Steris Plc (NYSE:STE) Q1 2015 Earnings Conference Call Transcript
Aug 04, 2015 • 10:00 am ET
Welcome to the STERIS fiscal 2016 first quart 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 now like to introduce today's host, Julie Winter, Director Investor Relations. Ma'am may begin.
Thank you, Keano, and good morning everyone. I have just a few words of caution before we open for comments from management this morning. This webcast contains time sensitive information that is accurate only as of today. Any redistribution, retransmission, or rebroadcast of this call without the express written consent of STERIS is strictly prohibited. (Forward-Looking Statements)
Our SEC filings, including the 10-K, are available through the Company and on our website. During the review we will refer to non-GAAP financial measures to provide information pertinent to the underlying performance of our operations. These non-GAAP financial measures should not be considered separately from, or as an alternative for, and should be read together with GAAP results. Tables reconciling these measures to the most comparable GAAP measures are available in the schedules accompanying the press release, and on the investor relations section of our website.
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 on 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.
Thank you, Julie. Good morning, everyone. It is once again my pleasure to be with you this morning to review our first quarter financial results. Following my remarks Walt will provide his commentary on our performance and discuss our outlook for the full fiscal year. We are pleased to report another strong quarter and a solid start to fiscal year 2016.
Total Company revenue grew 7% in the first quarter, driven by a 4% increase in volume, a 1% increase in price and 4% from acquisitions, offset by a 2% decline from foreign currency. Gross margin as a percent of revenue for the quarter increased 40 basis points to 41.9%. Gross margin was positively impacted by foreign currency and improved productivity, partially offset by unfavorable product mix. EBIT margin increased 30 basis points to 13.9% of revenue due to the improvement in gross margin I just mentioned, somewhat offset by an 11% increase in R&D spending.
The increase in R&D spending is primarily related to the development of surgical products and accessories. During the first quarter as part of our plans to fund the Synergy Health acquisition, we issued $350 million in senior notes in a private placement. The notes have 10, 12, and 15-year maturities, with an average interest rate of 3.56%. As a result of this issuance, we repaid all of the outstanding debt under our current bank credit facility.