Steris PLC (STE) Q2 2025 Earnings Call Highlights: Strong Revenue Growth Amid Margin Pressures

GuruFocus News
4 min read

In This Article:

  • Total Revenue Growth: 7% in the second quarter.

  • Constant Currency Organic Revenue Growth: 7% in the quarter.

  • Gross Margin: Decreased 50 basis points to 43.7%.

  • EBIT Margin: Decreased 30 basis points to 22.2% of revenue.

  • Net Income from Continuing Operations: $212.2 million.

  • Adjusted Earnings Per Share: $2.14, a 15% increase over last year.

  • Capital Expenditures: $210 million for the first half of fiscal 2025.

  • Depreciation and Amortization: $228 million for the first half of fiscal 2025.

  • Total Debt: $2.2 billion, with a debt to EBITDA ratio of approximately 1.5 times.

  • Free Cash Flow: $344.5 million for the first half of fiscal 2025.

  • Healthcare Segment Revenue Growth: 7% constant currency organic growth.

  • AST Segment Revenue Growth: 9% constant currency organic growth.

  • Life Sciences Revenue Growth: 3% constant currency organic growth.

  • Full Year Revenue Growth Outlook: 6% to 7% constant currency organic growth.

  • Full Year Adjusted EPS Outlook: $9.05 to $9.25.

  • Full Year Free Cash Flow Outlook: Approximately $700 million.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Steris PLC (NYSE:STE) reported a 7% growth in total as-reported revenue for the second quarter, maintaining momentum from the start of the fiscal year.

  • Adjusted earnings per share from continuing operations increased by 15% over the previous year, reaching $2.14.

  • The company successfully reduced its total debt, ending the quarter with $2.2 billion and a total debt to EBITDA ratio of approximately 1.5 times.

  • Healthcare segment saw a 7% growth in constant currency organic revenue, driven by strong recurring revenue streams and market share gains.

  • Life Sciences segment experienced a 3% growth in constant currency organic revenue, with strong growth in consumables contributing positively to margins.

Negative Points

  • Gross margin for the quarter decreased by 50 basis points to 43.7%, impacted by labor inflation and productivity challenges.

  • EBIT margin decreased by 30 basis points to 22.2% of revenue compared to the previous year.

  • Healthcare capital equipment revenue declined by 2% due to the timing of shipments, with expectations for flat to slightly down revenue for fiscal 2025.

  • AST segment faced margin pressures due to labor and energy costs, and a significant loss on a capital equipment order in the med-x business unit.

  • The company no longer expects to achieve double-digit revenue growth in the AST segment by the end of the fiscal year, citing slower-than-expected bioprocessing demand recovery.

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