The following is a summary of the STERIS Plc (STE) Q2 2025 Earnings Call Transcript:
Financial Performance:
Q2 2025 total revenue increased by 7%, with a net income from continuing operations at $212.2 million.
Gross margin decreased slightly by 50 basis points to 43.7% due to labor inflation, offset by positive price improvements and favorable material costs.
Adjusted earnings per share from continuing operations increased by 15% to $2.14.Capital expenditures were higher year-over-year at $210 million due to timing, with free cash flow for the first half of fiscal 2025 at $344.5 million.
Business Progress:
Healthcare constant currency organic revenue grew 7%, driven by strong recurring revenue streams from procedure volumes and market share gains in the U.S.
The company faced a decline in healthcare capital equipment revenue by 2% due to shipment timings.
Significant growth in orders by over 30%, resulting in a $405 million healthcare backlog.
AST segment saw a 9% growth, led by services and a significant quarter in capital shipments, despite increased costs impacting margins.
Life Sciences segment achieved a 3% growth driven by strong consumables growth, with a positive impact from the divestiture of the CECS business.
Opportunities:
Continued strong demand in healthcare services and consumables with significant backlog indicating robust future revenues.
Expected bioprocessing revenue growth in AST segment during the second half of the fiscal year contributing to overall revenue growth.
Risks:
Challenges in the healthcare capital equipment revenue, anticipated to be flat to slightly down due to timing of shipments and difficult fourth quarter comparisons.
Increased labor and energy costs in AST impacting margins, although expected to improve in the second half of the year.
Tips: For more comprehensive details, please refer to the IR website. The article is only for investors' reference without any guidance or recommendation suggestions.
