Sotera Health Company (SHC) Q3 2026 Earnings Call Transcript

Operator: Good morning. And welcome to the Sotera Health Third Quarter 2026 Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press *1 on your touch tone phone. To withdraw from the question queue, you may press *2. Please note this event is being recorded. I would now like to turn the conference call over to Vice President of Investor Relations, Mr. Jason Peterson. Mister Peterson, the floor is yours, sir.

Jason Peterson: Good morning, and welcome to Sotera Health's third quarter earnings call. Today's press release and earnings presentation are available on the Investors section of our website at soterahealth.com. This webcast is being recorded and a replay will also be available on the Investors section of the Sotera Health website shortly after the call. Joining me today are chief executive officer, Alton E. Shader; chief financial officer, Jonathan Lyons and Executive Chairman, Michael Petras. During today's call, some of our comments may be considered forward looking statements. The matters addressed in these statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Please refer to Sotera Health's SEC filings in the forward looking statements slide at the beginning of the earnings presentation for a description of these risks and uncertainties. The company assumes no obligation to update any such forward looking statements. Please note that during the discussion today, the company will present both GAAP and non GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, tax rate applicable to adjusted net income, adjusted net income, adjusted EPS, net debt, and net leverage ratio as well as constant currency comparisons. A reconciliation of GAAP to non GAAP measures for all relevant periods may be found in the schedules attached to the company's press release and in the supplemental slides to the earnings presentation. The operator will be assisting with the Q&A portion of the call today. Please limit yourself to 1 question and 1 follow-up. For further questions, feel free to reach out to the investor relations team. I will now turn the call over to Sotera Health CEO, Alton E. Shader.

Alton E. Shader: Good morning, and thank you for joining us. Today, we reported solid top and bottom line growth versus the third quarter of 2025. Driven by strong execution. And sequential adjusted EBITDA margin improvement of nearly 100-basis points. For the third quarter, we delivered constant currency revenue growth of 4.4% and constant currency adjusted EBITDA growth of 4% versus the same period last year. Sterigenics continued to perform well. Generating 8.2% constant currency revenue growth and 57-basis points of segment income margin expansion despite experiencing some softness in the med device market during the quarter. Which has continued into the early part of Q4. Nelson Labs delivered another strong quarter, with revenue increasing 9.2% on a constant currency basis as the team continued to execute on complex projects to support our customers' regulatory needs. As expected, Nordion results reflected the timing of cobalt-60 harvest schedules. The Nordion teams did a great job delivering critical cobalt-60 shipments for their customers and expanded segment income margins by 71-basis points. Based on our year to date performance, and our current visibility into the remainder of the year, we are reaffirming our constant currency revenue and adjusted EBITDA outlook for 2026. At Sotera Health, we work tirelessly to help ensure the safety and availability of healthcare products that millions of patients rely on every day. Before John reviews the financials in more detail, I want to provide some additional context around an example we shared on our second quarter call that highlights how our teams make a meaningful difference for customers and patients. As we have discussed previously, customers regularly turn to Nelson Labs when they face time sensitive and complex challenges. During the second and third quarters, a customer of ours faced an urgent regulatory testing need involving a product used in a significant percentage of surgeries performed around the world. The Nelson Labs team quickly mobilized scientific and technical expertise completed the required testing on an accelerated timeline, and helped the customer maintain the availability of a critical health care product. While it is 1 project, The impact was far broader. By helping our customer address a time sensitive challenge our team played an important role in supporting tens of millions of patients who rely on these critical medical procedures. This is exactly what we mean when we talk about putting customers first and delivering on our mission of safeguarding global health. I will now hand it off to John who will walk us through the financials.

Jonathan Lyons: Thank you, Alton. I will begin with an overview of our consolidated financial results, followed by performance highlights from each of our business segments. I will then review the balance sheet, cash generation and capital allocation before concluding with an update on our 2026 outlook. On a consolidated total company basis, third quarter revenues increased 4.4% on both an as-reported and constant currency basis to $325 million as compared to the third quarter of 2025. Net income on a GAAP basis for the quarter was $58 million or $0.20 per diluted share, Adjusted EBITDA improved by 3.9% to $171 million or 4% on a constant currency basis. While adjusted EBITDA margins expanded sequentially by nearly 100-basis points. To 52.5%. On a year to date basis, adjusted EBITDA margins were up 8 basis points Interest expense for the third quarter was $34 million, a $5 million improvement versus the prior year period driven by our repricing actions and last year's $75 million term loan pay down. Adjusted EPS increased to $0.29 per diluted share an improvement of 12% versus the prior year. Now let's review our segment performance. Sterigenics delivered revenue growth of 8.5% to $209 million or 8.2% on a constant currency basis, driven by favorable pricing of 4.8% increased volume and mix of 3.4% and a foreign currency benefit of 30-basis points. Segment income increased 9.6% $117 million or 9.2% on a constant currency basis. Reflecting continued operating leverage and strong execution. Segment income margin improved 57-basis points year over year to 56.1%. In Nelson Labs, revenue grew 8.8% to $61 million or 9.2% on a constant currency basis. Growth was driven by strong volume mix of 6.6% and favorable pricing of 2.6%, partially offset by a 40-basis point foreign currency headwind. Revenue growth exceeded expectations as we saw an increase in Expert Advisory Services at activity in the quarter. Nelson Labs segment income rose 2.5% to $19 million or 3% on a constant currency basis. Segment income margin declined 199-basis points. to 32.1% driven primarily by business mix. Nordion's third quarter revenue was $55 million down 12.4% or 11.5% on a constant currency basis. Favorable pricing of 2.2% was offset by a volume mix decline of 13.7% and a foreign currency headwind of 90-basis points. I would also like to mention that although Nordion's revenue was down for the quarter, it did come in ahead of our expectations driven by earlier than anticipated timing of certain shipments. Nordion's segment income decreased 11.4% to approximately $34 million or 10.4% on a constant currency basis. Margin performance remained strong with segment income margin improving 71-basis points versus Q3 25, to 61.3% driven by operational productivity and favorable pricing. Turning to the balance sheet, cash generation and capital deployment. Year to date, we have generated $228 million in operating cash flow. Including $111 million in Q3. Demonstrating solid generation during the period. Capital expenditures totaled $105 million during the first 9 months of the year, including $53 million in the third quarter. Supporting Sterigenics capacity expansions and EO facility upgrades Nordion cobalt-60 development initiatives, and the completion of a new state of the art clean room at our Salt Lake City lab. We continue to make great progress strengthening our balance sheet Net leverage improved to 2.9x as of 9/30/2026. Within our long term target range of 2x to 3x. This progress was recognized with a credit rating upgrade from Moody's in early October. Now I would like to turn to our 2026 full year outlook. As Alton mentioned, we are maintaining our 2026 revenue outlook of 5.25% to 6.75% constant currency growth, with reported revenue in the range of $1.233 billion to $1.25 billion We also remain confident in our full year adjusted EBITDA outlook. Of 5.75% to 7.25% constant currency growth. With adjusted EBITDA in the range of $632 million to $641 million These reported ranges incorporate an estimated 70-basis point foreign currency benefit for the full year, with foreign exchange anticipated to be a headwind of more than 100-basis points in the fourth quarter. We expect full year consolidated adjusted EBITDA margins to be approximately flat versus last year, with anticipated margin expansion at Sterigenics and Nordion offsetting a reduction in Nelson Labs. Our outlook continues to assume total company pricing for 2026 to be within our long term range of 3% to 4%. We continue to expect Sterigenics to deliver mid to high single digit constant currency revenue growth in 2026. Reflecting recent softness we have seen in the med device market fourth quarter constant currency revenue growth is anticipated to be approximately 6%. At Nordion, we now expect full year constant currency revenue growth in the mid single digits supported by a year to date performance and our demand expectations through year end. At Nelson Labs, based on our year to date performance, we now expect full year 2026 constant currency revenue growth in the low to mid single digits. As we look to the fourth quarter, we expect growth to moderate from third quarter levels while continuing to benefit from the previously mentioned Expert Advisory services activity. We now project full year segment income margins to be similar to year to date levels. Turning to several other assumptions underlying our outlook. Based on market rates, we are narrowing our 2026 interest expense outlook to a range of $137 million to $140 million Our effective tax rate applicable to adjusted net income remains unchanged at 27% to 28%. We anticipate depreciation expense to increase in 2026 modestly above the increase experienced in 2025. On a weighted average basis, we continue to expect a fully diluted share count in the range of 289 million to 291 million Taking these factors into account, we expect to remain on track to deliver adjusted EPS of $0.95 to $1.01 per diluted share in 2026. Capital expenditures are anticipated to be in the $200 million to $225 million range. We continue to expect net leverage ratio improvement compared to 2025. Finally, as usual, our outlook does not assume any M&A activity. I will now turn the call back over to Alton.

Alton E. Shader: Thank you, John. We are pleased with our performance through the first 3 quarters of the year and remain focused on executing against our priorities. I continue to be impressed with our team's focus on delivering for our customers and the essential nature of our offerings across the company. With that, operator, let's open the line for questions.

Operator: Thank you, sir. To ask a question, you may press *1 under touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time a question has been addressed and you would like to withdraw. As a reminder, we please ask that you limit yourself to 1 question and a single follow-up. Please follow-up with the company's Investor Relations if you have additional questions. At this time, we will just pause momentarily to assume our roster. The first question we have will come from Sean Dodge of BMO. Please go ahead.

Sean Dodge: Yes. Thanks. Good morning. Maybe just on the guidance your range for EBITDA this year is a little wider going into Q4 than it has been historically. Is that just a philosophical change that they have to do with something with timing unknowns around Nordion, maybe just kinda why the wider outlook. And then if you could just kind of walk us through what the bigger unknowns are. At this point going into kind of late Q4?

Jonathan Lyons: Hey, Sean. Thanks for the question. I will have to go back and look. I am pretty sure we have not narrowed our EBITDA consistently over the years. I think it is pretty typical range for us if you look over the last 3 to 5 years. You know, and there are some, of course, moving pieces as we finish up the year here. So nothing. Nothing's changed really that led to this.

Sean Dodge: Okay. And then maybe on Nordion. I know revenue was down because the timing around harvest. But if you can share just a bit more detail on how you were able to improve margins. There despite the despite the lower revenue.

Jonathan Lyons: Yeah. No, thanks, Sean. We had some good operational really in the quarter and year to date. We had a couple of things that we had to work through from last year that the team's been focused on just, you know, in the day-to-day execution of the operation. And we have managed to improve that, and that really led to the performance. So really good work by the team to drive that.

Sean Dodge: Great. Thanks again for the time.

Jonathan Lyons: Thanks, Sean.

Alton E. Shader: Operator, can you go ahead and move on to the next question, please?

Operator: Yes, sir. We have Luke Sergott of Barclays.

Luke Sergott: Hey, guys. Thanks for the question here. I guess the. To start off, you guys talked about seeing some softness in the med device side. Excuse me if I missed this. I have been jumping around between calls. But can you talk about the visibility and how that frames into your Q4. But more importantly, what your customers are saying, like, what the bookings or the orders? I know it is more short cycle, but, like, how are you thinking about this flowing through to 2027?

Alton E. Shader: Yeah. Thanks for the question. I will take that 1. So high level, we performed well in Q3 and continue to have confidence in our full year outlook. And I will call out really strong quarters from Sterigenics with the 8.2% constant currency growth and Nelson Labs with the 9.2% constant currency growth. As we look to Q4, we do expect some moderation in the Nelson Labs growth versus the 9.2% we delivered in Q3, but we do expect to that business to grow in Q4. For Sterigenics, we remain confident in our full year outlook for the mid to high single digits of growth but we did experience some softness at the end of Q3 and beginning of Q4 here. And based on what we are seeing in the business and what our customers are communicating to us, we are not expecting the sequential Q4 growth that we normally see and this really informed our guide.

Luke Sergott: Okay. And then I guess from. As you think about that, lack of sequential growth, is this like I mean, look. it is a big question is just how this decel keeps going through or if this is like, you know, are we gonna bottom out here in the mid of 2027 and pick up from there?

Alton E. Shader: Yeah. I mean, our. We are obviously in the midst of our planning processes for 2027 now, and we will communicate what we expect in 2027 during our Q4 earnings call here in, in February 2027. Obviously, we are we are staying very close to our customers and doing all we can to understand the kind of the reduction in optimism that they have communicated to us as we head here into Q4.

Luke Sergott: Okay. Thank you.

Operator: Apologies for the delay, The next question will come from Elizabeth Koslosky of Goldman Sachs. Please go ahead.

Elizabeth Koslosky: Great. Thanks for taking my questions. So wanted to start on Nelson Labs. I know you mentioned the 1 large customer in the quarter. I guess, it sounds like a deceleration is expected next quarter. But maybe if you could help us quantify how much impact that was in Q3 and then what was sort of the underlying growth in that market?

Alton E. Shader: Yeah. So for Nelson Labs, we are we are obviously pleased with the third quarter performance of the 9.2% constant currency growth. Team's doing a really nice job of serving their customers and really helping them out with critical testing and remediation needs. As you mentioned, we do not expect another quarter in Q4 of growth like we saw here in Q3. But we do have a lot of confidence in that business as we move forward. As you know, we increased our guide from low single digits to low to mid single digits, and we did see some strength out of the EAS business here in Q3, and we do expect to see additional growth from that business in Q4 as well.

Elizabeth Koslosky: Okay. Great. And then on the Q4 guide for Sterigenics, like, understand the med the med device, comments I think that is something we have seen on a broad basis. But maybe if you could talk through some of the more idiosyncratic factors, so like the X-ray facility coming on online, the larger customer that was coming online in the back half. And how those should impact Q4? And then also on pricing, that came in a bit above our expectations for the quarter. So maybe just talk through what is baked into that 6% for pricing in fourth quarter.

Alton E. Shader: Sure. So, again, pleased with our results in q in Q3 here, 8.2% constant currency growth, 120 basis points of sequential growth at the at the top line. So team did a really nice job. We have benefited from the 3 factors we have discussed in the past with the favorable shutdown days, the outsourced customer that we have, as well as the North Carolina X-ray facility. So those. They contribute to our growth in Q3, and we expect them to contribute to the growth in Q4. I will note that even though we are talking about a 6% constant currency growth in Q4, we are seeing relatively stable demand in this business. So, we are looking at. You know, we mentioned that we are not seeing the sequential growth that we normally expect. We are seeing essentially a flat revenue performance in Q4 from Sterigenics versus Q3. So overall, while we have seen a little bit of softness here at the beginning of Q4, we have got a pretty stable environment right now, and this is an incredibly resilient business.

Analyst: It has been over the years, and we continue to see that here as we finish up the year.

Elizabeth Koslosky: Great. And then just pricing baked into that? Is it kind of still the upper end of the 4 to. The 3 to 4%, or is there upside levers to that?

Alton E. Shader: Yeah. I mean, pricing in Sterigenics is really been consistent, and it obviously reflects a number of factors that At the top of that list is the value that we deliver to our customers every day. We are at the higher end of that range, and we would expect to stay at the higher end of that range here in Q4 as well. Thank you.

Operator: Next we have, excuse me, Casey Woodring of JPMorgan.

Casey Woodring: Great. Thanks for taking my questions. Maybe just to follow-up on some of the comments around med device. You said that the softness started at some point in Q3. Can we just get a sense of, you know, when in the quarter you started to see that? And then kind of thoughts around, the more recent performance that you are called out in Q4? Know, is there you know, any sort of I guess, chance that things could get worse, and things deteriorate further based on some of the med tech prints we have seen so far this quarter. Thanks.

Alton E. Shader: Sure. So we started seeing some of the soft kind of mid to late Q3. And primarily, that softness came from our European customers So that is been the primary impact that, again, that we saw at the end of Q3 and here at the beginning of Q4. Our guide includes what we are seeing in the marketplace and what we are hearing from our customers. And, again, we are at in Q4 sequentially, we are going to be flat to Q3. So we are not seeing anything really much more than a pretty stable demand environment here. And, again, as we have gone and really gotten close to our customers here, essentially, this is a is a reduction in some of their optimism for Q4. Not uniform across any specific segment or any set of customers. But you bring all the data together and you have got this reduction in optimism. And we have included that in our guide, and we are and we are confident in our guide.

Casey Woodring: Got it. Understood. And then maybe just 1 more for me. Any just update on litigation in terms of, you know, number of plaintiffs in California? Any. Anything along those lines? Thank you.

Alton E. Shader: Yeah. Absolutely. So now, regarding litigation, we have got a strategy to defend the company, and we are executing against that strategy. And I can give you an update on a couple of the key cases here? So in Georgia, we have got a deadline for an appellate decision in spring of 2027, in California. We have got. Our first trials are scheduled for January and April of 2027. And in Illinois, we have got all our cases are assigned to a single judge at this point, and we are in the midst of pretrial proceedings. Thank you. Thanks.

Operator: And next, we have David Windley of Jefferies.

David Windley: Hi. Thanks for taking my question. I was wondering if you could comment on the progress of. You have referenced the large customer, the progress of the outsourcing decision and, execution. And has that event, I will call it, driven or catalyzed any additional conversations of the same ilk.

Alton E. Shader: Yeah. So if you. I am assuming you are commenting on the 1 outsourced customer we talked about previously. that is that is all on track. that is going well, and that was a contributor to our growth in 3 and will be a contributor to our growth in Q4. Our commercial team continues to do everything they can to build our commercial pipeline, and within that commercial pipeline are a number of programs and products that would require customers to outsource. I do not have any specific updates for you around specific programs, projects, etcetera.

David Windley: And could I ask on Nelson, with EAS having shown some strength for a couple of quarters running now, I think, and you are expecting again in the fourth quarter. How are you viewing the mix evolution in that business? Not in Nelson, to be clear. The mix in Nelson.

Alton E. Shader: So just to clarify, we really saw strength in EAS here in Q3. We did not see strength in EAS in Q2. Some of that growth we saw in Q2 was in our core lab testing. So but, yeah, we did see growth here and more growth associated with EAS in Q3 than we had previously. We do expect growth to be driven in some part by EAS in Q4 as well. And how do you expect that to evolve? So in the so going forward. I mean, obviously, let me take a step back here. So we have got a project component to the Nelson Labs business. And within EAS, those tend to be a higher concentration of project based programs. And opportunities. We do not expect long term EAS to be a larger percentage of the business and have this be a consistent mix shift towards EAS going forward.

David Windley: K. Thank you.

Operator: Next we have Ryan Halsted of RBC. Please go ahead.

Ryan Halsted: Good morning. Thanks for taking my questions. Sticking with Nelson Labs and following on the strength, in that segment over the past few quarters being somewhat, you know, broad based across the different business lines. You know, can you just confirm how are you viewing that business, from. In the lens of, cross-business unit selling? Do you kind of see this as opportunity to cross sell And how are you executing on kind of your, you know, your kind of refresh strategy to really try to drive that XPU strategy?

Alton E. Shader: Yeah. Absolutely. So the cross- business unit opportunity is significant for our organization. We have got approximately, 70% of our Sterigenics and Nelson Labs revenue comes from shared customers, and we obviously need to focus on penetrating these accounts with our full offering, and Nelson Labs absolutely will benefit from this work. We would expect over time core lab testing to benefit from the work that we are doing. Across business unit. And we have got a number of initiatives in place now to drive this growth across the overall organization, which again, Nelson Labs will benefit from.

Ryan Halsted: Great. And then turning to capital allocation. Can you just confirm are you on track to complete all the facility upgrade investments? And then just looking ahead, obviously, you are now within your leverage range. You know, how are you thinking about capital priorities into 2027?

Jonathan Lyons: Yeah. Sure. So we are on track to complete the EO facility enhancements here in Q4 or be completed here in Q1 27. So team's done a very nice job of that. We are also pleased with our progression of our balance sheet. So we are at 2.9 times net leverage today, and we are within our long term target of 2 to 3 times. And our approach to capital deployment is ultimately driven by where we see the best opportunities to create long term shareholder value. And we have not materially changed our approach. We continue to prioritize the organic growth investments as well as strategic M&A opportunities where we can drive clear value with a focus on sterilization services. We will continue to work with our board to evaluate the full range of other capital deployment opportunities, including share repurchase, debt pay down, etcetera. But, ultimately, we are going to deploy this capital to the areas where we think we can optimize our long term shareholder value.

Ryan Halsted: Great. Thank you.

Operator: Next, have Jason Bednar of Piper Sandler.

Jason Bednar: Good morning, everyone. A couple of follow ups here from us. Just on some topics that have been discussed this morning. So first maybe the obligatory question on the med device topic. Alton, you mentioned I think the softness was mostly tied to your European customer base. I hope I did not hear that wrong. But have you seen any shifts in volume demand from your U. S? Customer med device customer base? Or is that more stable? And then I just want to be clear what you are seeing is specific to end market volumes and September that persisted here in the fourth quarter. it is not a function of channel destocking like 1 of your peers has been referencing with their business.

Alton E. Shader: Yes. Thanks for the question. So again, we saw the softness starting in Q3 and extending here in the Q4, and it is primarily in Europe. So we are we are seeing the softness more in Europe than we are seeing here in the US. And when it comes to segments, again, it is. I mentioned this before, but it is not uniform. So within our customer base, we are seeing variability across the segments and end markets. But overall, the balance here is we are seeing an overall reduction in optimism from our customers in Q4. And I think that is pretty consistent to what we have seen from a number of the med tech companies who have announced their results over the course of the last few weeks and it. it is pretty in line with what with what we are seeing externally here.

Jason Bednar: Got it. And then a bit of a follow-up on the prior question. Can you talk a little bit about your CapEx plans here? I think you are in the past, you have referenced a significant or a meaningful step down in spending now that you are through a lot of these facility investments, you are rolling off some other big CapEx projects. As we think about the magnitude of inflection in cash flow next year, can you give us any guardrails to think about what this actually looks like? I think Street's modeling like a $50 million step down in CapEx. Is that a fair number? Would you have any lower or any higher than that? Just trying to get a sense as we think about 2027 cash flow.

Jonathan Lyons: Yeah. Hey, Jason. Thanks. Good to appreciate the question. We definitely see a meaningful step down in CapEx next year We are well on track. To deliver the free cash flow objective that we laid out at our Investor Day of $500 million to $600 million, of free cash flow over the period. You know, 1 of the moving pieces is just seeing exactly where we land this year. Then finalizing our plans with the board on the different programs. So we expect a meaningful step down. it is a little premature for me to tell you exactly how much, just given the uncertainty related to just closing out the year. We feel good about the execution, but you can always have a few moving pieces as we close out the year and then, again, finalizing the budget with the board.

Jason Bednar: Alright. Understood. Thanks, guys. Thanks.

Operator: Next, have Michael Polark, of Wolfe Research.

Michael Polark: Hi. Good morning. On the topic of the software medical device, customer trend in Sterigenics out of Europe heard. You know, we have heard labor strikes, war, government budget tightness in Europe. And so we can corroborate that. But it sounds like you are not seeing or saying anything in the US. Are you bracing for in the guidance for Sterigenics, bracing for any US softness, or no? Is this modeling contained to what you are hearing out of your European customers? Thanks.

Alton E. Shader: We are seeing relative stability out of the US at this time. And everything that we, again, are seeing from our data we are seeing in the first month of the quarter and what we are hearing from our customers is captured within our guide. And again, you know, that 6% constant currency growth in Sterigenics translates to a relatively stable flat revenue from sequential from Q3 to Q4. Again, I will just highlight the fact that you know, over time, the Sterigenics business and really Sotera Health overall has been incredibly resilient. Through different economic challenges. And, you know, we do see again, some of this softening. Here in Q4. But overall, feel like we have got a handle on it, and the business remains very healthy and strong.

Michael Polark: On expert advisory services, I am recalling from a couple years ago. When growth was significant. If I am recalling correctly, it was attributed at the time to some regulatory actions that customers were dealing with. So recalls, remediation, stuff like that. That create a tough comp. And now we have rebased and growing again. Is there a thematic behind the uptick that you would have us think about or no? it is a project based business and you know, you kind of dropped out last year, now you are growing off of that. Just any more color on what is driving the rebound there, I would appreciate. Thank you.

Alton E. Shader: Sure. I mean, this is a this is a project based business. And the team has done a really nice job of responding to the needs of our customers. And again, some of these projects did come into the business here in Q3, and we do expect additional business from these customers here in Q4 as well. I mean, we are very focused on having a durable business here in Nelson Labs. And focused on ensuring that we have core lab growth within this business. We have had a number of initiatives in place, including new commercial leadership within Nelson Labs to ensure that we are best in class commercially here and, again, got a lot of confidence in the team to drive durable growth in the business.

Operator: Okay. We will go ahead and proceed. To Brett Fishbin of KeyBanc.

Brett Fishbin: Hey, guys. Good morning. Thank you so much for taking the questions. Sorry to beat a little bit of a dead horse here. Just had 1 more question on the med device comments. I wanted to ask if the slowdown or softness you are commenting on in Europe, is this very broad based across the customers? Or would you say it is more specific to a few different product areas or customers in Europe where you may have more concentration?

Alton E. Shader: Yeah. This is more broad based. Again, we cannot say that it is happening with every customer that we have in Europe, but it is not it is not limited to just a couple. So, again, it is not uniform across specific segments. But overall, when you add up the information that we have, the conversations we are having with the customers, the data that we are seeing, there is there is softness there overall in Europe.

Brett Fishbin: All right. Great. And then just 1 more question on the X-ray facility project, which I believe is now online. I was hoping you could just provide a little bit of an update on how the ramp has gone so far and then how you are doing in progressing towards filling more of the overall capacity on a longer term basis there? Thank you so much.

Alton E. Shader: Sure. So we continue to be optimistic with our investment here in the X-ray facility. In North Carolina. We had a really strong Q3. We have seen a bit of softness here in Q4 in that facility. That said, we have got a very strong pipeline, and we are confident that we are going to be able to continue to improve the utilization in that facility.

Operator: This will conclude our question and answer session. I would now like to turn the conference call back over to Mr. Shader for any closing remarks. Sir?

Alton E. Shader: Thanks, operator. So we delivered another quarter of solid financial performance, and, I wanted to note that I have enjoyed being on the road and connecting with many of our shareholders. And I look forward to continued engagement in the coming months. As we move forward, we remain focused on delivering outstanding service strengthening our customer partnerships, and delivering value for both our customers and the patients that they ultimately serve. Thanks for your continued interest in Sotero Health. Take care, everybody.

Operator: And we thank you, sir, and to the rest of the management team for your time also today. Again, the conference has now concluded. Thank you all for attending today's presentation. At this time, you may disconnect your lines. Thank you. Take care, and have a great day, everyone.