STERIS (STE) Q1 2025 earnings summary

Executive summary

• Total revenue grew 8.1% year-over-year to $1.28 billion, driven by higher volume, pricing, and the BD asset acquisition in Healthcare.

• Adjusted EPS rose to $2.03, up 10% from last year; as reported EPS from continuing operations increased to $1.41.

• Free cash flow was $195.7 million, impacted by higher capital spending.

• The company closed the Dental segment divestiture, generating $787.5 million in proceeds, most of which was used to pay down debt.

• Income from operations declined to $185.5 million, mainly due to $28.1 million in restructuring expenses.

Financial highlights

• Gross margin was 44.7%–45.1%, aided by favorable pricing and material costs, partially offset by inflation and restructuring charges.

• Operating margin from continuing operations was 14.5%, down from 16.7% due to restructuring charges.

• Adjusted effective tax rate was 21.3%, while the reported effective tax rate was 20.1%.

• Capital expenditures were $108.1 million, up year-over-year, mainly due to timing.

• Quarterly dividend increased to $0.52 per share, marking the 19th consecutive year of increases.

Outlook and guidance

• Full-year guidance reiterated: 6%–7% constant currency organic revenue growth and adjusted EPS of $9.05–$9.25.

• Free cash flow outlook unchanged at about $700 million, with $360 million in capital spending expected.

• Management expects restructuring actions to be substantially complete by fiscal year-end, with $25 million in annual operating income improvements expected, mostly benefiting fiscal 2026 and beyond.

• Healthcare capital equipment revenue expected to grow low single digits for the full year.

• Full-year tax rate guidance remains at 23%.