STERIS plc

Good morning, everyone, and welcome to the Staris PLC first quarter 2022 conference call. All participants will be in a 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 and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Ms. Julie Winter, Vice President of Investor Relations. Ma'am, please go ahead.

Thank you, Jamie, and good morning, everyone. This morning speaking on our call will be Mike Tuggett, our Senior Vice President and CFO, and Dan Crestio, our President and CEO. 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 extra results to differ materially from those in the forward-looking statements, including, without limitation, those risk factors described in Steris's 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's SEC filings are available through the company and on our website. In addition, on today's call, non-GAAP financial measures included including adjusted earnings per diluted share, adjusted 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, as well as 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 increased 21%. Growth was driven by organic volume as well as 130 basis points of price. Acquisitions in total added $141 million to revenue in the quarter, which is broken down by segment in the press release tables. To assist you with your modeling, I will share some color on the acquisition revenue contribution within the healthcare segment. Of the approximately $96 million in acquired revenue, about 70% is consumable revenue from both Key Surgical and Cantel Medical. About 20% of the balance is capital equipment revenue, with the last 10% being service revenue. We will not be breaking that down any further. as it is already difficult to differentiate some product lines as we are integrating the businesses quickly, and that challenge will only escalate with each passing quarter. Gross margin for the quarter increased 220 basis points compared with the prior year to 46.6%, as favorable productivity, pricing, and acquisitions were somewhat offset by negative foreign currency, inflation, and mix. Looking at the rest of the year, we do expect additional headwinds from inflation on raw materials. EBIT margin for the quarter was 22.9% of revenue, an increase of 130 basis points from the first quarter last year. As anticipated, we are starting to see some operating expenses such as travel and sales and marketing costs return, which limited EBIT margin growth. The adjusted effective tax rate in the quarter was 20.8%, higher than last year, but in line with our expectations for the fiscal year. Net income in the quarter increased to $159.9 million, and earnings were $1.76 per diluted share. Our balance sheet is a continued source of strength for the company. Our leverage ratio at the end of the first quarter is lower than our expectations and is below 2.9 times. we have less debt and higher EBITDA than we originally modeled. Cash at the end of the quarter totaled $535 million. Regarding the Cantel convertible notes, 100% of the holders have elected to convert their notes. All conversions will be fully settled in cash during the second quarter of fiscal 22. As of June 30th, the estimated total cash settlement value was approximately $366.5 million. During the first quarter, capital expenditures totaled $56.4 million, while depreciation and amortization was $83.6 million. Capital spending in the first quarter was somewhat lower than planned due to weather-related delays for several of our AST construction projects. Free cash flow for the first quarter was $41.2 million, and as anticipated, This is a decline from the prior year due to costs associated with the Cantel medical acquisition. With that, I will turn the call over to Dan for his remarks.