01—Abstract
Summary
Summary of the 10-K filed May 29, 2024. Cited figures are marked; the original filing is the authoritative source.
STERIS plc (STE) reported fiscal 2024 (year ended March 31, 2024) revenues of $5,138.7 milliona, up 13.3% from $4,536.3 million in fiscal 2023, driven by higher volume, including the BD surgical assets acquisition, and pricing.
Income from operations rose 5.7% to $836.1 millionb, though gross profit percentage slipped to 43.2% from 43.7%, reflecting inflation, restructuring charges and productivity headwinds partly offset by pricing. Net income attributable to shareholders was $378.2 million, versus $107.0 million in fiscal 2023, which included a $490.6 million goodwill impairment tied to the Dental segment. Income from continuing operations was $553.3 million, compared with $556.2 million a year earlier.
The Dental segment is now presented as discontinued operations following an April 11, 2024 agreement to sell it for $787.5 million in cash, plus up to $12.5 millionc in contingent payments tied to fiscal 2025 revenue targets. Proceeds are to be used to pay off existing debt. Operating cash flow was $973.3 million and free cash flow was $620.3 million, up from $409.6 million, and total debt was about $3.2 billion at March 31, 2024.
The company also increased its quarterly dividend for the eighteenth consecutive year to $0.52d. The filing also describes a restructuring plan affecting the European Healthcare surgical business, with fiscal 2024 pre-tax restructuring expenses of $44.4 million and expected additional charges of about $55.3 million, along with a $500.0 million share repurchase authorization that was unused during fiscal 2024.
02—Key points
Key Highlights
- Revenues rose 13.3% to $5,138.7 million, with Healthcare revenues up 17.1% to $3,613.0 million, helped by the August 2023 acquisition of BD surgical instrumentation and sterilization container assets for $539.8 million.
- Income from operations increased 5.7% to $836.1 million, while gross profit percentage declined to 43.2% from 43.7%, with inflation and material costs cited as a 120 basis point headwind partly offset by 150 basis points of favorable pricing.
- Dental segment divestiture agreed on April 11, 2024 for $787.5 million in cash plus up to $12.5 million contingent, presented as discontinued operations with a $202.9 million loss accrued on classification as held for sale.
- Net income attributable to shareholders was $378.2 million, compared with $107.0 million in fiscal 2023, which had included a $490.6 million goodwill impairment related to Dental.
- Free cash flow was $620.3 million, up from $409.6 million, as operating cash flow rose to $973.3 million; debt-to-total capital ratio was 33.7%.
- Restructuring Plan recorded $44.4 million of pre-tax expenses in fiscal 2024, with about $55.3 million more expected and anticipated income from operations improvements of about $25.0 million per year.
- Backlog declined to $425.2 million from $599.6 million as supply chain delays eased and lead times shortened; the company repurchased no shares in fiscal 2024 under its $500.0 million authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Steris kept $0.07.
- Revenue$5.14B100.0%
- Cost of revenue−$2.92B56.8%
- Gross profit$2.22B43.2%
- Operating costs−$1.38B26.9%
- Operating income$836.1M16.3%
- Interest, other & tax−$457.9M8.9%
- Net income$378.2M7.4%
Where FY2024 revenue went
$5.14B- Cost of revenue: $2.92B, 57% of revenue
- SG&A: $1.25B, 24% of revenue
- Net income: $378.2M, 7.4% of revenue
- R&D: $103.7M, 2.0% of revenue
- Other operating costs: $26.1M, 0.5% of revenue
- Interest, other & tax: $457.9M, 8.9% of revenue
Kept 7.4% as net incomeOther operating costs $26.1M · 0.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed May 29, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $5.14B$4.54B | +13.3% |
| Cost of Revenue | $2.92B$2.56B | +14.3% |
| Gross Profit | $2.22B$1.98B | +12.0% |
| R&D Expenses | $103.70M$98.48M | +5.3% |
| SG&A Expenses | $1.25B$1.09B | +14.8% |
| Operating Expenses | $1.38B$1.19B | +16.2% |
| Operating Income | $836.10M$791.10M | +5.7% |
| Interest Expense | $144.35M$107.96M | +33.7% |
| Net Income | $378.20M$107.00M | +253.5% |
| EPS (Basic) | $3.83$1.07 | +257.9% |
| EPS (Diluted) | $3.81$1.07 | +256.1% |
| Shares Outstanding (Basic) | 98.80M99.71M | −0.9% |
| Shares Outstanding (Diluted) | 99.40M100.25M | −0.8% |
05—Questions
Frequently Asked Questions
How did STERIS perform financially in fiscal 2024?
Revenues grew 13.3% to $5,138.7 million, and income from operations rose 5.7% to $836.1 million. Net income attributable to shareholders was $378.2 million, up from $107.0 million, which had been depressed by a $490.6 million goodwill impairment on the Dental business in fiscal 2023.
Why is the Dental segment being sold, and what are the terms?
The filing states that STERIS announced on April 11, 2024 its plan to sell the Dental segment for $787.5 million in cash, subject to customary adjustments, plus up to $12.5 million in contingent payments if Dental meets certain fiscal 2025 revenue targets. The transaction is structured as an equity sale and is expected to close in the first quarter of fiscal 2025. The filing does not state the strategic rationale beyond describing it as a strategic shift, and proceeds will be used to pay off existing debt.
How is the company's balance sheet and cash generation positioned?
Total debt was $3.2 billion at March 31, 2024, the debt-to-total capital ratio was 33.7%, and the company was in compliance with all financial covenants. Operating cash flow of $973.3 million funded $360.3 million of capital expenditures, $546.3 million of acquisitions, and $200.6 million of dividends. Credit ratings were BBB (S&P), Baa2 (Moody's) and BBB (Fitch), effective April 18, 2024.
What pressures on margins does the filing identify?
Gross profit percentage fell to 43.2% from 43.7%, with the filing citing unfavorable impacts from inflation and material costs (120 basis points), restructuring charges (40 basis points), adjustments and other charges (40 basis points), and productivity (30 basis points). Pricing was a 150 basis point offset. Management expects continued inflation in fiscal 2025 but not at the level seen in fiscal 2023 and 2024.
What is the status of the restructuring plan and the share repurchase program?
The Restructuring Plan includes a strategic shift in the European Healthcare surgical business, impairment of an internally developed X-ray accelerator, product rationalizations and facility consolidations, eliminating fewer than 300 positions. The company expects to substantially complete it by the end of fiscal 2025. Under the Board's May 3, 2023 authorization, $500.0 million remained available at March 31, 2024, and no shares were repurchased under the program during fiscal 2024.
06—Continue