Q1 2027 STERIS plc Earnings Call Transcript
Key Points
- Steris PLC (STE) reported strong first-quarter results with total revenue growth of 7% and constant currency organic revenue growth of 6%, driven by volume and pricing.
- Gross margin expanded by 70 basis points to 46%, and EBIT margin increased by 100 basis points to 23.8%, reflecting price, productivity, and cost discipline.
- Healthcare segment showed robust performance with services growing 10% and consumables up 9%, supported by share gains and procedural growth in endoscopy.
- Life sciences segment delivered 8% constant currency organic revenue growth, with capital equipment up 17% and consumables up 8%, benefiting from onshoring trends.
- The company announced a $600 million investment in a new Chemistry Center of Excellence, expected to generate over 10% ROIC within 3-5 years and drive long-term growth.
- Steris PLC (STE) maintained its fiscal 2027 outlook with EPS growth of 9-11%, and continued shareholder returns with $100 million in buybacks and a 21st consecutive year of dividend increases.
- AST segment services volume remained light due to ongoing customer inventory destocking, with growth of only 5% against difficult comparisons.
- Healthcare capital equipment revenue grew just 1% in the quarter, impacted by shipment timing, though backlog increased to $444 million.
- AST EBIT margins decreased 60 basis points to 48% due to increased depreciation and lower productivity, while life sciences margins fell 140 basis points to 42.1%.
- Free cash flow declined to $279.6 million from $326.5 million in the prior year, driven by lower working capital contributions.
- The company incurred $14 million in gross tariff costs in the quarter, with only $4 million in refunds received, and faces potential additional tariff-related expenses.
- The new North Carolina facility will require significant capital spending, with $450 million in fiscal 2027 CapEx and additional $350 million in fiscal 2028, potentially impacting near-term cash flow.
Good day and welcome to the STERIS plc first quarter 2027 financial results conference call. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Julie Winter, Investor Relations. Please go ahead.
Thank you, Nick, and good morning, everyone. Speaking on today's call will be Karen Burton, our Senior Vice President and CFO; and Dan Carestio, our President and CEO. And I do have a few words of caution before we open the comments.
This webcast contains time-sensitive information that is accurate only as of today. Any redistribution, retransmission, or rebroadcast of this call without the express written consent of STERIS is strictly prohibited. Some of the statements made during this review are or may be considered forward-looking statements. Many important factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation those risk factors described in STERIS' plc securities
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