STERIS Plc (Ireland) Q4 FY2025 earnings call

• Total as reported revenue grew 4% in Q4 2025, constant currency organic revenue grew 6% driven by volume and price. Gross margin increased 170 basis points to 44.3%, EBIT margin 110 basis points to 24.8%. Net income from continuing operations $270 million, adjusted EPS $2.74. Fiscal 2025 capital expenditures $370 million, depreciation/amortization $476 million, ended with $2 billion in total debt, gross debt to EBITDA 1.4x, free cash flow a record $787 million. For fiscal 2026, anticipated revenue growth 6%-7% constant currency, EPS range $9.90-$10.15 including $30 million tariff costs.

For the year, Healthcare constant currency organic revenue grew 6%, with capital equipment revenue declining 5% but orders growing over 12% and margins hitting 25%. AST constant currency organic revenue grew 9% with 7% growth in services, capital equipment shipments more than doubled, and EBIT margins 44.8%. Life Sciences constant currency organic revenue increased 1% with margins rising to 42.3%. Total company ended with 6% revenue growth and 12% earnings growth for fiscal 2025.

• Anticipate as reported revenue from continuing operations to grow 6% to 7% in fiscal 2026, constant currency organic revenue also 6% to 7% including ~200 basis points of price. EPS range $9.90 to $10.15 includes $30 million tariff costs. Effective tax rate planned at ~23.5%.

• Tariffs impact: $30 million tariff costs in fiscal 2026. Legal settlement: Anticipate $40 million legal settlement for ETO in fiscal 2026 which will negatively impact cash.

Q: Congrats on the quarter and the year. When looking at segments, color on LifeSci bouncing back to 6%-7% range?

A: LifeSci did well in recurring revenues, capital equipment orders dried up in first half but rebounded late, coming into fiscal 2026 with good backlog.

Q: Cash flow guidance down from 2025, main differential?

A: Big thing is anticipating $40 million legal settlement for ETO in fiscal 2026 negatively impacting cash, not anticipating overachieve or reduce inventory as dramatically as in 2025.

Q: Leverage ratio down, update on M&A?

A: Have capacity both financially and intellectually, will be involved if right opportunity presents.

Q: Talk on tariffs, $30 million breakdown?

A: About half China-related and half 10% global tariff, $30 million net, supply chain working hard to mitigate.

Q: Share repo pause, signal?

A: Bought ~$200 million of shares in FY '25 earlier than previous year, no signal from pause, will consider additional buybacks.

Q: Healthcare market share gains, which line stands out?

A: Across entire Healthcare segment, teams doing phenomenal job, especially in North American markets with great portfolio and enterprise solutions.

Q: Healthcare segment growth in 2026, variances between consumables, services, equipment?

A: Not providing granularity, but had great order year for capital going into next year.

Q: AST services growth, capacity limiting?

A: Not a governor, well positioned to accommodate industry growth.

Q: AST services lumpy in fiscal 2025, phasing?

A: Phenomenal December, slow start in January due to plant restarts, then good second half of February and March, no tariff front-loading.