STE - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the STERIS plc Fourth Quarter 2020 Conference Call. All participants 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 would now like to turn the conference over to Julie Winter with Investor Relations. ahead. go Please

Julie Winter

and Chad, everyone. Thank good you, morning,

usual, President and today's President CFO. we our call, our Rosebrough, and Walt have CEO; Vice As Senior on and Tokich, Mike

we a information expressed time-sensitive is written without is or accurate today. STERIS of And rebroadcast webcast of that few strictly as consent redistribution, do comments. This of have caution I prohibited. the before Any open only of for contains call words retransmission this

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

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

financial Additional definitions, these measures, non-GAAP on available release, with regarding reconciliations GAAP and is along between information today's including measures.

with are management financial the measures this operational to in and decision-making. the of presented financial their transparency during Board information providing greater Non-GAAP and intent by call supplemental used financial analysis

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

Mike Tokich

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

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

million tuck-in constant A and service. strong our acquisitions total is experience and revenue from consumables spread of primarily currency capital, to health growth, organic customers continue in in success care across with We growth included new products. from products, $XX underlying

of that on the limited timing negatively to have and margin We Gross costs. XX revenue our fourth quarter. for estimate a business XX.X% fortunate to our higher million. impacted were during points year-end, impact $XX to had was the was net a offset we approximately and due basis Given relatively productivity increased labor the by impacted somewhat price, by quarter by favorably COVID-XX

tax to expense EBIT and was quarter from compensation due, our XX.X% to expenses was year, This a in in strong benefit basis fourth performance the an quarter incentive increase the the for of relating decrease of spending. last rate discrete points favorable increase quarter effective adjusted compensation R&D other The includes in to part, XX higher an items. related margin the XX.X%. related stock and to in revenue,

$XXX.X on moment Net go-to-market quarter income focusing per discuss our X% operations want better press some reviewed key customer the management release. to do changes increased providers. grew $X.XX. and the to take to health serve in share structure changes made our announced changes care strategy, care health our a in yesterday's largest of segment million to We These recently our to customers. our our realigning and group include to earnings I management

business, the the April is be Healthcare Services will now Healthcare. Products Specialty Effective simply as way segment, reported segment consistent viewing and and current the and management with one X, Healthcare called operating and combined

you quarterly the for XXXX to fiscal a release press modeling. results of included have year assist We recast in your with

million, company. ratio a Our access our Considering a positioned X.Xx position and debt-to-EBITDA, standpoint. liquidity continued well are leverage of to for balance is a lines the from available sheet below strength credit source we cash $XXX.X of

while amortization million, quarter, expenditures totaled During and $XX.X capital depreciation million. was the $XX.X fourth

driven Free reduction capital spending receivable. cash during due our where by uncertainty year we a expectations capital, spending to Given the impact the to the the COVID-XX, for steps capital could lower-than-planned primarily one quarter. and of was flow took exceeded of of accounts the first we in pause working

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

Walt Rosebrough

everyone. and you, Thank good Michael, morning,

our to are been get moment unprecedented Before the the I challenges take facing times caregivers gratitude and to providers front and These our into those like a would performance, I health unexpected monumental. to have of pandemic. the care lines express this on

I would the to out in our behind our their They essential with busy fulfilling mission each other, the thank I'm has working way our and a this factories, the and and crisis, caregivers world. those field together and healthier team with create also those our to those services. own scenes to helping homes. impressed like during are customers come people, support offices from our labs, in working increasingly safer products and

we to long-term STERIS, clear, have approach At business. a running the

are this and If last we pandemic well closely our our above-average groups, and it confident This decade deliver philosophy successfully for first has believe, through will will the are over we those as see do come customers well. through jobs two us several to by guided we plus, people. Our significant returns followed our us challenges we shareholders.

on to areas for We biologics. be we focus believe care, what strategy growth have vaccines, health chosen to in procedures, a

to balance While we in nature, we our procedures, revenue. be in to to believe downturn are we business recurring and capital have equipment of exposure good terms in of and not these temporary developed the areas mix to which immune a a nice

and a and to been delivery supply decade, protect for more on-shoring have have quality, service lean better Finally, than we employed our product in-sourcing cost. reliability improving techniques and and chains

a As a we've result, long-term had run. positive

our in has economy. significant far, disruption fared well the the so comparatively amidst global business And

this is say completed, safe to pandemic. For phenomenal, the it XXXX, were year fiscal celebrating we record-breaking not for just we be would it

the revenue S&P profitability, a very of very puts been year first enviable solid forward challenges with the We had another to rates have the in ended XXXX. repeat and an growth broke strong the face balance today. sheet $X time, mark in record and and the year billion looking to position strong growth XXX, revenue joined would before in This us performance fiscal for us

a constant we've investments on health all tuck-in made benefit mostly the currency basis XXX and as acquisitions organic This all basis in products. solid X% XX% performance XXXX small of a as in grew as with across in well our points growth Revenue approximately fiscal from result was businesses care of reported segments.

led Our pack, organic constant growing XX% year. AST currency the the revenue for segment

we've pharma We beyond. year, medical setting, personal segment customers. gowns As demand and and for strong like continued devices our has PPE AST and will medical in in fiscal experienced those our continue the this insulin use glucose like for gloves be from this device facilities the run, process XXXX blood for pumps and currently growth in long monitors. plan see that and in for home discussed Demand investing business increased core in to all view, we

see like devices implants. begun We to in declines have, procedure-related time-deferrable however, orthopedic

had this outstanding as revenue a again. year, organic providers begin year. despite constant currency health expect comparisons doing growing relatively be We to procedures Specialty difficult with prior short-term Services these Healthcare XX%, phenomenon the another care

to their see our our impact outsourced maintenance U.S. in decline offerings insulated comprehensive impacted in more by was fourth has Specific the success across of our instruments. COVID-XX, We of of of instrument as while repair our business for downtime procedures, advantage of a the the took relatively spectrum to continue quarter, reprocessing business been customers many

the so or due a across you procedures expect, decline to reduction America. last As March in in significant saw year-over-year into of and nonessential week we the might April,

COVID-XX. in but business constant had organic currency full on XXXX, followed sales Sciences than anticipated, lumpy this cadence typical better exceeded basis. growth to Life growing in fourth growth high Capital least, upward year due In single a consumables, fiscal year partially at a was XX%, spike revenue an to the a we our double-digit year expectations. equipment our quarter, which low with saw XX% all in

in But stocked level to have growth to to to XX% appear growth return expect for orders in customers coming Science our up, strong pharma a We've our continued Life resulting more fourth of we normalized quarter months. the Some in in consumables. see April.

challenging currency franchise. had And growth new year consumables finally, our and continues comparisons capital with infection revenue particularly constant growth from X% Organic Healthcare to to Products XXXX. prevention stem strong also organic in equipment products, fiscal against a

from which I XXX revenue products. acquisitions to added significant the a COVID-XX earlier, experienced growth. is annual the Products endoscopy pandemic, points dozen approximately Healthcare addition, the particularly loss or most from basis segment this the mentioned most with tuck-in acquisitions, In year, this Offsetting in as so impact our half immediate

volume the XXXX and increased fiscal positive over combined represent of gross our segment. for to XX.X%, end impact reflecting offset less share per points full improved this fiscal record acquisitions, STERIS COVID-related and of expectations high basis other total $X.XX, quarter, reductions each margin the fourth in in Adjusted growth a for diluted expansion. XX essentially earnings recent the Adjusted XX% For to were year operating XXXX. the margins the

us solid well with results, which, We addition these sheet, are future. pleased balance the position for to very our in

of procedures, fluid, at business making high-end remains care are impact As the are on we X% or we for this impact offset COVID-XX demand. of XXXX. by daunting severity are from in will many health linked the fiscal X% revenue impacted that you've pandemic, to depend of the for STERIS rates the others, to the Where our of of time. The profit experiencing growth COVID-XX have not would pullback areas heard and our been revenue and comfortable not increased traditional the forecasting confident of at

quantitative of to year and will the views guidance qualitative share we progresses. guidance, lieu In revisit as our expect

a is fiscal Great across provider pharma is we customers, as the during device, X%. that our We will Recession XXXX, it be XXXX, in Even was business which, healthcare decline months coming source of year of revenue the strength and fortunate are believe, our as diversified our and medical quarters. worst

decline that our revenue the we period Great about care decline year. uncertainty be X% during Recession, was fiscal quarters and we had years. contained at three impact different downturn. And worst declined at beginning of economic XXXX, may the calendar This look happened our recall, four few health Obamacare you spending That that other the going with for If spread time. it in revenue consecutive things of of on the over combined a to the quarters

capital time we than at that The was equipment in that today. of more we are equipment, capital heavy preponderance and decline were

In earlier, Healthcare of mentioned performance Life business, somewhat March, in from offset well and I AST. declines our experienced so fared to we relatively As positive our far. by month businesses modest neutral the Science

XXXX In positive Science versus April, AST. XX% return total for This and performance Life beginning Healthcare of with to than again stronger less are April we of On in resulted deposit STERIS note, decline a April procedures. revenue in see a in we XXXX. saw neutral a declines

gradual and are calendar Similar possibly to end While we levels sooner. we this we of expect anticipate back to early in our this encouraged space, ramping by up the are the leaders. on, be year by discussions having hospital others with we return more normalized to

ready to start Given will or back expectation are that so, volumes our customer in up people standby to meet financial procedure our quarter underutilized strength coming ramp the needs. on our and

not We paid are have short-term instituted although furloughs. on layoffs, some

available as point, full-time they paid At to not is ramp they for wage every will hours, up normal or are We procedures are this regular people work full salary the our support one do or time. thing right at as of as to working levels. help long this they this our normal us being time their whether customers and basic their working to is believe

we We and to organization, have skilled highly skill set. that and and committed maintain grow in our people want

will to continue normal be until week-by-week we're more and levels, business as resumes able appropriate. adjust hope taking We to position this to it but

canceling our capital. some increases, a significant freeze hiring for routine slowdown. include travel to for growth events, protect deferring expenditures near-term most restricting We implementing from have capital These actions cash travel positions, executive strategic except deferring flow the wage and taken

part, most are customers. service the running been our have operations and our support and For plants to

are We some of and facilities limited below have operating shutdowns capacity. had normal some

our levels at particularly strategic continue intend to reprocessing. We continue R&D AST to normal growth in spending, in and outsourced capital invest and

that We continue intermediate believe longer-term. pay will in off these to and the investments

strength mentioned, of sheet Mike our strong As a remains company. balance the

priorities allocation We dividends in anticipated unchanged. paying future remain drive to to growth. plan and our continue to capital Our invest businesses

even become those Our evaluate buybacks near-term but discontinued lastly, opportunities. more for the been to expectations, and share deferred visibility of to M&A And compensation. for offset activities selective executive continue dilution lack have for we have now, due to

essential As care. business health know, an supporting is STERIS you

fortunate and be the a in in strong very are our be to procedures and We nimble to business support we're customers financial be position. as in We ready to to restart. clinical need

disinfect provide health to on this crisis. be We front pleased with able care to relief during solutions to some very lines the hospital respirators are

support. balance STERIS we continue of of to We thank the longer-term the We as enhance value working and company long-term you the opportunities. continued with our impacts is the all bright, your short-term your for future believe of pandemic for

Q&A. turn will Julie to over I call now the for back

Julie Winter

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

Operator

you. Thank

question-and-answer go question begin Mishan The now KeyBanc. Instructions] Please will first session. with come will [Operator Matt We from the ahead.

Matt Mishan

the handling that the and The your backlog in capital was XX%, XX% the how Products. – decline thanks the Does understand be like have I reflect overall like than reflect Does you should of your remarkable, more especially to like – customers seems eight Thank like for than the wanted around exposures, guys. orders new been questions some out, last of we kind Walt, Healthcare And pushed but shipped? Great. less your not over weeks? like the April less – how given orders a backlog? it bit equipment thinking taking like for and about are how it up little just

Walt Rosebrough

shipments out by orders – plus been has and coming minus going there. already in backlog mean, I is, Yes. was whatever definition,

new business sterile it to or last turn a project minute a through a operating business where health replacement where couple a think kind coming or very a one for section because you're all those of new reflect projects other opposed for care, call into Typically, month are as to department. light table because have time. So business, divided one broke or because you're ordering not weeks of our want the in major things. capital central you It's something does renovating they're we or of if room pushouts us or just it's what about or you on their common a

is or XX-XX in slow a much them replacement is We've project. in steel costs type whenever projects or to keep in the on times the uncertain they actually, – hospitals the business. this once down become capital, and turn that's a ground, And business steel need finish too because the several ground, XX% forward project split, XX% bit It moving if typically, seen stop. the the to

they slow On visibility the a down other until going get bit to hand, the what little turn business on. tends is to more

necessarily some that's economy. so or is not it happens an kind thing expect saw pressure. but hospitals, to And the times that hospital economic a see something we've well, under typical many, the general we constraint – of when financial in would seen care many health economy, that We If slowdown anything, for the similar. financial

– date. We've seen seen not pushouts, cancellations rare. are not have super to significant significant We that

the replicated cancellations. last have any months. seen haven't orders We And actually, couple of last year for

time days, in we slowdown have order pattern. order reps an change would So month or we the seen question news slowdown? to since anticipate hospital said as the had not our what's But it Having good And two here talk that, a next can't the I you of occur. people or said. the face-to-face in is seeing magnitude that backlog, is, these three, to takes for orders extraordinary

that, in point, have So months on the don't do the after of we deal hospitals, And those there's about then their they shift incoming this great the of more shape been uncertainty, to produce yet. in for next that assuming usually more at orders. pandemic a right we because what period how significantly, worrying we backlog, not. a can COVID in visibility now are the orders to time good pretty orders We're couple don't capital a depend couple lot weeks. equipment of of a than handle And

Matt Mishan

then dynamics. the shifting just And AST there. Okay. great That’s over to

that device was just difference moving exposure the I away in-sourcing in sterilization think device trying of a environment? break of also, pharma industry always service, volumes. given the think, OEMs one between the AST? I to outpacing you thought the from I more med and Can then business. you're And I'm struck clearly med down understand me, this regulatory comments are

Walt Rosebrough

and replacements devices knee stated like device do the and big med Yes. It business also you But and piece device. and have the med a like and pacemakers some hip things is the of correctly. – of replacements, some pharma Again, It But roles. for for that. various med a that it business things. I implants should preponderance happens things replacements it are to say, other is big,

expect, those of other are surgical but is piece, like generally pieces that need if big there normally, travel kind to do gowns components, said about, a spend don't with that time masks sterile a to other as you that, as big that's implanted. they're components Having sterile have talking be of we and there's lot implantable devices, be And we are things because that sterile. they and So may might those are process and versions, the well. that, there

consistently environment, of normal kind a you travels expect. in Now might with as procedures, that

traveling and gowns COVID. are with and gloves not now, procedures, traveling masks with Right are

are And – like those extraordinary what the other it's demand that's the more And devices, are devices, so seeing would also chronic characterize supplies home-based, things diabetic they're things you then as if opposed people consumer bit as the pull-forward. split, that are doing think I also increase more still see little a devices. – Those I And spaces. they we will, we're that. and medical devices procedural getting in devices, to but home-based medical where

you're very you're lot have when about that making a diabetic, not time sure of there's at anxious If you a sure. things are supplies

the monitoring you the seeing pull-forward will they up or how then, in diabetes we're growing the of that continue supplies, that rapidly space have of so it system. course, insulin monitoring people in innovation bit closed-loop – diabetic space companies I and stock-up And had a having anyway And will, of that is use they because whether terms is just a downward, stocking if unclear. think some

up stocking a is faster that now bit. of a and it's space fast-growing a anyway, So people because space bit little

Matt Mishan

would And could Can of STERIS products production? support be And Sciences you that? supportive in can illustrate how you in What a potentially like ramp for vaccine how Okay. manufacturing me. capacity? then shift just Life one last

Dan Carestio

and focus areas Yes, highly consumable to is say It's that Sciences, offering is look ramp on can focused Carestio. proper sure. we the aseptic they Life historically, to environments. the products, would our lends aseptic well our And that focused do Dan to to maintaining in type our production. on what we that had around in in vaccine environments. This I they ensure help to of that manufacturing is, of continue up as one customers ready production offering itself particular, on very pharma stand And

Matt Mishan

All right. you. Thank

Operator

from comes question go Inc. next The with Chris ahead. Cooley Stephens Please

Chris Cooley

questions. appreciate the Good Congratulations taking record and morning, you year. on the

me. entity Michael, and think or want curious there, Healthcare COVID-XX a get just profile, growth that So of combined Products could two forward some getting both I to Walt that color how some that should going if address about you we for you if Just you HSS maybe on from combination a there? ex additional the on there's I'm detail front. like benefits margin the some and us division. would the that to assuming give anticipate

whether sustain organic your that. comfortable emphasis terms the growth. I on X% the And revenue second to I'll high COVID-XX you debate and of color some X% now end There's a with segment. ex growth growth. my AST question in historical of of would alluded remarks, lot appreciate type of go particular, as single-digit throw the components to ahead that maybe just of can some been range in actually about prepared high in being And the well. In just

around you color of kind some So independent could again, if COVID-XX? Thank curious of just that, you. add

Walt Rosebrough

year. the about comments the appreciate and Chris, Thanks

as organizational the that it doesn't work doesn't in we in this have and mentioned started as out it exactly not side, I surprisingly, First, on does times – we that work found U.K. several – the America, doing as

same the expect, in STERIS might of equipment them. useful Also, CSDs, running are if market who have in of we've many set approaches number serve business, STERIS different working we we've with we're bringing in extraordinarily so products to the those, a and typically the which And been people, that are IPT together. of have customers, you the to our as they and and continued experiment,

worthwhile. And so set the product thought integration of was that we

STERIS under that rest business now business that America and in the is individual of consumables all business of So – term the is North who capital – now handles same the in is the side the world. true same historic under the in commercial of

believe the – STERIS And the So operations working the we've actually, at the from – world. commercial gain level, commercial do around we credibility we we at commercial transfer the combined level.

and local the Head. under still groups. still they're all they're management different Now forces different sales Commercial But

the appropriate moved we've some the And of get unit in amongst places. businesses the business products terms to leaders the actually of in them

And profits combined very a it's just of result, revenue the know harder to really as set coming going now where from a and to. businesses. really harder And and and so it's much

businesses, the So same at customer managing historically and organize we have felt are those from customers. the businesses, we you organizationally it was it's all logical we way that in. combine backwards look to if And continued our to both customers three

our Science around is largely organized also business So pharmaceutical, research. Life

and surgeries business around Our and place. is ambulatory organized is hospitals and AST devices our Healthcare business is devices Healthcare business organized around our med wherever organized they around med take

of so made the Specialty the outsourced instrument kind product IMS have and that Healthcare even and the reprocessing two was you CSDs, one resource lines the centers, the called U.S. historic business, being we will, call that's business outsourced of basic if And And – up the repair. outsourced Services, logic. most of IMS,

are of the lot are or – a U.S. same being like, interface and endoscopy instruments so there's repaired the And that in between of those. instruments type businesses

of the only true not So product but true that businesses, endoscopy-type ORC-type of line. the is also it's

don't move. those not will I changes a together. This that put is know have we in radical we see reduction cost. So cost

may of the but to be we're efficiency the ramp opportunities, minor really about revenue businesses some it's of those after. up There generation that in continuing

question. through change those Again, not it and the smooth. months now very now couple now. structure. or just It's global a ago three months reporting we up first that that's people in change is management or a It's the businesses in of lot way are that to organization, think that's ago much of I did answer So a pretty – the maybe, they

Do forgotten I was help? you now answered one. quick second first the since give me question mind Your I've a –

Chris Cooley

appreciate in would comments, ex the the was to, That – that the there. range, range, but X% with prepared detail No, at comfortable alluded end higher to. Again, organic happy of I the growth been range. to your you have all just X% COVID-XX, historical you

color Just the you would hoping emphasis with the the you maybe the a that was AST components us around drive end towards a of could of franchises. bit upper give on bit little of range little

of you know, least, high a historical the that the lot As kind year. in of there's Thank about at shorter-term the comp been based the franchise in debate upon of sustainability, single-digit tougher you. organic growth in the

Walt Rosebrough

Yes. said, Like are Thanks, business the reminder. plan We confident. pre-COVID. Chris, for I we built our

end And that confident, about are so sure we we we in are high not thinking are the numbers range. only of

the And quarter very perform of there. you on to We've and been there's April have some both edge We continuing going higher been or for going are and single-digit specific of And that those a to would March have think saying kind time comfortable the edge, forward numbers into April, as in absent you COVID. for AST, will, seen comfortable if AST we the businesses. the that for still runway leading so very, it quite now. higher

throws the in air. Now up everything COVID

device businesses are feel to of come in not in But rate for begin So doing out all, a nicely. the we do that first estimate of we what COVID, position. To AST would I we're this strong growth our would year. be comfortable that, as

going this, certainly all can even was plant A to you it, organization inside we've to being plant COVID from call that are prior would plant as C on question will to plant think people. to plant other I a things rather lot I'll opposed with have supply uncertainty before, a that said to things people having equal, secondly, as and And from to post, who relationship because now their move things that, see of to plant move B crossing the someone

a position before. a last I've said plants, even that before, this we're be and I they stronger chain were supply are like other there multiple will I given to position think, I STERIS, some in XX So in stronger have of we the have in think – things think as months, companies that and companies occurred six the than

Chris Cooley

Stay well. Thank you.

Walt Rosebrough

you, Thank Chris.

Operator

question comes Securities. ahead. next Turkaly JMP The Please from with go Dave

Dave Turkaly

Yes, see night refreshing peers. congrats year. than minimal release lot to because that different was the It certainly and a get it's the on last impact your

there. Two for congrats quick So ones me.

was capacity. a HSS, wondering you if color and I kind And exactly you're Healthcare are? you in wondering mentioned give little investments your of what a on too? then making if R&D you You what was us could you're of highlight up I just programs plans adding couple in XX%. Products, could Thanks. mentioned there,

Walt Rosebrough

couple a Yes, of responses.

our long shy We don't double-digit stopping. in about we're and We are particularly little a about portfolio we're shy. every see the investments, that – product talk And happy we a for time in general. in probably future we're I about generalized can – the talking enhancements new future in business and that products products But we to Healthcare across business. year have specifics, done them the now, continue

stream same we a provide products think continuation the – it's just And we types that good development So is product of thing. basic of that today. a

division are and more coming it's our more that's anything a some of something product – products, it's just or new new enhancements current like a but not which of not lines. whole are So and of out, which some

the just if will ante. anything we and be that So upping continuing

as in found version. area more second there than business, cat a versus that are the UK in the I the HSS The U.S. to one way skin we mentioned,

we thoughts with around ORC-type have our how customers might help So of capabilities. outsourced types multiple we

require real it the capital And investment. issue. case, adding other need rarer to types which just That's is of investment are and takes because those constant need it, capacity Whether we or to a operating we be adds, we going capacity all peak unless adding or that into their capacity be and facility capacity, capacity. is

say, we're it's what ORC kind adding. talking that's about be context, capacity the outsourced largely, So that's about. have to add, to think you in but broadest its And we'd that of

Dave Turkaly

Thank you.

Walt Rosebrough

You bet.

Operator

Please with next Larry The from Instructions] comes ahead. question Raymond Keusch James. go [Operator

Larry Keusch

Good everyone. Thanks. morning,

could seeing April. come Mike, you just talk were – For what to – and bit I guess a for of sort to you perhaps, I in Walt back want little

And behaving for up assuming XX% wondering year April segments, pull-forward come some And includes a us those you how so And as sort in sort of after a give that ago about? second could some wrapped flavors about. I was the were of that, that that you question versus I I'm dynamics versus you the if various get back that. to to you business and of talked had then talked March decline

Dan Carestio

and is The up being and what the were it Life and say to offsetting Yes, I was sort AST, Carestio. growth things neutral businesses, disinfectants relates and extremely our would elective and high sure. business cleaning. backlog This pretty strong off equipment Dan three products takes around COVID-related as between chemistries in between of of with to procedure slight products And highly puts is Sciences down. a coming demand, significantly much

And were it general, coming some Healthcare of that's And shipments of on in being anticipate capital, business through. we sustained. those don't our planned pull-forward, then already in terms

[ph]. bit, on lines. but have And generally And cancellations. a shipping any normal was the of early most it for anyway in those terms the seen haven't that's We part now consumable speaking, essence slowed our

Larry Keusch

I that the whole? And to assume again, the wrapped number business for Okay. all talking sort pull-forward, as were XX% you into about, in you talked again, just a was AST, diabetes, for example, in clarify, about that that Dan, of

Dan Carestio

products takes AST, that in said, And in kind like I neutral. of of about right. to them That's got terms and it's puts Yes. those Yes.

Larry Keusch

financial that in of surgical things is I hospitals I've thinking of spending Okay. around aware just And capital here negative all We're for, challenged shift along with a a it acutely mix who certainly a guess going procedure. the to mean, coming are it patient And a of been is versus could under lot months, knows. then about the like treating feels to position out clearly, losing COVID XX goes a this. be significant one very going six, be I be pressure

had business? or a But sounds your some as how do kind when start on to you of lot Walt see of may that to impact get yet. indicated, you start It visibility like, discussions haven't

have been things start at coming this Hospitals treating shake for really hospitals. to you the focused the when this a to may COVID get aside out start here? point. in months and on how But aren't obviously reps patients flavor do putting in Your other

Walt Rosebrough

this strategic not capital We a If Larry, docket. capital in to if in a then but they down going When under middle building time or you replacements. will, lots continue XXXX. they're hospital, think And get and the is put we've they on movie hospitals to the we just buy, they they're least movie buy it. general I've freeze. the they but They were already Yes. will a of put move since at pressure, it's seen freeze, the going in this the freeze strategic, seen build a going not to to a builds. put that do were it's of unlike the do. freeze, it's If they're slow things

Now got breaks, it. to they when stuff have

XXXX They is slow XXXX, as So just combination, that XXXX, like down. will uncertainty. of abhors and Obamacare mentioned the stop example. XXXX, uncertainty it's In – not a great they I replacements the have we capital completely. – still

financing right very of then a had long-term to of so. was hospitals their froze short-term financed lot there inexpensive so And it, the debt many for because it debt behind was the and uncertainty. window with debt short-term And do up,

they cash. didn't the And literally, have

described start It because two, or happens on things it like month a some put on truly so really They we – a down down they a slowed freezes. bit. happened. in And put then they backlog exactly capital Usually, through the while. releasing slows it's general, that's frozen for okay need, they the bit what what is a go I've and for

Right six the because Those have the for the been my has much really right the anticipated in on. now, see nothing for to I've I've are happening visibility place impact there's give would hospital. months, not better me stuff our four, conversations in last would to eight – and visibility next except I already pretty going we begin in negligible putting pipeline. or think now, weeks the five So pipeline

about So the be able we to time talk suspect pipeline. talk, next I we'll

Larry Keusch

Okay, quickly and on just more I'll great. one term sneak And I view. the guess just longer

more But the about to about you've front about other plan and thinking again, that in you you spending? an end do any Clearly, sort from capacity EO change scale than may into how as of of at pandemic, had out got think kind think you learned understand in up Just you've for what perhaps it past? investment the do Given come need investment guys of, we this, as that. about you you've I Do against investment you of lessons now? executing think been AST? you this differently

Walt Rosebrough

you Yes. reasons this bullish we're Larry, pretty And for our position we competitive the described. I've as in like space. know,

the of in we if different in very to a we plants or go be. have of if plant good We to our a a it needs plant, help their and of to they customers And have that's something to needed happens to one place to something happens technologies. and a go plants one different broad array ability think

extent the with that. the move do across the same you And have we technologies, technologies, ability to can to

we We future So that be think pleased have we to off of We're have. and reason we for our like a one business. the whole the plan backing space, it. of that solid a the don't capital lot position see of to growth is

the we in moment and is because capital business in closed. the reason that like that this like other get building permits that. and it's besides They're only time, things can't are things less – spend because permits things doing governments effectively we'll At permitting,

the provide no can We to right We be stopping. we reason gas gas. turn whatever, labor the and/or we to construction it. or don't It the see mean, it schedule, we time to to were takes from now. two able us being want – any be time do see we stopping to on the not doing that start on years companies So reason I

has so that going among space watching outside will that modalities. reason well months U.S. terms of where pretty XX And the business and in as change continued various add plans I to any of And in EO last current any that or to been our we not the as In forward. that's we that, shifting believe But the to we think great have And we'll what were. just beef up the because continue the We've other radiation of modalities, bulk well because capacity be was, scoped course. I don't reason. of out. have

Larry Keusch

the response. Appreciate it. Thanks Okay, terrific. for

Operator

and any Ladies would to our question-and-answer to like concludes I session. Winter gentlemen, for remarks. turn this closing the over conference Julie back

Julie Winter

Thanks, stay join everybody, time for us to taking today. Stay well. healthy the and

Operator

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

You may disconnect. now

STERIS (STE) 14 May 202020 Q4 Earnings call transcript