STERIS plc

Good day and welcome to the ERIS plc second quarter 2027 financial results 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, then one on a touch-tone 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, Nick, and good morning, everyone. Speaking on today's call will be Karen Burton, our Senior Vice President and CFO, and Dan Carestio, 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. 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 Karen.

Thank you, Julie, and good morning, everyone. It's my pleasure to be with you this morning to review the highlights of our second quarter performance. For the second quarter, total as reported revenue grew 9% to $1.6 billion. Constant currency organic revenue grew 8% in the quarter, driven by volume as well as 230 basis points of price. Adjusted gross margin for the quarter was 45.3%, up 100 basis points versus the prior year. Margin expansion was driven primarily by tariff refunds of approximately 20 million during the quarter, which added 130 basis points year over year. Underlying margins were down slightly as favorable price was more than offset by inflation. Gross tariff costs were approximately $15 million in the second quarter, flat with the prior year. For clarity, tariff refunds are not being allocated to our business segments, but instead are booked to corporate to enable business segment analysis. Adjusted EBIT margin was 24.6% for the quarter, up 150 basis points from the second quarter last year. Tariff refunds contributed 130 basis points to the increase. Underlying margin improvement benefited from favorable price and volume, partially offset by inflation and investments in the business, including the acceleration of R&D spending. We do not expect any material additional tariff refunds during the remainder of fiscal 2027. The adjusted effective tax rate in the quarter was 25.3%, an increase from 24.5% in the second quarter of last year. The increase was primarily driven by unfavorable discrete items. Adjusted net income in the quarter was $286.8 million, compared with $244.5 million in the prior year. Adjusted earnings per share were $2.94, a 19% increase over $2.47 in the second quarter of last year. Excluding tariff refunds, adjusted earnings per diluted share grew 13%. Capital expenditures for the second quarter were $76.1 million and depreciation and amortization totaled $125.6 million. We ended the quarter with a strong balance sheet reflecting $1.9 billion in total debt. Gross debt to EBITDA at quarter end was approximately 1.1 times. Free cash flow for the first six months was $492.5 million compared with $527.7 million in the prior year period. Cash flow from operations was $656.1 million compared with $707.8 million last year. The decline in cash flow was driven primarily by significantly lower contribution from working capital as we utilized cash to build inventory in support of second half shipments, partially offset by higher net income. Share buybacks in the second quarter totaled $100 million for $200 million for the year today. We have $800 million remaining under our current authorization. During the quarter, we approved an additional restructuring plan covering targeted facility realignment, product rationalization, and select organizational realignment. We anticipate total charges of $45 million, including $10 million in cash expenditures and $35 million in non-cash charges. Approximately $25 million was recorded in the second quarter. The plan is expected to generate annualized savings of approximately $9 million with a portion realized in fiscal 2028 and the full benefit in subsequent fiscal years. With that, I will now turn the call over to Dan for his remarks.