STE - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the STERIS plc Fourth Quarter 2024 Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. Julie Winter of Investor Relations. Please go ahead.

Julie Winter

Thank you, Jack, and good morning, everyone.

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

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

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

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

Michael Tokich

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

diluted and the fourth for the with the quarter press strong of revenue $X.XX. currency earnings of revenue were fourth As you growth quarter organic XX% per total Adjusted year X%. in in we share growth release, finished the constant saw

$X.XX expectations organic Adjusted exceeding revenue per diluted total and growth with totaled year, For revenue share earnings exceeded XX% growth X%. of the full our we outlook. constant currency

continuing now. With required the starting operations Dental of we results divestiture of announcement the segment, are the from to report

As on results operations. a operations help you within release our continuing an rest with of recast today and comments continuing press the from tables, discontinued be numerous focused the to X-quarter Contained from of will year-over-year result, will comparisons. find results

Continuing Once to quarter revenue expectations. when Operations. grew price. This driven basis fourth organic of well Fourth volume again, X%, as segment Turning Healthcare as compared currency constant our exceeded strong last to points year. impressive quarter is the by XXX

call Gross the income discrete declined quarter, and to decreased more a our were The last operating due the increased the fourth including from his by over for The shift equipment. was with XX cash I Free revenue as gross XX During the for price was Dan leverage. AST lower year. Positive quarter adjusted margin between EBITDA basis million, rate compared and to mix income tax of EBIT Net debt we fiscal anticipated item XX.X%, generation million Total to the the for again than materials will negative segment costs. sits from quarter approximately Healthcare -- and our impacted working margins. the million. less from offset totaled prior benefited were than $X.XX. Capital total capital shipped to in operations requirements. With XXXX was to share $XXX basis cash quarter from effective $X.X quarter turn and adjustments. Healthcare several points continuing for XX.X% debt totaled favorable at points quarter prior productivity in once margin with labor and to record $XXX cash XX.X%. earnings expenditures and year adjusted mix operations, compared $XXX.X was we per in end from capital remarks. of XXXX million use million continuing higher $XXX at amortization depreciation billion, that, fiscal X.Xx operations flow $XXX the for and while

Daniel Carestio

Thanks, already covered I our to on segment STERIS. fourth and focus so you will for XXXX Mike, year good outlook turned strong continuing the morning, today. Mike XXXX join time XXXX us everyone. our fiscal quarter, the a for operations. Fiscal for performance Thank making in be fiscal out to for

to outperformed this single the done As fiscal the operations by driver revenue teams back pleased back-to-normal you've for with our to a quarter, third levels. pre-pandemic previously, in was biggest of double-digit report has to lead lead reduce the times, I constant all as time consecutive years. XX% for backlog are levels us Healthcare from our year the currency growth, and segment. fourth heard result, am ending X our that The first XXXX return as organic consistently of times work year growth

grew growth but growth the improving U.S. for growth, continue and healthcare we a revenue for we service at strong mixture around service EMEA. normal up is from for revenue the the example, in ended X%, which consumables year low is fiscal single-digit the new $XXX in As breadth X% size offering a just and result, to backlog be constant of service in now quality double-digit which currency revenue grew and to also fourth and growth of each had with hovering teams. as is organic AST the revenue what the year, our revenue unusually believe million. Service quarter, light, of our benefit organic over the

the expect to impact Considering the to in stabilized the more unfavorably This to The forward. may in parts it demand we step sector, impressive In days, the year public bioprocessing Life with revenue the not at XXXX bit early our expectations our but contracts Sciences While results. the with have pharma customers. Life win the did for are is return achievement some do to a meaningful pleased facing positive new seems macro and until in used line path with that from half challenging quarter. our an we're performance is is long-term overall. growth. as We company revenue hearing organic we see not segment XXXX, continue of service been and ended aligned you solid swerved year have fiscal Sciences have fiscal bioprocessing currency X% sales. comments to, growth second double-digit improved the a constant a segment for particular, than of growth

to our Turning will updated outlook. STERIS. for 'XX another strong year Fiscal be

X.X% of operations neutral be segment As foreign from from expected is our year continuing business to divestiture additional months controlled full operations currency. Constant from BD revenue the reported the a to services currency X%. organic is X% to increase to X.X% impact expected of and Life This X fiscal acquisition, continuing includes Sciences environmental XXXX. growth the the within revenue for

the digits. For our segment Sciences half. revenue that single year expected second level that and low organic is in the your single to expectation accelerating with growth is Life high grow growth modeling, the grow anticipated to digits currency for grows Healthcare digits AST mid-single for constant

As a to high our year reminder, for abate. as XXXX healthcare. some headwinds was the with XXXX of margins fiscal fiscal first are from particularly quarter expected strong in improve teens EBIT growth

at segment to of that the $X.XX. As and share XX% quarter, a diluted to the variable result, XX% used to outlook closes range are to are proceeds adjusted divestiture the operations earnings assumes coming $X.XX anticipated Dental continuing of primarily per the repay increase a in rate This first from debt.

in anticipated split in be the the second XX% XX% to half Our and half. earnings is first revenue for

profitable to decided as on core few make medtech strategic Before growth. been After do we focus healthcare, significant we a I conclude, where and sustainable during and remarks our executing plan can well to in needed have pharma fiscal customers want improve the XXXX. we review, we areas we as on achieve

a result, a As to decision made the the divest notably segment. year, X businesses we during most Dental

Combined, surgical in including the as of accelerator, as Europe we In restructuring on a made on business our other impairment today, the which our announced includes business to internally capital restructuring focus an addition, product commitments high-capacity rationalizations these actions and we to long-term plan, actions, us facility core targeted investors. and allow deliver developed have well X-ray of consolidations. healthcare

right confident we begin our you the customers our come. That have the network deliver for with these to over instructions Q&A. changes, so of are give years to to prepared we sales will Julie, channels call. that We the facilities and the can the please remarks portfolio, concludes

Julie Winter

your and you open comments. we Jack, for you, for if can give Q&A. Dan, the instructions, Thank Mike

Operator

question come [Operator from Instructions] Wood the Patrick first And with will Morgan Stanley.

Patrick Wood

Just one. start guidance a dull with me. a to couple from Maybe

is that side the capital growth through the On of healthcare books makes you've side. equipment but of curious capital the just a or QX order trying the within and in keep tough, is side interplay got capital contingent how things, sense the on assumption coming that you that the sense. just mid-single very the flat? is kind comp the tough about Obviously, digit Obviously, that is mid-single-digit business of a that. I'm on you're equipment get thinking to I'm how growth, between for in healthcare? healthcare guidance And much very assuming it's equipment can

Daniel Carestio

thanks. have Patrick, our of capital business the in expectation growth is low that Dan. can is healthcare. side very we Yes, This on the single-digit

because the pushed X during shipped fiscal quarters, look If of challenges X rather, of supply we months delivery. sorry, we misspoke chain, capital last quarter with XXXX I extra in which you at an last the the or I'm the had out 'XX, there, kind

we which then So is us. as strong we QX, QX. abnormal in huge had for And finish a we do typically

going bit business. sides built then as that of into a more had momentum equipment, grow recovery place And for expect there year. a issue and some we strong of we've a So We've the the bit. procedural can that those comps both consumables next drives we've rates, remaining the business there really on consistent healthcare. seen obviously, then it consumption But in more of nonetheless, it the timing more books. are growth expectation procedurally consistently as had driven. organizations we order the in do the largely And we've is services and And that's maintain affecting level and we was -- the

Patrick Wood

second, just a bigger picture. then maybe And bit

could keep outsourcing? where go challenges industry FDA then forward guess, you For hall they the an competitive update decide and or EO Just facing thinking going to environment? customers, versus regulatory the, competitive seeing quite the the like had are I change the your sterilization been the you in-sourcing I stuff the lot and in-house. things with industry We a how changes. town the you from what vis-a-vis of guess are environment And and on side. there's overall,

Daniel Carestio

in say is Patrick, incredibly terms And we them say. technology in a I help that for large-scale contract a that own What in we've STERIS hard the use Well, of neutral expansion for company industry location deployment and terminal own means continued us sterilization or or long for that customers. as growth efforts continue situation mean, neutral in-house expect accelerators their our their positioned term. whether to I in-house to it's our VHP as would whether we well is where the we they sell deployment how consistently

capacity, we barriers on in from files to in the have like possibly a So customers regulatory I a also hydrogen regulatory methods believe peroxide and how of terms agencies our we but support regulatory. changing from classifications with in-house perspective perspective, like vapor from operate, and everything perspective for also to our from those working done master of terms things alternative lower

Operator

Next Fishbin question KeyBanc. will from come with Brett

Brett Fishbin

I'm just AST. more going to on ask X

to growth think service in see this progress it little terms a encouraging of of quarter. line really I in bit was the

Europe, reason a given lagging if the to curious more we just most an So regards could stand color the in in bit to standpoint. on provide be the from where inventory seemed overhang, inventory that that was little specifically you

Daniel Carestio

those second is the Sure, the in turn Brett. of were of year. that, of in speak in aside half can And overhang, you terms half second U.S. growing We market medical the type at products. thanks Dan. digits if bioprocessing and the saw really for Yes. for strongly segment, This of question. we the to put double in that things devices I the for most

in we've full seen a here So U.S. the recovery

procedure-driven, degree a to I'm turnaround a In it's play procedural I of more slower terms and of the And that in of sure in high to point, more there's Europe think the there we needs terms second a robust sort in half through, of should over time. has if of of out. the inventory believe terms right? year not got down, taken confidence that inventory, still at little so this And sell the just a Eventually, in European consumption. backlog that burn recovery that's see market overall we with it's

Brett Fishbin

EPS right. helpful. then one All quick And on Super just follow-up guidance. the

Sciences? result for margins as Just we if deal? of And aware the a in considerations curious thinking any that should impact how that EPS incremental if divestiture of there be to Life you're about financing there's was either or any

Michael Tokich

does small out small deal, it negative was in because all a wanted Life it impact was rates. to Sciences point all, a us. that it on But but we growth very No, very for have

So no impact line. bottom

Operator

will & The Mike Company. Matson with question from next come Needham

Michael Matson

Just on guidance. couple a the

got pricing? So first, 'XX And have 'XX? much pricing can in for for the you remind the you fiscal full you guidance for us how assumed fiscal then year what

Michael Tokich

Yes.

full basis what was company points we XXX XXX the of consolidated, guidance favorable. FY 'XX total price for year around So in And our 'XX, are price. basis points assuming our is of favorable total

Michael Matson

it. terms capacity degree, M&A, some expect that going should we have? debt to of dental deals with additional you're Got then divestiture, in And reducing given just Okay. to just near-term the your

Daniel Carestio

a we capacity from people have Yes, What financially Mike, internally this is perspective. is would say and the both Dan. I

for we've integrating know, those companies, imminent, We're be We're do, it's present good at years. number to good about they in you a and business opportunities to but when acquisition themselves talk it. of and when we'll As at the it. have been sure

Operator

from next Stephens. question will Jacob Your with Johnson come

Unknown Analyst

you guidance second is first half, follow is XX% guiding half just like up earlier. on the the half remarks, mind first for correct? be your growth want half, Mac like organic This Do question X% second Jacob. for you maybe it the on that to clarifying asked I roughly plus for and to seems may

Julie Winter

half to expect of that, not to We in The certainly clarify, don't guide up don't second earnings, To split. we we And we year. was split the revenue would that. based earnings the provided ramp revenue. on do growth

Unknown Analyst

shortage the that. in gamma I few believe caught there concern term, gamma radiation, on bioprocessing in medium on was a appreciate the loading I up I then years And know some you quarter, ago, some your last but state x-ray as thoughts the comes you demand capacity of gamma the supply as And bioprocessing well? for this current of about any demand what could have back? Do industry capacity. versus on mean

Daniel Carestio

will the basis have particular. have and that's -- that in years, expansion, sites of online the actually, we over come our and number online x-ray Well, of year a next X come

to terms we're versus exist for in of processing. that isotope demand think we and well that supply gap will they advantage the take does radiation the So positioned short-term have grow of of

Operator

next Instructions] come question Our [Operator with Sandler. will from Bednar Jason Piper

Jason Bednar

take little pacing. a maybe finish here bit fiscal 'XX, nice on to swing a guys. on Congrats I'll revenue of a different the

with I think But over or AST tick kind is a course acceleration the year. the it of guide a -- based models not dial year, you of half the guiding the trying all organic back-end to and I the in loaded to half, think X today? of right we're sure second to little said we're what just full for -- company-wide year above, level, think below maybe your first our on too make you're with bit

Michael Tokich

Yes.

be first now are with in and half agree comparisons margin obviously a the QX would would lighter, that both from a from both in revenue standpoint. the and I little but a standpoint QX, finish Our tough strong bit

Jason Bednar

Mike. on earlier. a here Perfect, right. up Patrick's question I'll ask question follow All to And

normal I those I'm unless why you trying level if was reconcile backlog could wouldn't us out, So year? to expecting is to help last equipment meaningful you're points. order reductions to if moderate levels, above-normal just growth revenue guess, compensate healthcare backlog of an what really for back

Daniel Carestio

although we of at a order X say, demand significantly like we years huge had remains ago, would if today I our intake lot level, high products higher. The look what a looks a last for product backlog. you And year annual At high. it's our because Yes. pushed up out built versus

our to positioned We're we year, capital continue. of but and down. of more We in general last I IPT a that expect believe, rates the share slow our would don't order we on portfolio. we we're expect really our particular, of an side anomaly that believe think with to well the in projects, bit I had than terms winning business,

Jason Bednar

a equipment necessarily still going here, hard up you're as just having still doesn't that piecing time Dan, your to backlog imply just growing that mean, if pre-normal guess, maybe -- be to that is the can not follow-up I to a we sorry unless times levels, are there, together. pace? same that back quicker missing, lead follow you're something But healthcare I'm at I'm right. turning offline, All but quick monopolize I

Julie Winter

to we've just low to been So grow expectation. clearly, is clarify, double-digit our the going Jason, saying to growth we growth we're to single-digit but pace, not are same we're from expecting at right? the doing down grow,

Operator

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

Julie Winter

this the for in time speaking to us coming you I of morning. everyone, you, the taking many days. forward join to with Thank look

Operator

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

disconnect. now may You

STERIS (STE) 9 May 242024 Q4 Earnings call transcript