STE - Earnings call transcript Q2 2021

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Operator

Good day, everyone and welcome to the STERIS PLC Second Quarter 2021 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 also note, today's event is being recorded. At this time, I'd like to turn the conference over to Julie Winter, Vice President of Investor Relations. ahead. go please Ma'am,

Julie Winter

our of and webcast Rosebrough, everyone. of Mike our President Dan Senior Jamie, have I expressed as we before few a Tokich, Any of we today's have This Vice words Carestio, and CFO Walt President and Operating redistribution, comments is this that good the information you, Officer. On do morning, STERIS retransmission call, our Chief from Thank and for caution time-sensitive consent is rebroadcast call prohibited. today. written without of management. or open contains strictly accurate only CEO;

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

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

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

Michael Tokich

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

points X% organic increased price. and of points volume by consecrate XXX quarter, the For basis of XXX basis driven revenue

million quarter operating XXX primarily due tuck-in from was margin diluted $X As of a business quarter quarter to includes in unfavorable in compensation, compensation to Gross for disruption offset and compared stock capital equipment total the was tax $XXX.X about EBIT attainment last quarter XX% COVID-XX. gross adjusted and and diluted the XXX the earnings $X.XX lower year XX.X% to increase benefited the for Net revenue due per the organic from basis XX% across prior quarter includes second prior mix, to from of healthcare the consumables an of The expenses service. acquisitions in marketing for and part up benefit year. of higher sales from and mainly share currency by million in spread revenue, productivity. points the was and for from year rate travel, and and the $X.XX the increased quarter margin basis in discrete to price income points grew item per adjustments. share as a XX.X% margin

are of solidly well-positioned in strength debt the to balance for is additional lines our source levels and we liquidity zone. leverage reflecting low available Our Even key a of a for credit million surgical acquisition, anticipated from Considering company. sheet access position our remained cash our the ratio the $XXX a standpoint. comfort continued leverage

over million for $XX.X $XX.X second and turn I primarily million $XX.X will the net an expenditures. million to now With capital flow Free the million. of working half improvements the higher that, of to income was somewhat due year, the quarter, cash half Walt totaled for and over remarks. call by offset increase his first last capital capital first in During expenditures while depreciation $XXX.X amortization was

Walter Rosebrough

all all. today. later morning good Mike Thanks hope voted will and have you I or

business our good quarter, grew and segments second recovery a to with report by revenue in results STERIS encouraging resilience such you services. COVID-XX the related which with sequential pleased our are exposure on of to organic constant for work total, associates. quarter In procedure benefited the currency to and in continued reflect basis. done be volumes We as from products We improve as substantially well and strength X% continued year-over-year during the the

Our but performance through quarter, sciences few in the details, consumables. the for XX% the particular in highlights grew its quarter. on touch I release strong of walks will second a Life continuing

growth anticipation the the of the difficult of teens in XX% and the lower to the is believe we consumables demand. production underlying dissect growth vaccine due COVID-XX growth pre-buying it's While in in rate quarter, the balance remained to

COVID-XX product sterilization we related volumes. AST do quarter our particular first segment year-over-year the in device maintaining X% difficult procedure-related from as percentage continued levels was year's revenue comparisons as for COVID-XX quarter beginning sterilization fourth benefiting uptick. levels quarter, significant of demand not of grew all in As science anticipate a life year, last fourth significant quarter has In the recovery medical growth consumables the Rebounding these from said we our perpetuity. as well

AST, business. expansions in expectations As prior in reflecting invest continue to we said for growth quarters, the long-term at our aggressively we capacity in this

shipments second service segment revenue anticipated. as revenue equipment in shipments basis. healthcare anticipated, be rebounded was and from year. with some XX% Both of down quarter declined levels quarter impacted consumables procedures the our while continued by disruption year-over-year, declining growing flat. versus improving on last quarter X% in to consumables nicely were Those As a first we year-over-year and but X% the segment Capital sequential the service

quarter more have orders As May and business orders in large either pleasantly procedure from you low the return normal in grown point escalating world. that be equipment were know in procedures to in a as uncertainty replacements. the see around or return pandemic months sequentially last improvement is to to about date we replacement there areas in into Like volumes. capital revenue our are to many significant a the in We October while from the sequentially through Capital motion we projects COVID-XX reflecting sequential break rebounding levels. year's see our to pleased to the coming appears space, surprised

have going in and in the forward experience parts our disruption a of what second half We the planning the significant in Europe of That next of we US procedure recent seen will months. said, six too It volumes procedure is in soon not year. tell declines Europe. are we to in

a any we surgical are revenue As anticipated the about second key half result planning from for year-over-year in sequential excluding result the acquisition. growth to revenue, in flat impact

some and with quite near-term. in portfolio difficult start second to If line normal year, trends, more we're improve levels is back limit to the coming pleased consider somewhat. and bottom predict. have operation our downside the While the the continue cost to pandemic in subsides, healthcare we to to capital growth risk the our of expect the situation procedures still We the greatest fluid recent half of will equipment percentage will which

we As haul. said the long, long all we this business manage for

in pandemic. changed. Similarly, we programs by were and in business expenses $X.X this our reflect quarter, approach for QX. for avoid layoffs to what million decline our care including those to to second during unpaid and to place to saw of pandemic of our due that programs the operations half support cost COVID-XX to fiscal or related in about people extra who approach, hard actions COVID-XX. Total has decision in that furloughs in paid We providing not worked putting our impacted for compensation those take were jobs Our furloughs people maintain investments and need

next and surgical expand ORI continue We've in We system. full generation tables several to suite operating year a our surgical to a new of invest and AST including new introduced footprint this R&D. lights, products room

footprint On efforts result new the infection our or launched prevention rapid in development for sterilizers others. new as indicators the the more We in our business, slowdown spending smaller do consequential R&D of we recently side biological steam our include pandemic. not among product of a expect and products

our people I Before commitment front to we pandemic. the customers again their of STERIS be the thank to open who heroes to continued on like Q&A, for this lines have to would

like global well pandemic positioning of come there is COVID-XX during in we out we the of the portfolio near-term While the uncertainty our the it. situation, when as as given

of capture Surgical long-term family. opportunity continue With bright. over announced the that, completing is to previously forward turn Q&A. by I'll for toward for future the the year that to believe the to stand people Key's additional call calendar We STERIS are open STERIS and welcoming look and acquisition working We to ready to to Key Julie

Julie Winter

for and Rob the line Mike you please instructions and comments. you, Jamie, the give to going your Thank would for start we're Q&A.

Operator

with [Operator from question instructions] today Please JMP question. Turkaly our ahead your go from And comes Securities. David first

David Turkaly

on little talked seen get particularly I super into The about might where about that's of in want if not that, I think was what points and this know to better you wondering XXX in that you just may comment than you're you I gaining but basis detail you’ve in late a price, environment.

Walter Rosebrough

points, basis XX we typically and somewhere XXX XXX are basis between Dave Yeah points.

XXX are level price across in second point quarter the all our quarter. This segments of and are that obviously basis we actually we three seeing

not would point each individual but just one, our out one of I across segments. So

David Turkaly

mentioned as you out improvements. you called some then a follow-up quick And capital working

improvements we view at are them of of a forward? is you. you and how one-time some permanent look So I looking or should those am just at should moving curious as or some it Thank if of those how we sort

Walter Rosebrough

math this do that a standpoint, outstanding offsetting a been Yeah is actually have outstanding sales although does and you will increase if year-over-year is Dave been decrease sales rise. of the on days successful little day that from in I or would working we've because drop, improvement our capital EBIT significantly Inventory as inventory. bit say reducing pretty we year the

both because level we We we levels are loading. have surety inventory and maintaining continue to of higher supply are

should year. still I I and continue elevated fiscal DSOs the that know about remainder would favorable, to this at also I that be So end drive by say inventory say the of days, fiscal the of least year we that next our year. is would inventory able fiscal couple projection to would don't be

will say to will free So pretty much generation. we as two those naturally we I will growth, income offset continue cash we and see to as net flow continue long see see would

spoken capital in times, our expansion capital we $XXX growth and addition, over million anticipate as also do up In expenditures we've for many are spending AST. about

year. So surprised in in the that first see fiscal half growth full we We to CapEx than $XX be were million if the the for up end up you year-over-year the be year. don't by project more and of

Daniel Carestio

longer-term receivables if probably a inventory more the their levels have cleared, say add Pandemic are will would another payments is and obviously one mix think bag and the has related zero. government I term, at is temporal the time. as revert bit spending the Act. normal longer There's payments tax Mike a deferred temporal, I capital I you to been back look And to government would

Operator

Mishan next your with our from from question. question ahead comes go And Please Matthew KeyBanc.

Matthew Mishan

did all, half, on the back I catch didn’t the all for flat the half year-over-year for implying I say to the quite basis you’re organic full-year didn’t I you half? of catch and going it you growth the wanted for versus clarify. just to guidance be are what first second

Walter Rosebrough

But to plan guiding have Yes, be morning. Matt, going all morning, that's even first of fair independent after we’re of clear amount just uncertainty to good we on. the not but good of

so constant largely not currency And essentially half of speaking and we're fact, constant in kind that's revenue all year. roughly back flat the growth think in no, planning currency. no year-over-year the inorganic There's I the of same

But is consumables comes with it's grow in of the place, half going capital on recurring for irrelevancy business what talking do not is of our continuing kind conservatism and about the year. to an magnitude, that's of business revenue And some we're back key. or unless flattish. key to we're thinking So orders

Matthew Mishan

for little Okay. that over Understood, and that M&A assuming tuck-in next from just then a the bit purposes, clarity the the several as contribution anniversary? those quarters, wanes I'm contribution

Walter Rosebrough

quarter. it's Mike? tiny, Zero, this

Michael Tokich

$X the million every by this anniversary. get I quarter, we the believe one time of Matt. third quarter, those And will almost to

very be will very, to zero. it So zero, close if not

won't even it. to speak we So

Matthew Mishan

right, everyone's that. about I All think happy

Michael Tokich

coming. We're unhappy, significant we'd got to we've but like more, a have one

that's So fine.

Matthew Mishan

flex produce minus. just got? at capacity of you what this everything $XXX kind you Are right. about What right And or of even is you the then now business could could if it that capacity, a All way, me the you ask at you I this XX% business. kind maxing further? the is customer up Life million could plus or out you're Maybe Consumables you give point Sciences said, plus actually

Walter Rosebrough

where we’re this and Yes, to the remember I'm great supply aware have to Life space but chain most that go Matt work in point, But get Science pay chain unaware barring you attention issue some sharing of we our components, we're I'm barring at that constrained IPT not the of, issues. to not are in up could any deal, so you a factories. supply and this to have which ability of capacity struggling, always

those is we XX% and I the greater, And capacity Life shared that problem. the up facilities, have But goes capacity that AST the issues. that's of not so capacity factories everything Science we don't in feel a combined have significant

Matthew Mishan

I And how outperforming where breadth then with realize it's a markets given and But All It you're your right, the end much you're this realized the would one, excellent. think be. you by last like just tough volatility portfolio. of well your just seems do overall share gains? question market above the I

Walter Rosebrough

I feel in have for else, will. versus Matt, us it's particularly the very and don't to a about know you terms, quantity short everybody if difficult

we a it's helpful, competitors but public. reports, have are lot of As that everybody not

that getting get reach. I in all virtually than to difficult of more think our wallet confident we're of share we’re that overall spots. So it's But fair our still

Matthew Mishan

Thank Walter. you Thanks Julie. much, very

Operator

question next from Raymond with your Keusch Larry James. comes go ahead Our Please from question.

Lawrence Keusch

morning, Good there all within serve really as things is, I pandemic, exports of about different business set guess obviously that hedges benefit businesses essentially are well. as interesting can of these question are you first thanks. that the is one everyone. here have that, STERIS Great, and impacted portfolio the during the

for So headwind really quarter, And of think for there help any you quantify is the to quarter? what just quarter? revenue of trying tailwind in what to amount what was for understand the amount conversely, was way I you the was think the the

Walter Rosebrough

about is revenue, but that's and question a being we're overall I that to segments which than to is I we work the being think way all in, we easiest answer, tough equal flat, it not guess did again flat flat. quantify to better Larry, tend the running anticipate in Well, things pre-COVID

probably would high have So up as negative result, expected maybe this up we plus a would minus we said into tailwind, single would on we a that were little that to the XX% low to probably about I being even And have would year, plan numbers. be double-digit versus headwind bit. argue or

gearing we're have orders of PPE where our And are tailwind, So to where in a we're In magnitude, beat Science, a procedural obvious, in nice best we're and would up Life gotten base and we're the but answer. right. up. for AST, vaccines, that getting be procedures doing company places healthcare the

the been of that's the side So opposite equation.

Lawrence Keusch

other Sciences. Two good. very Life Okay, ones, on

understand there I'm to Walter, guess I So, again, should production. we think just exposure about trying the vaccine to how

to you if you specific type I’m you positive about, doesn't and impact don't, And that a of through, just you improvements can forward other come they to a think are as So, again, if in wondering talk is, it investing the the question technology as guess this? that's drop the the you if seen how bit through, you've vaccine customers the how that as another, manage little come bit on I trying off positively that of are one very other to margins the part to that line, are letting of exposed they much. perhaps I'm more side this and you you that little are versus as are the business, exposed make to profits you bottom you, a

Daniel Carestio

terms manufacturing. of Hi, spot in with [indiscernible] I our this Dan the definition you really market STERIS’s can a that's is Larry, in little is information particular, by vaccines, maybe in sweet give on every aseptic Carestio,

that manufactured manner. rooms, to can in operate products those and we in it's used that near services an sterile have, So aseptic and are the a sell, we environments clean the that and environment, sterile ensure

vaccine in that methods. basically or of and And Sciences, vaccine terms liners these or the another in we've precursor, I demand a terms in on uptick bags In manufacturing we're environment. serve demand require customers vaccines. a more wouldn't based into lesser like sets say are in what They're that an AST, for methods things seen company aseptic a their has production, is Life also any all or demand one similar of higher specifically bioprocess or very in in we and significant addition from tubing to selling aseptic used

Walter Rosebrough

we’re a are that think be better, customers across, best And ones Larry, I But our that lucky be and the there's all guess a are worse. our that'll seeing customers, not we’re obviously, of pretty best to that couple happen a candidates. if broadly hot function if the I the who confident the little ones, we're people we're pre-buys of are enough likely

the XX% growing see think that it's intermediate we’ll just So I we're term, in forever. kinky a effect to and unlikely shrink. a comfortable going pretty ongoing it's to year short It's an

Lawrence Keusch

the question improved around are the vesting there, doing you’re you margin Okay, profitability that? against and on how

Walter Rosebrough

question. expansion mix. strictly is a margin Part the function great of Yes, of

of most clear not how And started. ugly and but natural, so companies, at thing as was call get I that's, this going it I'll some were secondly, just to we all think it when

so a there expect, week comfortable there's might right of of watch could can quarter-to-quarter uncertainty And not I spending so many to as back. be kept we're but And we back see very out and term step some R&D we positive, we now. forward, places, positive. that pick be we of increasingly we shut kept short of some up spending, a intermediate it. we're Normally things, down caught the and going as on on, week still some you watch so look we long-term to future hiring we'll but watching in which we things which the and call kind in not I’ll there long-term certain the the And of lot going took functions, are

And careful. just being so we're

appropriate then and will we'll for little piece lag spending up the while catch it a the at So bit time. a probably

Lawrence Keusch

comes me sterilization Sciences think we be do margin that pandemic, higher. about think needed around of influencing impressive for the should kind is higher the continue in about margins do in, as whether of very about at the think or peakish to And you are other higher one coming trying these business? in continue that volume for really Life these How then how just AST just to again, you it we here, that price, incremental longer-term it. and some be is that's think kind and last of to margins Got move this margins

Walter Rosebrough

or I It's you're investment, the extraordinary. very the And complaining good ROIC the The it's good. turn we're very of we're happy But that mean, with make that's not about AST capacity, hundred to ploughing is a business, million in as we're to know, around that when business, every to of space, not you grow make lot money. obviously. time that and margins money ROIC ROS. you a in putting place money that but so

characterize it the you we of top facilities not new when would at room look those so think mature. I So there's improvement terms as in as for ROIC, over

with so older but difference, much an were look like if over today you ROIC plant, every affected XXX basis, the by you and those added the ROS the money are you on plants overall we kind basis knock-off that If us, on are. because plant, had ROIC plant XX ROS, look than we time plants, points, not plant make a each some when of plant back, have time basis well one to doesn’t ago, or making to plants we XX newer

things. function those So it's a of

Lawrence Keusch

very Thanks good. very Appreciate it. Okay, much.

Operator

Chris Cooley with from go Please question ahead next from question. Incorporated. comes our Stephens And your

Christopher Cooley

we getting maybe questions. here And the was kind Walt, morning, what thanks following this picture of could Larry for start there. the and big Good out with if on taking morning. one

your Science with have franchises Life structurally seeing growth. a accelerating and You AST lift

do going a model pick natural kind see we back in investment start go-forward But But COVID? the the should think up we well there normalize, months of of to cash I've couple out as versus taken more so of cash natural historical starts much You've levels? forward. now, from a follow-ups. to Should their about as costs over business some just also the the next lift others, got for a hopefully this XX year? or how lift a we planned cash Or so of in business uses of flow we basis? on see through generation? that will half Should Not see there, fiscal the flow

Walter Rosebrough

I call would the limited say, that's has are Chris, there's suspect are money that to And travel number I our a now. result more competitors either. and more spending of I'll detrimental of right world and the of, boots cost. we competitors and a street in on both do a more expense strongly world, in But not Yes, cash, none it we it that we things sales to when lot return in marketing effect, And that a going and put going as more our the cannot do. because on real

will and naturally have effect will that that. So earnings some cash normalization on follow with

side that's your toward order So will flow things, point would But out the of as intend and investment that two grow much higher in of those spend the to organic pull though generations we as as possible is we only point in it, as question that future profitability in or take of that's future through I then much use the grow. for of we those either grow to completely. a some profitability, we if more way we to cash in two and because will one, to hope Again, the to organically growth have acquisition cash then yes, points think through will that flow mixed be areas, spend the we're acquisition. cash reasonable able and how fully cash in you spending the are. for in what And can much as profit

Christopher Cooley

kind want then Thanks. quick here I'm you're lot us that agreements. when and that on follow-up. of as resolidified of two were a those But the could you aware terms last contracts when materials front, more you Appreciate revisit then late, for last of and that the XX of revisited raw one your just specifically remind had And about just color Cobalt was that quick time as follow-ups. discussion other sure first maybe to just those

Walter Rosebrough

do vendor of like in it tend get get We Hey, of Chris, question. visibility reasonable time, that Suffice just the appreciate we contracts. don't do to into the we details both of for have customer those say contracts, everybody on suppliers, customers and long-term we if and that basis, in better business and people vendors, a cannot the AST the the in recognize and we of do particularly what going provide not kind everyone's do. we the our not can know our to the and a what a spot, details are to all

tend contracts. to to across be the those case So intermediate board. longer-term the And in that's

Christopher Cooley

get appreciate Understood, lastly want squaring And I’ll in make that. correctly. then just then I to and back sure assumptions queue, my am

bit you’re essentially prior incremental the half in these So consumable cited year that the in they headwinds, whether talked of conversations we've your or purchasing it's or a calls, still full on any higher from patterns. it's you COVID-XX some incremental procedure maybe inventory they about, not on And parts than the fiscal year, assuming in directional experiencing hospitals Surgical, are from back little for flat, what had maybe headwinds in the as past. you’re ex-Key in guess I of now assuming planning Europe carrying softness, site

a tough what make getting there's to I you're appreciating year fully And Thank comp? ex-Key you're year-over-year the Surgical, wanted making. flat when sure, the for talking fourth quarter you. understand fiscal Just about

Walter Rosebrough

again, plan that Yes, and planning can next I'm month. next week Chris change or

or do time catastrophic. giving in difficult right that bit, not and built a not we forecast. we thinking. is think we in do temporal March, like and if reduction our of less huge There that's uncharacteristically a and into both to offsets changes, was that a kind are in around procedural have more a a that, of part kind we're May, May, Again, June, expect we general, one But which April, pretty PPE level more why we're of anticipating more have we the we procedures will, of negative, have But changes the that expect have we having now, not and saw we spot so April, less, it's little guidance. of uncertainties said anticipating positive the little little and we a PPE reduction that, many a in little So we're devices. other that's little of process,

seen balancing of of those we've flat. issues. is view we job facilities to that date, thing off work about have still the that, treatment come done it best nice history So, have is about said Having our with and best given the COVID-XX. out protocols we're And we which that, to is we a how of, the that the

I grossly the nurses and deal the of the misunderstood with globe underappreciated disease. around facilities as the of have think this that's and how kind and to around physicians improved globe really their knowledge

lot they're to deal. in to operate better, take be deciding have only unless than positioned So as lot a be their able due that even procedural to that a as it to goes a continue it great only COVID, it heats view, spaces, a worse better procedures patients, care up some, be of and anticipated, it lot the would my patients of reduce would to would a result done things concern

volume globe, that wait anticipating spot see expecting the But a and as some we clearly production. saw out. one good issues Life vaccine around some not we're and in we’re just or overwhelming we to We're general, before. but good additional for Science like reduction growth have in the So expecting business PPE result, to an processing

that's So at high a I'd level, it. much pretty say

so orders come back little little a capital. better even flattish bit anticipation, our capital, a being cautious bounce better We’re view bit, than being we about bit we're on expected quite is though recently of a thinking cautious a in but being than our have capital can

Christopher Cooley

you. Thank

Walter Rosebrough

bet. You

Operator

Please Matson Mike from comes question your next Our question. Needham from go Company. ahead and with

Michael Matson

that by I I to year-over-year and driven a was fair about mean, were mix. thanks. want just bit gross they like of sounds Yes, some up ask margins.

that So the could that something rates kind more different sustainable? your is to businesses? potentially something in go way, other Is if that's normalized rates the back that revert growth of

Walter Rosebrough

kind and that the thing say up. you that quarter saw down, biggest would the of was single everything I Healthcare else was on is Capital

of that so is longer a comes Healthcare over expect mix effect you'd And down. back Capital period, mix that a

On general see of impact the most Sciences my and we and faster comes in on growing if view. positive than growing, back, kind do other long-term hand, in impact, a of AST it and space, everything's still temporal margins healthcare it's Life still the

Michael Matson

potential then Life thanks. about the Science question the the And wanted Larry's business of follow-up Okay, just to on vaccine. and impact

demand So comps can start decline to out? there's do for that rolled because business as orders it think launched? that vaccines that or consumables then would destocking been are that does remain as the mean, Thanks. we mean how about be the vaccines I strong the your would

Walter Rosebrough

have perfect but call, giving experience are what space, that's pharma probably who guidance that is visibility the conservative or supply would than of if that, these be my don't comes the most would we our vaccine tough we I when a it differential customers giving, to in to this call did, are Yes, we facilities folks we're running chain.

good is requirements have So to know know time what amount build, in a they're and how that they're be. suspicion my going and going their long know they know are inventory fair what they’re much hold they're shape for going of to to until running, to a

be the to going a in So term, I reduction. think don't short huge there's

one it we tend but those year. of they're of down a not on won't, chain, shutting this, dollars supply will to day, if shut kind things you they're they speaking, millions of conservative if conservative, indeed, slow of work those overstocked, you're millions a they be factories, they As appropriately through down, And down. not, dollars generally

have just So supply about mention, visibility should going pretty do again, they're who's this perfect we at all-time not our being visibility, and also everything I you about be building chains. talked don’t like to sciences another risk look have of all-time when. to But careful perfect at all-time to our we capital been at. backlog, capital capital I've effect has their life healthcare, record records, record want shipments,

is to in equipment short we’re quite So intermediate life term. the strong. capital And not in the citing it science

Michael Matson

down was look And they just double-digits healthcare the your since improving helpful. Okay, thanks. of on it but That was May, I kind around of heard very orders kind does year-over-year. commentary then bottomed backlog in like the that,

better that's So that’s indicator is more or just that Thanks. something showing not of change? why a of year-over-year kind lagging

Walter Rosebrough

may ORI more for resulted this you It recognized to the million down in range. in that similar same if quarter, so $XX is roughly the $XX based but we in is But is it's down, the had that in you so that but the million minus quarter of this backlog look approach, plus roughly at you million that quarter, would $XX first see on the change little bit double-digits. probably being not recall that a number accounting it's first a or

of more the And so seems XX% roughly that run, many capital to pressure see the it replacement have it's nice be under in see, but is which been than that's the business returning, And has capital pressure, to short orders. just consumables. we to of

the So several direction next that we’ll see continues we way. sequentially months. moving it right been the It's hope and

Michael Matson

Thank you. great. Okay,

Walter Rosebrough

You bet.

Operator

question. Instructions] question comes ahead next with Please your Our [Operator Polark Michael Baird. go from from

Michael Polark

for Thanks the taking morning. good question. Hey,

you that from is trending. do Walt that AST, how and in that sequentially PPE on the I'm curious June up category total down? Curious here. have piece couple volume view? Did versus quarter a just a flat Just

Daniel Carestio

is Dan. this Yes,

I sustained at think maybe that on point. requirements suppliers have future, the with onto raw the procedures a slight demand PPE those the some for without believe level supply do pandemic. certain We seeing the increased as similar have changed, for even were or saw uptick. been levels QX, more And for it's demand products this there'll the material, been be ramped-up it we governed we as than in has by at

Michael Polark

As elevated issues into Are is and and let's with and levels, And these recover, capacity, electives significant just gets hence access we tight? going that AST. amount to electives is arise don't enough fill of recover. assume next, as decisions these up presumably, of that when arise? where a network CapEx risk you back live discussed or the tight, your global that at frictions very new PPE gets quarters curious stays where elevated? preference learned is capacity your there stays those quite there how such you who kind PPE that in of over about I'm normal to make Is world the a there facilities handful between

Daniel Carestio

but not time and supply builds see across because more market. does lifetime globe. a time building the we number happen customers reason for so of In optimal constraints there's it right our America, customer site, going why North to we across now to from given now one plants we're sterilization, we in product can in a capacity Asia, of their for have time, AST long-term Well, of period we get Europe the chain, work increased some in with terms into the be and sterilized it right ever my a multiple demand validate, or may methods at on of than that

Walter Rosebrough

Helpful, more room yes. Carestio room jello, there's I that me for would tells for it's Always one customer. say, always jello. Mr. always like

Michael Polark

not you're sure hour the I'm facilities at day, is that? running or every of And

Walter Rosebrough

we’re. No,

run Day For world, essentially in Christmas the Western XX/X. we

Michael Polark

it. Got

you're outlook flat But those The are in reasonable putting Surgical is quite other? other in back fiscal point for context context such the there one would ratio ex-Key those Or revenue topic the is the that a year-on-year. you expectation to the How way of variance didn’t on a of expect you XXXX similar know the dollars was of SG&A. not bit expect dollars SG&A half. would of year-on-year for fine I the just frame that or revenue full-year? flat,

Walter Rosebrough

anticipate much. not there, we would Yes, we be decline time as at And we as Mike a versus of to definitely, in then nearly total. there's would to favorability obviously, the be expenses expect say definitely guidance we give future, for half, second would half that more first saw will in obviously but more. know we when the hopefully a But the the operating half year the point that the then first full-year, lot favorability the for in second look see obviously spending half. in of And going we to we

Michael Polark

much. very you Thank

Operator

like the management over closing remarks. for And we’ll today's ladies conference, that to session. today's gentlemen, turn I’d to back conference any question-and-answer conclude with and

Julie Winter

Stay joining time morning. taking to for us the everybody this Thanks healthy.

Operator

Ladies and joining. gentlemen, with that we’ll conclude today’s conference call. We do for thank you

now may You your disconnect lines.

STERIS (STE) 3 Nov 202021 Q2 Earnings call transcript