STERIS (STE) Q2 2025 earnings summary

Executive summary

• Second quarter revenue grew 7.3% year-over-year to $1,328.9 million, driven by volume and pricing, especially in Healthcare and AST segments.

• Net income attributable to shareholders was $150.0 million for Q2 FY2025, up from $115.3 million in Q2 FY2024.

• Adjusted EPS rose 15% to $2.14, with as-reported EPS from continuing operations at $1.51.

• Completed divestitures of the Dental and CECS businesses, using proceeds to pay down debt.

• Announced a restructuring plan focused on European Healthcare operations and efficiency improvements.

Financial highlights

• Gross margin for Q2 FY2025 was 43.6%, down from 44.1% in Q2 FY2024, due to higher labor and overhead costs.

• Operating income for Q2 FY2025 was $219.7 million, up from $191.6 million in Q2 FY2024.

• Free cash flow for the first half was $344.5 million, up from $284.7 million in the prior year.

• Debt-to-total capital ratio improved to 25.3% at September 30, 2024, from 33.7% at March 31, 2024.

• Cash dividends paid were $1.09 per share for the first six months of FY2025.

Outlook and guidance

• FY25 revenue expected to increase 6.5–7.5%, with constant currency organic revenue up 6–7%.

• Adjusted EPS guidance for FY25 is $9.05–$9.25.

• Free cash flow for FY25 projected at approximately $700 million; capital expenditures anticipated at $360 million.

• Restructuring actions expected to be substantially complete by fiscal year-end 2025, with $25 million annual operating income improvements mostly realized in fiscal 2026 and beyond.

• Effective tax rate for FY25 expected to be about 23%.