01—Abstract
Summary
Summary of the 10-Q filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.
STERIS plc's 10-Q for the quarter ended September 30, 2024 shows revenues up 7.3% to $1,328.9 milliona for the three months and up 7.7% to $2,608.4 million for the six months, driven by higher volume (including the BD assets acquired in August 2023) and pricing.
Income from operations rose to $219.7 millionb for the quarter from $191.6 million, and net income attributable to shareholders was $150.0 million versus $115.3 million. Diluted EPS from continuing operations was $1.51 for the quarter compared with $1.20 a year earlier. Gross profit percentage slipped to 43.6% from 44.1%, reflecting higher labor and overhead costs, and the company recorded $30.9 million of restructuring expense in the first half under a plan that includes eliminating fewer than 300 positions.
The balance sheet and cash flow improved meaningfully. The company sold its Dental segment, closed May 31, 2024, for $787.5 millionc in cash, and used most of the proceeds to repay debt. Total debt fell to $2,236.2 million at September 30, 2024 from $3,206.1 million at March 31, 2024, and the debt-to-total capital ratio dropped to 25.3% from 33.7%.
Operating cash flow was $554.5 milliond for the first six months and free cash flow was $344.5 million. Shareholders received $1.09 per share in dividends during the period, and the company repurchased $100.0 million of shares. On October 7, 2024, STERIS entered a new $1,100 million revolving credit facility that matures five years later, replacing the previous facility.
The filing also discloses an ethylene oxide lawsuit in Illinois involving approximately 275 plaintiffs, with a first trial scheduled for November 2024. The company states it cannot reasonably estimate a range of loss and believes the outcome will not have a material adverse effect on its consolidated financial position or results of operations.
02—Key points
Key Highlights
- Total revenues rose 7.3% to $1,328.9 million in the quarter and 7.7% to $2,608.4 million for the six months, driven by volume (including the BD acquisition) and pricing.
- Income from operations increased to $219.7 million in the quarter from $191.6 million, while gross profit percentage declined to 43.6% from 44.1%.
- Diluted EPS from continuing operations was $1.51 for the quarter versus $1.20 a year earlier.
- Total debt decreased to $2,236.2 million from $3,206.1 million at March 31, 2024, after applying Dental sale proceeds of $787.5 million to debt repayment.
- Debt-to-total capital ratio improved to 25.3% at September 30, 2024 from 33.7% at March 31, 2024.
- Free cash flow was $344.5 million for the first six months of fiscal 2025, up from $284.7 million a year earlier.
- A new $1,100 million revolving credit facility was entered into on October 7, 2024, and a restructuring plan recorded $75.3 million of cumulative pre-tax expense since inception.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Steris kept $0.11.
- Revenue$1.33B100.0%
- Cost of revenue−$750.1M56.4%
- Gross profit$578.8M43.6%
- Operating costs−$359.1M27.0%
- Operating income$219.7M16.5%
- Interest, other & tax−$69.7M5.2%
- Net income$150.0M11.3%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed November 7, 2024Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $1.33B$1.24B | +7.3% |
| Cost of Revenue | $750.10M$691.98M | +8.4% |
| Gross Profit | $578.80M$546.23M | +6.0% |
| R&D Expenses | $27.00M$26.27M | +2.8% |
| SG&A Expenses | $329.30M$328.43M | +0.3% |
| Operating Expenses | $359.10M$354.68M | +1.2% |
| Operating Income | $219.70M$191.55M | +14.7% |
| Net Income | $150.00M$115.32M | +30.1% |
| EPS (Basic) | $1.52$1.17 | +29.9% |
| EPS (Diluted) | $1.51$1.16 | +30.2% |
| Shares Outstanding (Basic) | 98.70M98.78M | −0.1% |
| Shares Outstanding (Diluted) | 99.20M99.41M | −0.2% |
05—Questions
Frequently Asked Questions
How did STERIS perform in the second quarter of fiscal 2025?
Revenues rose 7.3% to $1,328.9 million and income from operations increased to $219.7 million from $191.6 million. Net income attributable to shareholders was $150.0 million, compared with $115.3 million a year earlier. Growth reflected higher volume, including the BD assets acquired in August 2023, and pricing across all three segments.
What drove the decline in gross profit percentage?
The filing attributes the decline from 44.1% to 43.6% in the quarter to unfavorable impacts from labor and overhead costs (160 basis points), productivity (60 basis points), and adjustments and other charges (50 basis points). These were partly offset by favorable pricing (130 basis points), mix, material costs, and divestitures.
How did the Dental divestiture affect the balance sheet?
The Dental segment was sold for $787.5 million in cash, subject to adjustments, and closed on May 31, 2024. A majority of the proceeds were used to pay off existing debt, reducing total debt to $2,236.2 million at September 30, 2024 from $3,206.1 million at March 31, 2024.
What legal risks does the filing disclose?
A subsidiary has been sued in Illinois state court by about 275 individual plaintiffs alleging cancer from ethylene oxide emissions at a former sterilization facility. The first trial is scheduled for November 2024. The company disputes the allegations and says a loss is reasonably possible, but a range of loss cannot be reasonably estimated.
What restructuring actions is STERIS undertaking?
In May 2024 the company adopted a Restructuring Plan that includes a strategic shift in its European Healthcare surgical business, an X-ray accelerator impairment, product rationalizations, and facility consolidations, eliminating fewer than 300 positions. Pre-tax restructuring expense since inception totals $75.3 million, with about $25.0 million more expected in fiscal 2025, and the company anticipates roughly $25.0 million of annual operating income improvement.
06—Continue