01—Abstract
Summary
Summary of the 10-Q filed August 8, 2024. Cited figures are marked; the original filing is the authoritative source.
STERIS plc's first-quarter fiscal 2025 10-Q (quarter ended June 30, 2024) shows revenues up 8.1% to $1,279.5 milliona from $1,183.4 million, with income from operations of $185.5 million, down from $197.8 million, as restructuring expenses of $25.7 million and higher compensation costs weighed on results.
Net income attributable to shareholders was $145.4 millionb, versus $123.6 million a year earlier, helped by income from discontinued operations of $5.6 million and an $18.8 million pre-tax gain on the sale of the Controlled Environment Certification Services business. Diluted EPS from continuing operations was $1.41, compared with $1.31 a year earlier. The balance sheet deleveraged sharply following the divestiture of the Dental segment, which closed on May 31, 2024 for total cash consideration of $787.5 million, plus up to $12.5 million contingent.
Proceeds of $809.6 millionc were used largely to repay term loans ($638.1 million) and revolving credit facility borrowings ($253.2 million net). Total debt fell to $2.32 billion from $3.21 billion at March 31, 2024, and the debt-to-total capital ratio dropped to 26.7% from 33.7%. Operating cash flow was $303.7 million and free cash flow was $195.7 million, versus $214.5 million a year earlier, which the company attributed to timing of capital spending.
Management launched a targeted restructuring plan in May 2024, with total pre-tax restructuring expense of $72.5 milliond recorded since inception, fewer than 300 positions being eliminated, and approximately $28.0 million of further costs expected in fiscal 2025. The company expects roughly $25.0 million per year of improved operating income, mostly from fiscal 2026 onward. Healthcare revenues grew 10.1% to $901.2 million, while Healthcare backlog declined to $362.0 million from $491.7 million a year earlier.
02—Key points
Key Highlights
- Total revenues rose 8.1% to $1,279.5 million, driven by higher volume (including the BD surgical assets acquisition) and pricing; consumable revenues grew 20.8% while capital equipment revenues fell 10.3%.
- Income from operations declined to $185.5 million from $197.8 million, primarily due to $25.7 million of restructuring expenses tied to the May 2024 restructuring plan.
- Net income attributable to shareholders was $145.4 million, or $1.46 diluted EPS, versus $123.6 million or $1.25 a year earlier, aided by a $5.6 million income from discontinued operations.
- Dental segment divestiture closed May 31, 2024 for $787.5 million cash plus up to $12.5 million contingent, with $809.6 million in sale proceeds received during the quarter and used largely to repay debt.
- Total debt fell to $2,315.6 million from $3,206.1 million at March 31, 2024, and the debt-to-total capital ratio declined to 26.7% from 33.7%.
- Free cash flow was $195.7 million versus $214.5 million a year earlier; operating cash flow increased to $303.7 million from $281.1 million.
- Healthcare backlog was $362.0 million at June 30, 2024, down from $491.7 million a year earlier, which the company attributed to shortened lead times following strong fiscal 2024 shipments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Steris kept $0.11.
- Revenue$1.28B100.0%
- Cost of revenue−$707.1M55.3%
- Gross profit$572.4M44.7%
- Operating costs−$386.9M30.2%
- Operating income$185.5M14.5%
- Interest, other & tax−$40.1M3.1%
- Net income$145.4M11.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed August 8, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $1.28B$1.18B | +8.1% |
| Cost of Revenue | $707.10M$654.38M | +8.1% |
| Gross Profit | $572.40M$529.00M | +8.2% |
| R&D Expenses | $25.60M$24.69M | +3.7% |
| SG&A Expenses | $335.60M$306.53M | +9.5% |
| Operating Expenses | $386.90M$331.24M | +16.8% |
| Operating Income | $185.50M$197.76M | −6.2% |
| Interest Expense | $30.38M$32.36M | −6.1% |
| Net Income | $145.40M$123.55M | +17.7% |
| EPS (Basic) | $1.47$1.25 | +17.6% |
| EPS (Diluted) | $1.46$1.25 | +16.8% |
| Shares Outstanding (Basic) | 98.90M98.71M | +0.2% |
| Shares Outstanding (Diluted) | 99.40M99.24M | +0.2% |
05—Questions
Frequently Asked Questions
Why did operating income decline despite higher revenue?
Income from operations fell to $185.5 million from $197.8 million mainly because restructuring expenses rose to $25.7 million from $19 thousand a year earlier, along with higher compensation and professional fee costs in SG&A, which rose 9.5%. Higher volume and pricing partially offset these pressures.
What is the restructuring plan and what savings does it target?
The plan, adopted in May 2024, includes a strategic shift in the Healthcare surgical business in Europe, impairment of an internally developed X-ray accelerator, product rationalizations, and facility consolidations, eliminating fewer than 300 positions. Total pre-tax restructuring expense since inception is $72.5 million, with about $28.0 million more expected, and the company anticipates roughly $25.0 million per year of improved income from operations, mostly from fiscal 2026 onward.
How did the Dental divestiture change the company's debt position?
Proceeds of $809.6 million from the Dental and CECS sales were used mainly to pay off term loans, with $638.1 million repaid, and to pay down the Revolving Credit Facility by a net $253.2 million. Total debt decreased to $2,315.6 million from $3,206.1 million at March 31, 2024, and the debt-to-total capital ratio fell to 26.7%.
Is the company still returning cash to shareholders?
Yes. The company paid $51.4 million in cash dividends ($0.52 per share) and repurchased 251,507 ordinary shares for $56.1 million net of fees and commissions during the quarter. About $443.9 million remained available under the share repurchase authorization at June 30, 2024.
06—Continue