STE - Earnings call transcript Q2 2020

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Operator

Good morning, and welcome to the Steris plc Second Quarter 2020 Conference Call. All participant will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I’d now like to turn the conference over to Julie Winter, Investor Relations. ma’am. ahead, go Please

Julie Winter

and everyone. Keith, good you, morning, Thank

few for As our Tokich, without President information is today’s the call, have strictly consent our Steris open as contains before expressed accurate or rebroadcast Walt Rosebrough, prohibited. we time-sensitive redistribution, is have a do and I Vice and usual, today. of President written Any retransmission webcast caution of we comments. on Senior CFO. words CEO; only This and that of Mike this call of

Some may of without including results in Many could the are statements those made during statements, actual be important limitation, this review those cause to or from forward-looking statements. differ company any not or risk materially company through considered factors of does update and forward-looking the developments. in factors events result a available our The forward-looking as information SEC website. to revise or new future the on Steris’ or undertake securities Steris’ are statements filings filings. described

In call, non-GAAP organic including segment free diluted measures, addition, used. on per cash operating constant-currency and growth revenue today’s will adjusted share, be income, earnings flow, financial

operational Board Additional non-GAAP Directors are regarding greater measures. GAAP release, between including financial these of financial and supplemental financial intent decision-making. to and in transparency management definitions, call measures, the reconciliations in available by information is measures with this and presented today’s providing during Non-GAAP the financial including of analysis used information their

I cautions, will call to those With the over Mike. hand

Mike Tokich

second morning, to the to with morning be Thank performance. everyone. review is pleasure my our of you you, It Julie, and once good again highlights this quarter

and growth of revenue constant-currency volume quarter, the was points XX% organic price. driven basis For XX by

new impacted labor and margin underlying our by customers higher products. was productivity, the points and and increased to costs. experience growth quarter favorably offset to somewhat by success strong continue basis XXX Gross price currency, We XX.X% for from with

last primarily second anticipated we points effective year. quarter XXX XX.X%, EBIT than the favorable revenue, an of in to to from items, increase rate. the earnings and $XXX.X expenses. the compensation of growth, stock per benefiting for from had effective a share, tax margin margin income grew and XX% quarter rate lower due increased expansion discrete XX.X% quarter of basis in to was The diluted the revenue the $X.XX lower quarter benefit was million Net somewhat adjusted tax

sheet, terms we $XXX.X ended with in of of billion million $X.X balance the cash September In total debt. and

$XX.X to declined During planned for Free the $XX.X million, $XXX totaled anticipated million. capital second flow quarter, amortization spending. due slightly capital cash as to million months and six first expenditures was in the depreciation while the increase

However, of timing invested of in capital we not projects. simply half the thought first year, as due have fiscal the we to much as the

$XXX cash As $XX spending to free a result, expectations are our capital million for an full to our by million. $XXX flow increasing expectations we year decreasing million,

With that, Walt? his remarks. Walt I will turn the for call over to

Walt Rosebrough

Michael, good and Thanks, morning everyone.

volume, higher our exceeding growth tax As drive and combined expectations began segments. quarter. our quarter in The last our effective margin from that heard lower above outperformance attainment with the expectations all trend additional rate of the fiscal year you’ve already our meeting continued Mike, earnings in for or four a second to

expect healthcare outlook. fiscal underlying completed, outperformance of primarily prior fiscal is X.X% the of the performance of for due points XXXX business our are The for Starting of up rest growth first year revenue X% as X.X% we from currency XXX of the our X%. impact products. and that well year, as tuck-in have our to to updating the in half acquisitions several basis full increase small revenue, range constant in again to with our on expectations the once now organic Based we we

will they a year. on of we fiscal growth points expect none million full XXX to the transactions our or are material revenue currency $XX While for constant the basis, organic add standalone about combined basis when

quarter revenue year. across $X these of purposes, about second with modeling the your benefited million the For by the second half to balance fiscal from tuck-in be spread acquisitions

segments service seeing growth performance principally across As which Products gives rate and revenue the second year. capital quarter with growth. are ongoing comparisons, improved demand us segment fiscal reminder, steady two driving of strength the Healthcare this and growth from has consumables, fourth some our challenging Healthcare on Products increased organic and improved in are the equipment. a AST the half the caution for

continues the strong have us AST growth, demand. capacity that year and meet demand online is to delivering so increased expansions as customers or allowed that in medical past come the device core our from have

in As you temporarily others the may closed around industry due the to of several gas. by ethylene or operated oxide have oxide been ethylene permanently emissions facilities have concerns read,

to The safe efficient need ethylene patients. sterilization global of the meet and oxide is for life-saving use and life-changing required medical devices critical for

use single using globe the that sterilized devices require oxide. medical are sterilization For ethylene context, XX% around of approximately

XXXX, as items who These devices and volume quarter include up from adhesive impacted been have the by surgical simple of and as picked have modest second as a complex we fiscal Through customers, bandages the kits. of pacemakers closures. as amount

on ethylene additional the second our U.S. running However, limit will full, our are capacity plants ability take half. which significant oxide to in

we coming of to outlook. $X.XX The to from from half, acquisitions our last of in to range diluted expected quarter’s we’ve underlying our we strength the approximately for the pipeline of business $X.XX seen earlier see discussed in adjusted outperformance the this to second anticipate the business share so add half, back up the are across the earnings be the segments outlook now year far business. $X.XX Given and per $X.XX with remainder

excise of no tax the is assumes impact upper The earnings in range quarter. calendar from end device which medical our fiscal our quarter, fourth first outlook the

will the absorb of be first our year, end not. if or delayed calendar we uncertainty, it is Although, the this of around range device repealed believe the tax lower the should possible

work fiscal the short-term are future appreciate half first ongoing year long-term of year record the the and of the of XXXX. continue happen. performance another believe strong the expect for We Steris a had XX,XXX your appreciate making who people We to support Steris, that and is bright. We’ve in and of

take to the the Q&A. you Julie, open may meeting. call happy balance please any have for of We’re the questions for

Julie Winter

comments. you for Mike Thank the get please Walt you, Q&A. Keith, instructions give your on would and and we’ll started

Operator

certainly. Yes,

now [Operator Securities. will comes begin today Instructions] Turkaly from question-and-answer We the session. question JMP the first from And Dave

Dave Turkaly

we I’m I if that’s it for on there you Good driving stay you to at you sentiment? those of any it there on EO Is how how out you’re who any that that the closer to when address? you are. the morning. color Walt, guys Just have then happened? refresh an because you And the problem fear memory, of certainly side. might in clear look was think of have. color our the I thanks curious many terms the plants sure can guess, than actual things you going was Or of issues,

Walt Rosebrough

Good morning, Yes. Dave.

use intents used your using sense, that worldwide, it’s and only globally. I world. for about your question, gas many this about purposes, for First this is because how We to – and around question, makes facilities purpose that have double oxide the nine have? answer first And all answer – U.S., sterilize the the we which guess facilities have to in we ethylene

about that around do this things is And But just view science. in think we facilities. community running make a scientifically live may on about sense. we about is, the of I for Safety is also And And Steris. are that’s we this of us. answer work safety, of than Second around us the the inside conversations virtue safe fear your that one in. we absolutely has talk adamant our that think, happened when people we more going – there are don’t with are lot the that strongest about think question be that and process. to And

safety. to committed absolutely are we So

the have it do – everything I’ll those are call we how end in plants strong ideas we industry, know and We – across best we our terms we way so at the it end about not can deploy or facilities, we better And across for of we just gas. that also of much, handle facilities. because the look look the –

the we at So positive we spectrum. the of think end do are

the plants As to work. we it, roughly do country this around kind of understand XXX

sure And spectrum a I’m there’s full activity. of so,

think applaud both way do I the do conversation FDA and EPA I end to the in will I it most but that’s of not So, has the working think, think I And hard been scientifically up. handle for the scientifically. this And and effort handled process. things manage to

Dave Turkaly

of Great, thank you trying the happening that. in of number on apologize, times, get surgical this finger but you a I’ve my is pulse terms And what still I procedures. I’m of to asked for

a maybe mean, another we I about the and baby sustainable know fear don’t Medicare the little maybe any all, like, growth, there’s do talked boomers know, some strength something constant for hospital commentary little deals. from about currency think had your XX% driving you But small a of number anecdotal is? from how what’s So help customers, it from, you but procedures, bit I and I

Walt Rosebrough

talked for little of most to and is people But as variances that’s out, some to question. healthcare, necessarily over procedures, is those by And more are mean, decide do be you it where can obviously, they not they I something pay payments. Yes. was of by the time, tend driven pointed be for do Those or ability there cosmetic not do. then not case, things, have about it but or tend tend I driven to a less. this They have think, personal more to to reimbursement. healthcare one little pay ability when to this, to less and more we’ve a There this broad are since much a not things.

So in in of will number view, is broad, And it my the very clear procedures continue rising. to that rise. it’s just

we’re baby the – the mid-XXs. of middle generation are now, their right We in is boom

XXs, call back get the it money, so it’s And of still the spend of most half baby to so our in we to generation have, and mid-XXs the we terms the really XXs and healthcare. boom where of I’ll

procedures are So rising. clearly

more there’s more outpatient systems discussed, being to out in outside same procedures at and going complex we’ve the as time, are the done. are hospital busy more type both of And hospital and But facilities, and still more systems. hospitals and

in or that So inpatient. stays for that outpatient, arthroscopic or transplant lungs hearts to something goes, knee every of there’s goes another

the outpatient though not that rising rising the and that is when settings, And settings. drives the So many then you be respects, industry. in hospital Their number even in in the to rise as complexity well. all continues in growth put may complexity the together,

I function of companies reporting strength as seen the have that’s reporting guys And procedures. think, well. medical their and you other a device

Dave Turkaly

Thank you.

Operator

Thank from James. you. Raymond Larry And Keusch with the comes next question

Larry Keusch

morning, Good everyone. Thanks.

Walt Rosebrough

Good Larry. morning,

Larry Keusch

certainly are come concern agree I that with back want their thoughts to in are But, comments there voicing communities facilities EO I EO backyard. and to look, having your there. about the

at I – So was and also just… recognize time, there the same

Walt Rosebrough

Hey, are Larry, very soft up. you breaking and

the So we of did comment. your catch last not piece

Larry Keusch

about sorry that. Yes,

Walt Rosebrough

better. That’s

Larry Keusch

Yes.

So recognize really it. viable EO, are question look, but are I there lack here alternatives voice the for is, and about concern communities of

think what do Where out week? handle this be from comes going situation? the think the So FDA of do the to are Adcom you to suggestions the at you

Walt Rosebrough

will, information. discuss agency Well, of who again, discuss ones who if discuss personal the potential not our doing good thought the better methods, in oxide would see view, asked gathering some other sterilization ethylene who that that meeting requested – to be called presenting those I space. is they speak speaking. they to believe the and in are presenter I The has chose the attend presenters, or order every Larry, there, we you a FDA the like you thoughts, this, to FDA would I is my for to those don’t know to mean, think, if to for alternatives job and ones of our

a future for going know, time, withstand at there activities. the someplace, that is all other use think event, things. because of ethylene the somewhere long-term be particularly radiation. oxide them know that, So moment will largely that on gentle on in is virtually to sterilize to intermediate frankly, And the because what or the certainly agency a by effective choice of the gas that think portion is I any and medical cannot lot in decades of it’s for been we the can for it because is it’s And accept a and of devices hand that we And gas both just makers for of see method certain better sterilization this And certain – ways device now. we single I heat you that that is are of lot and very methods significant use devices. to

for designed everyone’s so designed And around that, that.

significant my opinion, mean, in we discussed. method. earlier non-science long be of were, And a So believe I That have though, continuously a what for improve. that being comments can’t our that I that exactly even time, lot view said, will we a doesn’t in my

for have that, to been that lean processes is and the the technology to our the and one improve The remediate. to that. our in decades improving not And approach And continue We of is typical areas now is a we key manage we and will useless. it’s view to of things. way key biggest

a call years had almost process oxide. sustainable ethylene developed what ago, and so so to we And year a two now, up we or ago, do procedure

less use than is they less, And can up many that some we to obviously. you the customers use year, have accept even lower end XX% have you XX% maybe the seen going because of used, gas. out of gas XX% and of less if gas, And our

in the we semi That’s a obvious that’s idea. be next in we event, seeing think will customers thinking more any couple are more the great of so the and reasons, at discussing one And that’s good a that we agency that of and for things days approach.

much we’ll sterile. gas. same of what use still do so all means, see lower levels So of It’s less the sterile gas sterilization. That’s with can kill get bugs. I the of greater think we but We to level

Larry Keusch

then That’s two for Okay. questions helpful. And you. other

year. think organic revenue about half more Just second help the for deceleration in a currency of us the bit the the implied constant base little

you back of the the if and something midpoints imply use range of like, is XXX points going the inorganic half basis that think, contribution, to take I X.X%-ish.

just declined you. maybe in is, Thank little quarter. the that other flush bit. guess X% how we question think believe again, about Products I So a out And about I backlog, do Healthcare the this which

Walt Rosebrough

Sure, Larry.

pretty last was in prepared a year it time. phenomenal we quarter previous As pretty pretty the remarks, year we in beats the mentioned our beating and of – was of all And phenomenal just forecast don’t top the fourth on phenomenal.

customer. capacity, of full stronger last and a I have pause is customer our they’re to have they another of as take not get flip the strength so our when year, around. move the now, the it’s And our that that, last And fourth more capacity. difficult, if business. use we’re which – And is of one to decide you easy at more is or in minute to to they current strength as lack going mentioned built full, more plants do something things to will at you if are lot of if pretty end related you for of right our not before, a quarter the it It difficult getting to something

buildings job, years. Our guys adding building the have great capacity last a without done several

last meet do at so the to minute And the have ability flexibility but to that. we the we something. have the forecast to do do ability have We in place, we less have move

of quarter, a slip projects out the growth lower only us of quarter. for in little move could of couple to it takes a to It the bit significant have out order So rate.

a numbers in the in your be of numbers what But is much deceleration terms don’t that think the positive. – terms low, the and “implied” I – acceleration quarters, truthfully, pretty about in of worry year we might implied means. the little

have continues of strong have function been two backlog orders our our strong. our last backlog, and shipments And and healthcare as in coming of going is extraordinary a – terms seen, as and out. quite been And result in In pipeline quite have a you orders quarters. the in shipments

little in, of you’re where but levels, couple minute the than think thing, like have dollars something orders we so I a came we this bit or year-over-year. talking that more that And million shipped temporal

Mike Tokich

Yes, Larry, it’s Mike.

If about you past. Walt’s we half in million. X% did the which shipments look, to healthcare $XX equipment first by we in up were our And seen haven’t grow sequentially almost that capital backlog point, year-over-year, is

backlog is why definitely just that year-over-year. slightly So explains down

Larry Keusch

Okay.

Mike Tokich

the is near levels. like, And record backlog the at

up X%. backlog is still total So about

Larry Keusch

Great.

very thoughts. Okay. the much. Thank you Appreciate

Mike Tokich

welcome. You’re

Operator

from you. And Great Jason Review. question Thank next the comes Lakes with Rodgers

Jason Rodgers

far any some at developments the picking steam make on you outsourcing U.S. Yes. that’s up as all. new if just in trend any the I wonder comments could as

Walt Rosebrough

outsourcing. – we about to talking The us Sure. customers continue have to

As models And have and think different reason think we’ve be before, I will there into that in play. the for that been United mentioned track I to the any change expected. don’t that I the that States somewhat have will But we’ve we’re on in revenue still growth revenue various models we UK. they the be that growth revenues expected, view. come we’ve – And

continue grower our same. think So we and see positive business we for still a the to that’s

of one are the we that fact, In in money we again about service is spending talked things the business.

You future of that’s spend we front in people money front in But of in revenues. growth not have to always to growth, to business. spend get have every true for ready

win. future And that so that suspect back the spending half year growth we’ll have in the seen I the we we’ll – we clearly be have see business. will of that ahead of in

Jason Rodgers

spending And by segments, held the speaking back there. the investments growth, quarters? operating the at was future next expectation the few income over for HSS Is somewhat that of looking the

Walt Rosebrough

But of are kind continuing the question The I’m growth few quickly of don’t revenue magnitude, it. to next I I comes the still is double-digit the we expect the next we’re to question to say, that’s would in with how know the case. how and along comes about pretty quickly quarter, orders then continue And profitability. spend is to revenue thinking forward. sure for definitely support quarters, it. going But

It’s that. more So X% we’re where modest something are from conversation we anticipating not not going like, think. I like or it’s to now

Jason Rodgers

you. Thank Yes.

Operator

comes with Stephens. the Chris Cooley And you. next question from Thank

Chris Cooley

quarter. questions taking the second Good morning really congrats a and you strong on fiscal and appreciate

two maybe for me. Just

you growth bit for after here, XQ full while that’s that’s raise to side, event the uncharacteristic I’m little On looking back you. second quarter. for year guidance historically, the

you a have times comp half then different confidence the in So follow-up earnings range, of here here in flow? takes and now quick with maybe help really of this and both morning, at us much that puts and through revenue and as look think you fourth referenced gives quarter just you’ve well. the I of what a all back number this strong And that cash kind we revised a when could

Walt Rosebrough

a to these revenue we and tuck-in we’ve And We mean, I X.X within that that kept those the X.X because of move point we we first needed for discussed Chris. another expect. Sure. points. raise should to moved of and well acquisitions we was the thought all, same. roughly point range what

a that high level, – about really we first the piece at is we with development. description. again, on When indeed that’s side, the business earning the there’s the the simple So component talked

do when of earnings. those plants level in addition we’ve a then tend provide that, and clearly plants running little better. bit full, our So acquisitions But are some run full the That’s do to they seen, to expansion.

we continue haven’t – And and more do more it, we don’t talked to in-sourcing. continue but we – about

in just and that in-source And adding the squares that’s you’re continuing and in-sourcing. – plants, are you’re so to to our addition volume impact, growing because

better. So it it makes even

the So are that’s positive those – the things.

year trade out. we we We haven’t Now, haven’t – half is an the range still in leave only still device same, which but We every we earnings seen still sort the have other a for day out. the roughly conversation. did Brexit year, sort seen to tax go, have

think bank was move in see we coming, is, hand may given just we we it we the what because we in put the up. have occur. we of we orders there’s and in have thought the range a what more left to uncertainty orders So anticipate it the advisable and bit do already as But what

Chris Cooley

of I CapEx But point the there. hopping leverage appreciate that My color. into at cash not mid really the now on couple much year. cash one flow target calls really here delta, additional morning. for final flow we’re it’s going this of to a really I between XX% nitpick healthy like guidance, getting flow. It of is the it’s hard And looks essentially that’s the at cash just Understood, apologize guidance. what’s sales the

about flow it you capacity at to there to good the utilized get, three been continue as over So perspective of, opportunity we think this the from AST. Or investment online I leverage Thank investments the in But dramatically you comes gets I we of when so understand for can you grow to is and together, to guess kind greater kind start we just years, much. there’s spend leverage and forward. made lot as to flow is you’ve cash just think bring a as have next AST. a going of different some cash of as and

Mike Tokich

Mike. Hey, Chris, this is

by But have you’re exact question, did and CapEx not – all the and is we increase guidance do cash So same not we right in what adjust good the we is cash did down you’re seeing free taking we $XX flow million. flow.

of and another is acquisition, the coming roughly costs $XX free impact restructuring there So the are our still to integrations, for impacting million cash flow us.

which I you’re you still if $XX add back for job that generating solid million, a So flow. in another you those solve the help issue cash free nice out, would to looking think of would doing were

Chris Cooley

on quarter. a Congrats Super. Thanks. super

Mike Tokich

Thanks, Chris.

Operator

Instructions] And Matthew the KeyBanc. [Operator with you. question comes Mishan next from Thank

Matthew Mishan

in congratulations Well, the business. really continued strong Julie Thanks questions. Mike, Great. momentum for and on taking

Mike Tokich

you, Thank sir.

Matthew Mishan

capacity? the you’re U.S. a that expanding, that sites sites you EO, in question us the a give you’re e-beam, sense of whether on capacity – and Just opening or could Gamma, breakdown on international not between quick AST, that’s the or

Walt Rosebrough

Yes.

At website. tell so level little on our of Matt. doing we you many, We’re top my tough. that is will announce head, do that breakdown the a of I those

grown say, are can oxide OUS. you U.S. And based. are so have globally openings, we want preponderance growing you at ethylene in the and up details, if both our we and high But website. easily our U.S. capacity ethylene level, based, radiation could a the pick and the not of off in And them I of it oxide both

other more on EO a range. on with to magnitude, expected have X% the which orders is that roughly And of what be, hand, on side, expectation the bit we growth. our But of will faster line radiation X% growth in

have we business, either rapidly continue the in or are e-beam U.S. And even we than so growing and radiation. radiation than our that we expanding much x-ray and all And equal, again, both things being in are cobalt more to. in OUS more are gamma

as complimentary. being those see we And

expanding be speaking, not we’d x-ray locating may that be or well either generally is in comfortable so, more around are And for both as moving That’s in e-beam or the we cobalt have, in said differently, cobalt a And some or we’re comfortable have new x-ray to as also facilities where customers, in reason that or backup the or already one need e-beam, they thing. if the is radiation. customers sites.

it’s combination those events. So of a two

cobalt expect or we speaking, long, But to more of expect of long, time. x-ray, so those radiation. long business a the generally forms in happen we the So of growth e-beam to either see around

Mike Tokich

AST Hey, revenue. if about Matt, EO of just for our you our some total is XX% EO context, business, at look

total for impact some So EO the you year. that revenue and of the context with gives the of facilities our

Matthew Mishan

mean, interchangeable I and that maybe the of x-ray? e-beam could products and Is this there that question. a of same how but I a the bad ask the EO a question tend gamma. or to some versus certain between percentage those, switch EO lot and is

Walt Rosebrough

of one. they and have We that And they EO versus of of to of Yes, do percentage can because radiation know of the specifically cases, term, you for not with gas in There sterilize, are semi either surprise most some wouldn’t can small way. happen both to can is our or get in radiation lack but Having we could with that, own be the product. are, ruin preponderance speaking, kind a short products the one that they are the either the that interchangeable. product product we other. better done they that you sterilize we EO. – answer that said generally methodology. sterilization the, there the it’s wouldn’t sterilize, where sterilize can’t cases, or But actually gas Because

product, ruin while can’t And so we’re obviously, the sterilizing. we

go can high level, So way. XX% maybe at talking level. this – go is but either a ballpark one high not either XX% either a it’s I’d at say, that we’re XX% of could or way, Is with

doing for things So almost possibility, we on every are there a it what useless sterilization, virtually we is some used for substitution in do for sterilization the most is of steam commonly for of reprocessing, industrial, really first of planet, gas said because that’s the in hospitals reasons. industrial pre-packaged use is the form that, we’re in limited. that’s packaged. have true hydrogen where is good but to why for peroxide because It’s The and time hospitals. where and commonly that already variety is irrelevant completely versus steam, example, most same will Having

probably the you work would if it nothing And so and anyway. packaging, else be ruining wouldn’t

So very at a high level, it’s limited.

more And there on packaging the itself, place. the based the Now and the of in when way device you will. you come it put cobalt, again it the cobalt, combination of much if versus there’s is x-ray substitutability to the inside radiation, x-ray e-beam device, versus varies

limited radiation more to versus much So there very substitutability is high radiation a at really is radiation, substitutability gas level. there

Matthew Mishan

do mid-XXs point I where that to you giving appreciate you of about, color previously out? very appears. to bit Have you’ve a we’re moving reached this kind a once kind those get really I And we you about get call. are level up then moving And worried Healthcare into margins, especially little – level. of this on on remember conference business, on talking Products, we’re mid-XXs Okay. now helpful That’s the and all level, just it into actually that

Walt Rosebrough

problem six you’ve been six only a can there I believe covering is for new Matt, long, no too for around or seven don’t years. said haven’t is, us that analyst your seven is we that be answer short been years, The we’re going business we to looking improve. because or

any so carefully. line from there’s and or decide any product and we’re that to price of you risk a to creating point because we you space, And a business, that any for which monitor In business competitors umbrella working take very improvement. always at price other

costs price, you usually, reduce we’re raising production than is because or We we – not faster we’re It’s of our back cost prices, that that’s some not you cutting into that we why, it raising to will, tend place not that if know, profits rise, as prices. prices.

that’s of So mantra. a part our

is determinant You to the or important to start are whether we to remember difficult fact, watching sales you the not that. also have of side ROIC levels is you component, component. on enter this, price hard have other correctly things But or important is in ROS, very more get are to only return compete. certain it’s whether a correct, to of very,

of some are of capital on awful invest products very to have there. lot we those that to get an making so, healthy returns sales, And

whether And that types and working of or is capital also whether we receivables watch kind or of carefully. capital capital, capital inventory very capital, intellectual that spending that capital that capital surely kind property of is,

And I we where it. when end, as we’ll an we with comfortable We’re ago, are. about think maybe I declare not talking get I’m years five we’re about said XX, Well, it. four ready or to talk to

in natural So feeling we’re our business. any cap not

Matthew Mishan

call out there adjacency a small pretty looks nice you good And excellent. has long-term something done particularly I’m what it’s one that deals you’ve that your like? being growth Right. driver, all the any last as that strategy pretty done. – then Of And something the of want a it, to to is that’s

Walt Rosebrough

help various No, tuck-ins, think I one of not them lines. spread of They’re across product are These there. this each will kind at the time.

Products them of HSS, of companies These four time, significant, we than at there’s spread at all that’s buying the was change most we product like that across because was when spread out, four things. products. going not and – even product When three different them instead Healthcare were are one out lines very it’s line it concentrated. are or in one to though, So

– Healthcare it yes. our So does that changing call enhance does I’ll these in Does and world Yes. better? business? to But are customers total, Absolutely, not, our it hospitals our enhance it acquisitions. Products serve ability

Matthew Mishan

you Thank much. right. very All

Operator

with the Keusch from Thank Raymond you. a question James. And follow-up next Larry is

Larry Keusch

But guys maybe alternative sterilization be is many, gas you just years. will going mode certainly of gas? that do that discussion you purely commercial again, Walt, methodologies. have I viable something to suppose around at the there remain to practical Adcom, And any alternates, do certainly I sterilization large for on recognize many be EO a key perspective, out EO developing a or you as there to sort that could alternative a just scale a gas see

Walt Rosebrough

a first discuss that’s all, product product acquisitions development, of don’t Larry, future for kind we to of statement number reason, one. so

We be thought a space. might to We one world. will novel who everyone I of deepest, broadest, decades. and we scale thought about intermediate we are I’m another. and who when something and will us days should how our it, weeks, years that about the for this it’s sterilizer to sterilization change they and as go will are since I’m in if unequivocally oxide commercialize term, a that they be talking, see, see And for of which say to and alternative the we But sterilize in ethylene It if on which in is talking hydrogen habit see own presenting or the an works do widest expect, the alternative, see space, short think a industrial the has is picture has can to coming and/or can it peroxide one you might world. or the view a for way not not used one

Larry Keusch

you. good. Thank Very Okay.

Operator

more present the to at comments. And like as I there management any for floor would no are questions return closing the time, to you. Thank

Julie Winter

look of weeks. again your Thank to the for road forward you we on the joining for seeing in you and and coming everyone support many today us continued out

Operator

has now Thank attending presentation. Thank conference you you. concluded. today’s for The

You disconnect lines. now your may

STERIS (STE) 5 Nov 192020 Q2 Earnings call transcript