Sotera Health Company (SHC) Earnings Call Transcript & Summary

Thanks, operator. Hello, everyone, and we appreciate you being here for Sotera Health's inaugural quarterly update since becoming publicly traded. This marks the beginning of an exciting new era for us. First, I want to express gratitude to every one of our colleagues around the world—they've played a vital role in shaping the Sotera Health we're presenting now. Roughly 2,900 employees embody our purpose of protecting health worldwide, and their relentless commitment has enabled us to keep supporting health care customers throughout these exceptionally difficult times. Since our IPO happened not long ago, some investors may still be getting up to speed on what we do and the value we offer. So to start things off, I thought it would help to give a brief overview of our company. Sotera Health ranks among the top global suppliers of essential, full-service sterilization, plus laboratory testing and consulting for health care. Our three industry-leading divisions — Sterigenics, Nordion and Nelson Labs — bring our offerings to market. Through Sterigenics and Nordion, we keep delivering complete sterilization support to health care customers. And when you put those two together, they represent the sole provider of gamma sterilization worldwide that operates as a fully vertically integrated business within the sterilization sector. Through Sterigenics' worldwide operations, clients can access a full spectrum of contracted terminal sterilization solutions, relying mainly on three primary methods: gamma irradiation, ethylene oxide treatment, and electron beam irradiation. Nordion stands out as a top supplier globally of Cobalt-60 and gamma irradiators, essential elements within the gamma sterilization workflow. Nelson Labs delivers vital laboratory testing alongside consulting offerings to our clients, evaluating product quality, efficacy, patient safety, and comprehensive sterility for medical device and pharmaceutical items. Bringing together almost 200 years of experience throughout our organization, plus scientific and technological know-how acknowledged by the industry, we assist in safeguarding millions of patients and health care professionals globally each year. Now, after that quick context, we can move on to the company's financial performance and a few recent developments. Our IPO took place in November, so it has only been a matter of months since we sold 19% of our outstanding shares to the public and brought in $1.2 billion of proceeds. Most of that money went toward reducing debt. I'm extremely happy to share these strong results today; in 2020, we achieved solid growth. During the fourth quarter, revenue rose 12%, adjusted EBITDA was up 20%, and adjusted EPS came to $0.09. For all of 2020, revenue increased 5%, adjusted EBITDA climbed 11%, and adjusted EPS reached $0.42. The results we posted for the fourth quarter closed out the year, and they made it even clearer just how vital the services we provide are to health care around the world. All year long, our company kept its attention on serving customers, health care workers and patients. We performed critical testing, produced barrier protection like masks and gowns, and sterilized medical devices and pharma products — and we did all of that while keeping employees safe at work for the duration of the pandemic. Across the year, we achieved growth in every part of our business by combining organic growth with efforts centered on operational excellence. During 2020, we continued putting capital to work so that we could satisfy customer demand for additional capacity and testing services. Our capital deployment strategy will stay focused on these sectors, allowing us to put money back into the business for future growth. For example, Nordion and Sterigenics are each continuing to fund strategic programs — at Nordion, that includes three cobalt supply development projects with a long-term horizon, while Sterigenics has nine projects aimed at expanding capacity. Over at Nelson Labs, we expect to wrap up construction on our European microbiological center of excellence before 2021 comes to a close. Reducing debt remains a top priority, and essentially all the money raised through the IPO has gone toward paying it down. That has enabled us to lower leverage to 4.3x adjusted EBITDA at year-end, and we additionally increased the size of our revolving credit facility to provide more liquidity. Looking at our interest costs, the combination of paying down debt as 2020 ended and the term loan repricing we completed during the first quarter of 2021 should translate into annual savings of about $135 million. Across every one of our business units, we're running a number of operational excellence initiatives; this effort has been a priority for Sotera Health and will continue to be one, both because of the operational efficiency gains it delivers and because it keeps driving margin expansion. Turning to our 2021 outlook, since this marks the first occasion we've provided any guidance, I'd like to begin by walking through how we approached it. Rather than breaking things out by quarter, we chose to center on the full year and call attention to the factors we see as most relevant for investors. During these calls, whenever we believe seasonal patterns or shifts in timing would clarify how the business is performing overall, we might call them out. With that in mind, our guidance for the full year 2021 is as follows: total revenues between $890 million and $920 million, reflecting roughly 9% to 12% growth; adjusted EBITDA between $465 million and $485 million, which works out to about 11% to 16% growth; and adjusted EPS ranging from $0.78 to $0.86. Scott will walk through the outlook more thoroughly, covering our qualitative assumptions about trends and what we presently anticipate regarding the cadence. Before I close, I'd like to take another moment to say how much pride I feel in everyone at Sotera Health and what they managed to achieve throughout an extraordinarily difficult 2020. Everyone kept their eyes on the mission and delivered at a very high level. We recognize that, just like the rest of us, a great number of our people faced difficulties in both their personal lives and their work during 2020 as the worldwide pandemic unfolded. We extend our thanks to the team for all their effort and their commitment. Because of that commitment, we closed out 2020 and are entering 2021 from a position of operational and financial strength. To those who invest with us and the equity analysts following Sotera Health, the conversations we've had — both around our IPO and afterward — have been a pleasure, and we appreciate your ongoing backing. At this point I'll hand things to Scott, who will take a closer look at how we performed operationally in 2020, walk through our capital structure, and share additional detail on what we're expecting for 2021. Scott?

Appreciate that, Michael. My plan is to move through the Q4 and full year 2020 financials at a high level pretty quickly, then go deeper by business unit. I'll wrap up with a few remarks about our balance sheet and how we see 2021. Starting with the quarter, revenue was up 12%, reaching $217 million. Adjusted EBITDA rose 20% to $113 million, helped by 330 basis points of adjusted EBITDA margin expansion. That solid operating performance produced adjusted EPS of $0.09 per share, which is $0.04 higher than Q4 of 2019. Turning to the year, revenue increased 5% to $818 million. We drove adjusted EBITDA margins 250 basis points higher, with adjusted EBITDA up 11% to $420 million. During 2020, our interest costs ran higher than they had the year before, and that pushed adjusted EPS down slightly—by $0.01—to $0.42. It's worth noting that the advantages from our recent debt paydown and repricing aren't fully reflected in either the fourth quarter or the full year 2020 figures; on a full year run rate basis, we expect that to move adjusted EPS by $0.35. Let's turn now to how each business unit did. Sterigenics saw revenue rise 11% in Q4, with segment income up 14%. For the full year, Sterigenics grew revenue by nearly 6% and segment income by roughly 9%. When we break down the drivers for the entire year, price contributed close to 4%, and roughly 2% came from each of organic volume growth and the Iotron acquisition. Working against those gains were the downtime at our Atlanta EO site tied to installing facility improvements, along with residual impacts from shutting down Willowbrook. For both the quarter and the full year, segment income margins improved by about 150 basis points, driven by Sterigenics raising capacity utilization throughout the network. Our commitment to funding Sterigenics' future hasn't changed, and that covers emission control upgrades at our North America EO locations and, as Michael noted, nine capacity expansion projects currently underway. Turning to Nordion, fourth quarter revenue was up 18%, reaching roughly $29 million, while segment income increased 29% to $16 million. Looking at the full year, Nordion's revenue came in just a bit lower, down 1%. Meanwhile, segment income climbed by about 7%. It's important to keep in mind that Nordion's numbers can fluctuate quite a bit between quarters, since our cobalt harvesting schedules with suppliers play a big role. That's precisely what played out in Q4, when industrial-use Cobalt-60 harvests happened to be favorable, which gave the top line a boost. Over the long run, swings like that tend to balance out. Nordion's full year 2020 results illustrate this, showing revenue of $115 million — only a modest decrease versus the previous year. On the medical-use Cobalt-60 side, volumes fell 5%, which weighed on Nordion's top line. Industrial-use Cobalt-60 shipments stayed about level for the year, as certain supplier deliveries shifted into 2021. In the Nordion segment, income margins grew by over 450 basis points in both the fourth quarter and the entire 2020 fiscal year, with higher prices and a beneficial mix driving the improvement. At Nelson Labs, fourth-quarter revenue increased by more than 11%, hitting $53 million, and segment income rose almost 33%, landing at $23 million. For the whole year, sales climbed 7% to $205 million, which helped produce 19% bottom-line growth as segment income came in at $86 million. This top-line performance at Nelson Labs was driven by demand for protective barriers testing, which is essential to ensuring that safe personal protective equipment reaches the people who need it. From a margin perspective, the business did extremely well last year, with segment income margins expanding by close to 700 basis points in Q4 and 400 basis points across the entire year. Under Joe Shrawder, the new segment President, the Nelson Labs team has truly taken to our company-wide focus on operational excellence and continuous improvement. What came out of that is a lengthy roster of OpEx wins for the Nelson Labs group that helped drive this remarkable margin expansion. Shifting to our balance sheet. We keep putting money into the Sotera Health platform to advance our mission of safeguarding global health. During 2020, before Q4, the company's overall CapEx levels ran below what we'd normally expect, since the pandemic hampered our capacity to spend on projects that had been budgeted. On top of that, acquiring Iotron gave us yet another chance to add capacity. Our Q4 CapEx came to $21 million, which covered spending tied to EO facility enhancements along with multiple capacity expansions at Sterigenics and Nelson Labs. Across the year, we invested roughly $54 million in CapEx. We've said this previously, and it still holds: we expect spending on investments to rise across the next few years. That money will go toward projects related to improving the EO facility as well as building new Cobalt-60 sources for Nordion, plus continued funding for additional capacity and capabilities at Sterigenics and Nelson Labs. At year-end, our cash balance stood at $102 million, an increase of almost $40 million from the prior year. In December of 2020, we also expanded our revolver, which added more than $150 million in liquidity. When you combine cash with what's available under the revolver, we have $386 million in total, and we believe that puts the company in a solid liquidity position to meet our operational requirements and fund our investments. We carried out significant financing work that led to deleveraging and efforts to cut interest costs. Before we went public, we had net leverage above 7x and trailing 12-month interest expense exceeding $210 million. In December, we said that the bulk of IPO proceeds went toward paying down debt, which included retiring our priciest debt, the second lien notes. On a pro forma basis as of Q3, net leverage fell all the way to 4.5x. By year-end 2020, net leverage had dropped further to 4.3x. We feel good about moving closer to the leverage targets we've set for the long term, which sit between 2x and 4x, and continuing to reduce our debt remains one of the priorities for deploying capital. In addition to that reduction, we recently announced that a repricing of our term loan went very well, lowering our effective interest rate at present by about 2.25%. Combined, the debt reduction and the repricing will significantly impact interest expense. The figure we reported for 2020 was $215 million, and on a full year run rate basis we anticipate interest expense dropping to approximately $80 million, prior to any onetime charges related to the transaction. That cut of $135 million is going to generate quite a bit of free cash flow, and we can steer those funds toward other things we want to do — putting more money back into infrastructure to speed up growth, paying down more debt, or making acquisitions when the right opportunities come along. One more thing: I'd like to add some detail on what we expect for 2021. Like Michael said, we plan to give guidance for the entire year. I'll start with the numbers and then walk through what we're assuming. Looking ahead to the whole of 2021, here's what we're projecting: revenue overall should land somewhere between $890 million and $920 million, which works out to roughly 9% to 12% growth; adjusted EBITDA should come in between $465 million and $485 million, or about 11% to 16% growth; we expect a tax rate on adjusted net income of around 28%; adjusted EPS should fall in the $0.78 to $0.86 range; and on a weighted average basis, our fully diluted share count should be somewhere between 281 million and 283 million shares.

Two more quantitative items deserve mention: first, the year-over-year growth in weighted average shares outstanding stems mainly from our November 2020 IPO; and second, as I noted before, we anticipate roughly $135 million in annual interest expense savings resulting from paying down our debt and repricing our term loan, and that savings shows up in our adjusted EPS guidance. On the qualitative side, here's what we're assuming. We expect the economy to improve and procedure volumes to normalize steadily across the year. When it comes to the cadence of quarterly reporting, 2 key points stand out. First, we've discussed at length how Nordion's results can vary, driven largely by Cobalt-60 harvesting schedules. Given how deliveries appear to be taking shape this year, we believe the split between the first half and the second half will be fairly even. That said, it's always possible that shifts in the Cobalt-60 harvest schedule could move orders out of one quarter and into another. Second, because of when our first year 10-K was filed, with over 2 months of the quarter already gone, we can offer more insight into current quarter expectations than we typically would at this point. Based on what we've seen thus far, we anticipate Q1 revenues between $205 million and $210 million; we expect 20 to 30 basis points of adjusted EBITDA margin compression in the first quarter versus the first quarter of 2020 as we ramp up spend tied to being a public company and satisfying new requirements, such as Sarbanes-Oxley compliance and SEC filing requirements; that wouldn't alter our expectation of adjusted EBITDA margin expansion for the full year. On FX, our guidance reflects exchange rates in effect as of the start of 2021. As I said earlier, we'll keep prioritizing growth initiatives, debt repayment and opportunistic acquisitions we identify throughout the year. And as we've said before, we expect new CapEx spend between $100 million and $110 million this year. That figure includes roughly $30 million designated for special project spend tied to EO facility enhancements and Cobalt-60 supply development. I know that was a lot, and we're glad to take questions during the Q&A. Before I hand the call back to Michael for closing remarks, I wanted to echo what he said earlier about how proud we are of the whole team. Their efforts have helped position Sotera Health strongly going into 2021 and beyond. Michael, over to you.

Appreciate that, Scott. On the whole, we feel really good about how we did in Q4 and across 2020, particularly given the unprecedented difficulties the globe has been dealing with. There's no way I could feel prouder of the people on our team for steering this business through everything that happened, and it brings us a great deal of satisfaction to now be talking with our investors and the equity analysts covering us and asking them to join us on the Sotera Health road ahead. So with that, operator, please let's begin the Q&A portion.

Excellent. And congratulations on this being your debut earnings call, plus a strong set of results right out of the gate. I appreciate all the detail, and definitely the detail regarding Q1. Perhaps we could begin with simply what you are observing across a few of the end markets where you have exposure, in terms of what is driving or shaping some of the top line features of Q1; and perhaps for those among us with wider exposure to general supplies and devices used in surgery and some of the end markets that your customers represent, say, how the ups and downs during the past several months have affected your business when it comes to devices seeing greater or lesser demand, or getting ready for a rebound? And then I have one follow-up.

All right; this is Michael. Thanks for being on the call. I will do my best to answer your questions. So on the volume side, 2020 got off to a fairly good start; and then we began to enter the COVID stretch, April, May, June, July, and we obviously observed, just as you did with some of the other companies that you cover, that procedures declined. In the fall, we began to notice volume beginning to return and beginning to head in a positive direction. And then we experienced that second COVID dip, so to speak, roughly across the holiday season and into January; we had anticipated this as we examined the numbers and how we build, as Scott said during his remarks, and also as we slowly ramp the plan for the year. We saw it coming; so I would say during the fourth quarter, we were performing fairly well, and then volumes began to ease somewhat as elective procedures carried into January and February. And we feel fairly good about where we stand right now in the latter part of February and moving into March. And I would say we observe that throughout our businesses; on the Nelson side, we keep seeing volumes increase and with Sterigenics, more closely linked to the elective procedures I just mentioned; and on the Nordion side, we have experienced a bit of fluctuation around certain areas where shipping things in and out is somewhat harder because of the COVID impact in certain countries. But on the whole, we are fairly optimistic, and it matches what we had anticipated.

That's excellent. Now, regarding how you're deploying capital — good work on restructuring and aligning your balance sheet while lowering borrowing expenses. From what you've explained, I know you've got established priorities for CapEx when it comes to expanding and upgrading facilities. Could you share a bit about where the opportunities lie, possible timelines, or your willingness to invest strategically across any end markets and core businesses during the coming 6, 12 months? Does that factor into the plan? Or does it depend on some of your other spending priorities coming first?

Yes. Matt, we will keep putting money into this business to drive growth. We have strong confidence in the end markets we've participated in. Our standing in those markets feels very solid to us. We'll keep funding organic expansion in addition to inorganic expansion. However, I don't want to overlook what we've communicated to you and the other investors — that our long-term target is 2 to 4x leverage, and we're making solid progress on that path. On that note, another question you might have concerns M&A; we've said that when we examine the large TAMs we participate in, there will be small tuck-in acquisitions we might pursue at certain moments that keep strengthening our capabilities or build upon the ones we already have; keeping that in mind, just as an example, yesterday we completed a deal on the Nelson Labs side, acquiring a small lab whose focus is antimicrobial and virology capability; this simply extends what we already do with Nelson Labs. We believed that would speed up our entries into the marketplace's very accretive deals and assist us on our path to keep growing both organically and inorganically.

Let me add my congratulations on a fantastic — difficult but fantastic 2020. Regarding the guidance, to return to what you said, Michael, about how COVID affected volumes, if we consider Sterigenics' results in 2020, what does that translate to in terms of capacity utilization? I suppose, absent any contribution from the capacity expansions you're currently investing in, how much additional revenue might your current footprint handle in a more typical year?

As we've discussed previously, I can offer a broad figure — 75%, 80% capacity utilization — though it truly hinges on where that facility is located geographically and which modality is involved. Is it EO? Is it E-Beam? Is it cobalt gamma irradiation, correct? The reason is that customers largely determine where our needs lie and what they require us to deliver in terms of sterilization capability; so on the whole, we feel fairly confident about our capacity. Certain regions offer greater room for growth, and we're allocating capital toward expansions there, as I mentioned during our opening remarks.

All right, and regarding the chances to grow margins, it appears that for both Sterigenics and Nordion, those mostly hinge on top-line growth, meaning the benefit really comes through operating leverage. In the case of Nelson, you've carried out quite a bit of optimization since the acquisition. I believe the 2020 results demonstrate that clearly. Could you share some sense of how much room is left for cost reduction or optimization there? Perhaps both for the near term, here in 2021, and then maybe somewhat further out.

Yes. As we've stated on several occasions, we continue to see room for margin expansion in this business. Our emphasis is squarely on operational excellence; and I want to be clear, this is not cost cutting as such. We're not coming in, eliminating a large number of positions, slashing a large number of expenses — for instance, we didn't use furloughs or anything of that kind throughout the global pandemic. This is simply rolling up your sleeves, pursuing operational excellence. How do you achieve better utilization? A few of the items — Scott brought up in his remarks Joe Shrawder and the leadership team at Nelson Labs, exactly how we handle the workflows, exactly how we arrange our media prep areas; we're examining Star Limbs, an IT investment we've put capital behind to enhance workflows. We're examining efforts with Mike and the group at Sterigenics, examining the way they load their chambers, the way they handle turn times, the way they handle advanced shipment notifications. So we continue to see room for margin expansion in this business as we keep driving more operational excellence throughout all businesses; and then I can offer you comparable examples on the Nordion side too.

Sean, it's Scott here. I want to build on what Michael said. Whenever we've discussed what moves margins in each of our 3 businesses, we tend to look at 3 buckets. The first is gains from pricing moves, and a lot of that is tied to contracts. The second has to do with operating leverage, which you brought up. And third, as Michael mentioned, we've got a set of OpEx initiatives underway in all 3 of our businesses. So at least to some degree, we think every one of the 3 businesses can gain, at least somewhat, from each of those drivers.

Great. And congratulations on this first quarter as a public company. Michael, perhaps a quick question for you. A number of investor questions have come our way regarding the EO litigation, its timelines, and what to expect. Could you walk us through that, along with what we should anticipate as the year unfolds and how it fits with your guidance expectations?

Yes. Patrick, thanks for asking. Clearly, since we're in litigation, there's only so much detail I can share. What I can tell you, though, is that our comfort level is high regarding where that litigation stands and regarding the work our teams are assembling for our defense. In the end, however, a trial jury is going to hear it, and risk comes along with that. As things stand now, the timing originally was planned for late in this year for a portion of those trials to occur. Nothing has been officially declared by the courtship, I would say, but the probability is pretty high that sometime in 2022 the first trials will happen. But one thing I want to be sure everyone keeps learning about this entire EO situation is how critical it is to the health care industry. In the U.S., 50% or more of medical devices get sterilized with EO. Our systems are very compliant. It's built into our culture, and we continue to operate with high regard for the regulatory requirements. And I'm really proud of what the team's done, and we're going to keep moving forward and run these businesses like we have for years. We'll keep taking care of our customers who rely on EO for critical medical devices to be sterile.

All right, that's useful. Building on that, I suppose, is there anything new you can share about EO rules in the U.S. now that the new administration is in place? And then, in Europe as well, I believe your view was that the upcoming medical device regulations might give you folks a growth tailwind, perhaps requiring more capacity in that region. Could you maybe walk us through both of those?

Yes. Thanks, Patrick. We're eagerly waiting to do rights on NESHAP. I'd say to you, I wish it had come out in 2018. I wish it had come out in '19. My wish was for it to be released in 2020, and we remain hopeful for a 2021 release. Under the new administration, there was optimism about getting something done during this year's first quarter. Given that today finds us in the opening days of March, I consider that highly improbable. Our hope is that something emerges later this year. Beyond that, we have strong confidence in the solutions we've begun implementing across our facilities. Take Atlanta as an illustration — there, we're achieving capture of 99.99% of the EO we utilize. According to my engineers, the actual figure is 99.9999% of what's used at that site. My sense is that many of the upgrades we've implemented will serve as the sort of primary reference points and starting measures that NESHAP relies on for its more extended horizon rules — though we won't have confirmation of that until the language is actually published. Our practice of staying in dialogue with the folks who regulate us, as we've consistently done, carries on. My hope is simply that they hand down the requirements, letting us go carry them out and beat those targets; at this point, Patrick, we're still waiting on them. It's somewhat maddening, but my wish is that they provide the industry with guidance here sooner instead of later. Still, I have strong confidence in what we're rolling out right now. And when it comes to MDR, Scott, could you take that part?

Okay. Regarding the medical device rules over in Europe, there's a fresh stage gate we're arriving at in May of 2021, and at that point it will be required that either newly launched medical devices or even older ones going through recertification satisfy a different testing standard. If you look back to 2017, when we bought a company named Toxikon Europe, that deal was made in anticipation of rising demand in this space; through it we picked up a leading position in a testing category known as extractables and leachables testing, which we have kept funding organically, and we've enjoyed strong growth across several years there; however, with this new stage gate I just referenced now approaching, we're noticing greater demand in that space, at least based on the pipeline we expect for 2021. And we've built that sort of demand growth into our outlook for the year.

Congrats on getting through a tough and busy 2020. This is somewhat of a follow-up to what Patrick asked about your facility investments and enhancements. Michael, you brought up the Atlanta facility, and you've more or less validated the concept on the new approach there, as you noted, with the 99.99%. What I'd like to know is what sort of cadence or horizon you have for rolling those same approaches out to your remaining facilities. Could that be completed during 2021? Or does it stretch across multiple years? And I assume your answer will be yes, but I'll pose it regardless. Do you feel at ease carrying on with that spending across all of those facilities before the regulations arrive, should they keep getting pushed back?

Yes. David, we're — we have always been at the forefront and a leader when it comes to running these facilities, along with the emission control systems already installed, and our confidence in where we stand remains strong. Atlanta is up and running; improvements are already in place at a couple of other facilities that are close to finished, and then there are others trailing along that same course. Among the major upgrades we're implementing are negative pressure, double scrubbing, and centralized discharge points; so we're proceeding down those paths at a number of our facilities. Our expectation is that this happens in '21, '22 and perhaps stretching into '23 too; however, it's possible the government, the EPA, could impose additional requirements, and I feel fairly good about our position regarding some of those concerns; we're constantly searching for fresh opportunities to keep getting better. So there are additional items we're evaluating too that keep pushing our performance forward at these facilities; yet I feel quite confident about our situation, about what we've put in place and our path ahead, even though the new rules haven't come out yet; we think we will once again be leading in the industry, and keep leading in the industry, with our control systems.

That sounds fine. Turning to the outlook, I was hoping you might clear something up — perhaps Scott can address how much Iotron plus the deal you said closed yesterday will add to the revenue growth estimates for '21. Also, during our pre-IPO conversations, the harvest cadence at Nordion — the timing of those harvests — was supposed to make Q4 a very strong quarter as we exited '21 and moved into '22; based on what was said about Nordion being more level across the first and second halves, it seems that timing might have shifted, and I just want to confirm I have that right.

Sure. Appreciate the questions, Dave; let me take the first one. Regarding our 2021 guidance, we won't give a breakdown of the components right now. That said, if you review what we've disclosed previously, keep in mind that the Iotron deal closed at the end of July 2020. So clearly, there will be a small year-over-year — or rather no year-over-year effect for the period after the acquisition. As for January through July, what we've shared is that Iotron's revenue before the acquisition during those months came to roughly $15 million. And the facility obtained in that deal was fairly mature, in the sense that it had already ramped up to full capacity utilization. You could expect the 2021 contribution to be comparable for those periods. On your second question, I'd say first that the risk is becoming clear for Nordion — there's always some shifting when it comes to cobalt harvest schedules. We've definitely observed that over the recent months too. So you correctly caught our point, which is that Nordion's relative share of company revenue across 2021 will be fairly stable, and that's something our view hasn't always been for 2021.

I want to begin with something about guidance. I'm curious whether you can offer any commentary at the segment level; it hasn't been very long since we built the IPO model. I'd just like to know if any segment commentary has shifted since then; and then, assuming you saw upside, since your guidance sits a little above consensus, but if you saw upside beyond even that, where would you expect it to come from in this year?

Yes. So we don't intend to go into much depth at this point regarding the individual business unit pieces behind our 2021 guidance, but what I can say regarding the broader narrative, regarding all the things we've stated about the fundamental drivers behind each of our 3 business units and the strategic priorities too, honestly, nothing has shifted during the last couple of months following the IPO. And so we clearly have some tailwinds factored in around price and operating leverage. And then also, as both Michael and I said earlier, we're factoring in some steady normalization of volumes — processing volumes in the medical device space. And so clearly, that will have some effect, especially on Sterigenics and Nelson Labs. But all of these align with some of the remarks we've always made regarding what drives the businesses. Michael noted during his remarks that a number of capacity expansions are in progress for Sterigenics, and some of those are going to come online during 2021. And clearly, they will have some effect on our anticipated results too.

Tycho, Michael here. On a broad level, what we've guided to is a 9% to 12% increase in the top line, along with 11% to 16% adjusted EBITDA. Each of the 3 businesses is going to play a meaningful part in delivering that growth across the year. That's really the only additional point I'd offer beyond what Scott said.

Alright; and regarding the COVID situation, you mentioned greater need for services tied to PPE, biologics, and other quantification projects. Could you perhaps address — might you put a figure on that? Is it significant? Might that represent potential upside in the numbers? Then on the flip side, folks have asked us, does any danger exist to that 3.5% to 5% regarding pricing because of COVID difficulties faced by clients? I realize everything is under contract, yet do they possess any capacity to resist on pricing?