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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Executive
Walter M Rosebrough

temporary in nature, we have developed a nice balance to our business in terms of exposure to these areas and a good mix of recurring and capital equipment revenue.

Finally, we have employed lean techniques and have been in-sourcing and on-shoring to better protect our product and service supply chains for more than a decade, improving quality, delivery reliability and cost. As a result, we've had a long-term positive run. And so far, our business has fared comparatively well amidst the significant disruption in the global economy. For fiscal 2020, it is safe to say we would be celebrating this phenomenal, record-breaking year we just completed, were it not for the pandemic. We broke the $3 billion revenue mark for the first time, joined the S&P 500, had very strong growth rates in revenue and profitability, ended the year with a very strong balance sheet and would have been looking forward to another record year and repeat of solid growth performance in fiscal 2021. This puts us in an enviable position to face the challenges before us today. Revenue in fiscal 2020 grew 9% as reported and 10% on a constant currency organic basis with solid growth across all segments. This performance was a result of investments we've made in all our businesses as well as the benefit of approximately 100 basis points from small tuck-in acquisitions mostly in health care products.

Our AST segment led the pack, growing constant currency organic revenue 15% for the year. As we've discussed all year, this segment has experienced increased demand from our core medical device customers. Demand will be strong in the long run, in our view, and we plan to continue investing in this business in fiscal 2021 and beyond. We currently see continued growth in those AST facilities that process for pharma, for PPE like gowns and gloves and for personal use medical devices for the home setting, like insulin pumps and blood glucose monitors. We have, however, begun to see declines in time-deferrable procedure-related devices like orthopedic implants. We expect this to be a relatively short-term phenomenon as health care providers begin doing these procedures again.

Healthcare Specialty Services had another outstanding year, growing constant currency organic revenue 12%, despite difficult comparisons with the prior year. We continue to see success across our spectrum of offerings in the US. Specific to the fourth quarter, impact of COVID-19, while our outsourced reprocessing business has been impacted by a decline in procedures, our instrument repair business was relatively insulated as many of our customers took advantage of the downtime for more comprehensive maintenance of their instruments. As you might expect, we saw a significant year-over-year decline in the last week or so of March and into April, due to the reduction in nonessential procedures across America.

Life Sciences had a better year than anticipated, growing revenue 11% on a constant currency organic basis. Capital equipment sales in this business followed a typical lumpy cadence in fiscal 2020, but our full year