Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 001-38848 STERIS plc (Exact name of registrant as specified in its charter) (State or other ju ...

STERIS plc (NYSE:STE) Q2 2023 Results Conference Call November 10, 2022 10:00 AM ET Company Participants Julie Winter - IR Daniel Carestio - President, CEO Michael Tokich - SVP, CFO Conference Call Participants Matthew Mishan - KeyBanc Mike Matson - Needham & Company Jason Bednar - Piper Sandler Jacob Johnson - Stephens Michael Polark - Wolfe Research Dave Turkaly - JMP Securities Operator Good morning, everyone, and welcome to the STERIS plc Second Quarter 2023 Conference Call. [Operator Instructions] Plea ...

Financial Performance - Revenues increased 0.3% to $1,200.5 million for the three months ended September 30, 2022, and increased 8.8% to $2,357.0 million for the six months ended September 30, 2022, compared to the same periods in the prior year [160]. - Gross profit for the three months ended September 30, 2022, was $532.3 million, a 10.8% increase from $480.3 million in the prior year, with a gross profit percentage of 44.3% [180]. - Operating loss for the second quarter of fiscal 2023 was $(306.4) million, compared to operating income of $116.5 million for the same period in fiscal 2022 [162]. - Total revenues for the three months ended September 30, 2022, increased by 0.3% to $1,200.5 million compared to $1,197.0 million for the same period in the prior year [170]. - Total revenues for the six months ended September 30, 2022, increased by 8.8% to $2,357.0 million compared to $2,165.4 million for the same period in the prior year, with organic growth in multiple segments and an additional $166.2 million from the Cantel acquisition [175]. Segment Performance - Service revenues rose by 4.4% to $534.1 million for the three months ended September 30, 2022, driven by growth in the Healthcare and Applied Sterilization Technologies segments [171]. - Consumable revenues decreased by 7.7% to $413.4 million for the three months ended September 30, 2022, reflecting declines in the Healthcare, Life Sciences, and Dental segments [171]. - Capital equipment revenues increased by 6.5% to $253.0 million for the three months ended September 30, 2022, primarily due to growth in the Healthcare segment [171]. - Healthcare segment revenues decreased by 1.5% to $732.8 million for the three months ended September 30, 2022, compared to $744.1 million in the same prior year period [201]. - Applied Sterilization Technologies segment revenues increased by 13.4% to $232.4 million for the three months ended September 30, 2022, compared to $204.9 million in the prior year [203]. - Life Sciences revenues decreased by 5.0% to $125.8 million for the three months ended September 30, 2022, compared to $132.3 million in the prior year [204]. - Dental segment revenues for the three months ended September 30, 2022, decreased to $109.6 million from $115.6 million in the prior year [207]. Cash Flow and Capital Management - Cash flows from operations were $335.6 million in the first half of fiscal 2023, compared to $268.8 million in the first half of fiscal 2022 [163]. - Free cash flow was $138.2 million in the first half of fiscal 2023, slightly up from $135.8 million in the first half of fiscal 2022 [163]. - Capital expenditures were $198.7 million for the first six months of fiscal 2023, up from $133.4 million during the same prior year period [214]. - Total cash dividends paid to ordinary shareholders were $90.0 million, or $0.90 per outstanding share, in the first six months of fiscal 2023, compared to $77.1 million, or $0.83 per outstanding share, in the first six months of fiscal 2022 [219]. Debt and Financial Ratios - The debt-to-total capital ratio was 34.3% at September 30, 2022, compared to 32.1% at March 31, 2022 [164]. - The debt-to-total capital ratio was 34.3% at September 30, 2022, compared to 34.5% at September 30, 2021 [217]. Impairments and Expenses - A goodwill impairment loss of $490.6 million was recognized in connection with the Cantel acquisition [155]. - Goodwill impairment loss of $490.6 million was recorded during the second quarter of fiscal 2023 due to an interim assessment of the fair value of the Dental segment [186]. - Research and development expenses increased by 32.4% for the three months ended September 30, 2022, largely due to the addition of Cantel, focusing on new product development and technological innovations [186]. - Operating expenses for the three months ended September 30, 2022, totaled $838.8 million, a 130.5% increase from the prior year, primarily due to the goodwill impairment loss [183]. Tax and Non-Operating Items - Income tax expense for the three months ended September 30, 2022, was $19.98 million, compared to a benefit of $(17.83) million in the prior year, reflecting a change of $(37.81) million [190]. - Non-operating expenses decreased by $249,000 to $26.6 million for the three months ended September 30, 2022, compared to $26.9 million in the prior year [187]. - Interest expense increased by $3.1 million and $3.9 million during the second quarter and first half of fiscal 2023, primarily due to higher interest rates on floating rate debt [187]. Operational Challenges - Approximately $70 million in capital equipment shipments were delayed in the second quarter of fiscal 2023 due to supply chain disruptions [157]. - The company anticipates potential impacts from the COVID-19 pandemic and other market conditions on its operations and financial results [234]. Legal and Compliance - The company is involved in various legal proceedings and claims, which are considered normal for its size and complexity [229]. - The company evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of the end of the reporting period [241]. - There were no changes in internal control over financial reporting during the quarter ended September 30, 2022, that materially affected the company's reporting [242].

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) (Exact name of registrant as specified in its charter) Ireland 98-1455064 (State or other jurisdiction of incorporation o ...

STERIS plc. (NYSE:STE) Q1 2023 Earnings Conference Call August 3, 2022 10:00 AM ET Company Participants Julie Winter - Vice President-Investor Relations Mike Tokich - Senior Vice President & Chief Financial Officer Dan Carestio - President & Chief Executive Officer Conference Call Participants Chris Cooley - Stephens Matthew Mishan - KeyBanc Michael Polark - Wolfe Research Jason Bednar - Piper Sandler Dave Turkaly - JMP Securities Operator Good morning, everyone and welcome to the STERIS plc First Quarter ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) STERIS plc is a global provider of infection prevention products and services across four segments: Healthcare, Applied Sterilization Technologies (AST), Life Sciences, and Dental, driven by an aging population and increased medical procedures - STERIS is a leading global provider of products and services focused on infection prevention, helping customers create a healthier and safer world through innovative healthcare, life sciences, and dental solutions[10](index=10&type=chunk) - On June 2, 2021, STERIS acquired Cantel Medical LLC, a global provider of infection prevention products for endoscopy and dental customers. This acquisition added a new Dental segment and is expected to strengthen STERIS's market leadership and result in cost savings[13](index=13&type=chunk)[14](index=14&type=chunk) - The company operates and reports financial information in four business segments: Healthcare, Applied Sterilization Technologies, Life Sciences, and Dental[11](index=11&type=chunk) - The company does not believe the COVID-19 pandemic has had a material impact on its operations and has successfully managed liquidity while continuing to invest in expansion projects[15](index=15&type=chunk) [Information Related to Business Segments](index=4&type=section&id=Information%20Related%20to%20Business%20Segments) This section details STERIS's four business segments: Healthcare, AST, Life Sciences, and Dental, highlighting the Dental segment's customer concentration - The Healthcare segment provides a comprehensive offering for healthcare providers, focusing on sterile processing departments and procedural centers like operating rooms and endoscopy suites[17](index=17&type=chunk) - The Applied Sterilization Technologies (AST) segment is a third-party service provider for contract sterilization and sterility validation testing for medical device and pharmaceutical manufacturers[22](index=22&type=chunk) - The Life Sciences segment offers products and services supporting pharmaceutical manufacturing, particularly for biopharma customers in aseptic manufacturing[25](index=25&type=chunk) - The Dental segment, added after the Cantel acquisition, provides instruments and infection prevention products for dental practitioners. Three major customers account for approximately **45.1% of this segment's revenue in fiscal 2022**[30](index=30&type=chunk)[32](index=32&type=chunk) [Information with Respect to Our Business in General](index=5&type=section&id=Information%20with%20Respect%20to%20Our%20Business%20in%20General) The company sources raw materials globally, holds significant intellectual property, operates under extensive government regulations, and faces competitive markets - The company experienced delays and significant cost increases for raw materials in fiscal 2022, which are expected to continue into fiscal 2023. It has stopped purchasing cobalt-60 from its Russian supplier due to the conflict in Ukraine, though this is not expected to be material to the AST segment[34](index=34&type=chunk)[35](index=35&type=chunk) - As of March 31, 2022, STERIS held approximately **566 U.S. patents** and **2,346 in other jurisdictions**, along with approximately **2,463 trademark registrations worldwide**[38](index=38&type=chunk)[39](index=39&type=chunk) Capital Equipment Backlog Comparison | Date | Healthcare Segment | Life Sciences Segment | Total Backlog (excluding Cantel) | | :--- | :--- | :--- | :--- | | **March 31, 2022** | $423.6 million | $104.7 million | $528.3 million | | **March 31, 2021** | $206.3 million | $79.9 million | $286.2 million | [Environmental, Social, and Governance (ESG)](index=7&type=section&id=Environmental,%20Social,%20and%20Governance) STERIS has a formal ESG function, emphasizes ethical practices, focuses on human capital management, and maintains stringent quality control - The company has an established ESG function led by a Vice President of ESG, with oversight from a cross-functional Global Sustainability Steering Committee and regular updates to the Board of Directors[58](index=58&type=chunk) - In fiscal 2022, STERIS incurred **no monetary losses** from legal proceedings related to bribery, corruption, or false marketing claims[62](index=62&type=chunk)[72](index=72&type=chunk) Employee Headcount by Segment (Average) | Segment | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | | Healthcare | 10,546 | 8,529 | | Applied Sterilization Technologies | 2,961 | 2,686 | | Life Sciences | 1,111 | 868 | | Dental | 1,020 | — | | Corporate | 784 | 687 | | **Total employees** | **16,422** | **12,770** | Key Safety Metrics | Metric | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | | Total Recordable Cases Rate | **0.85** | **0.91** | | Days Away From Work Rate | **0.24** | **0.37** | - Employee turnover rate increased to **17% in fiscal 2022** from **11% in fiscal 2021**. The company aims for a rate of **10% or under**[86](index=86&type=chunk) - In fiscal 2022, STERIS did not receive any FDA warning letters, seizures, or consent decrees, and had **no Class I recalls for the third consecutive year**[91](index=91&type=chunk)[92](index=92&type=chunk) [Information About Our Executive Officers](index=13&type=section&id=Information%20About%20Our%20Executive%20Officers) This section lists the executive officers of STERIS as of March 31, 2022, including their positions and recent business experience Executive Officers as of March 31, 2022 | Name | Age | Position | | :--- | :--- | :--- | | Karen L. Burton | 54 | Vice President, Controller and Chief Accounting Officer | | Daniel A. Carestio | 49 | President and Chief Executive Officer | | Mary Clare Fraser | 51 | Vice President and Chief Human Resources Officer | | Julia K. Madsen | 57 | Senior Vice President, Life Sciences | | Cary L. Majors | 47 | Senior Vice President, Americas Commercial Operations | | Renato G. Tamaro | 53 | Vice President and Corporate Treasurer | | Michael J. Tokich | 53 | Senior Vice President and Chief Financial Officer | | Andrew Xilas | 57 | Senior Vice President and General Manager, Dental | | J. Adam Zangerle | 55 | Senior Vice President, General Counsel, and Corporate Secretary | [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company identifies various risks, including legal, regulatory, economic, geopolitical, operational, supply chain, and integration challenges from the Cantel acquisition - The company faces risks from international laws, economic conditions, and geopolitical instability, such as the Russia-Ukraine conflict, which has led to the cessation of cobalt-60 purchases from a Russian supplier[102](index=102&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Operations are subject to extensive regulation (e.g., by the FDA and EPA), and failure to maintain approvals or comply with regulations could result in penalties, recalls, or suspension of production[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - The business is highly competitive and faces risks from supply chain volatility for key raw materials like cobalt-60 and ethylene oxide (EO), which have a limited number of suppliers[135](index=135&type=chunk)[137](index=137&type=chunk) - The integration of Cantel Medical presents risks, including failure to achieve anticipated synergies, complexities in managing a larger business, potential loss of key employees, and managing the substantial debt incurred for the acquisition[152](index=152&type=chunk)[159](index=159&type=chunk)[164](index=164&type=chunk) - The Dental segment is highly dependent on a few large distributors, with the top three customers historically accounting for over **40% of its revenues**[151](index=151&type=chunk) [Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None [Properties](index=24&type=section&id=Item%202.%20Properties) STERIS's principal executive office is in Dublin, Ireland, with primary administrative offices in Mentor, Ohio, and operates numerous owned and leased facilities globally - The company's principal executive office is in Dublin, Ireland, and its primary administrative offices are in Mentor, OH[168](index=168&type=chunk) - The Applied Sterilization Technologies Segment utilizes **52 owned** and **12 leased** contact sterilization locations globally[169](index=169&type=chunk) - STERIS operates over **150 sales, administrative, and operational locations** in the U.S. and more than **25 other countries**, with the majority being leased[170](index=170&type=chunk) [Legal Proceedings](index=26&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding the company's legal proceedings is incorporated by reference from Item 7 of Part II (MD&A) and Note 10 of the consolidated financial statements - Details on legal proceedings are incorporated by reference from other sections of the report, specifically MD&A and Note 10 to the financial statements[172](index=172&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports that there are no mine safety disclosures - None Part II [Market for Registrant's Ordinary Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=Item%205.%20Market%20for%20Registrant's%20Ordinary%20Equity,%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) STERIS's ordinary shares trade on the NYSE under "STE," and the company expects to continue paying cash dividends, with a share repurchase program having approximately **$308.9 million** remaining available as of March 31, 2022 - The company's ordinary shares are traded on the NYSE under the symbol "STE"[175](index=175&type=chunk) - As of March 31, 2022, approximately **$308.9 million** remained available under the authorized share repurchase program, which has no specified expiration date[177](index=177&type=chunk) Share Repurchases in Q4 Fiscal 2022 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 1-31 | — | $ — | | February 1-28 | 50,000 | $229.59 | | March 1-31 | 58,368 | $231.64 | | **Total** | **108,368** | **$230.69** | [Reserved](index=28&type=section&id=Item%206.%20Reserved) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2022, revenues grew **47.5% to $4.59 billion**, driven by the Cantel acquisition and organic growth, while operating income declined **22.4% to $425.6 million** due to acquisition and integration expenses Fiscal 2022 Financial Highlights | Metric | Fiscal 2022 | Fiscal 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $4,585.1 million | $3,107.5 million | 47.5% | | Gross Profit % | 44.0% | 43.2% | +80 bps | | Operating Income | $425.6 million | $548.4 million | -22.4% | | Net Cash from Operations | $684.8 million | $689.6 million | -0.7% | | Free Cash Flow | $399.0 million | $450.9 million | -11.5% | - The significant increase in revenue was primarily due to the acquisition of Cantel, which contributed **$1,073.1 million in volume**[214](index=214&type=chunk) - The decline in operating income was mainly caused by additional acquisition and integration expenses, incremental amortization from the Cantel acquisition, and approximately **$45.0 million in unplanned supply chain and inflation costs**[200](index=200&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) For fiscal 2022, total revenues increased **47.5% to $4.59 billion**, with gross profit margin improving to **44.0%**, while operating expenses more than doubled due to Cantel acquisition costs Revenues by Type and Geography (FY2022 vs FY2021) | Revenue Category | FY 2022 ($M) | FY 2021 ($M) | % Change | | :--- | :--- | :--- | :--- | | **By Type** | | | | | Service | $2,028.8 | $1,664.0 | 21.9% | | Consumable | $1,607.1 | $726.0 | 121.4% | | Capital Equipment | $949.2 | $717.6 | 32.3% | | **By Geography** | | | | | United States | $3,228.9 | $2,227.0 | 45.0% | | Other Foreign | $1,274.2 | $808.6 | 57.6% | | **Total Revenues** | **$4,585.1** | **$3,107.5** | **47.5%** | - Gross profit percentage increased to **44.0% in fiscal 2022** from **43.2% in fiscal 2021**. Positive impacts from productivity (**+170 bps**) and pricing (**+70 bps**) were partially offset by unfavorable impacts from recent acquisitions (**-80 bps**), material costs (**-70 bps**), and inflation (**-50 bps**)[219](index=219&type=chunk) - Selling, General, and Administrative (SG&A) expenses increased **105.5% in fiscal 2022**, primarily due to acquisition-related costs from the Cantel transaction, including amortization of intangibles, fair value step-up, and integration expenses[221](index=221&type=chunk) - Interest expense increased by **$52.4 million in fiscal 2022** due to debt incurred for acquisition financing[225](index=225&type=chunk) [Business Segment Results of Operations](index=36&type=section&id=Business%20Segment%20Results%20of%20Operations) In fiscal 2022, all legacy segments showed strong revenue growth, with Healthcare revenues up **45.6% to $2.85 billion**, and the new Dental segment generating **$361.7 million** Segment Revenues and Operating Income (FY2022) | Segment | Revenues ($M) | % Change (YoY) | Operating Income ($M) | Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Healthcare | $2,845.5 | 45.6% | $626.1 | 22.0% | | Applied Sterilization Technologies | $853.0 | 24.4% | $410.1 | 48.1% | | Life Sciences | $525.0 | 12.3% | $216.2 | 41.2% | | Dental | $361.7 | N/A | $84.4 | 23.3% | - The Healthcare segment's backlog (excluding Cantel) more doubled to **$423.6 million at March 31, 2022**, from **$206.3 million a year prior**, reflecting strong customer demand and some supply chain-related shipment delays[235](index=235&type=chunk) - The Life Sciences segment's backlog (excluding Cantel) increased **31.1% to $104.7 million at March 31, 2022**, from **$79.9 million a year prior**[237](index=237&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash from operating activities remained stable at **$684.8 million** in fiscal 2022, while net cash used in investing activities was **$666.6 million**, primarily for the Cantel acquisition Cash Flow Summary (FY2022 vs FY2021) | Cash Flow Activity | FY 2022 ($M) | FY 2021 ($M) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $684.8 | $689.6 | | Net Cash Used in Investing Activities | ($666.6) | ($1,154.2) | | Net Cash Provided by Financing Activities | $115.8 | $345.6 | - Key investing activities in FY2022 included **$550.4 million for acquisitions** (net of cash) and **$287.6 million in capital expenditures**[244](index=244&type=chunk) - Major financing activities in FY2022 included proceeds from senior notes (**$1.35 billion**) and a term loan (**$650 million**), offset by repayments of Cantel's debt (**$721.3 million**) and convertible debt (**$371.4 million**), and dividend payments (**$163.2 million**)[245](index=245&type=chunk) - The debt-to-total capital ratio increased to **32.1% at March 31, 2022**, from **29.8% at March 31, 2021**, reflecting the debt taken on for the Cantel acquisition[246](index=246&type=chunk) [Critical Accounting Estimates and Assumptions](index=46&type=section&id=Critical%20Accounting%20Estimates%20and%20Assumptions) The company's financial statements rely on critical accounting estimates for revenue recognition, asset impairment, purchase accounting for acquisitions, and income taxes - Revenue recognition involves allocating transaction prices to multiple performance obligations based on standalone selling prices[269](index=269&type=chunk)[271](index=271&type=chunk) - Purchase accounting for acquisitions requires significant estimates for the fair value of assets and liabilities, particularly intangible assets like customer relationships, which impacts future amortization and goodwill balances[279](index=279&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually, using discounted cash flow analysis and other valuation techniques that rely on management's judgment regarding future profitability and market conditions. **No impairment was identified in fiscal 2022**[280](index=280&type=chunk)[281](index=281&type=chunk) - The company uses significant judgment in determining its effective tax rate and evaluating uncertain tax positions, which are subject to interpretation and potential challenges by tax authorities[282](index=282&type=chunk)[283](index=283&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk from variable-rate borrowings, foreign currency risk from international operations, and commodity risk from raw material price volatility - The company has interest rate risk exposure on **$58.9 million of outstanding variable-rate borrowings** under its Credit Agreement as of March 31, 2022[304](index=304&type=chunk) - Approximately **30% of revenues and cost of revenues** are generated outside the United States, creating exposure to foreign currency fluctuations. The company uses forward contracts to hedge some of this risk[305](index=305&type=chunk)[306](index=306&type=chunk) - The company faces commodity risk from price changes and availability of raw materials. It uses commodity swap contracts to hedge against price changes in nickel[307](index=307&type=chunk) [Financial Statements and Supplementary Data](index=52&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for the fiscal year ended March 31, 2022, and the report of the independent registered public accounting firm, Ernst & Young LLP - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[312](index=312&type=chunk)[313](index=313&type=chunk) - The auditor's report identified two critical audit matters: the valuation of Dental and Healthcare customer relationship intangible assets from the Cantel acquisition, and the company's position on uncertain tax positions related to deemed dividend inclusions[316](index=316&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk) [Note 2. Business Acquisitions and Divestitures](index=69&type=section&id=Note%202.%20Business%20Acquisitions%20and%20Divestitures) On June 2, 2021, STERIS acquired Cantel Medical for **$3.6 billion**, adding the Dental segment, with a preliminary purchase price allocation including **$2.94 billion** in intangible assets and **$1.52 billion** in goodwill Cantel Medical Acquisition Details (June 2, 2021) | Component | Value ($M) | | :--- | :--- | | Cash Consideration | $716.4 | | STERIS Ordinary Shares | $2,689.3 | | Other Equity-related Consideration | $193.7 | | **Total Purchase Consideration** | **$3,599.5** | Preliminary Purchase Price Allocation for Cantel | Asset/Liability | Fair Value ($M) | | :--- | :--- | | Intangible Assets | $2,942.0 | | Goodwill | $1,522.4 | | Net Tangible Assets | ($864.9) | | **Net Assets Acquired** | **$3,599.5** | - In December 2021, STERIS sold the Renal Care business, which was part of the Cantel acquisition, for approximately **$196.0 million in cash**[420](index=420&type=chunk) [Note 6. Debt](index=76&type=section&id=Note%206.%20Debt) As of March 31, 2022, total debt increased to **$3.09 billion** from **$1.65 billion** the prior year, primarily due to new credit facilities and senior public notes issued to finance the Cantel acquisition Total Debt Comparison | Date | Total Debt ($M) | | :--- | :--- | | **March 31, 2022** | $3,088.4 | | **March 31, 2021** | $1,650.5 | - To finance the Cantel acquisition, the company issued **$1.35 billion in Senior Public Notes** in April 2021 and borrowed **$650 million under a new Delayed Draw Term Loan**[449](index=449&type=chunk)[452](index=452&type=chunk) - All of Cantel's convertible senior notes were converted by holders following the acquisition, resulting in a total cash settlement of approximately **$371.4 million**[460](index=460&type=chunk)[462](index=462&type=chunk) [Note 8. Income Taxes](index=80&type=section&id=Note%208.%20Income%20Taxes) The effective tax rate for fiscal 2022 was **22.8%**, a slight decrease from **23.3%** in fiscal 2021, primarily due to profit distribution, while net deferred tax liabilities significantly increased to **$772.2 million** due to the Cantel acquisition Effective Tax Rate | Fiscal Year | Effective Tax Rate | | :--- | :--- | | 2022 | 22.8% | | 2021 | 23.3% | | 2020 | 18.2% | - In May 2021, the company received IRS notices of proposed tax adjustments for fiscal year 2018 regarding deemed dividend inclusions, which could result in a cumulative tax liability of approximately **$50 million**. The company is contesting these assertions and has not recorded a liability[486](index=486&type=chunk) - Net deferred tax liabilities increased from **$227.3 million in FY2021 to $772.2 million in FY2022**, primarily driven by a large increase in deferred tax liabilities related to intangible assets acquired in the Cantel transaction[491](index=491&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=104&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None [Controls and Procedures](index=104&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of March 31, 2022, excluding recently acquired entities - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[601](index=601&type=chunk) - Management concluded that internal control over financial reporting was effective as of March 31, 2022. This evaluation excluded the internal controls of businesses acquired during fiscal 2022[603](index=603&type=chunk) [Other Information](index=106&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=106&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - Not Applicable Part III [Directors, Executive Officers and Corporate Governance](index=107&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section incorporates information regarding directors, executive officers, and corporate governance by reference from the company's 2022 Proxy Statement - Information regarding directors, corporate governance, and delinquent Section 16(a) reports is incorporated by reference from the 2022 Proxy Statement[617](index=617&type=chunk) [Executive Compensation](index=107&type=section&id=Item%2011.%20Executive%20Compensation) This section incorporates information regarding executive and director compensation by reference from the company's 2022 Proxy Statement - Information regarding executive compensation is incorporated by reference from the 2022 Proxy Statement[619](index=619&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=107&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section incorporates information regarding security ownership by reference from the company's 2022 Proxy Statement and summarizes equity compensation plan details - Information regarding security ownership is incorporated by reference from the 2022 Proxy Statement[620](index=620&type=chunk) Equity Compensation Plan Information as of March 31, 2022 | Plan Category | Securities to be issued upon exercise | Weighted-average exercise price | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 1,560,954 | $138.37 | 3,146,465 | [Certain Relationships and Related Transactions, and Director Independence](index=107&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) This section incorporates information regarding related transactions and director independence by reference from the company's 2022 Proxy Statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2022 Proxy Statement[622](index=622&type=chunk) [Principal Accountant Fees and Services](index=107&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section incorporates information regarding principal accountant fees and services by reference from the company's 2022 Proxy Statement - Information regarding principal accountant fees and services is incorporated by reference from the 2022 Proxy Statement[623](index=623&type=chunk) Part IV [Exhibits and Financial Statement Schedule](index=108&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedule) This section lists the consolidated financial statements and financial statement schedule included in Item 8, along with a detailed list of all exhibits filed with the Form 10-K - This section provides a comprehensive index of all financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K[624](index=624&type=chunk)[626](index=626&type=chunk) [Form 10-K Summary](index=112&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not Applicable

STERIS plc. (NYSE:STE) Q4 2022 Earnings Conference Call May 12, 2022 10:00 AM ET Company Participants Daniel Carestio – President and Chief Executive Officer Michael Tokich – Senior Vice President and Chief Operating Officer Julie Winter – Investor Relations Conference Call Participants Chris Cooley – Stephens Inc Mike Matson – Needham Matthew Mishan – KeyBank David Turkaly – JMP Securities Operator Good day and welcome to the Steris PLC Fourth Quarter 2022 Results Conference Call. All participants will b ...

STERIS plc. (NYSE:STE) Q3 2022 Earnings Conference Call February 9, 2022 10:00 AM ET Company Participants Dan Carestio – President and Chief Executive Officer Michael Tokich – Senior Vice President and Chief Operating Officer Julie Winter – Investor Relations Conference Call Participants Matthew Mishan – KeyBank Chris Cooley – Stephens Mike Matson – Needham David Turkaly – JMP Securities Operator Good day and welcome to the STERIS PLC Third Quarter 2022 Earnings Conference call. All participants will be in ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 001-38848 STERIS plc (Exact name of registrant as specified in its charter) (State or other jur ...

[Part I—Financial Information](index=3&type=section&id=Part%20I%E2%80%94Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements show significant balance sheet growth and higher revenue driven by the Cantel acquisition, though net income declined due to related costs [Consolidated Balance Sheets](index=3&type=section&id=1.1%20Consolidated%20Balance%20Sheets) Total assets grew to $11.75 billion and liabilities to $5.21 billion, primarily due to goodwill, intangibles, and debt from the Cantel acquisition Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 (Unaudited) | Mar 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $1,904,627 | $1,211,754 | | Goodwill | $5,132,697 | $3,026,049 | | Intangibles, net | $2,954,417 | $898,406 | | **Total assets** | **$11,752,448** | **$6,574,471** | | Total current liabilities | $785,701 | $577,920 | | Long-term indebtedness | $3,421,506 | $1,650,540 | | **Total liabilities** | **$5,207,517** | **$2,683,003** | | **Total equity** | **$6,544,931** | **$3,891,468** | [Consolidated Statements of Income](index=4&type=section&id=1.2%20Consolidated%20Statements%20of%20Income) Q2 revenues rose 58.3% to $1.20 billion due to the Cantel acquisition, while net income fell to $69.8 million on higher acquisition-related costs Income Statement Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | Change | Six Months 2021 | Six Months 2020 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $1,196,985 | $756,132 | +58.3% | $2,165,407 | $1,425,064 | +52.0% | | Gross Profit | $480,344 | $330,037 | +45.5% | $906,626 | $617,421 | +46.8% | | Income from Operations | $116,503 | $141,263 | -17.5% | $130,827 | $257,079 | -49.1% | | **Net Income Attributable to Shareholders** | $69,811 | $105,858 | -34.1% | $48,004 | $195,455 | -75.4% | | Diluted EPS | $0.69 | $1.23 | -43.9% | $0.50 | $2.28 | -78.1% | [Consolidated Statements of Cash Flows](index=6&type=section&id=1.3%20Consolidated%20Statements%20of%20Cash%20Flows) H1 operating cash flow was $268.8 million, with significant cash used for the Cantel acquisition and raised through new debt issuance Cash Flow Summary for Six Months Ended Sep 30 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $268,766 | $296,073 | | Net cash used in investing activities | ($680,335) | ($112,863) | | Net cash provided by (used in) financing activities | $579,703 | ($199,319) | | **Increase (decrease) in cash** | **$162,963** | **($7,553)** | - Key investing activities included **$547.4 million** used for the acquisition of businesses, net of cash acquired[21](index=21&type=chunk) - Key financing activities included proceeds from senior public notes (**$1.35B**) and a term loan (**$650M**), offset by payments on long-term obligations (**$721.3M**) and convertible debt (**$371.4M**)[21](index=21&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=1.4%20Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the accounting for the $3.6 billion Cantel acquisition, which created a new Dental segment and increased goodwill, assets, and debt - On June 2, 2021, STERIS acquired Cantel Medical for total consideration of **$3.6 billion**, creating a new Dental segment and integrating operations into Healthcare and Life Sciences[54](index=54&type=chunk)[55](index=55&type=chunk)[58](index=58&type=chunk) - To fund the Cantel acquisition, the company issued **$1.35 billion** in Senior Public Notes and borrowed **$650 million** under a delayed draw term loan[75](index=75&type=chunk)[77](index=77&type=chunk) - As a result of the Cantel acquisition, the company now reports in four segments: Healthcare, Applied Sterilization Technologies, Life Sciences, and the new **Dental segment**[103](index=103&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The Cantel acquisition drove a 58.3% revenue increase in Q2 FY22, but gross margin and operating income declined due to related costs and inflation - Revenues increased **58.3%** in Q2 2022, reflecting organic growth and added volume from the Cantel acquisition[181](index=181&type=chunk) - Gross profit percentage for Q2 2022 decreased to **40.1%** from 43.6% in the prior year, primarily due to unfavorable impacts from recent acquisitions (460 basis points) and inflation (40 basis points)[182](index=182&type=chunk)[204](index=204&type=chunk) - Operating income declined in Q2 2022 compared to the prior year, mainly due to acquisition and integration expenses and incremental amortization related to the Cantel acquisition[183](index=183&type=chunk) - Free cash flow for the first half of fiscal 2022 was **$135.8 million**, down from $185.6 million in the prior year, due to Cantel acquisition costs and higher capital expenditures[184](index=184&type=chunk)[190](index=190&type=chunk) [Results of Operations](index=36&type=section&id=2.1%20Results%20of%20Operations) Q2 FY22 revenue grew 58.3% to $1.2 billion, while gross margin and operating income fell due to acquisition costs, inflation, and higher taxes Q2 2022 vs Q2 2021 Revenue by Type (in thousands) | Revenue Type | Q2 2021 | Q2 2020 | % Change | | :--- | :--- | :--- | :--- | | Service revenues | $511,747 | $416,628 | 22.8% | | Consumable revenues | $447,799 | $178,590 | 150.7% | | Capital equipment revenues | $237,439 | $160,914 | 47.6% | | **Total revenues** | **$1,196,985** | **$756,132** | **58.3%** | - SG&A expenses increased **99.6%** in Q2 FY22, primarily due to acquisition and integration costs, amortization of acquired intangibles, and fair value step-up related to the Cantel acquisition[208](index=208&type=chunk) - The effective tax rate for Q2 FY22 was **22.3%**, up from 20.8% in Q2 FY21, mainly because Cantel and other recent acquisitions have higher effective tax rates than STERIS historically[213](index=213&type=chunk) [Business Segment Results](index=40&type=section&id=2.2%20Business%20Segment%20Results) All segments saw Q2 FY22 revenue growth, led by Healthcare's 58% increase and the new Dental segment's $115.6 million contribution Segment Revenue and Operating Income - Q2 2022 (in thousands) | Segment | Revenue | % Change YoY | Operating Income | Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Healthcare | $744,134 | +58.0% | $160,390 | 21.6% | | Applied Sterilization Technologies | $204,892 | +20.8% | $99,789 | 48.7% | | Life Sciences | $132,327 | +14.4% | $57,519 | 43.5% | | Dental | $115,632 | N/A | $32,392 | 28.0% | - Excluding Cantel, the Healthcare segment's backlog increased **74.8%** YoY to $311.2 million, and the Life Sciences backlog increased **31.3%** to $98.3 million, driven by customer demand and supply chain delays[222](index=222&type=chunk)[224](index=224&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=2.3%20Liquidity%20and%20Capital%20Resources) The Cantel acquisition was funded by $2.0 billion in new debt, increasing the debt-to-total capital ratio to 34.5% - Net cash from operating activities for the first six months of FY22 was **$268.8 million**, down from $296.1 million YoY, due to costs associated with the Cantel acquisition and integration[231](index=231&type=chunk) - Financing activities in H1 FY22 were dominated by debt issuance to fund the Cantel acquisition, including **$1.35 billion** from Senior Public Notes and **$650 million** from a term loan[233](index=233&type=chunk) - The debt-to-total capital ratio increased to **34.5%** as of September 30, 2021, compared to 21.8% a year prior, reflecting the new debt taken on for the acquisition[231](index=231&type=chunk)[236](index=236&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk exposures are unchanged, but new unhedged currency forward contracts for EUR, MXN, and CAD may introduce earnings volatility - The company's exposures to market risks (interest rate, currency, commodity) have not changed materially since March 31, 2021[255](index=255&type=chunk) - In Q2 FY22, the company began using forward currency contracts to hedge earnings denominated in euros, Mexican pesos, and Canadian dollars; **hedge accounting was not applied**, which could cause earnings volatility[256](index=256&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed effective as of September 30, 2021, with ongoing integration of Cantel's internal controls - The Principal Executive Officer and Principal Financial Officer concluded that **disclosure controls and procedures were effective** as of September 30, 2021[257](index=257&type=chunk) - The company is in the process of integrating the internal controls of the acquired Cantel business into its existing operations[258](index=258&type=chunk) [Part II—Other Information](index=49&type=section&id=Part%20II%E2%80%94Other%20Information) [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings not expected to have a material adverse financial effect - Information on legal proceedings is detailed in Note 8, 'Commitments and Contingencies'[261](index=261&type=chunk) [Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) Key risks include Dental segment distributor dependency, COVID-19 supply chain disruptions, and potential changes to tax laws - A new risk factor highlights that the Dental segment's sales are **highly dependent on a small number of large distributors**, with the top three historically accounting for over 40% of its revenue[264](index=264&type=chunk) - The COVID-19 pandemic continues to pose a risk, causing disruptions in the supply chain and labor scarcity, which has resulted in **material and labor cost inflation**[265](index=265&type=chunk) - The company notes significant uncertainty regarding potential changes to tax laws, such as the proposed U.S. 'Build Back Better' legislation and the OECD's BEPS project, which could **increase tax liabilities**[268](index=268&type=chunk)[269](index=269&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's share repurchase program remains suspended, with no shares repurchased under the plan in Q2 FY22 - The company's share repurchase program was suspended on April 9, 2020, and **no shares were repurchased** under the publicly announced plan in Q2 FY22[273](index=273&type=chunk)[274](index=274&type=chunk) - As of September 30, 2021, approximately **$333.9 million remained available for repurchase** under the board-authorized program, which has no expiration date[272](index=272&type=chunk) [Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required Sarbanes-Oxley certifications - Lists required exhibits, including certifications from the PEO and PFO pursuant to Sarbanes-Oxley Act rules[275](index=275&type=chunk)