STERIS plc

Good morning and welcome to the Staris PLC third quarter 2020 conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star then two. 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, Gary, and good morning, everyone. As usual, on today's call, we have Walt Rosebrough, our President and CEO, and Mike Tokich, our Senior Vice President and CFO. I do have a few words of caution before we open for comments from management. This webcast contains time-sensitive information that is accurate only as of today. Any redistribution, retransmission, or rebroadcast of this call without the expressed written consent of Staris 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 Staris' securities filings. The company does not undertake to update or revise any forward-looking statements as a result of new information or future events or developments. Shares of SEC filings are available through the company and on our website. In addition, on today's call, non-GAAP financial measures including adjusted earnings per diluted share, segment operating income, constant currency organic revenue growth, and free cash flow will be used. Additional information regarding these measures, including definitions, is available in today's release, including reconciliations between GAAP and non-GAAP financial measures. Non-GAAP financial measures are presented during this call with the intent of providing greater transparency to supplemental financial information used by management and the Board of Directors in their financial analysis and operational decision-making. With those cautions, I will hand the call over to Mike.

Thank you, Julie, and good morning, everyone. It is once again my pleasure to be with you this morning to review the highlights of our third quarter performance. For the quarter, constant currency organic revenue growth was 12%, driven by volume and 60 basis points of price. We continue to experience strong underlying growth from our customers and success with new products. A total of $13 million, or 180 basis points, is included in constant currency organic revenue growth for the quarter, from the eight tuck-in acquisitions we completed this fiscal year. Gross margin for the quarter increased 40 basis points to 43.1% and was impacted favorably by productivity, price, and NICs, somewhat offset by higher labor costs. EBIT margin for the quarter was 21.1% of revenue, an increase of 30 basis points from the third quarter last year, despite an increase in expenses relating to higher incentive compensation due to our strong performance and a 9% increase in IRD expenses. The adjusted effective tax rate in the quarter was 20%. That income in the quarter grew 16% to $124 million, and earnings increased to $1.45 per diluted share, benefiting from revenue growth and margin expansion. In terms of the balance sheet, We ended December with $199.2 million of cash and $1.1 billion in total debt. During the third quarter, capital expenditures totaled $55.5 million, while depreciation and amortization was $49.6 million. Free cash flow for the first nine months declined, as anticipated, to $238.1 million, primarily due to the planned increase in capital spending. Our capital expenditures have been lowered through the first three quarters of the year due to the timing of capital projects. As a result, we are decreasing our full year expectations for capital spending to $240 million and increasing our free cash flow expectations to $340 million. With that, I will turn the call over to Walt for his remarks.