STERIS plc

Good morning and welcome to the Staris PLC fourth quarter 2023 earnings 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 touchtone 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, Chad, and good morning, everyone. As usual, speaking on our call this morning will be Mike Tuchich, our Senior Vice President and CFO in the Uncrustio, our President and CEO. And 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 growth, and free cash flow will be used Additional information regarding these measures, including definitions, is available in our 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 cautions, I will hand the call over to Mike.

Thank you, Julie. Good morning, everyone. It is once again my pleasure to be with you this morning to review the highlights of our fourth quarter performance. Following my review, Dan will comment on the full year fiscal 23 and talk about our outlook for fiscal 24. For the quarter, constant currency organic revenue increased 16%, driven by volume as well as 330 basis points of price. As anticipated, gross margin for the quarter decreased 240 basis points compared with the prior year, to 43.1% as pricing and currency were more than offset by unfavorable mix and approximately $15 million in excess material and labor inflation. We incurred approximately $90 million in higher material and labor costs during fiscal 2023. We achieved approximately $10 million of cost synergies from the integration of Cantel Medical in the fourth quarter, bringing our full year total to just over $55 million. We are proud of the work our folks did to integrate Cantel Medical into Steris, overachieving our projected total cost synergies ahead of schedule. We have substantially completed the integration process, and going forward, we will no longer be tracking and reporting cost synergies from Cantel. EBIT margin increased 20 basis points to 23.8% of revenue compared with the fourth quarter last year. This reflects a reduction in SG&A as a percentage of revenue somewhat offset by the gross margin pressures I mentioned earlier. The adjusted tax rate in the quarter was 23.6%, net income in the quarter was $229.2 million, and earnings were $2.30 per diluted share. Capital expenditures for fiscal 2023 exceeded our plan and totaled $362 million, while depreciation and amortization totaled $553 million. Our capital expenditures spending was higher than anticipated, primarily driven by the timing of investments in our AFT segment. Total debt remains just over $3 billion, reflecting borrowings to fund a few small acquisitions during the year and opportunistic share repurchases. We remained active buying back stock in the fourth quarter and in total repurchased 1.6 million shares in fiscal 2023. for a total spend of $295 million. As we anticipated last week, or as announced last week, our board has authorized a new repurchase program for up to $500 million in buybacks. For fiscal 2024, we would anticipate returning to our normal cadence of repurchasing shares only to offset dilution. Total debt to EBITDA at the end of the fiscal year is just under 2.3 times gross leverage. Free cash flow for fiscal 2023 was $410 million. Free cash flow was limited by higher than planned capital spending and pressure on working capital, in particular for inventory and receivables. With that, I will turn the call over to Dan for his remarks.