The STERIS First Quarter of 2025 Earnings Call is about to begin, and the operator introduces the speakers. Julie Winter from Investor Relations will be moderating the call, and Mike Tokich, Senior Vice President and CFO, and Dan Carestio, President and CEO, will be speaking. The call will contain time-sensitive information and may include forward-looking statements, and redistribution or rebroadcasting without consent is prohibited. Non-GAAP financial measures will also be used and defined in the press release. The purpose of these measures is to provide transparency in financial analysis and decision-making.

Mike Tokich and Dan Carestio are discussing the highlights of the company's first quarter performance, focusing on results from continuing operations. They mention a revenue growth of 8%, driven by volume and price increases, and a slight decrease in EBIT margin due to increased costs. The adjusted effective tax rate was lower than the previous year and net income and adjusted earnings per share both saw a 10% increase. Capital expenditures and depreciation and amortization were higher due to timing, and the company was able to pay down debt and increase its quarterly dividend.

In the third paragraph, the speaker discusses the performance of the company's Healthcare, AST, and Life Sciences segments in the first quarter of the fiscal year. They mention growth in Healthcare consumables and services, a decline in capital equipment revenue, and overall growth in the AST and Life Sciences segments. The company reiterates their outlook for the full year and expresses confidence in their ability to meet their guidance.

The paragraph discusses the conclusion of a conference call and the transition to the Q&A session. It also mentions the first quarter results for the Healthcare capital equipment segment, which were in line with expectations. The company expects a step-up in trends throughout the year, driven by market share gains and healthy market activity. The services and consumables segments saw double-digit growth, offsetting a miss in capital equipment.

The speaker, Dan Carestio, emphasizes the recurring nature of consumable products and services and their contribution to the company's sustained growth. The company has also been successful in capital sales, allowing them to gain market share. The operating margin was slightly lower in the first quarter due to increased compensation and insurance costs, but the company still expects to achieve positive EBIT margin leverage for the full year.

The speaker discusses the current state of the materials and labor components of the business, noting that while materials have improved, labor is still facing pressure. They anticipate labor rates to stabilize and turnover to decrease. The Life Sciences segment has seen a slowdown in demand for capital products, but they are showing strong growth in services and consumables.

The speaker thanks the questioner for their inquiry about the Healthcare capital equipment guidance for low single-digit revenue growth this year. They acknowledge that the model has been broken over the last 18 months due to backlog and large project orders, but they are now able to sell more on the turn business. They also mention that AST will continue to have a higher growth rate and that capacity expansions will be a normal contributor to their growth.

The company's expansions are mostly focused on existing sites and are expected to facilitate future growth. The Life Sciences side of the business is seeing some headwinds but the injectable market is providing some tailwinds. The company is working on supply chain initiatives to improve efficiency and ensure a steady supply. This is a long-term strategy and may not have an immediate impact on margins.

The company learned the importance of choosing the right suppliers in the past year and a half. They do not provide exact numbers on orders, but based on revenue and backlog figures, it can be assumed that order growth will be mid-single digits and backlog will be around $350 million. The company is working to address the broken model and return to a more sustainable one. There were some discrete items in the interest other line, but further details were not provided.

The company had a notable delta versus their model, but it was factored into their original guide. The 21% tax rate in the period was lower than expected due to favorable discrete item adjustments and interest line benefits. The BD ad primarily sits in consumables in the Healthcare business and has a similar margin to the core. The company has a $100 million restructuring plan, with the majority going towards the closure of one manufacturing facility.

The company's projected benefits for the year include a $25 million increase, but the majority of this will not be seen until fiscal year 2026. The company's investment priorities remain unchanged, and they are in a good position for potential M&A opportunities. The interest in other line is expected to be around $100 million for the full year. The conference call has ended.

This summary was generated with AI and may contain some inaccuracies.