Sotera Health Company (SHC) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for being with us. On behalf of Sotera Health, I want to welcome all of you to this call discussing our second-quarter results. Our press release for today, as well as the earnings presentation, can be accessed in the investor section of soterahealth.com. This webcast is being recorded, and once the call wraps up, a replay will be made available in the investor section of the Sotera Health website shortly afterward. Joining us today are Alton Shader, who serves as our Chief Executive Officer; Jon Lyons, our Chief Financial Officer; and Michael Petras, our Executive Chairman. Certain remarks we make during this call could be considered forward-looking statements. What we'll talk about in those statements comes with risks and uncertainties, and because of them, actual results could end up materially different from anything projected or suggested. If you'd like details on those risks and uncertainties, take a look at Sotera Health's filings with the SEC, and also the forward-looking statements slide included at the beginning of the earnings presentation. No obligation is assumed by the company to update any of those forward-looking statements. Also, please note that on today's call, the company will present financial measures under both GAAP and non-GAAP, among them adjusted EBITDA, adjusted EBITDA margin, tax rate applicable to adjusted net income, adjusted net income, adjusted EPS, net debt and net leverage ratio, plus constant currency comparisons. You can locate a GAAP-to-non-GAAP reconciliation covering every applicable past period within the schedules included with the company's press release, as well as in the supplemental slides accompanying the earnings presentation. Assisting us with today's Q&A segment will be the operator. We ask that you limit yourself to a single question plus one follow-up; should you have additional inquiries, please don't hesitate to contact the investor relations team. Having said that, I'll hand things over now to Michael Petras, our Executive Chairman of the board.

Hello, everybody, and thanks for being on our call about quarterly earnings today. You already know from our earlier announcement that Alton Shader stepped into the Chief Executive Officer position on May 26th. I'm still in my post as Executive Chairman of the board and I stay deeply involved with the business, but Alton handles the company's daily operations. Today marks Alton's debut on a Sotera Health earnings call, and we're glad to have him here. It's been a privilege to work alongside Alton over these last 2 months and more, and the smoothness of this handover has been heartening. The feedback coming our way from team members, customers, investors, and other stakeholders has been favorable. A sturdy base has been put in place, and for this wonderful company, we feel the road ahead is very bright. At this point, I'll hand things over to Alton.

Michael, thank you. Good morning to all of you, and thanks for being with us today. To start, I'd like to express my gratitude to Michael for the strong leadership he's shown over the past 10 years as Sotera Health's CEO. The company he's built is a great one. I'm eager to work alongside him in his role as our Executive Chairman. I also want to thank him for the partnership he's shown throughout this transition. Serving as Sotera Health's CEO is an honor for me. The warm welcome from our team members, customers, and shareholders means a great deal to me. My career has been spent in healthcare for the past 25 years. I've consistently been inspired by how much good healthcare product and service companies do in the lives of people worldwide. Finding a company more essential than Sotera Health to the delivery of life-saving healthcare products would be a difficult task. This criticality to healthcare delivery, the way our businesses complement one another, the growth opportunities available to us, and the company's financial strength are among the reasons Sotera Health drew me in. Since I came aboard, I've been impressed by how dedicated our teams are, by the trust our customers place in us, and by the industry-leading expertise that sets our business apart, particularly in the highly regulated healthcare markets where we operate. I'm excited to collaborate with our teams so we can leverage these advantages and sharpen our daily focus on exceeding what customers expect from us; with these strengths behind us, we're well positioned to produce steady, dependable growth. That was evident in what we achieved during the second quarter, when revenue rose 8% on a constant currency basis, adjusted EBITDA climbed 8.7% in constant currency terms, and our adjusted EBITDA margins widened relative to the same period a year earlier. Gains were spread widely throughout the portfolio. Sterigenics carried forward the momentum it established in Q1, posting constant currency revenue growth of 7% along with margin expansion exceeding 50 basis points compared with Q2 2025. Nordion kept performing at a high level, posting 16.7% growth in constant currency revenue along with an increase of over 160 basis points in segment income margin. Nelson Labs came in above what we had anticipated, generating 5.4% constant currency revenue growth. A major part of how Nelson Labs delivers value to its customers involves applying our technical know-how to tackle complicated challenges. When customers face urgent, business-critical matters, they frequently seek out Nelson Labs. That pattern showed up clearly during the second quarter. Given how strongly we performed in the first half, the durability of our business model, and our optimism about the rest of the year, we are increasing our full-year 2026 outlook. Our outlook now calls for revenue to rise 5.25%-6.75% on a constant currency basis, while adjusted EBITDA on the same basis is expected to grow 5.75%-7.25% versus 2025. Ahead of handing things to Jon, I want to take a moment to note several key items from the second quarter. This past May, the private equity firms that previously backed us wrapped up their last secondary offering. As anticipated, they no longer own any portion of Sotera Health. I'd like to express gratitude to those former sponsors for the partnership and backing they provided throughout the years. Their work played a vital role in building the strong foundation that we have today. I also want to update you regarding a leadership transition at Nelson Labs. Joe Shrawder, who served as President of Nelson Labs, retired not long ago, having been with the organization for 6 years. We appreciate all that Joe did for Nelson Labs and extend our best wishes for his retirement. It's a pleasure that Riaz Bandali is taking over at Nelson Labs after a successful period as president of Nordion. Riaz has broad expertise guiding laboratory services entities, which includes managing bioanalytical lab operations globally throughout North America and Europe. That background means he is extremely well-prepared to head Nelson Labs and carry out our growth objectives. Last, our hunt for Riaz's replacement at Nordion is moving along nicely. I take pride in what our team achieved during the first half of the year and feel even more enthusiastic about what lies ahead as we keep implementing our strategy and act as a dependable partner for our clients. Having said that, I'll pass things to Jon so he can go over our Q2 financial performance and revised full-year guidance in more depth.

Thanks, Alton. Before we dive into the quarter, I want to share how thrilled I am to be working side by side with Alton in his new role as our CEO. From the moment he came on board, he's thrown himself into learning our business, our culture, and our customers. I'm eager to team up with him as we keep building on the momentum we have. Now, moving to the quarter, I'll walk through our consolidated financial results, share highlights from each of our business segments, and then talk about capital allocation, liquidity, and leverage. I'll wrap up with some extra details on our revised 2026 outlook. In the second quarter, on a consolidated total company basis, revenues rose 9.2% to $321 million, which works out to 8% on a constant currency basis versus Q2 2025. GAAP net income for the quarter came in at $54 million, or $0.19 per diluted share. Adjusted EBITDA climbed 10% to $166 million, or 8.7% growth on a constant currency basis, and adjusted EBITDA margins widened 36 basis points to 51.6%. Interest expense for the quarter totaled $34 million, an improvement of more than $6 million from the same period a year ago, mostly thanks to the benefits from the term loan repricing and the debt reduction moves we finished in the third quarter of 2025, plus lower interest rates. Counting the repricing we wrapped up this past quarter, we've brought down the borrowing cost on our $1.4 billion term loan by 100 basis points in under a year. Adjusted EPS rose to $0.26 per diluted share, a 30% improvement over the prior year. Now let's look more closely at the segment details. Sterigenics posted strong second quarter 2026 revenue growth of 8.6% to $212 million, or 7% on a constant currency basis. Favorable pricing of 4.3%, better volume mix of 2.7%, and a foreign currency benefit of roughly 160 basis points fueled the revenue growth this quarter. Segment income rose 9.6% to $118 million, or 7.9% on a constant currency basis, while segment income margins improved 53 basis points compared with the prior year quarter. The gains in segment income and margin came from the strong top-line growth, partly offset by inflation. Nordion's Q2 2026 revenue was up 15.8% to $49 million, or 16.7% on a constant currency basis versus last year, mainly driven by a volume mix increase of 13.6% stemming from the timing of Cobalt-60 harvest schedules, along with pricing benefits of 3.1%. As we mentioned on our last earnings call, we anticipated that Nordion's first half 2026 revenue would account for approximately 40%-45% of Nordion's full-year revenue. First half revenue came in above that range, driven by certain shipments expected in the second half that instead landed in the second quarter. Nordion segment income grew 19.2% to $28 million, or 20.6% on a constant currency basis for the quarter, with segment income margins expanding 160 basis points to 56.9%, driven by higher volume mix, favorable pricing, and foreign currency benefits, partly offset by inflation. At Nelson Labs, revenue for the quarter improved 6.3% to $61 million, or 5.4% on a constant currency basis. Pricing tailwinds contributed 2.8% to the top line, while volume and mix added 2.6%, which includes the gains Alton mentioned before, plus a helpful effect from foreign exchange. For the quarter, segment income came to $20 million, which was up 0.6%, or a decline of 0.6% when you strip out currency movements, and segment income margin landed at 32.4%. That margin figure rose 438 basis points on a sequential basis and sits inside our long-term low to mid-30s range. Compared with the same quarter a year ago, segment income margin was lower, mainly because of elevated costs. Now shifting to the balance sheet, cash generation, and capital deployment. During the second quarter, operating cash flow came in positive at roughly $88 million. Capital expenditures reached $46 million for the quarter, funding Sterigenics' capacity expansion projects aimed at future growth, upgrades to the EO facility, Nordion's Cobalt-60 development initiatives, and the clean room expansion at Nelson Labs. Our balance sheet remains in a solid position to back our capital allocation priorities. The net leverage ratio improved further, reaching three times in the second quarter, which is a significant milestone since we have now arrived at our long-term target leverage range of two to three times, and our liquidity is still robust. As Alton pointed out, we are raising our 2026 outlook for both revenue and adjusted EBITDA constant currency growth. Total company revenue is now projected to rise to a range of $1.236 billion-$1.254 billion, which works out to 5.25%-6.75% constant currency growth plus an estimated 100 basis point benefit from foreign currency. Given recent exchange rates, we anticipate foreign currency will act as a slight headwind during the third quarter. We expect adjusted EBITDA to increase to a range of $634 million-$643 million, equal to 5.75%-7.25% constant currency growth and an estimated 100 basis point foreign currency benefit. Our 2026 outlook assumes total company pricing will fall within our long-term 3%-4% range. For 2026, we still expect Sterigenics to post mid to high single-digit constant currency revenue growth versus the prior year. At Nordion, we anticipate constant currency revenue growth in the low to mid-single digits for 2026, with revenue in the second half divided roughly evenly between Q3 and Q4. As for Nelson Labs, we continue to anticipate full-year 2026 constant currency revenue growth in the low single digits. In line with what we have said previously, we expect segment income margin in the low to mid 30% range. Turning to other outlook items. Given the current forward rate curve and the interest savings from our most recent term loan repricing, we are raising our 2026 interest expense outlook to a range of $135 million to $142 million, up from the prior range of $135 million-$145 million. We are also lowering our effective tax rate applicable to adjusted net income to a range of 27%-28%. We continue to expect depreciation to rise in 2026, matching the increase we saw in 2025; on a weighted average basis, we anticipate a fully diluted share count between 289 million and 291 million shares. When we factor all of this in, we're raising the range for adjusted EPS guidance to $0.95-$1.01 per diluted share, up from the earlier $0.93-$1.01. Since a number of important projects are moving ahead as expected and we're now halfway through the year, capital expenditures should land somewhere between $200 million and $225 million. We look for the net leverage ratio to keep getting better relative to 2025. And as always, no M&A activity is baked into this outlook. At this point I'll hand the call back to Alton.

Thanks, Jon. We turned in a robust quarter, one marked by dependable performance throughout our operations and a raised projection for the entire year. What these figures show is how vital our contribution is to healthcare worldwide, the robust alliances we've established alongside our clients, the durability of our enterprise, and the dedication shown by our teams. The possibilities in front of us energize me, and I have every confidence in our capacity to carry out our key initiatives and generate lasting worth for those with a stake in our company. I'd also like to express gratitude to our associates, customers, and shareholders for standing with us, and I'm eager to sit down with a great many of our investors over the coming months. With that, operator, please go ahead and open the line for questions.

Morning, everyone. Chris Charlton here, filling in for Sean Dodge. Appreciate you letting us ask a few things. Alton, welcome aboard. Perhaps we begin with Nelson Labs, since that was quite a solid quarter. Could you give us additional color regarding what drove the gains during the period? Is it mostly a matter of finally clearing away those EHS obstacles, or are other pockets also showing momentum? And what level of confidence do you have that this carries through into the latter portion of the year? Thanks.

Yes. Hi, Chris, this is Alton. Appreciate the question. Yes, we're quite happy with how Nelson Labs performed in Q2, delivering 5.4% growth on a constant currency basis. A handful of customers who had been exploring an engagement with Nelson gave us favorable news, which lifted our numbers during Q2, and our confidence remains solid regarding the fundamental demand present across the market as well as the part we play as a dependable partner for those we serve. Broadly speaking, once more, we feel quite good regarding Q2 results and the way the team stayed dedicated to taking care of their customers and, once again, we're optimistic about conditions ahead as we move through the second half of the year.

All right, that's helpful. Regarding Sterigenics, is there anything further you can provide about the way volumes have been moving within your categories — medtech, bioprocessing, and commercial? From what I recall, you've said before that bioprocessing is a modest yet rapidly expanding piece of the business, while commercial has had a tougher environment. Does that remain true, or has anything shifted in the dynamics among those categories?

Of course. Let me offer a few points regarding Sterigenics. That 7% constant currency growth during the quarter — once again, we're genuinely happy with how it came in. On volume, 2.7% — we feel quite good about that as well. I'd like to draw your attention, along with everyone else's, to the reality that we faced a rather difficult comparison against Q2 2025, a period when we posted 10% growth with a 6% volume contribution. Once again, that team delivered a really solid performance. Broadly speaking, we observe a steady demand backdrop for our Sterigenics business; clearly, we serve an extremely wide range of customers there — more than 2,000 of them. On the whole, we're seeing robust growth throughout that entire portfolio. As for your comment about bioprocessing — yes, it represents a smaller portion of our business, yet we achieved solid growth there, and our commercial teams remain focused on it.

Great. Thanks again.

Thanks.

Hi, and thanks for taking my questions. Michael, it's been great working with you these past several years, and Alton, congratulations on stepping into the new role. To kick things off, Alton, could you maybe take us through what your main priorities look like during your first year as CEO, and then share any thinking on generating further synergies across the businesses, or perhaps an update on commercial strategy?

Yeah, absolutely. Hey, Evie. Appreciate the question. My number one focus in the near term is making sure I grasp the business, build relationships with my team, learn how our processes work, and genuinely figure out where we're strong and where we can get better. Central to grasping the business is getting to know, understanding, and evaluating our talent. Among the most critical things I do as CEO is making certain we have top talent throughout the organization, and that's something I've been digging into. After that comes how we collaborate with our customers. I need to grasp the way we partner with them, the way they see us, and the way we operate across Sotera Health to genuinely create differentiated solutions. I'll touch shortly on that cross-business unit, or One Sotera offering. The final point I'll make before diving into that is that I want to strengthen the customer-focused culture that exists here right now. Genuine credit goes to Michael, Jon, Jason, and the remaining members of our leadership team for creating a culture that puts customers first. Being able to join a company like this is a true pleasure, and I feel lucky to be part of it. I want to make sure every associate at Sotera Health grasps how vital their role is, and that they bring a strong sense of urgency to delivering our solutions and delighting our customers each and every day. That's among my major areas of focus here — simply customer focus, and again, recognizing that we're a service business and we have to delight our customers each and every day. I believe a genuine opportunity for us centers on our One Sotera offering, or our cross-business unit collaboration. Plenty of really solid work has been accomplished over time here, and I think there's additional opportunity — the more I dig into the differentiated solutions we offer, the clearer it is that we perform at our best when we work together.

Excellent, that's really useful. Regarding Sterigenics volumes, I'm aware you mentioned it briefly, and they exceeded what we had projected. So then, from a rivalry perspective, what are you observing in that marketplace? Compared with wider end market patterns, and perhaps you could walk through a few of the competitive wins involving new customers and what direction those are taking.

Absolutely. This is a market where competition exists. Over the past quarter, we have not observed anything materially different when it comes to competition, and I'd say the same for the year's first half taken as a whole. That covers point one. Point two: while assembling our guidance for the back half of the year, we invested considerable time with our team, and doing so genuinely shaped how assured we feel about that guidance; within Sterigenics, no demand deceleration is visible to us; we acknowledge that certain mixed data points have appeared among some providers. Broadly speaking, we view the indicators as rather favorable, and among many med tech companies, we've witnessed quite robust figures during Q2 along with their guidance too. On the whole, competition looks much the same. Our standing in the market remains something we like, and our guidance is something we feel sure about, given where we see the business going.

Excellent. Thanks a lot.

Thanks. I'd like to build on that point. Your company beat your other big competitor, and if we probe a bit into what sets you apart from a blend standpoint, is it tilted more toward EO, where you're gaining, since that's the quicker-growing segment, or is more need coming from those volumes that are headed to EO sterilization technologies rather than your gamma and X-ray? I'm simply attempting to grasp the positives and negatives there, and whether you aren't witnessing — as you mentioned, volumes are fine — but we pick up a lot of chatter about ACA headwinds possibly striking the sector and flowing through. Could that be among the reasons you believe you'd be protected, since it's a more strategic piece or a more essential element of what you deliver?

I appreciate the question. Let me begin by saying I'm only a couple of months into this role, so I might not address every single one of those items you raised, but I'll share my view. First, I can't really speak to the competition and what's happening in their business. What I can say is that I know we are more heavily indexed to the U.S. than to markets outside the U.S. when compared with our main rival. That's the first thing. At a high level, once more, when we go really deep with our teams, we simply aren't observing that deceleration in demand. On the technology front, I've been doing all I can to visit as many sites as I can, and I've been genuinely impressed by what our teams accomplish. Once again, we've been achieving genuine headway on this cross-business unit effort, or in marshaling the entire strength of Sotera Health toward creating solutions for our customers. I'd like to believe we're having an impact there and that our customers are taking note. Grant me a bit more time as I go deeper into this role and spend longer in the seat, and I might be able to provide you a more complete response.

Okay, excellent. From the standpoint of margins, especially with regard to Nelson, all of you mentioned the larger step-up in costs during this quarter. Could you elaborate on what caused those increased expenses? While you're onboarding the clean room expansions and working through that, what's our framework for thinking about it across the back half or even heading into 2027, as utilization and capacity ramp up in those new rooms or facilities?

Absolutely. I appreciate the question. To start, I want to say we're quite pleased with the 438 basis point sequential improvement in margin for Nelson Labs between Q1 and Q2. The team performed very well on execution during Q2. I'd also point out that our guidance for the full year on margin remains in the low to mid-30s range for Nelson. We anticipate remaining inside that band. Once again, the team is doing a solid job addressing what customers are asking for. As has been mentioned, our results in Q2 came in above what we had anticipated. A portion of that expansion came from extra business secured during Q2, and our team truly worked hard to fulfill it within the quarter, which gave us a financial lift. Looking ahead, for the full year once more, we keep guiding toward that low to mid 30% range on margins.

Excellent, thanks a lot.

Morning to everyone. I appreciate you letting me ask, and it's good to be on this call. I'd like to start with Nelson Labs. I was just curious whether there's anything new regarding the validation testing pipeline, what kind of progress you expect during the second half of the year, and how the timing of that effect should factor in relative to the guidance.

Yes, I appreciate that, Ryan, and thanks for asking. Our outlook on the pipeline is positive. There are quite a few opportunities we believe can drive further growth for the business. Even so, our guidance for the rest of the year is shaped by what we currently know and by all the Nelson Labs data we're reviewing.

All right. And then regarding your comment about inflation acting as a margin pressure, it would help to understand which cost increases you're dealing with. Is this temporary in nature? Do they tie back to certain geopolitical developments? Any additional detail would be useful.

Hi, Ryan, this is Jon. I appreciate you asking about that. Nothing out of the ordinary is showing up in inflation for us. What we're experiencing is typical inflation appearing as higher labor expenses, along with the usual categories on materials. Nothing unusual. From any secondary impact tied to the Middle East, we truly have no material exposure. There are a few very small utility-related expenses in Europe, that sort of thing, but nothing of consequence there.

All right, that's excellent. Many thanks.

Wonderful. I appreciate you fielding my questions. And yes, congratulations on the new position, Alton. I'm eager to collaborate with you. Perhaps I'll start with something broad. If you look at the guidance, you lifted the upper end following the beat here. My recollection is that roughly 12 months ago, after your beat, you merely lifted the lower end. So could you perhaps speak briefly about the apparently better visibility you now have, and then, going forward, what makes you confident enough to lift at the upper end?

Yes, Casey, I appreciate that question. Perhaps a brief reflection or two regarding my own view on guidance. The initial thing I'd say is that I'm strongly in agreement with the way Michael, Jon, and Jason approached guidance previously, and I believe you should anticipate a comparable method here. What we aim to do is offer guidance that's realistic and supply our investors with information so they grasp how we view the business and what's happening at the company. That covers the first part. On the second part, clearly, we're quite happy with how the company performed in Q2 and during the first half of the year. At the time we lifted our guidance, numerous factors needed to be weighed. Among them is that we foresee a significant acceleration in growth at Sterigenics during the latter half of the year relative to the first half. Our guidance accounts for that. Another item factored in is what Jon brought up during his opening remarks — the Nordion business. We directed that 40%-45% of full-year revenue would land in the first half. In fact, we came in above the top end of our range. Certain revenues we had anticipated for the second half moved into the second quarter because of customer requests; that too had to be factored in. Once you combine all of that, we examine what we're seeing in our markets. Again, we're near our customers, reviewing our backlogs, and so forth. That's what shaped our 25 basis point increase to both the revenue and EBITDA guide here.

Understood, that helps. Alton, perhaps you could take a moment to explain the wider rationale behind expanding the X-ray capacity that will be coming online during the next 2 years. You've discussed this before — or at least your company has. Are customers requesting this more frequently nowadays? Is the new capacity being built because you expect the market could shift further toward X-ray? Any insight on that, and afterward, what effect on margins would there be once those new facilities are opened and a greater share of volume shifts to X-ray?

Absolutely. I appreciate the question. I'll begin, then pass it to Jon regarding some of those points, since clearly those choices were made prior to my joining the organization. A few points about our new X-ray facility. The encouraging part is that progress is going quite well. We remain on schedule. A number of customers are in validation, plus revenue is beginning to move through that facility starting in Q3, which is among the reasons we feel confident about the increase in growth from Sterigenics during the second half of the year versus the first half. On the whole, X-ray is going quite well. I'd add that, being a leading sterilization provider, we aim to possess all modalities, and we want to provide that to our customers. I'll now pass it to Jon for additional specifics.

Right. The major factor here, looking back several years, is that our largest rival was also installing quite a few X-ray systems. Like Alton mentioned, we were examining that opportunity and making certain we could provide a full range of options to our customers, and going further back, we actually considered going beyond that. We felt it was at minimum essential to install one. The board made a strategic call on this. Normally, as we've told you previously, we aim for a 40% commitment from our customers, and this was a case where we placed a somewhat larger wager. I'm pleased to say, just as Alton noted, the pipeline is building up. That gives us confidence for the second half as we expand from here. We viewed this as a strategic choice and a signal that we needed to establish it in order to have that complete offering. Having said that, we're the global leader in Cobalt-60. We have a strong belief in gamma sterilization, and that remains a vital component of our portfolio moving forward, while X-ray serves more as a supplement from our perspective. Regarding your question on margin, what's excellent about these facilities is that you don't incur much additional fixed cost when you add them — apart from depreciation — when you bring these facilities in. They aren't especially labor intensive or material intensive. The main factor is electricity, which means you can switch them on and off. There's no significant margin effect. In fact, we've already taken on some expense over the past 12 months that you wouldn't even notice in the financial statements, honestly.

Got it. Understood. Thank you, guys.

Thanks.

Hey, everyone. Thanks for letting me ask a question, and congratulations on the quarter. I'd like to focus for a moment on the higher EBITDA guidance. My understanding is that the Nelson Labs guidance was basically kept in the low to mid 30% range. Could you speak to the Sterigenics and Nordion outlook, given some of the changes that occurred in Nordion and the raised outlook for Sterigenics?

Yes, absolutely. Let me begin with Sterigenics. Once again, we delivered 7% constant currency growth in Q2, following 6.1% in Q1. For the second half of the year, we anticipate an acceleration in growth relative to the first half. We have fairly strong confidence about that for several reasons. First, I mentioned that overall demand appears stable in the market, but also, more significantly, our conversations with customers, our review of the backlog pipeline, and so on, give us confidence in the guidance we've issued. Beyond that, we expect a few tailwinds in the second half of 2026 relative to the second half of 2025. The first is that our facility shutdown schedules are favorable in the back half of this year, 2026, again, compared with 2025; we've previously discussed a large customer that used to handle sterilization in-house and now outsources it to us, and we'll see that effect in the second half. X-ray, with our new facility, with the incremental revenues coming online there. All of these feed into the guidance we have, and again, explain why we have confidence in this fairly significant acceleration in growth for Sterigenics in the second half. On Nordion, we expect, as we guided before, low to mid single-digits growth for the full year; we expect Q3 and Q4 to show similar revenues. When you put all of that together, that is what led us to establish and provide the full-year guidance that we did.

Thanks. I wanted to ask about the higher CapEx budget planned for this year — what's driving that bump, and does it affect the expectation for 2027 at all, specifically the step down? Thanks again.