STERIS plc (STE) Q1 2024 Earnings Call Transcript

For the period ending June 30, 2023

August 2, 2023 9:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the STERIS plc First Quarter 2024 Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Ms. Julie Winter, Vice President of Investor Relations. Please go ahead.

Julie Winter

Thank you, Chuck, and good morning, everyone. As usual, speaking on our call today will be Mike Tokich, 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.

This webcast contains time-sensitive information that is accurate only as of today. Any redistribution, retransmission or rebroadcast of this call without the expressed written consent of STERIS 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 STERIS' 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. STERIS' 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 press 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 cautions, I will hand the call over to Mike.

Michael Tokich

Thank you, Julie, and good morning, everyone. It is once again my pleasure to be with you this morning to review the highlights of our first quarter performance. For the quarter, constant currency organic revenue increased 11%, driven by volume as well as 290 basis points of price. Gross margin for the quarter decreased 30 basis points compared with the prior year to 44.8%. Favorable price was more than offset by continued material and labor inflation as well as lower productivity.

EBIT margin decreased 50 basis points to 22.4% of revenue compared with the first quarter last year, which reflects a decline in gross margin as well as the anticipated increase in year-over-year incentive compensation, which is recorded in Corporate and Other.