Steris Plc (NYSE:STE) Q4 2015 Earnings Conference Call Transcript

May 07, 2015 • 10:00 am ET

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Steris Plc (NYSE:STE) Q4 2015 Earnings Conference Call Transcript

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Operator
operator

Welcome to the STERIS Fiscal 2015 Fourth Quarter Conference Call. All lines will remain in listen-only until the question-and-answer session. At that time, instructions will be given should you wish to participate. At the request of STERIS, today's call will be recorded for instant replay.

I'd like to now introduce today's host, Julie Winter, Director of Investor Relations. Ma'am, you may begin.

Executive
Julie Winter

Thank you, Yomi, and good morning, everyone. It's my pleasure to welcome you to STERIS' Fiscal 2015 Fourth Quarter and Full Year Conference Call. Thank you for taking the time to join us this morning. As usual, participating in the call are Walt Rosebrough, our President and CEO, and Mike Tokich, our Senior Vice President and CFO.

Now, just a few words of caution before we begin. 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.

(Forward-Looking Cautionary Statements)

One last reminder before we get started, because of our pending offer for Synergy, STERIS is bound by the UK Takeover Code, which places restrictions on what may be said by STERIS in this call. In particular, only information and opinions which are already in the public domain may be discussed.With those cautions, I will hand the call over to Mike.

Executive
Mike Tokich

Thank you, Julie, and good morning, everyone. It's once again my pleasure to be with you this morning to review our fourth quarter financial results. Following my remarks, Walt will provide his commentary on our performance for the full fiscal year and discuss our outlook for fiscal year 2016. As usual, our comments this morning will focus on adjusted results. Please see the reconciliation table included with our press release for additional details.

We are pleased to report another strong quarter despite the challenging comparisons with a very strong fourth quarter last year. Total revenue growth was 8% in the quarter. On a constant currency basis, revenue growth was 10% with acquisitions contributing 9% and price and organic volume contributing an additional 1%.

Gross margin as a percent of revenue for the quarter increased 100 basis points to 42.5%. Gross margin was positively impacted by product costs and foreign currency. EBIT margin was 17.8% of revenue, a decline versus the prior year, but a substantial improvement sequentially as anticipated.

The effective tax rate in the quarter was 29.9% compared with 33.8% last year. We did have several favorable discrete item adjustments in the fourth quarter, which lowered our effective tax rate below what we anticipated. We do not expect several of these discrete item adjustments to continue at this level of favorability in fiscal year 2016. Driven by growth and operating income and the lower effective tax rate, net income for the quarter increased 9% to $59.3 million or $0.98 per diluted share.

Moving on to our segment results, Healthcare had a good quarter growing revenue 9%. Contributing to that growth, Healthcare service revenue grew 43%, largely as