Core Insights - The article emphasizes the importance of Steris' international operations in assessing its financial strength and growth potential, particularly in the context of a global economy [2][3]. Revenue Performance - Steris reported total revenue of $1.37 billion for the quarter ending December 2024, reflecting a decline of 1.8% year-over-year [4]. - Revenue from Ireland was $24.12 million, accounting for 1.76% of total revenue, which was a decrease of 17.04% compared to the projected $29.07 million [5]. - Other Foreign Revenues contributed $343.87 million, representing 25.09% of total revenue, falling short of the consensus estimate of $382.04 million by 9.99% [6]. Future Projections - Analysts project Steris to report total revenue of $1.49 billion in the current fiscal quarter, indicating a 5.1% increase from the prior year [7]. - For the entire year, total revenue is forecasted at $5.48 billion, a 0.7% improvement from the previous year, with Ireland expected to contribute 1.9% ($102.31 million) and Other Foreign Revenues 26.2% ($1.44 billion) [8]. Market Context - The reliance on foreign markets presents both opportunities and challenges for Steris, necessitating close monitoring of international revenue trends to gauge future performance [9]. - Financial analysts are increasingly focused on international developments and their impact on earnings estimates for companies operating globally [10].

Financial Performance - Revenues increased 5.6% to $1,370.6 million for the three months ended December 31, 2024, compared to $1,297.7 million for the same period in the prior year[160]. - Gross profit for the three months ended December 31, 2024, was $610.3 million, a 9.0% increase from $560.0 million in the prior year[180]. - Income from operations for the third quarter of fiscal 2025 was $245.3 million, compared to $226.5 million for the same period in fiscal 2024[162]. - Total revenues for the nine months ended December 31, 2024, were $3.98 billion, reflecting a 7.0% increase compared to $3.72 billion in 2023[200]. - Operating income for the same period was reported at $686,140,000, while net income stood at $574,877,000[226]. Cash Flow and Capital Management - Cash flows from operations were $887.3 million for the first nine months of fiscal 2025, compared to $718.5 million for the same period in fiscal 2024[163]. - Free cash flow for the first nine months of fiscal 2025 was $588.1 million, an increase from $457.0 million in the same period of fiscal 2024[169]. - Total cash dividends paid to ordinary shareholders increased to $163.9 million, or $1.66 per share, in the first nine months of fiscal 2025, compared to $149.2 million, or $1.51 per share, in the same period of fiscal 2024[218]. - The company repaid $638.1 million of term loans during the first nine months of fiscal 2025, compared to $45.0 million in the same period of fiscal 2024[213]. Debt and Capital Structure - The debt-to-total capital ratio improved to 25.2% at December 31, 2024, down from 33.7% at March 31, 2024[164]. - Debt-to-total capital ratio improved to 25.2% at December 31, 2024, down from 34.0% at December 31, 2023[216]. Segment Performance - Service revenues rose by 10.4% to $652.2 million for the three months ended December 31, 2024, driven by growth in the Healthcare and AST segments[171]. - Healthcare segment revenues increased by 6.5% to $976.0 million for the three months ended December 31, 2024, driven by a 13.5% increase in service revenues[201]. - AST segment revenues increased by 9.9% to $258.1 million for the three months ended December 31, 2024, primarily due to increased pricing and volume[203]. - Life Sciences segment revenues decreased by 6.9% to $136.4 million for the three months ended December 31, 2024, impacted by a 30.7% decline in capital equipment revenues[204]. Expenses and Investments - Total operating expenses increased by 9.4% to $365.0 million for the three months ended December 31, 2024, compared to $333.6 million for the same period in the prior year[182]. - Research and development expenses rose by 8.3% to $27.4 million for the three months ended December 31, 2024, reflecting ongoing investments in new product development and technological innovations[183]. - Capital expenditures totaled $299.2 million for the first nine months of fiscal 2025, compared to $268.8 million during the same prior year period[213]. Restructuring and Future Outlook - The company anticipates annual improvements in income from operations of approximately $25.0 million due to a targeted restructuring plan, with benefits expected to materialize primarily in fiscal 2026 and beyond[184]. - Total pre-tax restructuring expenses recorded in fiscal 2025 related to the restructuring plan amounted to $33.1 million for the nine months ended December 31, 2024[185]. - The restructuring plan aims to achieve pre-tax savings, although the timeline and realization of benefits remain uncertain[235]. Legal and Regulatory Risks - The company is involved in various legal proceedings and claims, which may impact financial results but are not expected to have a material adverse effect on the consolidated financial position[231]. - The company anticipates potential risks from public health crises, market demand fluctuations, and regulatory changes that could affect operations and financial performance[234]. Currency and Commodity Risks - The company is subject to interest rate, currency, and commodity risks, with exposures not changing materially since March 31, 2024[237]. - The company held forward foreign currency contracts to hedge a portion of expected non-U.S. dollar-denominated earnings against the US dollar during the third quarter of fiscal 2025[238]. - The company entered into commodity swap contracts to buy 197.3 thousand pounds of nickel to hedge against price changes impacting raw materials[240]. Internal Controls and Compliance - 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 that materially affected or are likely to materially affect the company's internal control during the quarter ended December 31, 2024[242].

Financial Data and Key Metrics Changes - Total revenue for the third quarter grew by 6%, with constant currency organic revenue also increasing by 6%, driven by volume and a 240 basis point price increase [8] - Gross margin increased by 90 basis points year-over-year to 44.6% [8] - EBIT margin decreased by 10 basis points to 23.3% compared to the previous year's third quarter [9] - Net income from continuing operations was $229 million, with adjusted earnings per diluted share increasing by 11% to $2.32 [10][11] - Free cash flow for the first nine months was $588 million, on track to meet the full-year guidance of approximately $700 million [12] Business Line Data and Key Metrics Changes - Healthcare constant currency organic revenue grew by 7%, driven by strong recurring revenue streams, while capital equipment revenue declined by 5% due to shipment timing [13][14] - AST constant currency organic revenue grew by 10%, with services growing by 10% and a slight decline in capital equipment shipments [15] - Life Sciences Group saw a 1% decline in constant currency organic revenue, with margins improving to 42.6%, benefiting from favorable mix pricing and the divestiture of CECS [17] Market Data and Key Metrics Changes - Orders in the healthcare segment grew over 10%, reflected in a $435 million healthcare backlog [14] - The company noted that while order growth remains robust, shipments were delayed due to customer project delays [14] Company Strategy and Development Direction - The company is tightening its revenue and earnings guidance for 2025, now expecting approximately 6% as-reported revenue growth and constant currency organic revenue growth [19] - The company is optimistic about the bioprocessing demand and believes it has worked through inventory challenges, expecting normalized growth going forward [30] - The company continues to invest in facilities and processes to meet or exceed environmental and regulatory standards [21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the trends in the AST segment, noting that while there has been a recent uptick in growth, they are not ready to declare victory [45] - The management highlighted that the spending from healthcare customers remains strong, with no significant concerns about order structures [73] - The company is well-positioned to comply with existing regulations regarding ethylene oxide and does not anticipate changes in the current legislative environment [63] Other Important Information - The company incurred over $10 million in additional litigation expenses year-over-year due to ongoing legal matters related to ethylene oxide [9][20] - Capital expenditures for the first nine months totaled $299 million, with depreciation and amortization at $354 million [11][12] Q&A Session Summary Question: Concerns about Healthcare Capital Equipment - Management indicated that delays in shipments are due to customer readiness rather than hesitancy, with strong order growth still observed [26] Question: Trends in Bioprocessing Demand - Management noted optimism in bioprocessing demand, suggesting that the market is recovering from previous inventory challenges [30] Question: Potential Impact of Tariffs - Management is taking a wait-and-see approach regarding potential tariff reintroductions, emphasizing ongoing analysis of the situation [35] Question: Sustainability of Margin Performance - Management expressed confidence in the sustainability of margin improvements, driven by favorable volume, mix, and pricing [53] Question: Update on Ethylene Oxide Cases - Management confirmed that the retrial for the first ethylene oxide case is scheduled for May, with no additional cases added beyond what was previously disclosed [58] Question: Customer Concerns about Policy Changes - Management reported no significant concerns from customers regarding potential policy changes, with strong order growth in both healthcare and life sciences [71]

Core Viewpoint - STERIS plc reported third-quarter fiscal 2025 adjusted EPS of $2.32, reflecting a 9.9% increase year-over-year, aligning with Zacks Consensus Estimate, while revenues of $1.37 billion increased 5.6% year-over-year but missed estimates by 0.7% [1][3][12] Financial Performance - Adjusted EPS of $2.32, GAAP EPS of $1.75, up 17.4% from $1.49 year-over-year [1][2] - Revenues of $1.37 billion from continuing operations, a 5.6% increase year-over-year, but missed Zacks Consensus Estimate [3][12] - Organic revenues at constant exchange rate (CER) rose 6% year-over-year [3] Segment Performance - Healthcare segment revenues rose 7% year-over-year to $976.0 million, with consumable revenues up 9% and service revenues up 13%, partially offset by a 5% decline in capital equipment revenues [4] - Applied Sterilization Technologies (AST) revenues improved 10% to $258.1 million, driven by a 10% growth in service revenues [5] - Life Sciences segment revenues decreased 7% to $136.4 million, impacted by the divestiture of the CECS business, despite a 14% growth in consumable revenues [6] Margins and Expenses - Gross profit increased 9% to $610.3 million, with gross margin expanding 138 basis points to 44.5% [7] - Selling, general and administrative expenses rose 8.8% to $335.4 million, while research and development expenses increased 8.3% to $27.4 million [8] Cash Flow and Guidance - Cumulative net cash flow from operating activities reached $887.3 million, up from $718.5 million year-over-year [10] - Updated fiscal 2025 revenue guidance expects approximately 6% growth, down from earlier estimates of 6.5-7.5% [11] Overall Assessment - The earnings met estimates, but revenue performance was mixed, with growth in most segments except Life Sciences, attributed to a rebound in procedure volume and favorable pricing [12] - Margin expansion is a positive indicator, although the lowered revenue guidance may raise concerns [13]

STERIS (STE) Q3 2025 Earnings Call February 06, 2025 09:00 AM ET Company Participants Julie Winter - Vice President of Investor Relations & Corporate CommunicationsMichael Tokich - Senior VP & CFODaniel Carestio - President and Chief Executive OfficerJacob Johnson - Managing Director Conference Call Participants Brett Fishbin - Vice President & Equity Research AnalystMichael Polark - Senior Equity Research AnalystJason Bednar - Senior Research AnalystPatrick Wood - AnalystMike Matson - Senior Equity Researc ...

Core Insights - Steris reported revenue of $1.37 billion for the quarter ended December 2024, a decrease of 1.8% year-over-year, with EPS at $2.32 compared to $2.22 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $1.38 billion, resulting in a surprise of -0.67%, while EPS met the consensus estimate [1] Financial Performance - Healthcare revenues were $976.04 million, below the average estimate of $983.64 million, reflecting a year-over-year increase of 6.5% [4] - Healthcare Products - Consumables generated $358.23 million, slightly above the estimate of $356.72 million, with an 8.7% year-over-year increase [4] - Healthcare Products - Capital equipment revenues were $254.80 million, below the estimated $285.02 million, showing a decline of 4.5% year-over-year [4] - Healthcare Products - Service revenues reached $363.01 million, exceeding the estimate of $341.91 million, with a year-over-year increase of 13.5% [4] - Life Sciences revenues totaled $136.38 million, below the estimate of $141.59 million, marking a 7% decline year-over-year [4] - Applied Sterilization Technologies (AST) revenues were $258.14 million, slightly above the estimate of $254.63 million, with a year-over-year increase of 9.9% [4] - Life Sciences - Service revenues were $36.64 million, below the estimate of $41.15 million, reflecting a 12% decline year-over-year [4] - Life Sciences - Capital equipment revenues were $31.06 million, exceeding the estimate of $28.74 million, but showing a significant decline of 30.7% year-over-year [4] - Life Sciences - Consumables revenues were $68.68 million, below the estimate of $78.26 million, with a year-over-year increase of 14.3% [4] Operating Income - Operating income for Healthcare was $246.92 million, surpassing the average estimate of $231.39 million [4] - Corporate and Other reported an operating loss of $100.84 million, worse than the average estimate of -$86.36 million [4] - Operating income for Applied Sterilization Technologies (AST) was $115.76 million, slightly above the estimate of $112.21 million [4] Stock Performance - Steris shares have returned +6.3% over the past month, outperforming the Zacks S&P 500 composite's +1.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Group 1 - Steris reported quarterly earnings of $2.32 per share, matching the Zacks Consensus Estimate, and showing an increase from $2.22 per share a year ago [1] - The company posted revenues of $1.37 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.67%, and down from $1.4 billion year-over-year [2] - Steris shares have increased approximately 6.7% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] Group 2 - The earnings outlook for Steris is mixed, with the current consensus EPS estimate for the coming quarter at $2.60 on revenues of $1.49 billion, and $9.08 on revenues of $5.48 billion for the current fiscal year [7] - The Medical - Instruments industry, to which Steris belongs, is currently ranked in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Performance - Total revenue from continuing operations for Q3 fiscal 2025 increased 6% to $1.4 billion compared to $1.3 billion in Q3 fiscal 2024[2] - Net income for Q3 fiscal 2025 was $173.6 million or $1.75 per diluted share, up from $148.4 million or $1.49 per diluted share in Q3 fiscal 2024[3] - Adjusted net income for Q3 fiscal 2025 was $229.1 million or $2.32 per diluted share, compared to $207.6 million or $2.09 per diluted share in the prior year[3] - Healthcare revenue grew 7% to $976.0 million, driven by a 9% increase in consumable revenue and a 13% increase in service revenue[4] - Applied Sterilization Technologies (AST) revenue increased 10% to $258.1 million, with service revenue also growing by 10%[5] - Life Sciences revenue decreased 7% to $136.4 million, primarily due to the divestiture of the CECS business and a decline in capital equipment revenue[6] - Fiscal 2025 revenue outlook updated to approximately 6% growth, down from previous expectations of 6.5% to 7.5%[9] - Adjusted earnings per diluted share for fiscal 2025 is anticipated to be in the range of $9.05 to $9.15, reflecting a ten cent negative impact from currency[9] Cash Flow and Assets - Net cash provided by operations for the first nine months of fiscal 2025 was $887.3 million, compared to $718.5 million in the same period of fiscal 2024[7] - Free cash flow for the first nine months of fiscal 2025 was $588.1 million, up from $457.0 million in the prior year[7] - Free cash flow for the nine months ended December 31, 2024, was $588,104, an increase of 28.7% from $457,013 in 2023[25] - The company reported a free cash flow of $700,000,000 for FY 2025[32] Revenue Breakdown - Revenues for the three months ended December 31, 2024, increased to $1,370,570, a 5.6% rise from $1,297,724 in the same period of 2023[20] - The Healthcare segment generated revenues of $976,044 for the three months ended December 31, 2024, up 6.5% from $916,227 in 2023[23] - Total revenue for the nine months ended December 31, 2024, was $3,978.984 million, with a GAAP growth of 7.0% and organic growth of 6.3%[29] - The total revenue for the Healthcare segment for the nine months ended December 31, 2024, was $2,821.495 million, reflecting an 8.3% growth[29] - The Life Sciences segment had a revenue decline of 4.4% for the nine months ended December 31, 2024, with total revenue of $392.805 million[29] Profitability - Gross profit for the nine months ended December 31, 2024, reached $1,761,553, up 7.7% from $1,635,258 in 2023[20] - The company reported a gross profit of $610.332 million for Q4 2024, compared to $560.026 million in Q4 2023[30] - The company’s gross profit for the nine months ended December 31, 2024, was $650,490,000, compared to $615,784,000 in 2023, reflecting a 5.6% increase[31] Shareholder Returns - Net income attributable to shareholders for the nine months ended December 31, 2024, was $468,969, representing a 23.5% increase compared to $379,616 in 2023[20] - Earnings per share (EPS) for continuing operations increased to $1.76 for the three months ended December 31, 2024, compared to $1.50 in 2023, reflecting a 17.3% growth[20] - Adjusted diluted EPS for Q4 2024 was $2.32, up from $2.09 in Q4 2023[30] - Adjusted net income from continuing operations per diluted share is projected to be between $6.66 and $6.76 for FY 2025[32] - Adjusted net income from continuing operations per diluted share is expected to be between $9.05 and $9.15 for FY 2025[32] Liabilities and Assets - Total current assets decreased to $1,897,853 as of December 31, 2024, down from $2,869,123 as of March 31, 2024[21] - Total liabilities decreased to $3,579,816 as of December 31, 2024, compared to $3,817,249 as of March 31, 2024[21] - Cash and cash equivalents at the end of the period were $155,178, down from $207,020 at the beginning of the period[24] Backlog and Market Presence - The total backlog for continuing operations was $520,000,000, down from $534,433,000 in the previous year[33] - U.S. revenues accounted for 73% of total revenues, amounting to $1,002,586,000 in Q3 FY 2025, compared to $949,957,000 in Q3 FY 2024[33] - The international revenues for Q3 FY 2025 were $343,867,000, slightly up from $328,166,000 in Q3 FY 2024, maintaining 25% of total revenues[33]

Core Insights - STERIS plc reported a 6% increase in total revenue from continuing operations for Q3 fiscal 2025, reaching $1.4 billion compared to $1.3 billion in Q3 fiscal 2024 [1][8] - The company updated its fiscal 2025 outlook, expecting revenue growth of approximately 6%, down from previous expectations of 6.5% to 7.5% due to unfavorable currency rates and lower anticipated capital equipment revenue [7] Financial Performance - Net income for Q3 fiscal 2025 was $173.6 million, or $1.75 per diluted share, up from $148.4 million, or $1.49 per diluted share in Q3 fiscal 2024 [2] - Adjusted net income for Q3 fiscal 2025 was $229.1 million, or $2.32 per diluted share, compared to $207.6 million, or $2.09 per diluted share in the same period last year [2] Segment Performance - Healthcare revenue grew 7% to $976.0 million in Q3 fiscal 2025, driven by a 9% increase in consumable revenue and a 13% rise in service revenue, despite a 5% decline in capital equipment revenue [3] - Applied Sterilization Technologies (AST) revenue increased 10% to $258.1 million, with service revenue also growing by 10% [4] - Life Sciences revenue decreased 7% to $136.4 million, primarily due to the divestiture of the CECS business and a decline in capital equipment revenue, although consumable revenue grew by 14% [5] Cash Flow and Outlook - Net cash provided by operations for the first nine months of fiscal 2025 was $887.3 million, up from $718.5 million in the same period of fiscal 2024 [6] - Free cash flow for the first nine months of fiscal 2025 was $588.1 million, compared to $457.0 million in the prior year [6] - The company anticipates capital expenditures of approximately $360 million and free cash flow of around $700 million for fiscal 2025 [9]

Core Insights - Steris has consistently surpassed earnings estimates, making it a strong candidate for future earnings beats [1][2][3] Earnings Performance - In the last reported quarter, Steris achieved earnings of $2.14 per share, exceeding the Zacks Consensus Estimate of $2.11 per share by 1.42% [2] - In the previous quarter, the company reported earnings of $2.03 per share against an expectation of $2.01 per share, resulting in a surprise of 1% [2] Earnings Estimates - There has been a favorable change in earnings estimates for Steris, with a positive Earnings ESP of +0.57%, indicating bullish sentiment among analysts [3][6] - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat [6] Predictive Metrics - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [4] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [5]