STERIS plc

Good morning, everyone, and welcome to the Staris PLC fourth quarter 2021 conference call. All participants will be in a listen-only mode. Should you need assistance, please see 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 and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded, and at this time, I'd like to turn the conference call over to Julie Winter, Investor Relations. Ma'am, please go ahead.

Thank you, Jamie, and good morning, everyone. Speaking on today's call, we have Mike Tokich, our Senior Vice President and CFO, Walt Rosebrough, our President and CEO, and Dan Crestillo, our Chief Operating Officer. I do have a few words of caution before we open for comments. 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 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. Staris' 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, adjusted operating income, constant currency organic revenue, and free cash flow will be used. Additional information regarding these measures, including definitions, is available in today's release. This also includes reconciliations between GAAP and non-GAAP financial measures. Non-GAAP financial measures are presented during this call with the intent of providing greater transparency for 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 fourth quarter performance. For the quarter, constant currency organic revenue increased 0.3% as favorable pricing was somewhat offset by organic volume, which was slightly lower than last year's strong pre-COVID performance. Key Surgical added $32 million to revenue in the quarter, which is somewhat lower than we originally anticipated due to continued disruption of COVID-19. You will notice that we have a small acquisition called out within AST. In January, we completed the acquisition of one of our suppliers. While this is a vertical integration, we do expect revenue generation of approximately $25 million annually. Gross margin for the quarter was flat with the prior year at 44.3% as favorable pricing and cost management were offset by mix and currency. EBIT margin for the quarter was 22.3% of revenue, an increase of 60 basis points from last year. The adjusted effective tax rate in the quarter was 25% and 20.7% for the full fiscal year, higher than last year and higher than our expectations due to income mix from higher tax rate countries and discrete item adjustments, including stock compensation. As we noted in the release this morning, we have discontinued the use of LIFO. We believe that the FIFO method of accounting is preferable because it more closely resembles the physical flow of our inventory, aligns how we manage the business, and improves comparability to other companies. Net income in the quarter was flat at $140.3 million, and earnings per share were $1.63 million. Our balance sheet is a continued source of strength for the company. Our leverage ratio at the end of the fourth quarter is below 1.9 times as we continue to pay down debt post the key surgical acquisition. Considering our cash position of $220 million, access to available credit lines, and a low leverage ratio, we are well positioned from a liquidity standpoint. Following the close of Cantel Medical, we expect our leverage ratio to be about three times as we take advantage of the financing arrangements already put in place, including our first-ever public debt offering. During the fourth quarter, capital expenditures totaled $74.8 million, while depreciation and amortization was $59 million. Free cash flow for fiscal 21 was strong at $450.9 million, an increase of approximately $70 million over last year, primarily due to working capital improvements somewhat offset by higher capital expenditures. With that, I'll turn the call over to Walt for his remarks.