STERIS (STE) 7 Nov 242025 Q2 Earnings call transcript

Good day, everybody, and welcome to the STERIS plc Second Quarter 2025 Earnings Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the call over to Julie Winter, Investor Relations. Please go ahead.

Thank you, Eric, 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 prohibited. Any retransmission the today. expressed webcast as call of consent of redistribution, time-sensitive accurate or is This only that STERIS of written this rebroadcast without information is strictly

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

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

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

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

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

margin X% operations EBIT higher quarter the the productivity. quarter, by costs X% to totaled also margin for prior continuing start decline share of organic XXX and the from currency continued adjusted earnings in have well XX release, $XXX of amortization second was as-reported continuing effective the last inflation a quarter. Positive XX.X% points compared points fiscal saw driven in million. to XX.X%. grew the income And $XXX.X revenue increase from from As and Constant were Total the press revenue of $XXX you the Reflecting last in XX.X%. year-over-year, labor XX% points material margin, were for decreased volume the rate gross $X.XX, depreciation offset basis million. the quarter year per momentum compared we basis to with price. Gross the decreased fiscal price by due XXXX in quarter as as in and year. year. Capital basis first grew favorable mainly revenue in Net timing. over expenditures million, totaled were with operations XX year. Capital half was The the tax expenditures and of adjusted the

ending halfway our debt. million. pay X.Xx first Free gross approximately with quarter, at the full right was during to debt the of million, end EBITDA of $XXX fiscal continued quarter at the Total leverage. billion half guidance cash XXXX for $XXX.X debt total mark in down to We $X.X year was of approximately flow

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

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

you Mike, another from quarter. As had heard strong we

currency organic X% recurring revenue segments. quarter, by once our at led strong the again constant Looking Healthcare revenue streams. grew in

in U.S. market the to declined and quarter X% as continues to driven revenue the for be be healthcare grew as capital will in over the make shipments. price second anticipate share year XXXX, expect that quarter procedure flat equipment difficult in of and slightly the for in mainly due segment in fourth reflected to quarter, fiscal our Healthcare expectations the the during Orders the outperformance year backlog. a comparisons. XX% to our of Our the timing consumables We strong remain of confident We the in now in shipments recurring labor and in due material revenue which $XXX pricing, fiscal than healthcare outperformance equipment down care more inflation. timing revenue. positive million Margins that gains. the held health offsetting revenue Healthcare have capital lower up will with costs for well lower by the productivity equipment up volumes nicely capital and services

global grew Turning in to significant AST. the Constant increased services and capital with of in in were a shipments. and X% first growth signs we stable, bioprocessing quarter saw currency services, X%, organic medtech revenue customers Supporting the growth demand.

will costs, second which labor segment. year grow. We the increase half continued EBIT of anticipate AST continue our in impacted in for to bioprocessing margins fiscal were by to revenue energy and the

a In recorded of We on these business loss capital a unit. we in from order med-x our the will long-standing would improve half equipment the expect in levels margins year. second addition,

for Sciences revenue once in Constant growth quarter, was X% again Life currency growth organic consumables. in by strong the driven

CECS Margins of divestiture X revenue. pricing the impacted from mix, the as-reported our benefited favorable the divestiture. and on April expected, business As

Turning outlook XXXX. fiscal our to for

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

Our expectations spending. for unchanged cash free million, at with about capital $XXX also approximately flow million $XXX about are in

year in to highlight. continued Life pieces single revenues. year we to for we to be strength to X% For in, Science anticipated the but for strength recurring is exit longer anticipated revenue to moving do growth the flat no to declines have to mitigated with X% capital in full be outlook revenue your consumables. the modeling, year. mid- to is expect double-digit a now organic revenue revenue growth. Healthcare grow we wanted fiscal growth high currency constant year, From All at equipment, for The now by with single-digit somewhat expect the about in perspective, a AST for we segment continues digits be the high few

the profit perspective, for margins a anticipate to year. flat From be we now about

continues benefit to the half first performance. diversified of total with of pleased to the our The a are year. we in, be fiscal our All segments nature

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

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

Our first with comes from Instructions] Stephens. question Jacob [Operator today Johnson

on Maybe a AST. couple

your EPS. the just kind that that the in the of large sale, bad just much segment First, I'm in you're think this curious, given of a up this included were guy of something contemplated -- the that guidance the how still margins the year? was sequentially? proverbial for loss, loss Or in something overcoming? that adjusted is bad on I was that a Was magnitude to frame you on down equipment can headwind they And then was

of about Jacob, loss loss. was mean, contemplated the to I on basis not margins that we but had impact points as -- large XXX itself. loss, a a And

So surprised the goes original back But back the had to Med-X we order, project. in, of no and fulfill ability adjust it taken to by the a were little bit is event onetime think, amount. And to had recur. we that XXXX, while it that acquisition that a we I costing not a will quite on

it. it double AST, positive year heard commentary Got some at like you no then seems the longer exiting mention there. bioprocessing Dan, maybe but digits for I And then

thought... offsetting or of kind be not as incremental talked about back bioprocessing is could by just as maybe AST any headwinds quickly coming seen bioprocessing You you that in you've as

going And see in through perspective second the very the think we this continuing our growth, it this point, where I half based a bioprocessing to not it's point. year. at especially exit to being we're been improve double-digit And from point. year. maybe And growth although rate, believe medtech We're optimistic on a had we're hoped I multiple at the be although on actually at run it don't has would to the at I of accretive this halfway nice,

than we're get would it that. we're probably quarter. there hoped a now it's think fourth little to I going seeing by is be And I'd what eventually. later

with Our will Brett next be question Fishbin from KeyBanc.

on capital the updates. equipment healthcare one Just

So backlog the stepped that you'd if year-to-date slightly you between really parse be little moving this appreciate maybe low expectation I then versus why that was the moving little bit pieces bit, coming just where down. flat quarter? could a I progress up around the from out and thought hoping you to a to into single-digit growth quarter? update And maybe

detailed. I shipments, the the I it shipments. into mean ran that best We some at little quarter bit of with especially the on hurricanes wasn't quarter quarter weather-related Southeast. end mean the impact like the things specifically, some the for did a Yes. and delays that in

importantly, top in on months strong, strong Our months stacking organization. especially the is book The other, up talking with X about backlog reality margins of order more the too remains mix we're we ship, this of and remaining each -- or incredibly and to that keep we're or really healthcare the it X% and coming offsetting in on terms than consumables in much through. time higher other. spend services of and X% direction wouldn't more that's profit of one with I

that And All there just on then the and investors next ability operating And then in the that, anything just from for get language to change revenue as in tied maybe Is how of changed really follow-up the else prior confident of confident a right. Cool. at quarter? call margin to AST operating get Or pace level to the sequential your margin a the favorable my just or improvement return it, we do mix? year? follow-up is expectation. to expansion

else to to an expectations to AST. stop I and AST continuing obtaining that say not would than at Obviously, margin Other basis. double that, are there's from impact the going digits, improvement. at point the EBIT related us would that goal Yes. EBIT not exiting we able Brett, margin to performing would our our on is of we long-term with to drive annual be expand that nothing definitely

Stanley. from with Patrick Our Wood question next Morgan comes

tariffs on got Do from just you I for positive around could for move and quick. there of have it's expectations I've heard customers how if have any I that around please. supply in? two, chain first or things guys? coming an effect know you changes, any might guess negative But you be one, your the

as business question. have as challenges really, occur couple got Malaysia, the there's in would a region, a that Asia or few of AST operation of front-shoring haven't what number We've and for with new say. Patrick, where might over a builds particularly we in have may last a business, some thanks relates relates of has enormous we've located reshoring not front-shoring, online seen in But Pacific anticipation to and we've No, come of lot seen it's as lot our of last the as I it there growth we years over China. the seen that more years to the of that it

on that I the on yield it, that's Do one news of next -- data playing Or lot public other can have That's give how And any months? the a update out guess was only on things. sort help but in really us of then few side for helpful. of upcoming a the not over the there's litigation flow? you anything we sense

Q. discussing it's would not look is of litigation Waqigail-Illinois in the And until under to I we we best I owned I something there. we path provided is that think and continue facility the Isomedix XXXX you from Yes. would do you to that disclosures And but have definitive I'll What there over point ongoing say to those, XXXX the refer related have some discuss, litigation more X on the name. our years we significant that for to a little to

Polark comes Wolfe question with next from Our Research. Michael

stuff, you services. consumables of There's Is unpack you the consumables? I Can Is a lines. well? in share? lot want in differentiation And gains obviously that Can us? of going is Is What's department? of a mentioned a as products share it it -- on especially in it Where for to are and processing you all differentiated OR lot ask the repair of it driver it? two stuff? growth. seeing services you care those health

on as It's sterile our well. And that, fact we've equipment and strong it's well which the honest of ourselves processing. be as parts, procedure of just all We've or as to of lot consumable And the Yes. U.S. the an volumes really consumables that with that having driving shipped our consumption gangbuster particularly especially nicely the relates is it large over business contracts year in months that's I of business, capital services in GPO positioned just so. to a IDM some think the are as awful you. XX last

It's Can obviously follow-up I versus ask a sheet. you your balance say, the on let's under-levered, history.

more is on the you does this moment, assertive Seller the is pipeline? How with the there M&A of if compelling at So can opportunity kind it not expectations? share overly comment chance look? a becomes And set M&A repurchase?

financial I news we're capability. comment the move we'll on of you that. when integration a don't have and the and a plenty discuss if have on always appropriate, where from we if capacity have it's cannot mean we M&A opportunities position timing and something, our in Clearly, We definitely pipeline. to up. But we the and management abilities sync will, powder, internal

see how that out. we'll So plays

But we historically have at half right acquisitions, looking and also the $XXX is buy done. in add it what that reflected which now. -- what at I standpoint, we is is of which time, million in the is smaller year, in back first balance shares the but did most And fiscal the would of we're sheet the debt deal point the tuck-in same robust, of

[Operator Instructions] comes from question Matson Mike Company. Our & Needham next with

some costs to degree. to and labor around commentary margins your pressure the heard I energy So continuing

seen, the other, Just costs? I be of this that's to something given of sort some kind there here is we've of causing the kind Or guess, those just else going inflation higher? on lagging of and cooling is general

say, we is our would Mike, incur a are that I of I cannot and really out we there we And fiscal costs, of a energy those too, control. piece, that the think on sometime should energy immediately. pass the the is also something during labor, Unfortunately, because costs the year. lagging those anniversary are as issue, timing bit obviously,

lag So of bit is definitely too. little there a a there,

Yes.

time I of looked Okay. or something of revenue. you that And bioprocessing, the of last last us just that I say is? a that give much you if X% was total time was heard I think wondering or... I the sense AST then about so guys how Is can your accurate

we off over level. of sort the X% that X.X something It's of based it's like the that. in projected mean or to the I and than new ballpark set that years reduction to last X% new the AST nicely saw less the to on that, revenue it's point, of grow

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

I that you could AST, going thought you management to you've Do think quite Dan, think or is this on else ask just the where on want something stuff? customer picked is there inventory medtech I Or trends. not mentioned should be. you it up?

things. two management. I think definitely I it's think it's do inventory

And lot Just the sometimes what is tight end a a our I taking mean of And business overproduced a like see to of is what And job high very the we'll down mean pretty versus out that where that is strong that medtech this nice customers as It's disappointing. that are of think I for all just are STERIS a our right same Overall, not inventory. better now, QX, are we bit has of let's I done and those We the say growth X% inventory AST. be on seen procedure we early bringing that drives AST overcritical here. not hold I rates classic growth opportunity. is saw converge, effect. standard. then not then rates procedure what QX, year, business. growth a up. in keeping slowdown saw think controls maybe AST would matched they had I and I've the

a of Understood. mix Since perking you one are On segment, thing? as self-help it of other equipment to on that ask Sciences, a has so you I'm I'll defend Life profit? the lower here, it. taking simply more. it's commented portion been Is margin Or kind up actions

perspective, the it It's the all capital percentage and is than nicely business is from that And higher-margin up. a decline in perspective business consumable more driving from is a incredibly mix. That and profit but there. growing that offsetting is

Sandler. comes Jason Our with Bednar Piper from question next

in you're think a sole course. or juggling from situation? your I whether you've already but the are here on looking Why try against for, was of strategy, of I'll a defendant, out few these cases can you here court? just kind of what EO. it to want this the entire insurance these, calls help necessarily settle to XX-Q covered can't you is start on upfront anyways. answer -- us where Just defending whether morning, in what risk you you specify have you cases going codefendent morning. against? trial, with if I legal there disclosed And Can this apologies but then Apologies again, maybe And not not those might in

Yes. Other than talk the absolutely strategy, legal M&A other strategy. about don't thing we is

to around on So litigation say comments that our the I the are in will stay queue, refer and comments you ongoing this at time. to we'll that

Okay. insurance sole comment of defendant I those? the I any factual. on more legal and of pieces versus and guess, mean mean I versus strategy part is Dan, either the

I have no. comment, no

Okay.

In Is probably any related? Are in sounds like better maybe that outlook Fair I on moderation, that say should that there exclusively adjustments category? you're today. the Okay. lower or AST, a enough. pricing hair seeing bioprocessing

No. the It's and that trend. no adjusted the that just of rate, -- we But up If take X.X whole a the end telling much for outlook you we've honestly, in change year-to-date, AST we'd run volumes were it's year. the be higher to just we've on points more the approach. seen conservative based year-to-date

in segment, the double-digit improved growth think Okay. you affect confidence I for But your at all a kind the that delayed idiosyncratic -- of in the And incremental last does was segment? year, within timing that equipment how in of about looking getting influence that seeing adjusting, margins margins on AST forward, course, does back that drag. guess, . to

we the in be second onetime the AST the of in loss for to on capital out year, half adjusting particular. in would the Mevex, strong No, expect margins

Company. question next Matson Mike as from Needham comes Our follow-up, a &

Just one quick one here.

you're flat, be EPS could still at margin our -- expect now reiterating margins the guidance. with the So

at on there still else in something? end offset to within that is going that? of fall Or the or something mean, the I lower it P&L maybe just kind range, So is

the it seeing a to about but Mike, does are Yes, be expense. $XX expect an for fall full interest the impact on impact We or interest year within we favorable range, now million.

Our next Stephens. with question Jacob from comes Johnson

else do follow-up. Everybody a

So I figure them. I join

right flesh of Life consumable you're Just seeing think demand, on curious, debate at I of that around going there's seeing you from kind of the customers a in now? -- lot you just And that maybe level, with strong demand, kind business, can pharma of kind What's on what the driving higher are Sciences those business? a out what's what demand?

in mind, last Yes. strong keep our products easy core comps, recovery production. in as on business, lot the I are -- say, chemistry got a we've very full barrier destocking customers particular, seen space going in of consumables that There space. would was so we've year. comps the somewhat well our in relatively And against from easy those as back in

will session. like This I over to you. closing Thank conclude for back turn our to now Winter conference Julie the would any remarks. question-and-answer

be everybody, this a to at you us Thanks, time fall taking with today, conferences the for forward and we'll to just catching then. few and look join up of here many

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

may disconnect. now You