Steris Plc (NYSE:STE) Q4 2020 Earnings Conference Call - Final Transcript

May 14, 2020 • 10:00 am ET

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Steris Plc (NYSE:STE) Q4 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Mike Tokich

quarter was 17.3%. This includes the benefit related to stock compensation expense and other favorable discrete items. Net income in the quarter grew 7% to $140.5 million and earnings per share increased to $1.64.

I do want to take a moment to discuss our segment changes announced in yesterday's press release. We recently made some key changes to our management structure and reviewed our go-to-market strategy, focusing on our largest customer group health care providers. These changes include realigning the management of our operations to better serve our health care customers. Effective April 1, and consistent with the way management is now operating and viewing the business, the current Healthcare Products and Healthcare Specialty Services segment will be combined and reported as one segment, simply called Healthcare. We have included a recast of quarterly results for fiscal year 2020 in the press release to assist you with your modeling. Our balance sheet is a continued source of strength for the Company. Considering our cash position of $319.6 million, access to available credit lines and a leverage ratio below 1.5 times debt-to-EBITDA, we are well positioned from a liquidity standpoint.

During the fourth quarter, capital expenditures totaled $60.9 million, while depreciation and amortization was $50.9 million. Given the uncertainty of the impact of COVID-19, one of the first steps we took was to pause capital spending where we could during the quarter. Free cash flow for the year exceeded our expectations due to lower-than-planned capital spending and a reduction in working capital, primarily driven by accounts receivable.

With that, I will turn the call over to Walt for his remarks.

Executive
Walter M Rosebrough

Thank you, Michael. And good morning, everyone. Before I get into our performance, I would like to take a moment to express our gratitude to the health care providers on the front lines of this pandemic. These are unprecedented times and the challenges facing those caregivers have been unexpected and monumental. I would also like to thank our people, those out in the field and those working behind the scenes in our factories, labs, offices and increasingly from their own homes. They are busy working to support those caregivers with essential products and services. I'm impressed with the way our team has come together during this crisis, helping our customers and each other, fulfilling our mission to create a healthier and safer world.

At STERIS, we have a clear, long-term approach to running the business. Our customers come first and are followed closely by our people. If we do our jobs well for those two groups, we believe, we will deliver above-average returns to our shareholders. This philosophy has successfully guided us through several significant challenges over the last decade plus, and we are confident it will see us through this pandemic as well. We have chosen a strategy to focus on what we believe to be growth areas in health care, the procedures, vaccines, biologics. While we are not immune to the downturn in procedures, which we believe to be