and be able to connect that with the sterility plans and sterilization it's it's really value added that we create for our customers so overall we feel pretty good about where we've guided you for the second quarter as well as the rest of the year on that point i'm going to hover on that one for a second so this problem solving um responding to fda inquiry fda issues is there a cyclicality to that for example i'm wondering and i don't have as much perspective on the devices on on the pharma side but fda has obviously gone through a period of some you know some disruption

change in leadership is is that something that potentially stimulates more scrutiny more issues more you know need for those solutions yeah let me answer that in multiple aspects so you know within that business we have a consultant business we've talked about in the past rca which has had peaks and troughs all within the last year right the best year in the history you know the the the lowest year in the history that that segment within within nelson labs that that's really driven by fda activity and some issues that customers may be having what i was alluding to just moments ago was more more where we could help customers with this problem which could then lead to ongoing business for us after that when they see our ability to help solve that so and that's a key part and then the other thing I would tell you is just when new regulation comes out right when you have this new med device or you have this existing med device in new regulations additional safety measures the FDA wants around that device that's where we really excel and helping make sure these customers of ours are compliant with those new regulations so the FDA involvement David is across multiple fronts when they elevate their audits and things of nature we see elevated yes and it could come back down which is what we saw with rca but then there's this more you know just when they put in additional

regulations that require compliance that that creates an opportunity for us okay um while we're on this also the like the expert advisory services rca was an acquisition you've made a couple other acquisitions since coming public um the you know maybe challenges in the in the demand environment might have quieted that activity down, but going back to the top and change in leadership, M&A has not been as active. Is that something that resumes? You know, it's something that ramps back up.

Yeah, so I'd say when we look at M&A, it's also part of where you are in your capital structure and everything, and the timing wasn't right for us to do some M&A. We didn't see the opportunities that lined up with our capital situation and the market opportunity at that point in time. We will continue to look for M&A. as our cash flow becomes more available. We'll look at, obviously, Sterigenics has lots of opportunities around that and opportunities to continue to accelerate growth in that business. But those are tradeoffs we'll make versus buy ongoing and making sure we're good stewards of capital.

And one more, coming back to Nelson. I forgot this one, but there's a complementary, you touched on it a little bit, between Nelson's capabilities and things that can then roll into regular sterilization volume with sterigenics, and you have your cross-cell initiatives that you've ramped up. Can you give us a sense of how much of Nelson's business is tied to sterigenics and maybe vice versa, how much of sterigenics growth is caught by Nelson?

Yeah, I'll just give you a couple high-level figures. I would tell you about 40% of Nelson's business is generally wrapped around sterility assurance. And I would tell you about 20% of the revenue, approximately 20% of the revenue is tied to embedded labs right within the Sterigenics facility. So there's strong correlation. We think there's real opportunity. We've showed it in our customer satisfaction scores, which, by the way, we just recently reviewed our scores for 2025. We had phenomenal numbers again. And the CrossBU customers continue to be delighted. I think that's really one of the opportunities I think Alton will bring a lot of insights to in his experience on the commercial end and working with a lot of these same customers we see opportunities to continue to accelerate that cross bu opportunity and the value prop there's several things that we're working out the team right now of how to increase our penetration with key customers around some of the services jointly we could offer between sterigenics and nelson guys that are doing sterilization but not doing as much testing with us and then vice versa okay Okay.

Coming back to balance sheet, you mentioned capital structure. You're on track to achieve your LRP targets for free cash flow over the three-year period, I think $500 or $500 to $600 million, and improving your profile there. How do you think about deployment of capital as it becomes more available?

Yep. Thanks for calling that out. yeah we we committed at our november 24 investor day for the time period 25 26 27. we would do 500 600 million free cash flow i'm telling you today we're still very confident our ability to deliver against that when we look at capital allocation the the number one priority would be organic growth the second would be m a and it's strategic m a that fits along our strategy and then the third one the third and fourth would be you know do we do buybacks or or do we go ahead and pay down debt Our net leverage ratio is around 3.2 times. We're trying to get it down below 3. So, you know, as we start to free up that capital and start to look at where we would deploy it against those other two priorities after we get through the first two, that's still something we'll work through depending on where we sit today. You know, one of the things that, you know, we looked at quite honestly is, David, and I think we talked about this briefly last time, you know the pe folks uh owned about 31 million shares about 12 percent of our stock coming out of earnings call and one thing we seriously considered the board was do we go ahead and and and buy the remaining some of the remaining tail shares that were left well fortunately the demand was so strong we didn't have to get in the middle of that so all those shares were bought out by the public markets which was great and you know we kept our our powder which is which is super one of the other things we've done since earnings that maybe you didn't notice we also reduced our our our debt by 25 bps uh we're down the sofa plus 225 you know so that's down about 100 bps from where it was last year when you look at our interest expense between a little pay down we did as well as refinancing we've we've got about 14 million dollars of interest expense so we're just constantly working against that uh how do we get to more free cash flow in the business and we see that accelerating as capex comes down as well thanks for that and for clarity the interest expense number the 14 million is the is the decline that's the savings number yeah between the the rate coming down as well as the slight payback that we did last year that on an annual so coming out of last year was about 11 million dollars we told you run rate and then with this latest 25 bips it's about another 3 million so it's total 14 million dollars okay think about it that way um on the uh moving to the the litigation here quickly before we um before we end there was a recent announcement out of california on a on a summary judgment is there an opportunity for the company to appeal or what are generally speaking next steps yeah david these these this litigation takes many twists and turns throughout uh throughout the process the trials are set for january and april of 2027 now we've got a strategy we're working uh we we we submitted a summary for motion judge a motion for summary judgment as you referenced we lost that we understood where it was in the timing of this process that the probability of getting that victory at that stage was low but there were a couple things we wanted to make sure we got on the record as part of our strategy and what we're most hopeful is this judge continues to focus on science and if he does that we feel pretty darn good about the prospects of us winning in those trials but listen it's a state court there's risk in that and we're going to continue to evaluate that as a board as we look through this but overall we're going to be well prepared for the trials in january and april and while we're on it you've had some progress in georgia um the the phase one phase two process is generally i think fallen in your favor yep you give a similar update there yeah so would you reverend basically the experts um the quoted experts from the plaintiff side weren't able to show causation which is pretty darn critical in these cases and the courts found on our side on that which is what we've always said that if you put science front and center we're going to prevail and that's what's happened thus far the plaintiffs are going to appeal on you know that that process is taking a little longer than most people would think it should take i think we'll have the outcome of those appeals phase one and phase two i won't get into too much detail what that is sometime spring summer of 2027 but again if science is front and center we feel very good because there is no causation proof that ethylene oxide these low levels are causing the cancer that's being alleged here yeah um is so the this process

through the the uh courts the legal um progress is the word i'm meant to use progress through the courts um is encouraging the case counts in these various regions seem to continue to kind of grow is there an event or a time lapse that would put a cap on that like what would what would prevent the case counts for real yeah i i won't get too much in the detail but there's this thing called statute of limitations that come into play and then there's folks at different you know i can't speak for planning firms on how they think about these things but there's some actions that they take that can have an impact on why you see case counts going up at any given time but at the end

of the day if it's junk science and that gets proven out in the court that's junk science i don't care what the case count is we'll we'll resolve these at the end of the day there's no causation here, and we're going to keep fighting that, but we've got to get the courts to see it the same way, and so far in Georgia, they are.

Got it. I think that brings us to the end. Thanks everybody in the audience for your attention, and Michael, thank you for being here.

Thank you.