STERIS plc Reports 8% Revenue Growth and 10% Surge in Earnings for Q1 2025
2024-08-11
STERIS Corporation recently conducted its First Quarter of 2025 Earnings Call, featuring key participants such as Julie Winter, Michael Tokich, Daniel Carestio, Brett Fishbin, Michael Matson, Michael Polark, Steven Etoch, Jason Bednar, and David Turkaly. The call began with precautionary statements regarding the dissemination of time-sensitive information, forward-looking declarations, and the utilization of non-GAAP financial metrics.
During the call, the company announced a notable 8% increase in total revenue for the first quarter of 2025, propelled by a 6% organic revenue growth in constant currency terms. This growth was primarily fueled by volume and a 270 basis point rise in pricing. Despite a slight 30 basis point uptick in gross margin to 45.1%, the EBIT margin experienced a minor decline to 22.3% of revenue. Adjusted earnings per share for the quarter reached $2.03, reflecting a 10% surge from the previous year.
STERIS also revealed that capital expenditures for the quarter amounted to $108 million, with total debt reduced to $2.3 billion following the dental divestiture. The company generated a free cash flow of $195.7 million and declared its 19th consecutive year of dividend hikes, with a $0.05 increase in the quarterly dividend per share to $0.57.
In terms of segment performance, the healthcare segment witnessed a 5% organic revenue growth in constant currency, while the AST segment recorded an 8% growth in the initial quarter. The company encountered challenges related to supply chain and manufacturing issues, with a significant backlog affecting its operations.
Despite these challenges, STERIS highlighted growth patterns in the healthcare segment driven by market share advancements, particularly in services and consumables. The company aimed to enhance its market share through strategic sales approaches and collaborations with healthcare systems. Operating margins were impacted by rising compensation and insurance costs, yet executives remained positive about achieving year-over-year operating margin expansion for the entire fiscal year.
Within the Life Sciences sector, there was a slowdown in the demand for capital products, and funding for pharma and biopharma companies experienced cutbacks in the past 6 to 9 months. Nonetheless, robust growth was observed in the services and consumables division within the Life Science segment.
Looking forward, STERIS underscored long-term strategies such as enhancements in supply chain management, capacity expansions for AST, and addressing challenges in the turn business. The company's investment priorities encompassed M&A activities and share repurchases, with a $100 million restructuring plan being announced. The call concluded with Winter expressing gratitude to the participants and anticipating future engagements.