STE - Earnings call transcript Q1 2025

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Operator

Good morning, and welcome to the STERIS First Quarter of 2025 Earnings Call. [Operator Instructions] Also please be aware that today's call is being recorded.

I would like to now turn the call over to Julie Winter of Investor Relations. Please go ahead.

Julie Winter

Thank you, Joe, and good morning, everyone.

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

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

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

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

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

Michael Tokich

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

on from operations. will today focused Our results be discussions continuing

with compensation points Gross quarter of well by in of total press as compared organic X% EBIT last as the release, earnings driven $X.XX, Capital adjusted for growth effective tax margin year the costs year in points first income XXX Positive revenue revenue fiscal the due and XX% offset to impacting to favorable XX.X% over Capital inflation. lower to and for compared started year, last increase X% quarter adjusted EBIT was currency of than we the and higher and the year costs saw million per basis totaled are material somewhat share prior increased depreciation price. the you strong year-over-year, points the price higher growth expenditures and expenditures $XXX.X by the with was $XXX.X of increased in totaled $XXX quarter decreased insurance adjustments. Net As a quarter. XX.X%. item volume year. amortization quarter rate discrete the XXXX million, XX.X%, were Constant revenue XX margin of were was due favorable in XX margins. first prior with the million. to basis The quarter timing. mainly basis

Free XXth leverage. first quarter Last of $XXX.X announced consecutive spending. the the down able was of year dividend flow pay With approximately we week, capital cash by was debt, gross impacted million. of we on total divestiture billion. the to at the closing debt were Total May to $X.X XX, end to Free X.Xx was EBITDA cash our timing increases. reducing debt flow dental for quarter

Our to share quarterly increased $X.XX. per $X.XX $X.XX from dividend

With call that, the I will over to turn Dan.

Daniel Carestio

for and us about performance joining of for more our Mike, everyone. the Thanks, year. first our hear Thank fiscal morning, to and good quarter the outlook you rest

a start strong new you had to heard we our Mike, from year. As fiscal

currency in the organic constant grew healthcare quarter. segments, our revenue at Looking X%

our and our by our half capital Over related consumables recurring gains. will expectation as driven not capital It shipments. and to independent services U.S. service is equipment. above revenue and price equipment in our in continues is to procedure outperformance market be continue relatively that the consumables of to as and grow procedure Our well share volumes revenue volumes of

comparisons. challenging equipment capital Healthcare quarter revenue in our anticipated, As declined against the

segment. anticipate still our single-digit year full expectations for our we of a fiscal confident Healthcare capital remain strong growth low for in for equipment year. Healthcare revenue We the However,

revenue Turning was in Supporting quarter, to globally. Medtech organic AST. growth, currency about have grew seen the over that bioprocessing in the grew Constant Europe flat and X%, best nicely we year-over-year a year. performance

We are organic to in Constant in fiscal these the playing in driven half growth planned was by out X% Life in see revenue consumables. strong growth pleased revenue bioprocessing to anticipate and to of a X our continue as second return factors Sciences for year. growth quarter, the currency

divestiture as-reported business CECS on of impacted X the revenues. April As the our expected,

adjusted $X.XX organic we full currency per our $X.XX. year, the of growth diluted to and earnings share constant X% revenue to For are reiterating X% outlook, including

guidance. free $XXX confident pleased fiscal with our about head a the are All full Our $XXX the cash spending. we direction approximately with our year in year. at expectations for are in for of to million in continue of in, Trends we segments on flow million start deliver ability positive also all to and capital unchanged our

please the Julie, the instructions that you prepared the concludes begin for give can the call. Q&A. remarks would That we so

Julie Winter

and for Thank comments. the and get your for Mike instructions give you, can started. can Q&A we please you Dan, Joe,

Operator

come [Operator KeyBanc. with question Brett Instructions] our And first of from today will Fishbin

Brett Fishbin

compared the kept start the bit step-up capital low single-digit the maybe internal wanted kind for a year. curious of how to on question off then equipment. expectations? just Healthcare I'll quarter year? little since through first your it Just what like versus you guidance And the the in trends sounds my repeat I'm already directional drives

Daniel Carestio

comps. and the tough in result still manufacturing challenges year enormous were supply generally for our new slowest terms remains backlog sales orders sales year exception, being as right would slip QX pushing always way the our of and the quarter. it quarter were of is with in terms line I There's an last some it And say that year in a expectations. or a and commissioning, we through It's year last general another unchanged. to But with in chain as shipments. we of in capital Yes. is lowest that our comps one that typically, having ship was and our outlook

Brett Fishbin

And capital services than growth in for and the nice it of the at the just more equipment. least the of activity. gains, on then strength call Healthcare you there else mentioned continue driving either Is you in some the really our healthy trends out consumables anything just see segments? I market was rest we've would seen market miss that segment, that to model, continued double-digit offset those mean share of in

Daniel Carestio

reoccurring most continued We've as you're particular, or procedures, of products above the seen in services nature But well in weight rise that in consumables growth North in We driven. those the of lifted American we've for punched been are And of aware, market in capital procedural market. area are as last reiterate the we've in fact our sustained couple that that the in sales. by general. years and

of So little out to placements part share systems ability large those full the as solution our where take IDNs that the to total having with selling having access there, take STERIS. large value from new fuel working care process, we're health a helped enterprise sales a has our and perspective really of

Brett Fishbin

for right. All me. it. question Got And last

could FY little XQ that bps you Just there. expansion but of I'm touching if full then operating couple 'XX? you XX give to more is margin. margin you a And drivers high-level little a was just year-over-year touched the it bit sometimes lower, seasonally if the year-over-year. bit on down I on year for given curious a expect level operating demonstrate still know color of a

Michael Tokich

Brett. certainly, Yes, Yes.

insurance increased As in look have you And EBIT we mean the did did spoke in negatively some we definitely EBIT $XX I impacted if costs comments, EBIT I margins. QX, higher significantly were my with have Everybody compensation which at quarter. dollars, looks dollars up at year-over-year million. our margin.

anticipate will the it's positive year quarter. margin drive not leverage obviously, the we leverage full we So still we we that anticipate. as getting about we're for But talked EBIT last that QX,

Operator

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

Michael Matson

Yes.

Just following around on there the up inflation. commentary

the the And rate has mean routine get like side, material year? there of still you employees. that that seeing while really battle expect and we've do right? this sounds to still seen starting is it to Or So pressure. labor out up? materials I improved it -- unemployment better the the Is side tick of some to kind is hire components kind

Daniel Carestio

labor I it's bit. continue go of to way. the rolls to place to Yes. it. before it believe the don't I ability you going would down and effect in mean, feel compensation any say tends in months of is, go thing quite meaningful to and I And the turnover with sort It's has staff aggregate. this, in it because up clearly, our come a

they over this So it in up with catching It's months, control. XX new labor put as feels have in months much just the that -- like into last X, X been year. the fiscal it's roll place rates very it's

Michael Matson

Yes.

a as in think, on the just Life an a then follow that device medical the to I looks analyst or much business about Okay. Sciences It I Got And little know don't get slower. been it. like closely. it's as us -- update wanted I

of kind what seeing is and what there the the outlook in wondering you're market. Just

Daniel Carestio

demand biopharma definitely purchases. the some pharma decreased in general products, of result last natural those X cyclicality for capital over funding the is and X, We've some seen the seen slowdown some we've and some cutbacks in of Yes. a that's and and of months there that to

disproportionate Life our However, that, amount businesses importantly, drives have Science segment. the which been we're through in and the consumables services growth our and in strong showing having a more income of said business,

we confident ability continue feel to So in to deliver aspects. on our those

Operator

Michael next Wolfe Research. our Polark come And will question with from

Michael Polark

still Like but me is XQ your to there. bad out single-digit the But where days why revenue I I all -- get heard could model backlog. year, and or I over XX bad the hate struggle suspect, there the Healthcare we last struggle of to the so, you fair. and growth our what like guidance harp equipment feedback, you've or a I this get models, interested what that to we to on I'm see low feedback. just And call feedback. given this I of are landed this, missing analyst in in capital and

bookings year higher, in there, that Any more dollar to be it color seeing rest versus terms? we've this what you appreciate a is lot it. I'd been the So expect of

Daniel Carestio

levels months chain XX, challenged. back where to in over have able turn we Mike, last and operated having we means. how project large months broken the model orders. and model in a or terms XX has the a over time business, now is we a last more to normal of lead back bad the up which control sell something or I now, backlog don't of do think ended manufacturing and What more bad the we to of XX is much on that is a got lot normally lot the ability any analyst supply problem were weren't And historically. lot really it The you're by a is

confident . we're our product to in So a turn by the end be able backlog with and even to fiscal in customers it ability, of get installed lower our year. the

Michael Polark

Obviously, the that. see of Appreciate a you of Europe. rate growth AST. out higher here. positive kind continuation on comments of I A heard follow-up

are growth Or here obviously so? or been As Are you've expand you and say this be capacity of differentiated as expansions investing look here year bid over fleet growth expansions a to forward contributor expected AST last relative the few that and would dollars your fiscal capacity to to to years? to the network. you normal rest the next of -- year, lot

Daniel Carestio

of normal. to it's existing most the existing our expansions adding existing -- on store just and capacity or new sites. you would play, same-store of versus new long-term adding look can't at sites say are expansions I as really because it's It's a

it see that growth the we've historically. continuation facilitate we So to a had

Operator

question our Johnson come will from Stephens. And Jacob with next

Steven Etoch

for Mac This on Jacob. is

business, like up Just the I'd the following here. question Life side on to of Sciences

there is capacity the to think are I I number in and that around this term, additions important seeing are spending, the capital in headwinds end demand, point? green but called a near market. out you at are you this know drug some of any market we this shoots injectable tied seeing In injectable

Daniel Carestio

as And say. the well definitely offsetting spot barrier some a the bit well our of manufacturing headwinds thing sweet We as of injectables, definitely that's the guess, in tailwind is I what are. space, our fortunate product solutions. of in critical and we'd into chemistries products about and obviously that's a aseptic environments It's feeds

as manufacturing of with -- to of from many the relates we So business which majors it's of . fortunately, and them. major it's customers do some it

Steven Etoch

And announced initiatives. previously you'd some chain supply then

How suppliers. any I on you And some think and going? margin working you're moving do impact larger to looking forward? is that expect

Daniel Carestio

is everything Yes, in scale those to also to a but play. long-term really, X over it's get X.X getting suppliers. ring surety ago long-term with is and to take thing we most value important that place. going supply. that the It's time time out making thing play years, better learned and Yes, the was to of suppliers out and there's vet the the were we But X years If of our sure operations. manufacturing X right year, and

Operator

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

Jason Bednar

Apologies think this the I to into order upfront book all to Healthcare the here. back I I'm equipment and revenue back numbers your don't based going provide know figures you that come you but on provide. us on orders, exact of backlog do topic.

Healthcare the for from beyond with we at backlog your lower So us the help this we or digits. of of guess the growth if can are further are I be Healthcare to equipment first guidance I'm remind low order X end revenue might anticipating or higher And wondering single where us year? Can go quarter? move step assumptions you you what

Michael Tokich

Yes, that broken. as we're target significantly, that to coming be would would said, Dan times the it to the doing obviously, that see something as assumptions, and really to the we in that the were earlier we're do, range, more tackle and with I a But really in spoke is be that's possibly sustainable is lead doing that do back used doing turn guys it. just model model really and opportunity equipment get to that not easily. did million past, capital And been in the we're need everything big And the business mid-single thing driver. to get backlog could than our the such have somewhere Dan wasn't when And we has we right? have. really that say That that the large we growth that can't how to can we and order conversation our what you but digits, ability we $XXX would a have have down about, that's lower

Jason Bednar

Okay. then That's Mike. questions follow-up maybe for just helpful, modeling And couple a you. of

it, the was other think delta I notable model. just you -- in versus And some sorry, missed line. were our interest items That there I just if discrete a that said

should can the guide a that provide then in thinking be original any is basis? And rate about than Just tax into the the were first there we one-timers these lower the factored there. quarter? level you expected in on Or the go-forward and period, rate other detail that pushed XX% you right were that

Michael Tokich

Yes.

definitely the adjustments rate, discrete there On rate pushed tax were favorable some the item that were one-timers that lower.

calls we dental would full a I proceeds we pick the And we more interest think XX% full to guidance little rate. bit in time. on able point still as that of did year-over-year the year benefit our with quickly from year stick the this line sale use for much I than were up at anticipated.

full But So again, here favorable year really got benefit. our of doesn't outlook. change bit little those It there. and pennies we a are

Operator

come will Dave Securities. question next from JMP our And Turkaly with

David Turkaly

does Healthcare your similar mix look you sit consumables where that in I from that. a And BD core, just business in to reconfirm like the wanted did, primarily Just margin you to think ad guys the that but it said at was we I standpoint?

Daniel Carestio

on both. as classified is healthcare in Yes, It consumables mix. our

Julie Winter

is bucket. in Dave, time are in that containers in last capital XX%, the the that consumables

Daniel Carestio

Yes.

David Turkaly

the exactly restructuring timing. And recall size a on don't I plan then And think I have But underway. you any detail that? the or

Michael Tokich

continue coming benefit that about year plan. That $XXX throughout this fiscal from million to $XX 'XX, will million was bulk a of year. facilities. X happen of last of announced We've not quarter our a the got in had manufacturing closure a We benefit but for that that, of occur Yes. bulk in we that The 'XX. restructuring had will

David Turkaly

look and maybe what saw of one, out we're track pretty But changed last priorities, the some peers valuation the share dividend, And space? a at the XX Great. increase the I seeing other you guess, M&A of and I front given record. repo, that in obviously, some anything smaller and good there is the capital on even in years as

Daniel Carestio

really forward-looking No. good and we debt. coming But in in a if will investment about remain history our do of we're what the active priorities we normally and position don't a M&A. I And being do. same, of we present themselves years, opportunities obviously, talk the mean over obviously have terms we

Operator

a from question next our And is follow-up Wolfe Polark Michael Research. with

Michael Polark

more, X with forma number is a in Just please, items the heard other in quarter. now for the pro called your the rest basis sheet balance for model. a interest The of out What line, the quarterly line for I this on good year? that discrete

Michael Tokich

of don't basis, at have year full front $XXX looking but total. still me, quarterly a about I we're million a in in that basis, On for

Michael Polark

I'll we it. appreciate I can -- Okay. take offline. that

Michael Tokich

in have me, I just don't front it of Mike.

Operator

turn remarks. our for like conference to with to Winter that back Julie And over will question-and-answer session. I'd that, conclude closing the any

Julie Winter

everybody, this us up days. you of with to join in to coming many Thanks, for taking the forward morning. catching the time Look

Operator

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

disconnect now lines. your may You

STERIS (STE) 7 Aug 242025 Q1 Earnings call transcript