STERIS plc

Good morning, everyone, and welcome to the SARIS PLC Fiscal Second Quarter 2024 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 on your touchtone telephones. 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 Julie Winter, Vice President of Investor Relations. Ma'am, please go ahead.

Thank you, Jamie, and good morning, everyone. As usual, speaking on today's call will be Mike Tokich, our Senior Vice President and CFO, and Dan Crestio, 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 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 second quarter performance. For the quarter, constant currency organic revenue increased 8%, driven by volume, as well as 330 basis points of price. Gross margin for the quarter decreased 50 basis points compared with the prior year to 44.3%. Favorable price was more than offset by lower productivity and continued material and labor inflation. EBIT margin decreased 130 basis points to 22.5% of revenue compared with the second quarter last year, which reflects the decline in gross margin as well as the anticipated increase in year-over-year incentive compensation expense. The adjusted effective tax rate in the quarter was 23.7%. Net income in the quarter was $202.2 million, and adjusted earnings were $2.03 per diluted share. Capital expenditures for the first half of fiscal 2024 totaled $149.9 million, while depreciation and amortization totaled $290.2 million. We are adjusting our capital spending outlook for fiscal 2024 down from $375 million to $310 million. This change reflects the timing of projects for our AST business. This change will allow us to offset higher than planned inventory levels, keeping free cash flow outlook for fiscal 2024 at approximately $685 million. Debt increased to $3.4 billion in the second quarter, reflecting borrowings to fund the acquisition of the BD assets. Total debt to EBITDA at quarter end was approximately 2.3 times gross leverage. Free cash flow for the first half of fiscal 2024 was $284.7 million, as we benefited from lower capital spending and the decline in cash used for tax and compensation-related payments. Inventory remains elevated as we continue to focus on reducing lead times and meeting customer demand. With that, I'll turn the call over to Dan for his remarks.