STERIS (STE) investor relations material

Executive summary

• Q3 revenue grew 9.2% year-over-year to $1.5 billion, with constant currency organic revenue up 8% driven by volume and pricing across all segments.

• Adjusted net income from continuing operations reached $249.4 million, with adjusted EPS up 9% to $2.53; net income attributable to shareholders was $192.9 million for the quarter.

• Free cash flow for the first nine months was $737.6 million, reflecting higher earnings and lower capital spending.

• The Dental segment was divested in May 2024 for $787.5 million, with proceeds used primarily to pay down debt.

• Tariff impacts were significant, with $16 million pre-tax in Q3 and $55 million annualized for fiscal 2026.

Financial highlights

• Gross margin declined 70 basis points year-over-year to 43.9%, as positive price and productivity were offset by tariffs and inflation.

• EBIT margin decreased 40 basis points to 22.9% of revenue.

• Effective tax rate was 24.6% for the quarter and 24.0% for the nine months.

• Capital expenditures for the first nine months totaled $278.8 million; depreciation and amortization were $363.1 million.

• Ended the quarter with $1.9 billion in total debt; gross debt to EBITDA was approximately 1.2x.

Outlook and guidance

• Fiscal 2026 outlook maintained: 8%-9% as-reported revenue growth, 7%-8% constant currency organic revenue growth.

• Adjusted EPS guidance of $10.15-$10.30, with the higher end less likely due to increased tariffs.

• Free cash flow expected at $850 million; CapEx guidance unchanged at $375 million.

• Q4 expected to see a slowdown due to tough comparisons, especially in AST capital equipment.

• Restructuring actions are anticipated to improve operating income by approximately $25 million annually.