Q4 2024 STERIS PLC Earnings Call
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After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone and to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to MS. Julie Winter of Investor Relations. Please go ahead.
Thank you Jack and good morning, everyone.
As usual on today's call, we will have Mike <unk>, Senior Vice President and CFO, and Dan correct, Seattle, Our president and CEO and I do have a few words of caution before we open for cameras.
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 Sarah is strictly prohibited.
Some of the statements made during this review are or maybe considered forward looking statements. Many important factors could also cause could cause actual results to differ materially from those in the forward looking statements, including without limitation those risk factors described in <unk> Securities filings.
The company does not undertake to update or revise any forward looking statements as a result of new information or future events or developments.
Just a SEC filings are available through the company and on our website.
In addition on today's call non-GAAP financial measures, including adjusted earnings per diluted share adjusted operating income constant currency organic revenue growth and free cash flow will be used additional information regarding these measures, including definitions is available in our earnings release as well as reconciliations between GAAP.
And non-GAAP financial measures.
non-GAAP financial measures are presented during this call with the intent of providing greater transparency to supplemental financial information used by management and the board of directors in their financial analysis and operational decision, making.
With those cautions I will hand, the call over to Mike.
Julian Good morning, everyone is once again my pleasure to be with you. This morning to review the highlights of our performance as you saw on the press release, we finished the year strong with total revenue growth of 10% in the fourth quarter in constant currency organic revenue growth of 6%.
Adjusted earnings per diluted share for the fourth quarter with $2.58 for the full year, we exceeded expectations with 12% total revenue growth and constant currency organic revenue growth of 9%.
<unk> earnings per diluted share totaled $8.83 exceeding our outlook.
With the announcement of the divestiture of the dental segment. We are required to report results from continuing operations starting now as a result, the rest of our comments today will be focused on results from continuing operations contained within the numerous press release tables, you will find an eight quarter recast of results from <unk>.
<unk> and discontinued operations to help with year over year comparisons.
Turning to continuing operations fourth quarter constant currency organic revenue grew 7% driven by volume as well as 240 basis points of price. This isn't this is impressive when compared to the strong fourth quarter last year. Once again, our healthcare segment exceeded expectations during the quarter healthcare shipped.
A record $332 million in capital equipment.
Gross margin for the quarter declined 80 basis points.
With the prior year compared to the prior year to 42, 6%.
Positive price and productivity were more than offset by negative segment mix and increased materials and labor costs.
EBIT margin decreased 30 basis points to 23, 7% of revenue compared with the fourth quarter last year.
The operating income mix shift between health care and a S. T. Once again impacted our margins.
The adjusted effective tax rate in the quarter was 21, 4% lower than we anticipated due to several favorable discrete item adjustments.
Net income from continuing operations in the quarter was $245 million and adjusted earnings per share from continuing operations were $2.41.
Capital expenditures for fiscal 2024 totaled $360 million, while depreciation and amortization totaled $565 million.
Total debt sits at $3 $2 billion.
And our total debt to EBITDA at quarter end was approximately two one times gross leverage.
Free cash flow for fiscal 'twenty 'twenty four was $620 million as we benefited from higher generation from cash from operations.
<unk> less use of cash for working capital requirements with that I will turn the call over to Dan for his remarks.
Thanks, Mike and good morning, everyone. Thank you for making the time to join US today, Mike already covered the fourth quarter. So I will focus on our fiscal 2024 segment performance and our outlook for fiscal 2025 for continuing operations.
Fiscal 2024 turned out to be a strong year for stairs as you've heard from US previously healthcare has consistently outperformed all year ending fiscal 2024 with 13% constant currency organic revenue growth the third consecutive year of double digit growth for this segment.
The single biggest driver was the work done by our operations teams to reduce lead times and as a result returned our backlog back to normal levels.
I am pleased to report that as of the fourth quarter. Our lead times are back to pre pandemic levels for the first time in two years.
As a result healthcare backlog is also now hovering around what we believe to be the new normal at just over $350 million.
Service and consumables each had strong organic revenue growth for the fiscal year as we continue to benefit from the breadth of our offering and the size and quality of our service teams.
[noise] Asps.
Grew 3% constant currency organic for the year, which is unusually light, but ended up with improving service revenue growth.
For example in the fourth quarter service revenue grew 7%, which is a mixture of double digit revenue growth in the U S and low single digit revenue growth in EMEA.
While it is early days bio processing demand seems to have stabilized and did not unfavorably impact our performance in the quarter. This is a positive step forward.
We do not expect to return to meaningful bioprocess and growth until the second half of fiscal 2025 align with the comments that you've been hearing from our public company customers.
Life Sciences ended fiscal 2024 in line with our long term expectations at 6% constant currency organic revenue growth.
Path may have served a bit more than we're used to but a solid year for the segment overall in particular double digit revenue growth in service for the year is an impressive achievement as we continue to win new contracts and see improved part sales.
<unk> some of the macro challenges facing the pharma sector. We are pleased with the life Sciences segment results.
Turning to our updated outlook fiscal 2025 will be another strong year for stairs as.
As reported revenue from continuing operations is expected to increase six 5% to seven 5% for fiscal 2025.
This includes the additional four months of the BD acquisition, a full year impact from the divestiture of our controlled environmental services business within the life Sciences segment and neutral foreign currency.
Constant currency organic revenue growth from continuing operations is expected to be 6% to 7%.
For your modeling our expectation at the segment level for constant currency organic revenue growth is that <unk> grows high single digits for the year with growth accelerating in the second half health care is anticipated to grow mid single digits and life science is expected to grow low single digits as a reminder, our firm.
First quarter of fiscal 2024 was particularly strong with high teens growth in health care.
It's a step forward we.
We do not expect to return to meaningful bioprocess and growth until the second half of fiscal 2025 align with what you've been hearing from our public company customers.
Yeah.
EBIT margins are expected to improve for the year as some headwinds from fiscal 2024 base.
As a result adjusted earnings per diluted share coming from continuing operations are anticipated to increase 10% to 13% at a range of $9 five to $9 25.
Life Sciences ended fiscal 2024 in line with our long term expectations at 6% constant currency organic revenue growth.
Path may have served us well.
Use it.
Speaker Change: Solid year.
Speaker Change: Oh.
This outlook assumes that the divestiture of the dental segment closes in the first quarter and the proceeds were primarily used to repay variable rate debt.
Speaker Change: In particular.
Speaker Change: Revenue growth for.
Any growth in service for the year is an impressive achievement as we continue to win new contracts and see improved part sales.
Speaker Change: For the year.
Speaker Change: We continue to work hard.
Speaker Change: Pardon me.
Speaker Change: Considering some of the macro.
Our earnings split for revenue is anticipated to be 45% in the first half and 55% in the second half.
Considering some of the macro challenges facing the pharma sector. We are pleased with the life Sciences segment results.
Speaker Change: Okay.
Julia: It's the pharma sector.
Julia: Pleased with that.
Speaker Change: That's all.
Speaker Change: Turning to our own.
Turning to our updated outlook fiscal 2025 will be another strong year for <unk> as reported.
Before we conclude I do want to make a few remarks on the strategic plan, we have been executing during fiscal 2024.
Speaker Change: Fiscal 2012.
Speaker Change: Hi.
Speaker Change: Yes.
Speaker Change: As reported.
Revenue from continuing operations is expected to increase six 5% to seven 5% for fiscal 2025.
After significant review, we decided we needed to improve focus on our core customers and health care pharma and med tech as well as areas, where we can achieve sustainable and profitable growth.
Speaker Change: Operation.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: 2025.
Speaker Change: This includes the additional four months.
Speaker Change: This includes the additional four months of the BD acquisition, a full year impact from the divestiture of our controlled environmental services business within the life Sciences segment and neutral foreign currency.
Speaker Change: Acquisition.
Speaker Change: Impact.
As a result, we made a decision to divest two businesses during the year, most notably the dental segment.
Speaker Change: Voltaire environmental.
Speaker Change: This business of life Sciences.
Speaker Change: Neutral.
In addition, today, we announced a targeted restructuring plan, which includes restructuring of the health care surgical capital business in Europe, as well as other actions, including impairment of an internally developed high capacity X Ray accelerator product rationalizations and facility consolidations combined these.
Patrick Wood: Constant currency organic growth.
Speaker Change: Constant currency organic revenue growth from continuing operations is expected to be 6% to 7%.
Speaker Change: Well, it's from continuing operation.
Speaker Change: Hum.
Speaker Change: For your modeling.
Speaker Change: For your modeling our expectation at the segment level for constant currency organic revenue growth is that ASP grows high.
Operator: That's.
Operator: Constant currency organic revenue.
Operator: Yes.
Speaker Change: I see.
Speaker Change: High single digits for the year with growth accelerating in the second half healthcare is anticipated to grow mid single digits and life science is expected to grow low single digits. As a reminder, our first quarter of fiscal 2024 was particularly strong with high teens growth in healthcare.
Speaker Change: I'm here with all of you.
Speaker Change: England.
Actions allow us to focus on our core business and deliver on the long term commitments. We have made to our investors. We are confident that with these changes we have the right portfolio sales channels and network of facilities to deliver to our customers over the years to come.
Speaker Change: Health care.
Speaker Change: Thanks.
Speaker Change: Life Science.
Speaker Change: Okay.
Speaker Change: As a reminder.
Speaker Change: At this point.
Speaker Change: Particularly strong.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: EBIT margin.
Speaker Change: EBIT margins are expected to improve for the year as some headwinds from fiscal 2024 base as a result adjusted earnings per diluted share coming from continuing operations are anticipated to increase 10% to 13% at a range of $9 five to nine.
That concludes our prepared remarks for the call Julia will you. Please give the instructions. So we can begin the Q&A. Thank.
Speaker Change: Sure some headwinds.
Speaker Change: Yeah.
Speaker Change: As a result.
Thank you, Mike and Dan to comment check if youll give the instructions we can open for Q&A.
Speaker Change: Adjusted earnings per share.
Speaker Change: Yeah.
Speaker Change: Operator.
Yes, ma'am he will now begin the question and answer session.
Speaker Change: Our anticipated.
Speaker Change: Turning to third.
To ask a question you May press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: A range of about $1.
Speaker Change: Hi.
Speaker Change: 25.
Speaker Change: Okay.
Speaker Change: This outlook assumes that the divestiture of the dental segment closes in the first quarter and the proceeds were primarily used to repay variable rate debt.
Speaker Change: This outlook.
Speaker Change: Yeah.
Anytime Youre question has been addressed you would like to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Speaker Change: What was this in the first quarter.
Speaker Change: Oc primarily use.
Speaker Change: Okay.
Speaker Change: Our earnings.
Speaker Change: Our earnings split for revenue is anticipated to be 45% in the first half and 55% in the second half.
Speaker Change: Revenue is paid.
Speaker Change: Paid it.
Speaker Change: First half.
And the first question will come from Patrick Wood with Morgan Stanley. Please go ahead.
Speaker Change: 55.
Speaker Change: Yeah.
Speaker Change: Before we conclude.
Speaker Change: Before we conclude I do want to make a few remarks on the strategic plan, we have been executing during fiscal 2020.
Thank you just a couple for me, maybe just start with a dull guidance one.
Speaker Change: I want to make.
Speaker Change: And we have been excellent.
Speaker Change: Okay.
On the health care side of things mid single digit growth makes sense, obviously, you've got a very tough comp on the capital equipment side and I'm just curious how you're thinking about that obviously Q1 very tough, but you know the interplay between the order books and are not coming through is the assumption that you can keep that capital equipment business in growth or is.
In addition, today, we announced a targeted restructuring plan, which includes restructuring of the health care surgical capital business in Europe, as well as other actions, including impairment of an internally developed high capacity X Ray accelerator.
The guidance, assuming it's kind of flat I'm, just trying to get a sense for how much not mid single digit in health care is contingent on the capital equipment side within health care.
Yeah, Hey, Patrick. Thanks. This is Dan Yeah, our expectations is that we can have very very low single digit growth on the capital side of the business in health care. If you look at the last five months or.
Rationalizations and facility consolidations.
And bind these actions allow us to focus on our core business and deliver on the long term commitments. We have made to our investors. We are confident that with these changes we have the right portfolio sales channels and network of facilities to deliver to our customers over the years to come.
Over the last four quarters, rather I'm, sorry, I misspoke, there, we kind of ship an extra quarter of capital during the fiscal 2024 because.
'twenty three we had the challenges with supply chain, which pushed out deliveries. So we had a huge Q1, which is abnormal for us in capital and then we finished strong as we typically do in Q4 so.
Speaker Change: That concludes our prepared remarks for the call Julia will you. Please give the instructions. So we can begin the Q&A.
There was a bit of a timing issue there that's affecting the comps going into next year, but nonetheless, we do expect that we can maintain the level and grow it a bit we'd have as we've consistently had strong order books and then the remaining growth is really the expectation on the the momentum we built in the services and then the consumables organizations for health care and as you know we.
Julia: Mike and Dan to comment Jack they'll give the instructions we can open for Q&A.
Mike: Yes, ma'am, we will now begin the question and answer session.
Speaker Change: You ask a question you May press Star then one on your Touchtone phone.
Speaker Change: You're using a speakerphone please pick up your handset before pressing the keys if at.
Speaker Change: Anytime Youre question has been addressed you would like to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Place more and more equipment that drives more consumption of both sides of that business.
And obviously as we've seen some consistent recovery in procedural rates.
Speaker Change: And the first question will come from Patrick Wood with Morgan Stanley. Please go ahead.
Those business are largely procedural driven.
Thank you and then just second one maybe a bit bigger picture.
Patrick Wood: Fantastic. Thank you just a couple from me.
The industry overall, there's been quite a lot of changes you know we had the FTA sterilization downhole and then the E O regulatory side I guess, what are you seeing from the competitive environment and how are you thinking you know the industry could change going forward, you know visa b stuff like insourcing versus outsourcing just an update on the competitive.
Speaker Change: To start with a dull guidance one.
Operator: On the healthcare side of things mid single digit growth makes sense, obviously, you've got a very tough comp on the capital equipment side and I'm just curious how you're thinking about that obviously Q1 very tough, but you know the interplay between the order books and that coming through is the assumption that you can keep that capital equipment business in growth or is.
Environment, and I guess, the challenges facing your customers and what they decide to go with you will keep things in house.
Speaker Change: The guidance, assuming it's kind of flat I'm, just trying to get a sense for how much of that mid single digit in health care is contingent on the capital equipment side within health care.
Well I mean, Patrick it's hard it's hard to say what I would say is this is that stairs is incredibly well positioned as a technology neutral and location neutral company in terms of how we help our customers and whether that means that we sell them accelerators for their own in house deployment or BHP for their own.
Speaker Change: Yeah, Hey, Patrick. Thanks. This is Dan Yeah, our expectations is that we can have very very low single digit growth on the capital side of the business in health care. If you look at the last five months or the last four quarters, rather I'm, sorry, I misspoke there.
In house deployment for terminal sterilization or whether they use US you know in a large scale contract situation, where we've consistently.
Speaker Change: Ship, an extra quarter of capital during the fiscal 2024, because in <unk> and 'twenty three we added challenges with supply chain, which pushed out deliveries. So we had a huge Q1, which is abnormal for us in capital and then we finished strong as we typically do in Q4 so.
Continuing our expansion efforts as we expect the growth in the industry to continue long term. So I believe from our perspective, we have done everything possibly to support our customers from a capacity from a in house perspective.
Speaker Change: There was a bit of a timing issue there that's affecting the comps going into next year, but nonetheless, we do expect that we can maintain the level and grow it a bit.
Also from a regulatory perspective in terms of how we operate but also working with the regulatory agencies on things like Master files.
Speaker Change: We've consistently had strong order books and then the remaining growth is really the expectation on the momentum we built in the services and then the consumables organizations for health care. It is.
And change in classifications for alternative methods like made for Hudson peroxide to lower those those barriers in terms of regulatory.
Speaker Change: We placed four and more equipment that drives more consumption of both sides of that business.
It was a lot going on thanks, so much for taking the questions.
Speaker Change: And obviously as we've seen some consistent recovery in procedural rates are those the business are largely procedural driven.
Okay.
The next question will come from Brent <unk> with Keybanc. Please go ahead.
Speaker Change: Thank you and then just second one maybe a bit bigger picture for.
Hey, guys. Thanks, so much for taking the questions I'm going to ask just one more on F. T. I think it was really encouraging to see a little bit of progress in terms of growth in the service line. This quarter. So just curious if you could provide a little bit more color on where we stand in regards to the inventory overhang specifically in Europe and given that was the reason that seem to be.
Speaker Change: The industry overall, there's been quite a lot of changes you know we had the FTA sterilization town Hall, and then the E O regulatory side I guess, what are you seeing from the competitive environment and how are you thinking the industry could change going forward, you know vis vis stuff like insourcing versus outsourcing just an update on the compare.
And the most just from an inventory standpoint.
Yes sure Brent This is Dan I can speak to that and thanks for the question.
Speaker Change: Live environment.
Speaker Change: I guess the challenges facing your customers and what they decided to go with you all keep things in house.
We really saw things turn in the U S market as strongly in the second half of the year in terms of medical devices in that segment. If you. If you put aside the bio processing overhang, we were growing at double digits for most of the second half for those type of products. So we've seen a full recovery here in the U S.
Speaker Change: Well I mean, Patrick it's hard it's hard to say what I would say is this is that there is incredibly well positioned as a technology neutral and location neutral company in terms of how we help our customers and whether that means that we sell them accelerators for their own in house deployment or BHP for their own.
Terms of the inventory burn down.
It's taken a little more time and I at this point I'm not so sure. If it's if it's just inventory I think it's more procedure driven and there is still a slower recovery over there in terms of procedural backlog that needs that needs to play out.
Speaker Change: In house deployment for terminal sterilization or whether they use us on a large scale contract situation, where we've consistently.
Speaker Change: Our expansion efforts as we expect the growth in the industry to continue long term. So I believe from our perspective, we have done everything possibly to support our customers from a capacity from a in.
<unk>, that's got a sort of sell through right.
And we believe with a high degree of confidence that in the second half of the year that we should see a robust turnaround in the European market in terms of overall consumption.
Speaker Change: In house perspective, and also from a regulatory perspective in terms of how we operate but also working with the regulatory agencies on things like Master files.
All right Super helpful. And then just one quick follow up on the EPS guidance.
Just curious if there was any impact how you're thinking about either margins or EPS as a result of the incremental divestiture in life Sciences, and if theres any financing considerations that we should be aware of for that deal.
Speaker Change: And changing the classifications for alternative methods like for hygiene products side to lower those those barriers in terms of regulatory.
So that was a that was a very small deal, but we wanted to point it out because it does have a negative impact on life sciences growth rates, but all in all it was it was it was very small for us So no no impact bottom line.
Speaker Change: It was a lot going on thanks, so much for taking the questions.
Speaker Change: Right.
Speaker Change: The next question will come from Brent <unk> with Keybanc. Please go ahead.
Brent: Hey, guys. Thanks, so much for taking the questions I'm going to ask just one more on Asps I think it was really encouraging to see a little bit of progress in terms of growth in the service line. This quarter, but just curious if you could provide a little bit more color on where we stand in regards to the industry overhang specifically in Europe, given that was the reason that seem to be.
Alright, thank you.
The next question will come from Mike Matson with Needham <unk> Company. Please go ahead.
Yeah. Thanks for taking my question just a couple on the guidance so.
First.
Can you remind us how much pricing you got for the full year for reporting fiscal 'twenty four.
Speaker Change: And the most just from an inventory standpoint.
Speaker Change: Yes sure Brent This is Dan I can speak to that and thanks for the question.
And the.
Fiscal 'twenty guidance for pricing yes.
Dan: We really saw things turn in the U S market strongly in the second half of the year in terms of medical devices in that segment. If you put aside the bioprocess overhang, we were growing at double digits for most of the second half for those type of products. So we've seen a full recovery.
Yes, so for the full year of 24, our total consolidated total company price was 270 basis points favorable.
And what we are assuming in our FY 'twenty <unk> guidance is around 200 basis points of favorable price.
Dan: In terms of the inventory burn down you know Europe has taken a little more time and I at this point I'm not so sure. If it's if it's just inventory I think it's more procedure driven and there is still a slower recovery over there in terms of procedural backlog that needs that needs to play out.
Okay got it.
And then just in terms of M&A with the dental divestiture.
Your your debt to some degree.
Should we expect.
Near term deals just given given that additional capacity youre going to have.
Dan: That's got a sort of sell through right.
Dan: And we believe with a high degree of confidence that in the second half of the year that we should see a robust turnaround in the European market in terms of overall consumption.
Yes, Mike This is Dan what I would say is we have the capacity both financially.
And internally from a from a people perspective.
Speaker Change: All right Super helpful. And then just one quick follow up on the EPS guidance.
As you know we've we've been in the acquisition business for a number of years. We're good at it we're good at integrating companies.
Speaker Change: Just curious if there was any impact to how you're thinking about either margins or EPS as a result of the incremental divestiture in life Sciences, and if theres any financing considerations that we should be aware of for that deal.
But those opportunities have to present themself and end and when they do and when it's eminent we'll be sure to talk about it.
Okay got it.
Yeah.
Speaker Change: So that was a that was a very small deal, but we want pointed out because it does have a negative impact on life sciences growth rates, but all in all it was it was it was very small for us So no no impact bottom line.
The next question will come from Jacob Johnson with Stephens. Please go ahead.
Good morning, this is Matt on for Jacob.
I just wanted to follow up on the guidance question asked earlier.
Do you mind clarifying your AR.
Speaker Change: Alright, thank you.
First half second half of March.
Speaker Change: The next question will come from Mike Matson with Needham <unk> Company. Please go ahead.
It seems like you maybe got into like roughly 2% organic growth for the first half and maybe 10% plus for the second half is that correct.
Michael Stephen Matson: Yes. Thanks for taking my question just a couple on the guidance so.
The earnings slightly provided with earnings not revenue.
Michael Stephen Matson: First can.
And certainly based on that we would expect growth ramp up in the second half of the year.
Michael Stephen Matson: Can you remind us how much pricing you got for the full year for reporting fiscal 'twenty four.
Michael Stephen Matson: What is your assumed in fiscal.
No we don't.
Michael Stephen Matson: Fiscal 'twenty guidance.
To clarify we don't guide revenue, but.
Speaker Change: Yeah. So for the full year of 24, our total consolidated total company price was 270 basis points favorable.
I appreciate that.
And then on gamma radiation I know you've caught up on some downloading last quarter, but in the medium term I believe a few years ago. There was some concern in the bio processing industry are about a shortage of capacity.
Michael Stephen Matson: And what we are assuming in our FY 'twenty five guidance is around 200 basis points of favorable price.
Speaker Change: Okay got it.
Or do you have any thoughts on the current state of the gamma supply versus demand.
Speaker Change: And then just in terms of M&A with the dental divestiture.
Bio processing demand comes back and what could.
Speaker Change: Your your debt to some degree.
Does this mean for your extra capacity as well.
Michael Stephen Matson: Should we expect.
Michael Stephen Matson: Near term deals just given given that additional capacity youre going to have.
That's the basis of our extra expansion in.
We have a number of sites.
Michael Stephen Matson: Yeah, Mike This is Dan what I would say is we have the capacity both financially.
That have come online and will come online over the next year two years actually in particular, so we think we're well positioned to take advantage of the gap.
Dan: And internally from a from a people perspective.
Dan: As you know we've we've been in the acquisition business for a number of years. We're good at it we're good at integrating companies.
That does exist and will grow in terms of short term supply of isotope versus the demand that they have for radiation processing.
Dan: But those opportunities have to present themself and end and when they do and when it's eminent we should talk about it.
Great. Thank you for taking my questions.
Yep. Thank you.
Speaker Change: Okay got it.
Again, if you have a question. Please press Star then one our next question will come from Jason Bednar with Piper Sandler. Please go ahead.
Speaker Change: Oh.
Speaker Change: The next question will come from Jacob Johnson with Stephens. Please go ahead.
Dan: Good morning, this is Matt on for Jacob.
Hey, good morning, and congrats on a nice finish to fiscal 'twenty four guys.
Matt: I just wanted to follow up on the guidance question asked earlier.
I'll take maybe a little bit of a different swing here on the revenue pacing.
Matt: Do you mind clarifying your AR.
Matt: First half second half of March.
I think you said ASP acceleration over the course of the year, but is it right to think the for kind of a company wide level first half of the year maybe.
Matt: It seems like maybe got into like roughly 2% organic growth for the first half and maybe 10% plus four.
Matt: Okay.
Matt: Okay.
Maybe a tick or two below the full year organic guide second half a little bit above I think we're all just trying to dial in to make sure. We're not too backend loaded with your you know with our model based on what you're guiding to today.
Matt: Okay.
Matt: Okay.
Matt: Okay.
Matt: Okay.
Dan: Okay.
Dan: Okay.
Dan: To clarify we don't guide revenue, but.
Yeah, our comparisons are tough in both Q1, and obviously now with the strong finish in Q4, but I would agree that the first half would be a little bit lighter both from a revenue standpoint and from a margin standpoint.
Speaker Change: No I appreciate that.
Speaker Change: And then on gamma radiation I know you've caught up on some downloading last quarter, but in the medium term I believe a few years ago. There was some concern in the bio processing industry are about a shortage of capacity.
Alright, perfect. Thanks, Mike and I'll ask a question here to follow up on Patrick's question earlier.
Dan: Or do you have any thoughts on the current state of the gamma supply versus demand.
If you could help us out if backlog is back to normal levels, I guess why wouldn't health care equipment revenue moderate unless you're expecting meaningful order growth to compensate for what wasn't above normal level of backlog reductions last year I'm, just really trying to reconcile those points.
Dan: <unk> bio processing demand comes back and what could what does this mean for your extra capacity as well.
Dan: That's the basis of our extra expansion and we.
Dan: We have a number of sites.
Dan: That have come online and will come online over the next year two years actually in particular, so we think we're well positioned to take advantage of the gap.
At a high level I would say, although we you know.
We pushed out a lot of product last year, because we had.
Dan: That does exist and will grow in terms of short term supply of isotope versus the demand that they have for radiation processing.
<unk> built up a huge backlog as the demand for our products remains high and you know if we look at what are our annual order intake looks like today versus four years ago, it's significantly higher.
Speaker Change: Great. Thank you for taking my questions.
Speaker Change: Yep. Thank you.
We had a bit of an anomaly last year, but we don't expect.
Dan: Again, if you have a question. Please press Star then one our next question will come from Jason Bednar with Piper Sandler. Please go ahead.
Our general order rates are really slow down we believe that we're well positioned with our portfolio.
We're winning more than our share I believe in terms of capital projects in particular on the IPP side of the business.
Jason M. Bednar: Hey, good morning, Congrats on a nice finish to fiscal 'twenty four guys.
Jason M. Bednar: I'll take maybe a little bit of a different swing here on the revenue pacing.
We would expect that to continue.
Jason M. Bednar: I think you said ASP acceleration over the course of the year, but is it right to think the for kind of a company wide level first half of the year, maybe a tick or two below the full year organic guide second half a little bit above I think we're all just trying to dial in to make sure we're not too backend loaded with your you know what.
Alright.
Dan just as a quick follow up there sorry to monopolize here, but if your lead times are back to pretty normal levels.
Unless you are turning that backlog quicker.
It doesn't necessarily imply that you're not going to be growing health care equipment at the same pace I'm just something is still missing and maybe we can follow up offline and still having a hard time beaten that together.
Jason M. Bednar: Our model based on what you're guiding to today.
Speaker Change: Yeah, our comparisons are tough in both Q1, and obviously now with the strong finish in Q4, but I would agree that the first half would be a little bit lighter both from a revenue standpoint and from a margin standpoint.
Jason just to clarify clearly, we're not saying, we're not going to grow at the same pace.
We're expecting to grow right so down from the double digit growth, we've been doing to low single digit growth expectation.
Speaker Change: Alright, perfect. Thanks, Mike.
Speaker Change: I'll ask a question here to follow up on Patrick's question earlier.
Okay, alright, thanks Julien.
Okay.
Speaker Change: If you could help us out if backlog is back normal levels, I guess, why why Wouldnt health care equipment revenue moderate unless you're expecting meaningful order growth to compensate for what wasn't above normal level of backlog reduction last year and I'm, just really trying to reconcile those points.
And this concludes our question and answer session I would like to turn the conference back over to MS. Julie Winter for any closing remarks.
Thank you everyone for taking the time to join US. This morning, I look forward to speaking with many of you in the coming days.
For our leaders share an extraordinary combination.
Speaker Change: Yeah, I mean at a high level I would say, although we you know we pushed out a lot of product last year, because we had.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Built up a huge backlog as the demand for our products remains high and if you look at what are our our annual order intake looks like today versus four years ago, it's significantly higher.
Speaker Change: We had a bit of an anomaly last year, but we don't expect you know are and order rates are really slow down we believe that we're well positioned with our portfolio.
Speaker Change: We're winning more than our share I believe in terms of capital projects in particular on the ICT side of the business.
Speaker Change: And we would expect that to continue.
Speaker Change: Yeah.
Speaker Change: Alright, I guess, Dan just as a quick follow up there sorry to monopolize here, but if your lead times are back to pretty normal levels.
Speaker Change: Unless you're turning that backlog quicker doesn't necessarily imply that you're not going to be growing health care equipment. At the same same pace I'm just something is still missing and maybe we can follow up offline that's installed in our time piece that together.
Speaker Change: Jason just to clarify clearly, we're not saying, we're not going to grow at the same pace, but we are expecting to grow right. So down from nickel does that growth we've been doing low single digit growth expectation.
Jason M. Bednar: Okay, alright, thanks Duane.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: And this concludes our question and answer session I would like to turn the conference back over to MS. Julie Winter for any closing remarks.
Julie Winter: Thank you everyone for taking the time to join US. This morning, I look forward to speaking with many of you in the coming days.
Speaker Change: For our leaders share an extraordinary combination.
Julie Winter: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change:
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Speaker Change: Yeah.
Speaker Change: Yeah.
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