STERIS plc

Good day, and welcome to SARIS PLC First Quarter Fiscal 2021 Conference Call and Webcast. 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 white on a touchstone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would like to turn the conference call over to Ms. Julie Winter, Investor Relations. Ms. Winter, the floor is yours, ma'am.

Thank you, Mike, and good morning, everyone. On today's call, we have Walt Rosebrough, our President and CEO, Mike Tokich, our Senior Vice President and CFO, and Dan Crestio, our Chief Operating Officer. 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 express written consent of SARIS 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' 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. Steris' 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 our 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 questions, 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 first quarter performance. For the quarter, constant currency organic revenue declined 3%. by a decline in volume offset by 70 basis points of favorable price. As a reminder, healthcare capital equipment revenue in the quarter reflects a one-time benefit of $15 million for a change in the timing of revenue recognition. You may recall that when we adopted the new revenue recognition accounting standard at the beginning of fiscal 2019, Our operating room integration capital equipment products required significant on-site system configuration during the installation process. As a result, we were required to defer all revenue until installation was complete. Since then, we have enhanced the design of our OR product line, which allows for full assembly and configuration of the equipment in our plant before shipment and simplifies the installation process. As a result, Revenue is recognized based on the shipping terms consistent with other capital equipment products. In addition, constant currency organic revenue for the quarter includes a total of about $10 million from prior year tuck-in acquisitions, primarily in health care, spread across capital equipment, consumables, and service. Excluding both of these items, total company constant currency organic revenue would have declined 8%. Gross margin for the quarter was about flat at 44.1% and was impacted favorably by mix and price, somewhat offset by lower productivity due to reduced volumes. EBIT margin for the quarter was 21.3% of revenue, an increase of 180 basis points from the first quarter last year, due in part to approximately a $5 million benefit from the change in the timing of revenue recognition, as I noted earlier, as well as lower travel expenses, compensation-related costs, and sales and marketing expenses. The adjusted effective tax rate in the quarter was 17.3% and includes the benefit of stock compensation deduction. Net income in the quarter grew 6% to $111.8 million and earnings increased to $1.31 per diluted share. Our balance sheet is a continued source of strength for the company. Considering our cash position of $255.6 million, access to available credit lines, and a leverage ratio below 1.5 times dativa da, we are well positioned from a liquidity standpoint. During the quarter, capital expenditures totaled $66.9 million, while depreciation amortization was $49 million. The increase in capital expenditures versus the prior year is related to expansion projects within the AST segment. Free cash flow for the quarter was $67.4 million, an increase over the first quarter of last year, primarily due to improvements in working capital and deferred tax payments under government programs. With that, I will turn the call over to Walt for his remarks.