Q1 2025 STERIS PLC Earnings Call

Operator: State will revise any forward-looking statements as a result of new information or future events or developments. STERIS's 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, cancer and cancer, again, agrovening growth and precache law will be used.

Statements as a result of new information or future events or developments.

Speaker Change: <unk> SEC filings are available through the company and on our website.

Speaker Change: 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.

Operator: Additional information regarding these measures, including definitions, is available in our press release, as well as reconciliation 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.

Speaker Change: Additional information regarding these measures, including definition is available in our press release as well as reconciliations between GAAP and non-GAAP financial measures.

Speaker Change: 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.

Mike: With those questions, I will hand the call over to Mike.

Operator: With those cautions, I will hand the call over to Mike.

Speaker Change: With those cautions I will hand, the call over to Mike.

Mike: Thank you, Julie.

Mike: Thank you Julie and good morning, everyone. It is once again my pleasure to be with you. This morning to review the highlights of our first quarter performance. Our discussions today will be focused on results from continuing operations.

Mike: Good morning, everyone. It is once again my pleasure to be with you this morning to review the highlights of our first quarter performance. Our discussions today will be focused on results from continuing operations. As you saw on the press release, we started the year strong with total revenue growth of 8% in the quarter, cancer currency, organic revenue growth of 6% driven by volume, as well as 270 basis points of price. Gross margin for the quarter increased 30 basis points compared with the prior year to 45.1%. Positive price and favorable material costs were somewhat offset by inflation.

Mike: As you saw in the press release, we started the year strong, with total revenue growth of 8% in the quarter, constant currency organic revenue growth of 6%, driven by volume, as well as 270 basis points of price. EBIT margin decreased 20 basis points to 22.3% of revenue compared with the first quarter last year. Increased compensation and higher insurance costs are impacting EBIT margins.

Mike: You saw on the press release, we started the year strong with total revenue growth of 8% in the quarter constant currency organic revenue growth of 6% driven by volume as well as 270 basis points of price.

Mike: Gross margin for the quarter increased 30 basis points compared with the prior year to 45, 1%.

Mike: Event margin decreased 20 basis points to 22.3% of revenue compared with the first quarter last year. Increased competition and higher insurance costs are impacting event margins. The adjusted effective tax rate in the quarter was 21.3%, lower than the prior year due to favorable discrete item adjustments. Net income in the quarter was 201.7 million, and adjusted earnings per share was $2.03, a 10% increase over last year. Capital expenditures for the first quarter of fiscal 2025 total $108 million, and depreciation total $112.7. Capital expenditures were higher year over year, mainly due to timing. With the closing of the dental divestiture on May 31st, we were able to pay down debt, reducing total debt to $2.3 billion.

Mike: Total debt to EBITDA at quarter end was approximately 1.6 times gross leverage. Free cash flow for the first quarter was $195.7 million; free cash flow was impacted by the timing of capital spending.

Mike: Last week we announced our 19th consecutive year of dividend increases. Our quarterly dividend increased $0.05 per share from $0.52 to $0.57.

Dan: With that, I will turn the call over to Dan.

Dan: Thanks, Mike, and good morning, everyone. Thank you for joining us to hear more about our first quarter performance and our outlook for the rest of the fiscal year. As you heard from Mike, we had a strong start to our new fiscal year. Looking at our segments, healthcare, constant currency, organic revenue grew 5% in the quarter. Our outperformance and consumables and services continues to be driven by procedure volumes in the U.S., as well as price and market share gains. It is our expectation that recurring revenue will continue to grow above procedure volumes and relatively independent of our capital equipment shipments.

Mike: Looking at our segments, healthcare, in constant currency, organic revenue grew 5% in the quarter. Our outperformance in consumables and services continues to be driven by procedure volumes in the U.S. as well as price and market share gains. It is our expectation that recurring revenue will continue to grow above procedure volumes and relatively independent of our capital equipment shipments. In fact, over half of our consumables and service revenue is not related to our capital equipment.

Dan: Over half of our consumables and service revenue is not related to our capital equipment. As anticipated, our health care capital equipment revenue declined in the quarter against challenging comparisons. However, we still anticipate low single-digit revenue growth for health care capital equipment for the full fiscal year. We remain competent in our expectations of a strong year for our health care segment. We are pleased to see these two factors playing out as planned and continue to anticipate a return to growth in bioprocessing revenue in the second half of our fiscal year. Constant currency organic revenue growth for life sciences was 4% in the quarter, driven by strong growth in consumables.

Mike: As anticipated, our healthcare capital equipment revenue declined in the quarter against challenging comparisons. However, we still anticipate low single-digit revenue growth for healthcare capital equipment for the full fiscal year. We remain confident in our expectations of a strong year for our healthcare segment. We are pleased to see these two factors playing out as planned and continue to anticipate a return to growth in bioprocessing revenue in the second half of our fiscal year. Trends continue to head in a positive direction for all of our segments, and we are confident in our ability to deliver on our full-year guidance.

Dan: As expected, the divestiture of the CECS business on April 1st impacted our as-reported revenues.

Dan: For the full year, we are reiterating our outlook, including 6-7% constant currency organic revenue growth in adjusted earnings per diluted share of $9.05 to $9.25. Our expectations for free cash flow also unchanged at about $700 million, with approximately $360 million in capital spending. All in, we are pleased with the start of the fiscal year. Trends continue to head in a positive direction for all of our segments, and we are competent in our ability to deliver on our full-year guidance.

Julie Winter: That concludes the prepared remarks for the call. Julie, would you please give the instructions so that we can begin the Q&A?

Julie Winter: Thank you, Mike and Dan, for your comments.

Operator: Joe, can you please give the instructions for Q&A, and we can get started. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your hands up before pressing the keys. Into withdraw a question, please press star then two.

Operator: At this time, we will pause this momentarily to assemble our roster.

Brett Fishman: And our first question of today will come from Brett Fishman with KeyBank. Please go ahead with your question.

Brett Fishman: Hey guys, good morning. Thanks so much for taking the questions. I just wanted to start off on healthcare capital equipment. I'll tweak my question a little bit since it sounds like you already kept kind of like the directional low single digit guidance for the year.

Brett Fishman: I'm just curious how the first quarter compared versus maybe your internal expectations, and then what drives the setup and trends through the year.

Dan: Yeah, I would say that it was right in line with our expectations. There's always orders that ship and slip one way or another; in terms of our general outlook for the year remains unchanged.

Dan: And typically, with last year being the exception, Q1 is our slowest quarter in capital shipments. It's a new year in terms of sales and sales commissioning, and it generally is our lowest quarter. But tough comps to last year as we were still pushing through an enormous backlog as a result of some supply chain and manufacturing challenges that we were having in the comps.

Brett Fishman: And then just on the rest of the healthcare segment, it was really nice to see some of the double-digit growth trends continue in services and consumables, more than offset, at least for our model, the missing capital equipment. I mean, you mentioned market share gains, you know, healthy market activity.

Dan: Is there anything else that you would call out just striving, you know, the continued trend that we've seen in either of those segments. You know, we reiterate the fact that most of those products and services that are consumables are reoccurring in nature or procedural driven. And as we've seen, you know, the continued rise and sustained growth of the procedures in particular in the North American market, you know, we've been lifted in that area by market in general. But, you know, as you're well aware, we've punched above our weight for the last couple of years in capital sales.

Dan: So, having those new placements out there, having that access from a sales perspective has helped fuel our ability to take a little share.

Dan: As part of our total enterprise solution selling process, we're really working with the large IDNs and large health care systems to take the full value STERIS.

Mike: Yeah.

Brett Fishman: All right, got it.

Speaker Change: Alright got it and last question for me just touching on operating margin I know <unk>, sometimes a little bit seasonally lower but just given that it was down 20 bps year over year I'm curious if you could give a little bit more color I know you touched on a couple of the high level drivers there and then if you still expect to demonstrate.

Brett Fishman: And last question from me, just touching on operating margin. I know one cue is sometimes a little bit seasonally lower, but just given that it was down 20 pips year over year, curious if you could give a little bit more color. You touch on a couple of the high-level drivers there. And then, if you still expect to demonstrate a level of year-over-year operating margin expansion for the full year FY25, thank you very much.

Speaker Change: Level of year over year operating margin expansion for the full year FY 'twenty five thank you very much.

Mike: Yes, certainly, Brett. Yeah, as I spoke with my comments, we definitely did have some increased compensation year over year in Q1, which negatively impacted our margins. And we did have significantly higher insurance costs in the quarter.

Brett: Yes, certainly Brett.

Shirley Brod: Yes, Shirley bread.

Speaker Change: Yeah. So as I spoke with my comments, we definitely did have some increased compensation year over year in Q1.

Speaker Change: Each negatively impacted our margins and we did have a significantly higher insurance costs in the quarter.

Mike: You know, everybody looks at EBIT margin. I mean, if you look at EBIT dollars, EBIT dollars are up 20 million dollars. So, obviously, we're not getting the leverage that we anticipate, but it's Q1. We still anticipate that we will drive positive EBIT margin leverage for the full year, as we talked about last quarter.

Speaker Change: Everybody looks at EBIT margin I mean, if you look at EBIT EBIT dollars EBITDA dollars were up $20 million. So obviously, we're not getting the leverage that we anticipate but it's Q1, we still anticipate that we will drive positive EBIT margin leverage for the full year as we as we talked about last quarter.

Mike Matzen: And our next question will come from Mike Matzen with Needham and Company. Please go ahead.

Speaker Change: And our next question will come from Mike Matson with Needham <unk> Company. Please go ahead.

Mike Matzen: Yeah, just following up on the commentary there, our installation, so, you know, it sounds like the, while the material side, material components is kind of improved, the labor side is still seeing some, some pressure. Is that right?

Mike Matson: Yeah, just following up on the commentary there are inflation. So it sounds like the while the material side materials and components kind of improve the labor side is still seeing.

Speaker Change: Seeing some some pressure.

Mike: And if you expect that to get better this year, I mean, we've seen the unemployment rate starting to tick off, or is it still really a kind of a battle out there to hire and retain employees? Yeah, I would say this. I mean, the thing with the compensation labor is it tends to go in place months before you feel the effect of it, because it sort of rolls in aggregate. And I don't believe it's going to continue to go up in any meaningful way, and clearly our ability to staff and turnovers come down quite a bit, so it feels like it's very much in control.

Mike: It's just, it's catching up with the labor rates that have been put in place over the last six, nine months, 12 months as they roll into this new fiscal year.

Mike Matzen: Yeah, okay, I got it.

Mike Matzen: And then just in the, I wanted to get an update on the life sciences business. You know, as a medical device analyst, it's an area that I don't know as much about, or follow as closely. It looks like it's been a little slower; just wondering kind of what the outlook is there and what you're seeing in the market. Yeah, we've definitely seen some slowdown in demand for capital products, and that's the result of some of the decreased funding and some of the cutbacks that we've seen in general farm and biopharma over the last six, nine months, and there is some natural cyclicality to those.

Unidentified Speaker: Yeah, we've definitely seen some slowdown.

Mike Matzen: versus.

Mike: However, having said that, we are showing strong growth in our services, businesses, and have men, and more importantly, in our consumables business, which drives a disproportionate amount of the income through the life science segment. So we feel confident in our ability to continue to deliver in those aspects.

Mike: Okay. Thank you.

Michael Polark: And our next question will come from Michael Polark with Wolf Research. Please go ahead.

Michael Polark: Hi. Good morning. Thank you for taking the question.

Michael Polark: I hate to harp on this, but the healthcare capital equipment guidance of low single-digit revenue growth this year. I still struggle to get there given where one queue landed and what we see out of the backlog. I suspect over the last 90 days or so, you've heard this feedback. And I'm interested in your feedback to the feedback. Like, what are we all missing in our models? Why? And you could call me a bad analyst and bad modeler; that is fair. But like, I just struggle to get there.

Mike: So, is it that you expect bookings to be a lot higher? The rest of this year versus what we've been seeing in dollar terms? Any, any more color there? I'd appreciate it.

Mike: Michael, I don't think you're a bad analyst or a bad model, or by any means the problem is that the model got broken over the last, you know, 18 months in terms of how it normally has operated historically. And we ended up having a lot of backlog and a lot of large project orders. What we have now, now that manufacturing and supply chain is back in control and back to normal lead time levels, is the ability to sell a lot more on a turn business, which is something we weren't really able to do over the last 18, 24 months where we were much more challenged.

Mike: So, so we're confident in our ability, even with a lower backlog, to be able to turn product and get it installed in our customers by the end of the fiscal year.

Mike: I appreciate that. I'll follow up on AST, obviously see kind of a continuation of the higher growth right here, her positive comments out of Europe. If you look forward to the rest of this fiscal year, our capacity expansions and, you know, you've obviously been investing a lot of growth dollars here to expand your fleet.

Unidentified Speaker: Appreciate that. I'll follow up on AST. Obviously, I see kind of a continuation of the higher growth rate here. Heard positive comments out of Europe. If you look forward to the rest of this fiscal year...

Mike: And network, our capacity expansions expected to be a differentiated growth contributor here to AST over the next year or so, or would you say that bit is normal relative to last few years. I would say it's normal. It's a long-term play, and you can't really look at the expansions as same store versus new store because most of our expansions are on existing sites of adding new capacity to existing sites. So, we see it as a continuation to facilitate the growth that we've had historically.

Mike: Thank you.

Jacob Johnson: And our next question will come from Jacob Johnson with Stevens. Please go ahead.

Jacob Johnson: Good morning, this is Mack on for Jacob. Just following up on the live side of the business. All right, question clear. I think this is important tied to injectable drug demand, and we are seeing a number of capacity additions in this end market. In the near term, I know there's some headwinds that you called out around capital spending, but are you seeing any issues from the injectable market at this point? We are. It's definitely a bit of a tailwind that's offsetting some of the headwinds in the space, I guess is what we would say. And the fortunate thing about the injectables, that's obviously in our sweet spot of day septic manufacturing, and definitely feeds well into our chemistries and critical environments products as well as barrier product solutions.

Mack: Good morning, this is Mack on for Jacob. Just following up on the life sciences side of the business, right question, Claire. I think this is in part tied to injectable drug demand, and we are seeing a number of capacity additions in this end market. In the near term, I know there are some headwinds that you called out around capital spending, but are you seeing any green shoots from the injectable market at this point?

Mike: And it's from, fortunately, some of the majors as it relates to major manufacturing customers, of which we do business with many of them. And then it previously announced some supply chain issues. I think you're working on moving to some larger suppliers. How is that going? Do you expect any margin impact and looking forward? Yes, but it's a long-term play. It's going to take time to ring that out and to vet those suppliers and get everything in place. Yes, the long-term play is over time. Also, you know, we're getting better scale and value out of our manufacturing operations.

Mike: But really, the most important thing is the surety of supply. There's one thing we learned, you know, you're going to have two years ago, is making sure that we were with the right suppliers.

Mike: Thank you.

Mike: Appreciate going.

Operator: And again, if you have a question, you may press star or the one to join the queue.

Jason Bednar: Our next question will come from Jason Bednar with Piper Sandler. Please go ahead.

Jason Bednar: Good morning, everyone. Apologies up front here. I'm going to come back to this healthcare equipment topic. I know you don't provide exact numbers on orders, but I think all of us back into your order book based on the revenue and the backlog figures that you do provide. So I guess I'm wondering if we can go one step further behind the healthcare equipment revenue guidance of low single digits. Can you remind us or help us with what your assumptions might be for order growth this year? And are you anticipating healthcare backlog to move higher or lower from where we are at the end of the first quarter?

Unidentified Speaker: Apologies up front here. I'm going to come back to this health care equipment topic. I know you don't provide exact numbers on orders, but I think all of us back into your order book based on the revenue and the backlog figures that you do provide. So I guess I'm wondering if we can go one step further beyond the low single-digit health care equipment revenue guidance. Can you remind us or help us with what your assumptions might be for order growth this year? And are you anticipating the health care backlog to move higher or lower from where we are at the end of the first quarter?

Speaker Change: You do provide.

Mike Matson: I guess I'm wondering if we can go one step further behind the health care equipment revenue guidance.

Speaker Change: Low single digits can you remind us or help us with what your assumptions might be for order growth this year.

Speaker Change: Are you anticipating healthcare backlog to move higher or lower from where we are at the end of the first quarter.

Mike: Yeah, I would say that in our assumptions, the order growth would be mid single digits, and we would have backlog somewhere in that $350 million range, but it could be lower than that easily. That is just a target that we have.

Speaker Change: Yeah, I would say that in our assumptions the order growth would be mid single digits, and we would have backlog somewhere in that $350 million range, but it could be lower than that easily.

Speaker Change: That is just a target that we have but the big thing that we really need to do as Dan spoke earlier about is really have the opportunity to get and tackle the turn business that we did not have the ability to do that with our lead times coming down significantly.

Mike: But the big thing that we really need to do is Dan spoke earlier about is really have the opportunity to get and tackle the turn business that we did not have the ability to do that with our lead times coming down significantly. That's really the driver, and that's something that you guys really can't see what we're doing and how we're doing it. And as Dan said, the model has been broken. And obviously we're doing everything we possibly can to get back to a more sustainable model that we were used to, and when capital equipment wasn't such a large conversation in the past, right?

Dan: That's really the driver and that's something that you guys really can't see what.

Dan: What we're doing and how we're doing it and as Dan said the model has been broken and obviously, we're doing everything we possibly can.

Dan: To get back to more a sustainable model that we were used to and when capital equipment wasn't such a large conversation in the past right.

Jason Bednar: Okay, that's helpful, Mike.

Mike Matson: Okay. That's helpful. Mike.

Unidentified Speaker: Okay, that's helpful, Mike. And then maybe I have a couple of follow-up modeling questions for you, and sorry if I missed it. I think you said there were some discrete items, and then interest, and other lines, that were just a notable delta versus our model. Just how were these factored into the original guide and any other detail you provided there? And then the 21% tax rate in the period, is that the right level we should be thinking about on a go-forward basis, or were there one-timers that pushed that rate lower than you expected in the first quarter? Yeah, the

Mike: And then there's maybe a couple of follow-up modeling questions for you. I'm sorry if I missed it; just I think you said there were some discrete items and then interest other line that was just a notable delta versus our model. We're these factored into the original guide and any other detail you provide there. And then the 21% tax rate in the period is at the right level.

Speaker Change: And then just maybe a couple follow up modeling questions for you and sorry, if I missed it just the I think you said there were some discrete items net interest and other line that was just a notable delta versus our model.

Speaker Change: Just when these factored into the original guide and any other detail you can provide there and then the 21% tax rate in the period is that the right.

Mike: We should be thinking about a go forward basis or were there one timers that pushed that rate lower than you expect in the first quarter? Yeah, on the tax rate, there were some just favor of the screen. I am adjustments that were one timers that definitely pushed the rate lower. I think our full year guidance still calls for a 23% full year rate. I would stick with that at this point in time.

Speaker Change: Well, we should be thinking about on a go forward basis or.

Speaker Change: Were there one timers that pushed that rate lower than you expected in the first quarter.

Mike: Yeah, on the tax rate, there were some favorable discrete item adjustments that were one-timers that definitely pushed the rate lower. I think our full-year guidance still calls for a 23% full-year rate. I would stick with that at this point in time. And we did pick up a little bit

Speaker Change: On the tax rate there were some favorable discrete item adjustments that were one timers, that's definitely pushed the rate lower I think our full year guidance still calls for 23% full year rate I would stick with that at this point in time, and we did pick up a little bit of it.

Mike: And we did pick up a little bit of benefit on the interest line year-on-year, as we were able to use the proceeds from the dental sale much more quickly than we anticipated, so we got a little bit of favorable benefit. But again, those are pennies here and there; it doesn't really change our full year outlook.

Speaker Change: Benefit on the interest line year over year, as we were able to use the proceeds from the dental sale much more quickly than we anticipated. So we got a little bit of favorable benefit but again those are those are pennies here and there it doesn't really change our full year outlook.

Jason Bednar: Okay, helpful.

Speaker Change: Okay helpful. Thank you.

Mike: Thank you. You're welcome.

Welcome.

Speaker Change: Okay.

Dave Turkley: And our next question will come from Dave Turkley with JMP Securities. Please go ahead.

Speaker Change: And our next question will come from Dave <unk> with JMP Securities. Please go ahead.

Dave Turkaly: And our next question will come from Dave Turkaly with JMP Securities. Please go ahead.

Dave Turkley: Hey, good morning. Can you hear him? Yep. Thanks.

Dave: Hey, Good morning can you hear me.

Speaker Change: Yes.

Speaker Change: Thanks.

Dave Turkley: Just wanted to look at the BD ad that you guys did. You know, does that sit primarily in consumables in the healthcare business like from a mixed standpoint? And I think you said it was a similar margin to your core, but I just wanted to reconfirm that. Yes, on both. It is classified as consumables in our healthcare mix. 90% of the consumables in the last time that the containers were in the capital bucket. Yep. Thank you for that.

Speaker Change: Because when we look at the BD that you guys did.

Speaker Change: Does that primarily in consumables.

Speaker Change: In the health care business like from a mixed standpoint.

Speaker Change: I think you said it was similar margin to your quarter, but I just wanted to reconfirm that.

Dave: Yes on both it is classified as consumables in our in our health care mix, 90%, Dave is on consumables and the last time.

Speaker Change: Containers that are in the capital market.

Speaker Change: Thank you for that and then I think you are.

Mike: And then I think you have a restructuring plan underway, and I don't recall exactly the size or the timing, but any detail on that. Yeah, we had announced last quarter that we had a hundred million dollar restructuring plan. The bulk of that was for a closure of one of our manufacturing facilities. That will continue to occur throughout this year. We've got about a 25 million dollar benefit coming from that, but the bulk of that benefit will happen in fiscal year 26, not in 25.

Speaker Change: Restructuring plan underway.

Speaker Change: Recall exactly the size or the timing, but any detail.

Speaker Change: On that.

Unidentified Speaker: Yeah, we had announced last quarter that we had a $100 million restructuring plan. The bulk of that was for the closure of one of our manufacturing facilities that will continue to occur. Throughout this year, we've got about a $25 million benefit coming from that. But the bulk of that benefit will happen in fiscal year 26, not in fiscal year 25.

Speaker Change: Yeah, We had we had announced last quarter that we had $100 million restructuring plan.

Speaker Change: The bulk of that was for a closure of one of our manufacturing facilities.

Speaker Change: That will continue to occur.

Speaker Change: Throughout this year, we've got about a $25 million benefit coming from that but the bulk of that benefit will happen in fiscal year 'twenty six not in 'twenty five.

Mike: Great.

Speaker Change: Great and last one and then I saw the increase in the dividend obviously.

Unidentified Speaker: Great, last one, and I saw the increase in the dividend. Obviously, 19 years is a pretty good track record, but as you look at M&A and share repo, I guess, and other capital priorities, anything change on that front, given what we're seeing out there, and maybe even the valuation of some of the smaller peers in the space?

Mike: Last one. I saw the increase in the dividend, obviously.

Mike: 19 years is a pretty good track record, but as you look at M&A and Sherripe, I guess, another capital priorities, anything changed on that front given what we're seeing out there and maybe even the valuation of some of the smaller peers in the space? No, I mean our investment priorities remain the same, and we don't really talk about looking at M&A, but we have the history of being active, and obviously we're in a good position in terms of debt. If opportunities present themselves, you know, over the coming years, we will obviously do what we normally do.

Speaker Change: 19 years as a pretty good track record but.

Speaker Change: Now as you look at M&A in <unk>.

Speaker Change: Share repo I guess another capital.

Speaker Change: <unk>.

Speaker Change: Anything changed on that front, given what we're seeing out there and maybe even the valuation of some of the <unk>.

Speaker Change: Mahler peers in the space.

Speaker Change: No I mean, our investment priorities remain the same and.

Unidentified Speaker: No, I mean, our investment priorities remain the same, and, you know, we don't really talk about forward-looking M&A. But we have a history of being active, and obviously, we're in a good position in terms of debt. And if opportunities present themselves over the coming years, we will obviously do what we normally do.

Speaker Change: We don't really talk about forward looking M&A.

Speaker Change: We have a history of being active in.

Speaker Change: Obviously, we're in a good position in terms of debt.

Speaker Change: If opportunities present themselves over the coming years, we will obviously do what we normally do.

Mike: Thank you.

Speaker Change: Thank you.

Mike: Yep.

Speaker Change: Yep.

Michael Polark: And our next question is a follow-up from Michael Pollard with Wolf Research.

Speaker Change: And our next question is a follow up from Michael Pollack with Wolfe Research. Please go ahead.

Michael Polark: Please go ahead. Just one more please for the model. The interest in other line, heard the discrete items called out in the quarter.

Michael Pollack: Just one more please for the model the interest and other line hurting her the discreet items called out in the quarter.

Unidentified Speaker: Just one more please for the model the interest in the other lines heard heard the discrete items called out in the quarter, with your proforma balance sheet now for that line on a quarterly basis for the rest of this year on a quarterly basis. I don't have that in front of me, but for

Mike: What is a good number with your performance balance sheet now for that line on a quarterly basis for the rest of this year? On a quarterly basis, I don't have that in front of me, but for a full year basis, we're still looking at about $100 million in total.

Speaker Change: What is a good number.

Speaker Change: With your pro forma balance sheet now for for that line on a quarterly basis for the rest of this year.

Speaker Change: On a quarterly basis I don't have that in front of me, but for a full year basis, we're still looking at about $100 million in total.

Michael Pollack:

Michael Pollack: Okay.

Mike: Okay, we can take that offline. I appreciate it. Thank you.

Speaker Change: Okay I'll, we can take that offline I appreciate it. Thank you I just don't have it in front of me like Yep.

Mike: I just don't have it in front of you, Mike. Yep.

Michael Pollack: Yep.

Michael Pollack: Thanks.

Mike: Thanks.

Michael Pollack: Okay.

Julie Winter: And with that, that will conclude our question-and-answer session.

Michael Pollack: That will conclude our question and answer session I'd like to turn the conference back over to Julie Winter for any closing remarks.

Julie Winter: I'd like to turn the conference back over to Julie Winter for any closing remarks. Thanks, everybody, for taking the time to join us this morning. Look forward to catching up with many of you in the coming days.

Operator: Thank you everybody for taking the time to join us this morning. I look forward to catching up with many of you in the coming days.

Operator: Thanks, everybody, for taking the time to join us.

Julie Winter: Thanks, everybody for taking the time to join US This morning, and look forward to catching up with many of you in the coming days.

Michael Pollack: Okay.

Michael Pollack: Okay.

Operator: The conference has now concluded. Thank you for attending today's presentation.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Operator: You may now disconnect your line.