STERIS plc

Good morning, everyone, and welcome to the Staris PLC first quarter 2023 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. 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 floor over to Ms. Julie Winter, VP of Investor Relations. Ms. Winter, please go ahead.

Thank you, Jamie, and good morning, everyone. As usual, speaking on today's call will be Mike Tuchich, 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 Staris is strictly prohibited. As much as 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 filing. 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 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 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 6%. Growth was driven by organic volume as well as 240 basis points of price. The net impact of acquisitions and divestitures added approximately $151 million to revenue in the quarter, which is broken down by segment in the press release tables. As a reminder, the renal divestiture will trim revenue by approximately $45 million per quarter through December. During the quarter, we anniversary the acquisition of Cantel Medical. Integration continues to go very well. We achieved approximately $20 million of cost synergies in the first quarter and are on track to achieve a total of approximately $50 million in fiscal year 2023. As anticipated, gross margin for the quarter decreased 150 basis points compared with the prior year to 45.1%. as pricing and favorable impact from acquisitions and divestitures were offset by lower productivity and higher material and labor costs. Material labor costs continued to be a headwind and totaled about $30 million in the quarter. Despite the decline in gross margin, operating margin held flat at 22.9% of revenue, compared with the first quarter of last year, as we did a nice job of controlling SG&A expenses. The adjusted effective tax rate in the quarter was 21%. That income in the quarter increased to $191.1 million and earnings per diluted share were $1.90. At the end of the first quarter, cash totaled approximately $316.3 million. We continue to focus on debt repayment as evidenced by our leverage ratio now being just below 2.3 times. Our focus on debt reduction continues to provide us great flexibility to make investments in growth capital expenditures and the capacity to pursue potential opportunities to expand our businesses. Capital expenditures totaled $115.9 million, while depreciation and amortization totaled $138.9 million in the quarter. Our first quarter spend on capital expenditures was higher than anticipated, primarily driven by the timing of investments within our AST segment. We still expect our full-year capital expenditures to be approximately $330 million. Free cash flow for the first quarter was $117.1 million, as we benefited from increased net income, including a reduction in costs associated with the Cantell Medical Acquisition, somewhat offset by higher capital expenditure spending. And finally, Last week, we announced our 17th annual dividend increase, which raised our dividend by 4 cents to 47 cents per quarter. With that, I'll turn the call over to Dan for his remarks.