STERIS Q3 2025/26 STERIS plc (Ireland) Earnings Call | AllMind AI Earnings | AllMind AI
Q3 2025/26 STERIS plc (Ireland) Earnings Call
Operator: Good day, and welcome to the STERIS plc Q3 2026 Conference Call. All participants will be in a listen-only mode.... Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. 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, Vice President of Investor Relations. Please go ahead, ma'am.
Operator: Good day, and welcome to the STERIS plc Q3 2026 Conference Call. All participants will be in a listen-only mode.... Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. 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, Vice President of Investor Relations. Please go ahead, ma'am.
Speaker #1: and Good day Third plc . Steris quarter 2026 conference All participants will be in a welcome to the mode . Should you Call .
Speaker #1: assistance , signal Conference Specialist by please pressing the star key , followed by zero . After today's presentation , there will opportunity to ask be an , to ask a question , you may questions star , then press touchtone withdraw your phone .
Speaker #1: question . Please press star , then two . Please note this event is being recorded . I would now like to turn the conference over to Miss Julie Winter , Vice President of Investor Relations .
Julie Winter: Thank you, Chuck, and good morning, everyone. Speaking on today's call will be Karen Burton, our Senior Vice President and CFO, and Dan Carestio, our President and CEO. I do have a few words of caution before we open for comments. 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. Some of the statements made during this review are or may be considered forward-looking statements. Many important factors could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, those risk factors described in STERIS's 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. STERIS's SEC filings are available through the company and on our website.
Julie Winter: Thank you, Chuck, and good morning, everyone. Speaking on today's call will be Karen Burton, our Senior Vice President and CFO, and Dan Carestio, our President and CEO. I do have a few words of caution before we open for comments. 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. Some of the statements made during this review are or may be considered forward-looking statements. Many important factors could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, those risk factors described in STERIS's 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. STERIS's SEC filings are available through the company and on our website.
Speaker #1: Please go ahead , .
Speaker #2: Thank you , Jack , and good morning , everyone . Speaking on today's call will be Karen Burton , our senior vice and president CFO in Daniel Carestio .
Speaker #2: Our president and CEO . And I do have a few words of caution before open for we . This webcast contains time sensitive is information that accurate only of as today .
Speaker #2: Any redistribution , retransmission , or rebroadcast of this call express written the consent of strictly prohibited during a this statements made review or may be are , considered looking statements .
Speaker #2: Important: Many factors could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, those risk factors described in STERIS results or securities filings.
Speaker #2: The company does not or revise any forward looking statements update as a result of new information future or events or developments . Stairs SEC are filings available through the company and on our website .
Julie Winter: 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 press 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 Karen.
Julie Winter: 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 press 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 Karen.
Speaker #2: In today's call , non-GAAP addition , on Financial measures , including undertake to diluted adjusted , adjusted operating income , constant organic revenue currency , growth cash flow will be used .
Speaker #2: Additional information regarding these measures , including definitions , is available in press our release as as well reconciliations between GAAP and non-GAAP financial measures .
Speaker #2: non-GAAP measures are presented during financial this call , with the intent of providing greater transparency to supplemental financial financial management and the Board of their financial directors in analysis and operational decision information .
Karen Burton: Thank you, Julie, and good morning, everyone. It is my pleasure to be with you this morning to review the highlights of our Q3 performance from continuing operations. For Q3, total as-reported revenue grew 9%. Constant currency organic revenue grew 8% in the quarter, driven by volume as well as 200 basis points of price. Gross margin for the quarter declined 70 basis points compared with the prior year to 43.9%. Positive price and productivity, primarily driven by volume, were more than offset by increased tariffs and inflation. EBIT margin decreased 40 basis points to 22.9% of revenue compared with last year, mainly driven by the decline in gross margin, which was somewhat mitigated by operating expense discipline.
Karen Burton: Thank you, Julie, and good morning, everyone. It is my pleasure to be with you this morning to review the highlights of our Q3 performance from continuing operations. For Q3, total as-reported revenue grew 9%. Constant currency organic revenue grew 8% in the quarter, driven by volume as well as 200 basis points of price. Gross margin for the quarter declined 70 basis points compared with the prior year to 43.9%. Positive price and productivity, primarily driven by volume, were more than offset by increased tariffs and inflation. EBIT margin decreased 40 basis points to 22.9% of revenue compared with last year, mainly driven by the decline in gross margin, which was somewhat mitigated by operating expense discipline.
Speaker #2: making With those questions , I will hand the call over to Karen . Thank you , Julie , and good morning , everyone .
Speaker #2: It is my pleasure to be this morning with you to used by review the highlights of our third quarter performance from continuing operations for the third total .
Speaker #2: quarter reported , revenue grew 9% . Constant currency , organic revenue grew 8% in the quarter , driven volume by , as well as 200 basis points of price .
Speaker #2: Gross margin for the quarter declined 70 basis points compared with the prior year 43.9% positive to price and productivity , primarily by driven volume , offset more than were by increased tariffs and inflation margin decreased .
Speaker #2: 40 basis Ebit 22.9% of revenue , compared with last year , mainly driven decline by the in gross which somewhat margin , was by operating mitigated expense discipline .
Karen Burton: The adjusted effective tax rate in the quarter was 24.2%, a small decline from 24.5% in Q3 of last year. The year-over-year decrease was driven primarily by changes in geographic mix. Adjusted net income from continuing operations in the quarter was $249.4 million. Earnings per diluted share from continuing operations were $2.53, a 9% increase over the prior year. Capital expenditures for the first 9 months of fiscal 2026 totaled $278.8 million, and depreciation and amortization totaled $363.1 million. We ended the quarter with $1.9 billion in total debt. Gross debt to EBITDA at quarter end was approximately 1.2 times.
Karen Burton: The adjusted effective tax rate in the quarter was 24.2%, a small decline from 24.5% in Q3 of last year. The year-over-year decrease was driven primarily by changes in geographic mix. Adjusted net income from continuing operations in the quarter was $249.4 million. Earnings per diluted share from continuing operations were $2.53, a 9% increase over the prior year. Capital expenditures for the first 9 months of fiscal 2026 totaled $278.8 million, and depreciation and amortization totaled $363.1 million. We ended the quarter with $1.9 billion in total debt. Gross debt to EBITDA at quarter end was approximately 1.2 times.
Speaker #2: The adjusted effective tax rate in the quarter 24.2% , small decline from 24.5% in a last year the third quarter of . The year year over decrease was driven primarily by geographic mix changes in .
Speaker #2: Adjusted net income from continuing operations in the quarter was $249.4 million. Diluted earnings per share from continuing operations were a 9% increase over the prior year.
Speaker #2: Capital expenditures for nine the first of months fiscal totaled 278.8 million , and depreciation and amortization totaled 363.1 million . quarter We ended the with 1.9 billion in total debt .
Karen Burton: Free cash flow for the first nine months of fiscal 2026 was $736.6 million, with year-over-year improvement driven primarily by an increase in earnings and lower capital spending. With that, I will now turn the call over to Dan for his remarks.
Karen Burton: Free cash flow for the first nine months of fiscal 2026 was $736.6 million, with year-over-year improvement driven primarily by an increase in earnings and lower capital spending. With that, I will now turn the call over to Dan for his remarks.
Speaker #2: Gross debt to quarter end was EBITDA at approximately times free 1.2 flow cash for the first nine months of fiscal 2026 was 736 , 7.6 million , with year over year .
Speaker #2: driven Improvement primarily by an increase in earnings and lower capital spending . With that , I will now turn the call over to Dan for his remarks .
Dan Carestio: Thanks, Karen, and good morning, everyone. Thank you for joining us to hear more about our Q3 performance. Karen covered the quarter at a high level, so I will add some commentary on our segments. Starting with Healthcare. Constant currency organic revenue grew 8% for the Q3, with growth across all categories. Service continued its streak of outperformance, growing 11% in the Q3. Consumables also performed well, with growth of 8%. Healthcare capital equipment revenue increased 7% for the quarter, with backlog remaining over $400 million. Orders were down 1% year-to-date against difficult comparisons to last year. EBIT margins for Healthcare in the quarter decreased 100 basis points to 24.3%, as volume, pricing, and restructuring program benefits were more than offset by increased tariffs and inflation. Turning to AST.
Dan Carestio: Thanks, Karen, and good morning, everyone. Thank you for joining us to hear more about our Q3 performance. Karen covered the quarter at a high level, so I will add some commentary on our segments. Starting with Healthcare. Constant currency organic revenue grew 8% for the Q3, with growth across all categories. Service continued its streak of outperformance, growing 11% in the Q3. Consumables also performed well, with growth of 8%. Healthcare capital equipment revenue increased 7% for the quarter, with backlog remaining over $400 million. Orders were down 1% year-to-date against difficult comparisons to last year. EBIT margins for Healthcare in the quarter decreased 100 basis points to 24.3%, as volume, pricing, and restructuring program benefits were more than offset by increased tariffs and inflation. Turning to AST.
Speaker #3: Thanks , Karen , morning , and good everyone . for joining us to hear more Thank you our third quarter about performance . Karen covered the quarter at a level .
Speaker #3: So I high will add some commentary on our segments , starting with . healthcare Constant currency , organic revenue grew 8% for the fourth .
Speaker #3: For the third quarter growth all across with categories Service continued its streak of outperformance , growing 11% in the third quarter . Consumables also performed well , with growth of Healthcare , 8% .
Speaker #3: Capital equipment revenue increased 7% for the quarter, with backlog over $400 million. Orders were down 1% year to date against difficult comparisons to last year.
Speaker #3: Ebit healthcare margins quarter in the decreased for 100 basis points 24.3% , as volume pricing and restructuring to program were more than offset by increased tariffs and inflation .
Dan Carestio: Constant currency organic revenue grew 8% for the quarter, with 9% growth in services and 103% growth in capital equipment revenue. Services benefited from stable medical device volumes, bioprocessing demand, and currency. EBIT margins for AST were 45.1%, up 30 basis points from Q3 of last year, as the additional pricing and volume were more than able to offset increases in labor, energy, and the unfavorable mix impact from strong capital growth. Constant currency organic revenue increased 5% for life sciences in the quarter, driven by 11% growth in consumables. Capital equipment also performed well, with 7% growth and backlog holding over $100 million. Margins declined 20 basis points as volume and price were more than offset by tariffs and inflation.
Dan Carestio: Constant currency organic revenue grew 8% for the quarter, with 9% growth in services and 103% growth in capital equipment revenue. Services benefited from stable medical device volumes, bioprocessing demand, and currency. EBIT margins for AST were 45.1%, up 30 basis points from Q3 of last year, as the additional pricing and volume were more than able to offset increases in labor, energy, and the unfavorable mix impact from strong capital growth. Constant currency organic revenue increased 5% for life sciences in the quarter, driven by 11% growth in consumables. Capital equipment also performed well, with 7% growth and backlog holding over $100 million. Margins declined 20 basis points as volume and price were more than offset by tariffs and inflation.
Speaker #3: Turning to AST , constant currency organic revenue 8% for the with 9% growth in quarter , services and 103% growth in equipment capital .
Speaker #3: Services benefited from stable medical device volumes , bioprocessing demand and currency Ebit margins for AST were 45.1% , points from up 30 basis year .
Speaker #3: As last additional the volume pricing were more able to than offset the third quarter of increases labor and energy in the in unfavorable mix .
Speaker #3: strong capital growth , constant currency , organic revenue increased 5% for life sciences in the quarter , driven by 11% growth in consumables , capital equipment also well , with 7% growth in backlog holding , over 100 million .
Speaker #3: Margins declined 20 basis points as volume and price were more than tariffs and inflation offset by in earnings perspective , we grew the bottom line 9% in the 1:45 $0.53 per diluted share Included in .
Dan Carestio: From an earnings perspective, we grew the bottom line 9% in the quarter to $2.53 per diluted share. Included in that number is approximately $16 million of pre-tax tariff impact, which primarily impacted our healthcare segment. Turning to our outlook for fiscal 2026. As noted in the press release, we are maintaining our outlook for the year. This includes approximately 8% to 9% as reported revenue growth and constant currency organic revenue growth of 7% to 8%. Our earnings outlook of $10.15 to $10.30 is also being maintained, although with $10 million more in anticipated tariffs, the higher end of that range is less likely. Free cash flow is expected to be $850 million, and CapEx remains unchanged at $375 million.
Dan Carestio: From an earnings perspective, we grew the bottom line 9% in the quarter to $2.53 per diluted share. Included in that number is approximately $16 million of pre-tax tariff impact, which primarily impacted our healthcare segment. Turning to our outlook for fiscal 2026. As noted in the press release, we are maintaining our outlook for the year. This includes approximately 8% to 9% as reported revenue growth and constant currency organic revenue growth of 7% to 8%. Our earnings outlook of $10.15 to $10.30 is also being maintained, although with $10 million more in anticipated tariffs, the higher end of that range is less likely. Free cash flow is expected to be $850 million, and CapEx remains unchanged at $375 million.
Speaker #3: that number is dollars approximately 16 million of pre-tax tariff impact , which impacted our healthcare primarily segment . Turning to our outlook for fiscal 2026 .
Speaker #3: As noted in the press release , maintaining outlook for the year . we are This our includes approximately reported 8 to 9% as revenue growth and currency organic constant revenue growth of earnings 7 to 8% .
Speaker #3: Our outlook of $10 to $10 $0.15 to $10.30 is being maintained , although also anticipated tariffs , 10 million more in the higher end of that range is less likely .
Speaker #3: Free cash flow is expected to be $850 million, and we remain with CapEx unchanged at $375 million. We are pleased with our performance year to date, delivering constant currency, organic revenue growth of high single digits, and double-digit earnings per share.
Speaker #3: Free flow is cash expected to be 850 million , and remains CapEx unchanged at We 375 million . pleased with our are to performance year date , delivering constant currency , organic revenue , growth of high single digits and double per earnings digit Despite the tariff headwinds .
Dan Carestio: We are pleased with our performance year-to-date, delivering Constant Currency Organic Revenue Growth of high single digits and double digits earnings per share, despite the tariff headwinds. That concludes our prepared remarks for the call. Chuck, would you please give the instructions and we can begin the Q&A?
Dan Carestio: We are pleased with our performance year-to-date, delivering Constant Currency Organic Revenue Growth of high single digits and double digits earnings per share, despite the tariff headwinds. That concludes our prepared remarks for the call. Chuck, would you please give the instructions and we can begin the Q&A?
Operator: Will do. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Our first question for today will come from Brett Fishbin with KeyBanc. Please go ahead.
Operator: Will do. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Our first question for today will come from Brett Fishbin with KeyBanc. Please go ahead.
Speaker #3: That concludes our prepared remarks call . for the Chuck , would you please give the instructions and we can begin the Q&A
Speaker #3: ? do
Speaker #1: Will . We will now begin the question and answer session . To ask a question , you may press star then one on your touch tone phone .
Speaker #1: If you're using a speakerphone , please pick up your handset pressing the before keys . If at your question has been any time addressed and you would like to withdraw your question , please press star then two and our first question will come from for today with Brett KeyBanc .
Brett Fishbin: Hello, good morning. Thank you very much for taking the questions. Just was hoping maybe at a high level, you know, company-wide, you could just touch on how you're thinking about, you know, fourth quarter constant currency growth. Just thinking about, you know, you're, you're kind of tracking a little bit above the high end of the 7% to 8%, you know, FY 2026 range and maintain 7% to 8% for the year. So just kind of wondering if there's any incremental concerns or temporary items impacting Q4, or maybe if, you know, it sets up as we should be thinking about, you know, the higher end or potential upside. Thank you.
Brett Fishbin: Hello, good morning. Thank you very much for taking the questions. Just was hoping maybe at a high level, you know, company-wide, you could just touch on how you're thinking about, you know, fourth quarter constant currency growth. Just thinking about, you know, you're, you're kind of tracking a little bit above the high end of the 7% to 8%, you know, FY 2026 range and maintain 7% to 8% for the year. So just kind of wondering if there's any incremental concerns or temporary items impacting Q4, or maybe if, you know, it sets up as we should be thinking about, you know, the higher end or potential upside. Thank you.
Speaker #1: ahead Please go .
Speaker #4: Hello . Good morning . Thank you very much for taking the questions . Just was hoping maybe at a high level , you you could company wide , on how just touch you're thinking fourth quarter , about constant currency growth .
Speaker #4: Just thinking about your kind of tracking a little bit above the high end know , of the 7 to 8% , you know , FY 26 range .
Speaker #4: And maintain year . 7 to 8% for the So just kind of wondering if there's any incremental or items impacting temporary for Q or maybe if it as we should be sets up about the higher end or potential upside ?
Karen Burton: Yeah, thanks, Brett. As we look at the fourth quarter, and as we said last quarter, we do have a bit of a slowdown in the second half. So, that would be my caution on getting too excited about the fourth quarter. That is why we're holding that 7% to 8% constant currency. Last year's fourth quarter was a solid quarter, so it's a tough comparison as well, particularly in AST, where we had a really strong capital equipment fourth quarter, which is not expected this year.
Karen Burton: Yeah, thanks, Brett. As we look at the fourth quarter, and as we said last quarter, we do have a bit of a slowdown in the second half. So, that would be my caution on getting too excited about the fourth quarter. That is why we're holding that 7% to 8% constant currency. Last year's fourth quarter was a solid quarter, so it's a tough comparison as well, particularly in AST, where we had a really strong capital equipment fourth quarter, which is not expected this year.
Speaker #4: Thank you .
Speaker #2: Yeah . Thanks , Brett . As we look at the fourth quarter and as we said last quarter , we do a bit of have a we slowdown in the second half .
Speaker #2: So and that would . Be my too caution on on getting excited about the fourth quarter . So that is why we're that holding that 7 to 8% comps .
Speaker #2: Currency . Last year's fourth quarter was was a solid quarter . So it's a it's a tough comparison as well , particularly in AST where we had a really strong capital Fourth quarter , equipment .
Julie Winter: Brett, this is Julie. Just to add on healthcare, too. We've been saying all year, we don't expect healthcare services to stay in the teens. We slowed a little bit to 11% in Q3. We would expect continued slowing in that business in Q4.
Julie Winter: Brett, this is Julie. Just to add on healthcare, too. We've been saying all year, we don't expect healthcare services to stay in the teens. We slowed a little bit to 11% in Q3. We would expect continued slowing in that business in Q4.
Speaker #2: is not this year . Brett , this is Julie . Just to add on healthcare too . We've been saying all year we don't expect healthcare services to stay in the team .
Speaker #2: We slowed a little bit to 11% in the third quarter . We would expect continued slowing in that business in the fourth quarter .
Brett Fishbin: All right. Perfect. Thank you very much. And then, maybe just one more from me. You know, I was just interested, you know, to hear maybe a little bit more about what you're seeing around, you know, capital equipment, backlog activity in both segments. You know, I think the healthcare backlog is, you know, showing stability, kind of in that same range it's been the last couple of quarters, but seeing some pretty strong growth out of the life sciences backlog. So just any thoughts on, you know, kind of what's going on there would be appreciated. Thanks again.
Brett Fishbin: All right. Perfect. Thank you very much. And then, maybe just one more from me. You know, I was just interested, you know, to hear maybe a little bit more about what you're seeing around, you know, capital equipment, backlog activity in both segments. You know, I think the healthcare backlog is, you know, showing stability, kind of in that same range it's been the last couple of quarters, but seeing some pretty strong growth out of the life sciences backlog. So just any thoughts on, you know, kind of what's going on there would be appreciated. Thanks again.
Speaker #4: All right . very much . And Perfect . Thank you then maybe just You know , it one more from me . was just interested to hear maybe a little bit more about what you're seeing around capital backlog activity equipment in both segments .
Speaker #4: I You know , think the healthcare backlog is , you know , showing stability know , kind of , you in that the same the last couple range it's been in But quarters .
Speaker #4: seeing some pretty strong growth out of the sciences backlog . So life any thoughts on kind of what's going on there would be appreciated .
Dan Carestio: Yeah, Brett, this is Dan. You know, the life science one is easy because that's just a recovery comparison to where we were a little over a year ago when, you know, pharma wasn't spending as much. And you know, we started booking strong orders Q3 last year, and that's continued, and it continues today. And as those continue to flush out, you know, we're just in a much better spot from a macro perspective than we were, you know, a little over a year ago. So, that's positive. On the healthcare side, you know, we've had strong orders all year. I mean, we're down 1% versus prior year, which was, you know, a blowout year in terms of order intake. So we have not felt any meaningful slowdown as it relates to capital spending.
Dan Carestio: Yeah, Brett, this is Dan. You know, the life science one is easy because that's just a recovery comparison to where we were a little over a year ago when, you know, pharma wasn't spending as much. And you know, we started booking strong orders Q3 last year, and that's continued, and it continues today. And as those continue to flush out, you know, we're just in a much better spot from a macro perspective than we were, you know, a little over a year ago. So, that's positive. On the healthcare side, you know, we've had strong orders all year. I mean, we're down 1% versus prior year, which was, you know, a blowout year in terms of order intake. So we have not felt any meaningful slowdown as it relates to capital spending.
Speaker #4: again Thanks .
Speaker #3: Brett , this is Dan . You know , the life science one is easy because little over a year when were a pharma wasn't spending as much .
Speaker #3: started And you know , we putting strong Q3 orders year . And that's continued last . And it continues today . And as those continue to flush out , you in a much we're just better know , macro perspective spot from a than we were , you know , a year little over a ago .
Speaker #3: that's on the positive healthcare side . You know , we've had strong orders all year . I mean , we're down 1% versus prior year , know , blowout which was year a , you a in terms of order intake .
Dan Carestio: And I go back to what I've said many times is, you know, a lot of times our products are treated almost as a utility. They're needed for capacity, they're essential in the hospital, and if the procedures continue to grow at some nominal rate, or location changes, that capacity has to be put in place as it relates to sterilization, disinfection, et cetera. So, we've been fairly resilient, whereas I know maybe some others have seen some capital slowdown.
Dan Carestio: And I go back to what I've said many times is, you know, a lot of times our products are treated almost as a utility. They're needed for capacity, they're essential in the hospital, and if the procedures continue to grow at some nominal rate, or location changes, that capacity has to be put in place as it relates to sterilization, disinfection, et cetera. So, we've been fairly resilient, whereas I know maybe some others have seen some capital slowdown.
Speaker #3: we So have not felt any meaningful slowdown as it relates to capital spending . back to what I've many go is , you times know , a lot of times said our our And I products are treated almost a utility .
Speaker #3: They're needed for capacity essential the in hospital . They're and the procedures continue to at some grow nominal rate changes has to be , that relates to place as it disinfection , etc.
Speaker #3: So sterilization , so location we've we've been fairly resilient , whereas I know others have some capital seen slowdown maybe some .
Operator: The next question will come from Mac Etoch with Stephens. Please go ahead.
Operator: The next question will come from Mac Etoch with Stephens. Please go ahead.
Steven Etoch: Hey, good morning, and thank you for taking my questions as well. Maybe just to follow up on Brett's capital equipment question, life sciences. I'd, I'd just like to know how you would characterize the current conditions in that end market, and how conversations with customers are evolving around US onshoring and capacity expansions. Thanks.
Mac Etoch: Hey, good morning, and thank you for taking my questions as well. Maybe just to follow up on Brett's capital equipment question, life sciences. I'd, I'd just like to know how you would characterize the current conditions in that end market, and how conversations with customers are evolving around US onshoring and capacity expansions. Thanks.
Speaker #1: question will come from The next Matt Eatock with Stephens . ahead Please go
Speaker #5: Hey , good morning and
Speaker #5: taking my thank you for questions . as well . just Maybe a follow up on Brett's capital equipment Sciences . I just like to know would characterize the question .
Speaker #5: conditions in that end market . And how conversations with customers evolving Life us . are around Onshoring and capacity expansions . Thanks
Dan Carestio: You know, I'd say in general, Mac, any time there's a juxtaposition of manufacturing locations, we tend to benefit on the capital side of things because they're putting in new capacity. You know, clearly there's been some pretty big announcements in North Carolina and Pennsylvania and other states that have got commitments to build large new processing capacity. And fortunately for us, a lot of that capacity is aseptic manufacturing type products, which tends to be our sweet spot. So it's definitely a positive macro for us right now.
Dan Carestio: You know, I'd say in general, Mac, any time there's a juxtaposition of manufacturing locations, we tend to benefit on the capital side of things because they're putting in new capacity. You know, clearly there's been some pretty big announcements in North Carolina and Pennsylvania and other states that have got commitments to build large new processing capacity. And fortunately for us, a lot of that capacity is aseptic manufacturing type products, which tends to be our sweet spot. So it's definitely a positive macro for us right now.
Speaker #5: . You know ,
Speaker #3: general , Matt , any time there's a say in I'd juxtaposition of locations , we tend to the manufacturing capital side benefit on things of new because they're putting in capacity .
Speaker #3: know , clearly there's been some some pretty You big in the last announcements few months North Carolina in Pennsylvania and other states that have got commitments to build large new processing capacity .
Speaker #3: And and fortunately for us , a lot of that capacity is aseptic manufacturing type products , which tends to be our sweet spot .
Dan Carestio: I think the more important thing is that despite some of the pricing pressures in pharma and some of the regulatory changes that may be coming there, nonetheless, they seem to be in a much better spot than they were a year and a half ago when there was some confusion. So, all in all, it's been a positive for us.
Dan Carestio: I think the more important thing is that despite some of the pricing pressures in pharma and some of the regulatory changes that may be coming there, nonetheless, they seem to be in a much better spot than they were a year and a half ago when there was some confusion. So, all in all, it's been a positive for us.
Speaker #3: So definitely a positive for us right now and I think the the more important is thing that some of the pricing pressures in it's and some of the regulatory changes that may be coming , there despite macro , nonetheless , they seem to be in a much were a year and a half ago when there spot than they some some confusion .
Steven Etoch: Appreciate that. And then, you know, obviously, the $10 million increase in tariff-related costs that popped up on the press release, I'd just like to, you know, potentially get an update on your mitigation efforts and, you know, get your sense of how you'll be able to maybe offset a majority of these costs in FY 2027, if that's possible.
Mac Etoch: Appreciate that. And then, you know, obviously, the $10 million increase in tariff-related costs that popped up on the press release, I'd just like to, you know, potentially get an update on your mitigation efforts and, you know, get your sense of how you'll be able to maybe offset a majority of these costs in FY 2027, if that's possible.
Speaker #3: all in all , it's was been a for us positive .
Speaker #5: I appreciate then that . And , you know , obviously the $10 million increase in just like to , the press that popped release , I'd you know , an update efforts on your mitigation and , you know , get of how you'll be your offset sense a majority costs in FY 27 , if possible of these that's .
Karen Burton: Sure. Yeah, there's a wide variety of mitigation efforts going on, and we are optimistic about our ability to continue to absorb those as we go forward and fully as we move forward. They range from, you know, shifting product movement, supplier negotiations, alternative suppliers. It honestly, the hardest work and the biggest part is looking for other cost reductions and an ability to offset those costs with productivity improvements, efficiencies in our facilities, across the offices, and back office as well.
Karen Burton: Sure. Yeah, there's a wide variety of mitigation efforts going on, and we are optimistic about our ability to continue to absorb those as we go forward and fully as we move forward. They range from, you know, shifting product movement, supplier negotiations, alternative suppliers. It honestly, the hardest work and the biggest part is looking for other cost reductions and an ability to offset those costs with productivity improvements, efficiencies in our facilities, across the offices, and back office as well.
Speaker #2: there's Sir . Yeah , there's a mitigation of going on efforts . And variety wide optimistic about our ability to are continue to absorb those as we go forward .
Speaker #2: And , and fully as we move forward . They range from , you know , product movements , supplier , alternative suppliers . It honestly , the the the hardest work and the biggest is looking for other cost part reductions in an ability to offset costs with improvements those productivity , efficiencies our in facilities and across the offices office as , back .
Julie Winter: Hey, Mac, this is Julie. Just to add on the Q3, and the $10 million for the year is mainly driven by metals, and we've seen an uptick in metals with more capital equipment sales. So you know, the mix shift to capital has a direct impact on the tariff exposure for this year.
Julie Winter: Hey, Mac, this is Julie. Just to add on the Q3, and the $10 million for the year is mainly driven by metals, and we've seen an uptick in metals with more capital equipment sales. So you know, the mix shift to capital has a direct impact on the tariff exposure for this year.
Speaker #2: Hey Mac , this is Julie . Just the on the third quarter add 10 million for the year is by mainly driven the And we see uptick in an metals with the more capital So metals .
Steven Etoch: I appreciate the color. Thank you all.
Mac Etoch: I appreciate the color. Thank you all.
Speaker #2: they , know , the mix has a capital shift to direct tariff impact exposure year on the equipment sales . for this
Operator: The next question will come from Michael Polark with Wolfe Research. Please go ahead.
Operator: The next question will come from Michael Polark with Wolfe Research. Please go ahead.
Speaker #5: appreciate the
Speaker #5: you all . I color . Thank .
Michael Polark: Good morning. Thank you. I'll stay on tariffs, and then I want to shift to AST. So just on tariffs, can you remind the $55 million that's now in the guidance, is that six months, just December and March, or was there an impact in the September quarter as well? And I ask just because I'm trying to understand, like, what - how much we'll need to annualize it.
Michael Polark: Good morning. Thank you. I'll stay on tariffs, and then I want to shift to AST. So just on tariffs, can you remind the $55 million that's now in the guidance, is that six months, just December and March, or was there an impact in the September quarter as well? And I ask just because I'm trying to understand, like, what - how much we'll need to annualize it.
Speaker #1: The next question will come from Michael Polak Research . with Wolfe Please go ahead .
Speaker #6: Thank you .
Speaker #6: I'll stay on tariffs . want to shift And then I AST . So morning . just on can tariffs you remind the to 55 million that's now in guidance .
Speaker #6: Is that is that six months just December and was there March . Or an impact the in September as well . And I asked just because I'm trying quarter understand like how much we'll need to the to annualize
Karen Burton: We were $16 million in Q3, Mike, and we would expect that to step up a little bit in Q4. The $55 million is an annual run rate for fiscal 2026, and we have been incurring tariffs every quarter.
Karen Burton: We were $16 million in Q3, Mike, and we would expect that to step up a little bit in Q4. The $55 million is an annual run rate for fiscal 2026, and we have been incurring tariffs every quarter.
Speaker #2: .
Operator: It seems that Mr. Polark has disconnected. Our next question will come from Patrick Wood with Morgan Stanley. Please go ahead.
Operator: It seems that Mr. Polark has disconnected. Our next question will come from Patrick Wood with Morgan Stanley. Please go ahead.
Patrick Wood: Hey, guys. Two kind of both on the, like, macro and regulatory side. You know, CMS had two different proposals. There was obviously the PPE sort of onshoring and some of the API stuff on the drug side. Curious if you think that would have any effect as supply chain shifts, and if that could, that could affect you guys in a, in a positive way. And then the other one was, like, another CMS, you know, proposal. They're obviously getting rid of, for a lot of surgeries, the inpatient-only list. They did that obviously for musculoskeletal, but they're doing it for some of the soft tissue surgeries and things. Is there a chance that that pulls more procedures into the ASC, and, and do you view that ASC shift as a, a good thing or a bad thing for you guys?
Patrick Wood: Hey, guys. Two kind of both on the, like, macro and regulatory side. You know, CMS had two different proposals. There was obviously the PPE sort of onshoring and some of the API stuff on the drug side. Curious if you think that would have any effect as supply chain shifts, and if that could, that could affect you guys in a, in a positive way. And then the other one was, like, another CMS, you know, proposal. They're obviously getting rid of, for a lot of surgeries, the inpatient-only list. They did that obviously for musculoskeletal, but they're doing it for some of the soft tissue surgeries and things. Is there a chance that that pulls more procedures into the ASC, and, and do you view that ASC shift as a, a good thing or a bad thing for you guys?
Speaker #1: seems that It Mr. has Pawlak disconnected our question will come from Patrick Wood with Stanley . Please go Morgan ahead
Speaker #7: guys . To kind of
Speaker #7: on macro side . the Hi . You regulatory CMS had two different proposals . There was obviously the PPE sort of onshoring and some of the API drug side .
Speaker #7: if you think have any as supply chain shifts and could , that could affect you guys in a positive way . if that then the other one was like Curious And proposal that would were of for a lot rid surgeries .
Speaker #7: The obviously getting only did that obviously for musculoskeletal , but they're doing it list they the soft tissue CMS surgeries and things . chance Is there a that that ASC ?
Speaker #7: more view into the shift a good as thing or ASC for you pulls guys a bad thing And do you ?
Dan Carestio: Yeah, sure, Patrick. This is Dan. Nice to hear from you. I would say that, you know, the ASC shift has generally been a positive for us. There's new capacity demands. There's also a higher degree of clinical support that those facilities need than maybe large acute care facilities in terms of sterilization, disinfection, and that's something that STERIS is uniquely positioned to provide, and we've been able to do that quite well. In terms of the PPE shift, I have not yet seen any material commitments of major manufacturing moving to US at this point that would have an impact on... I mean, that would largely be an AST play, right, in terms of PPE, that needs that sterile drape and gown type stuff.
Dan Carestio: Yeah, sure, Patrick. This is Dan. Nice to hear from you. I would say that, you know, the ASC shift has generally been a positive for us. There's new capacity demands. There's also a higher degree of clinical support that those facilities need than maybe large acute care facilities in terms of sterilization, disinfection, and that's something that STERIS is uniquely positioned to provide, and we've been able to do that quite well. In terms of the PPE shift, I have not yet seen any material commitments of major manufacturing moving to US at this point that would have an impact on... I mean, that would largely be an AST play, right, in terms of PPE, that needs that sterile drape and gown type stuff.
Speaker #3: Yeah , next That's helpful . It's
Speaker #3: sure . Patrick , this is Dan . hear from you . I would that , you know , the ASC Nice to is generally been positive a for us .
Speaker #3: shift capacity demands . There's also a higher degree of clinical There's new support that facilities those need than maybe large acute facilities . In terms of sterilization , say care disinfection .
Speaker #3: And that's something that steris is positioned to provide . we've been And uniquely able to do well in that quite the PPE shift .
Speaker #3: I have any yet material seen commitments of not major moving to at this us point . That would have manufacturing an impact on I mean , that would largely be an ASC play , right ?
Dan Carestio: I've read about it, but I haven't seen any impact from it as of this point. In terms of your question on the API relocation, I have not seen an impact on that yet either.
Dan Carestio: I've read about it, but I haven't seen any impact from it as of this point. In terms of your question on the API relocation, I have not seen an impact on that yet either.
Speaker #3: In terms of PPE that needs that sterile drape and gown stuff . But about it , but I haven't impact I've read point from it at this seen any .
Patrick Wood: Nice. No, that's helpful. And then just very quickly as a follow-up, you know, we had chatted before about potentially, I don't know, it's hard for what you can and can't say, but, a bit more of a commercial push, in EMEA across some of your product lines on the sterilization side. Is that still something, you know, a more integrated model and, competing a little bit more aggressively in EMEA? Is that still something that's on the cards?
Patrick Wood: Nice. No, that's helpful. And then just very quickly as a follow-up, you know, we had chatted before about potentially, I don't know, it's hard for what you can and can't say, but, a bit more of a commercial push, in EMEA across some of your product lines on the sterilization side. Is that still something, you know, a more integrated model and, competing a little bit more aggressively in EMEA? Is that still something that's on the cards?
Speaker #3: question terms of your API on the relocation , I have not seen an yet
Speaker #3: question terms of your API on the relocation , I have not seen an yet either
Speaker #3: .
Speaker #7: quickly , as a follow up , we had chatted before about potentially , don't know , it's hard for I can and can't say , what you but a of a bit more push in media commercial across some of your lines .
Speaker #7: side sterilization that is that still something a more is and model competing a integrated more product aggressively in EMEA ? Is that little bit something that's on the cards ?
Dan Carestio: Absolutely. Yes, that's something we're committed to. We've made a lot of structural changes in EMEA, in terms of how we're going to approach go-to-market. It's going to take a while to get that fully formulated and executed. It's a long process, but we're confident in the direction that we're heading.
Dan Carestio: Absolutely. Yes, that's something we're committed to. We've made a lot of structural changes in EMEA, in terms of how we're going to approach go-to-market. It's going to take a while to get that fully formulated and executed. It's a long process, but we're confident in the direction that we're heading.
Speaker #3: Absolutely , just very
Speaker #3: yes . That's something we're committed to . We've made a lot of structural changes in in terms of how we're going to approach go to market .
Speaker #3: while going to get to that take a fully formulated and long executed process , but we're . It's a confident in the we're heading .
Patrick Wood: Awesome. Thanks, Dan.
Patrick Wood: Awesome. Thanks, Dan.
Operator: Your next question will come from Mike Matson with Needham and Company. Please go ahead.
Operator: Your next question will come from Mike Matson with Needham and Company. Please go ahead.
Speaker #7: Thanks
Speaker #7: .
Michael Matson: Yeah, thanks. So I wanted to follow up on Mike Polark's question on the tariff exposure in 2026. I think maybe what he was trying to get at was, like, what's the incremental exposure in 2027? I know you probably can't give us a dollar amount, you're not giving guidance, but if you've been paying tariffs for basically all four quarters of 2026, does that imply that kind of any incremental tariff impact in 2027 will be small, you know, less than a quarter worth effectively, or?
Michael Matson: Yeah, thanks. So I wanted to follow up on Mike Polark's question on the tariff exposure in 2026. I think maybe what he was trying to get at was, like, what's the incremental exposure in 2027? I know you probably can't give us a dollar amount, you're not giving guidance, but if you've been paying tariffs for basically all four quarters of 2026, does that imply that kind of any incremental tariff impact in 2027 will be small, you know, less than a quarter worth effectively, or?
Speaker #6: Thanks . So I wanted to on Mike Pollak's follow up tariff the question on in 26 . I think maybe exposure what he was trying like , what's the was incremental exposure I know you can't give us a probably amount .
Speaker #6: Dollar not giving guidance, but if you've been paying tariffs for four quarters, basically all that implies that kind of any incremental tariff impact in—
Speaker #6: You're And the In And then
Speaker #6: small ? You know , direction that 27 will worth quarter effectively or .
Karen Burton: ... I think that's a logical approach. You know, obviously, the tariffs did fluctuate during the year, especially in the first half of our year, as rates settled in. And we're seeing it come through and reflected in the different mix, but I don't- I think it's reasonable to say that it wouldn't be more than another quarter's worth, kind of level, based on current tariffs.
Karen Burton: ... I think that's a logical approach. You know, obviously, the tariffs did fluctuate during the year, especially in the first half of our year, as rates settled in. And we're seeing it come through and reflected in the different mix, but I don't- I think it's reasonable to say that it wouldn't be more than another quarter's worth, kind of level, based on current tariffs.
Speaker #2: I think that's The a logical approach . obviously You know , the tariffs did fluctuate during the year , especially in the first half of our year .
Speaker #2: As as rates settled in and we're we're seeing it through and , and come reflected in the different mix . But I don't I think it reasonable to it's be wouldn't say that than more a nother quarters worth level kind of based on current tariffs
Michael Matson: Okay, thank.
Michael Matson: Okay, thank.
Karen Burton: Yes.
Karen Burton: Yes.
Michael Matson: Yeah, I understand. Yeah, I understand.
Michael Matson: Yeah, I understand. Yeah, I understand.
Karen Burton: Just to clarify what's in place right now.
Karen Burton: Just to clarify what's in place right now.
Michael Matson: Yeah. Okay. And then just, you know, your leverage ratios at just over 1 times. It's been, I think it's been a few years since you've done any acquisitions, so it used to be a pretty big part of the STERIS story. So maybe why haven't you been doing more deals? And, you know, what's the, you know, outlook? If, you know, do you have a pipeline of things that you're looking at, and can we expect to see, you know, more in the next few years?
Michael Matson: Yeah. Okay. And then just, you know, your leverage ratios at just over 1 times. It's been, I think it's been a few years since you've done any acquisitions, so it used to be a pretty big part of the STERIS story. So maybe why haven't you been doing more deals? And, you know, what's the, you know, outlook? If, you know, do you have a pipeline of things that you're looking at, and can we expect to see, you know, more in the next few years?
Speaker #3: Yeah . understand I
Speaker #3: .
Speaker #6: Yeah I understand .
Speaker #2: That... yes. Clarification—what's in place right now?
Speaker #2: .
Speaker #6: Okay . And then Yeah . just your leverage ratios at just over one times . It's been I think it's been a few years since you've done a any acquisition .
Speaker #6: So it used to be a pretty big part of the story . So maybe why haven't you been doing more deals and what's the outlook ?
Speaker #6: You know , do you have a of things pipeline looking at . And can we expect to see more in the next few years
Dan Carestio: Well, we've been active on smaller sort of bolt-on, you know, product acquisitions and some channel acquisitions over the last couple of years. You know, doing major transformative M&A is not easy. It's something that we feel we're good at, and we have the muscle for, and we're good at integration. But we also have a very disciplined approach at what meets our financial criteria and where we add value from a customer perspective. So, we're looking, but at this point, we've kissed a lot of frogs and not a lot of them have turned out to be princes.
Dan Carestio: Well, we've been active on smaller sort of bolt-on, you know, product acquisitions and some channel acquisitions over the last couple of years. You know, doing major transformative M&A is not easy. It's something that we feel we're good at, and we have the muscle for, and we're good at integration. But we also have a very disciplined approach at what meets our financial criteria and where we add value from a customer perspective. So, we're looking, but at this point, we've kissed a lot of frogs and not a lot of them have turned out to be princes.
Speaker #6: that you're
Speaker #3: Well ,
Speaker #3: active on smaller sort of on bolt , you know , product and some channel acquisitions over the last couple of . You know , doing years major acquisitions transformative is not M&A easy .
Speaker #3: It's feel something that we we're good have the muscle at . And we And we're good for . at integration also have . a very But we disciplined approach at meets our financial criteria .
Speaker #3: value we add customer from a perspective . So what at this point , kissed a we've we're lot of frogs and not a lot of them have turned out to be princes .
Michael Matson: Okay, that's a good way to put it. Thank you.
Michael Matson: Okay, that's a good way to put it. Thank you.
Operator: The next question will come from Jason Bednar with Piper Sandler. Please go ahead.
Operator: The next question will come from Jason Bednar with Piper Sandler. Please go ahead.
Speaker #6: Okay . That's a good way to put you it . Thank .
Jason Bednar: Morning, everyone. I got to follow the frog kissing comment here. I'm gonna start with the cash flow guidance here. You left that unchanged, but look, based on where you're at for the first nine months, that, that target just looks like a lay-up. So I guess, why not bump that higher? I get, I get not changing revenue, I get not changing the EPS guide, but are there any cash flow fluctuations you're anticipating at year-end that would keep you from clearing that guidance bar?
Jason Bednar: Morning, everyone. I got to follow the frog kissing comment here. I'm gonna start with the cash flow guidance here. You left that unchanged, but look, based on where you're at for the first nine months, that, that target just looks like a lay-up. So I guess, why not bump that higher? I get, I get not changing revenue, I get not changing the EPS guide, but are there any cash flow fluctuations you're anticipating at year-end that would keep you from clearing that guidance bar?
Speaker #1: See you . Next question will come from Jason Bittner with Piper Sandler . Please go ahead .
Speaker #8: Morning , everyone . I gotta Hi . frog kissing comment here . I'm going to start with cash flow guidance here . You left that unchanged , but look , based where you're at the first for nine months at that on a layup .
Speaker #8: not bump that So I higher ? I get I get changing revenue . I get not not changing the guide . But EPs cash flow are there any anticipating at would keep you fluctuations you're year end that from clearing that bar guidance ?
Karen Burton: Hi, Jason. Yeah, I think it's... You're right. We are very confident with that guidance. A lot of times in the fourth quarter, timing really matters. So, we've got a heavy capital quarter. That activity will shift into next year in terms of cash collections. So it's a little bit harder to predict in the fourth quarter, especially since it is winter, and weather can play a part. So a little bit of conservatism there.
Karen Burton: Hi, Jason. Yeah, I think it's... You're right. We are very confident with that guidance. A lot of times in the fourth quarter, timing really matters. So, we've got a heavy capital quarter. That activity will shift into next year in terms of cash collections. So it's a little bit harder to predict in the fourth quarter, especially since it is winter, and weather can play a part. So a little bit of conservatism there.
Speaker #2: Hi , I it's think Jason . you're Yeah , We are very confident with that guidance . A lot of times in the timing really fourth quarter , matters .
Speaker #2: So we've got quarter capital, a heavy of those that shift activity will the into. In terms of next year, cash. So it's a little bit collections.
Speaker #2: predict harder to fourth quarter , especially in the since it is and weather can play a part . So a little bit of conservatism there .
Jason Bednar: Okay. All right. Fair enough. And then for a follow-up, I, I did want to peek a little bit ahead to fiscal 2027. You know, so you're, look, you're sitting on a healthy backlog, that's no secret. The AST momentum is obvious for you and the broader market. The street's only modeling 6% growth for next year. Is there a reason you wouldn't be able to maintain your typical 7/11 growth algorithm beyond fiscal 2026? I know a lot have asked about here today about tariffs and kind of the impact on tariffs in fiscal 2027, but any other considerations we should have in mind, whether it's top line or margin related?
Jason Bednar: Okay. All right. Fair enough. And then for a follow-up, I, I did want to peek a little bit ahead to fiscal 2027. You know, so you're, look, you're sitting on a healthy backlog, that's no secret. The AST momentum is obvious for you and the broader market. The street's only modeling 6% growth for next year. Is there a reason you wouldn't be able to maintain your typical 7/11 growth algorithm beyond fiscal 2026? I know a lot have asked about here today about tariffs and kind of the impact on tariffs in fiscal 2027, but any other considerations we should have in mind, whether it's top line or margin related?
Speaker #8: Okay . All right . Fair enough
Speaker #8: then follow up , I for a did want to peek a little bit ahead to fiscal 27 . You know you're look you're sitting on a healthy That's no backlog .
Speaker #8: secret . The AST momentum is obvious you . And the broader for market , the street's only winter modeling 6% growth for next there a reason you year .
Speaker #8: wouldn't be typical maintain your able to Is 711 growth algorithm beyond fiscal 26 ? I know a lot of aspects here today about tariffs and kind of the impact on tariffs in fiscal 27 , other but any considerations we should have in mind , whether it's top line or margin related .
Speaker #8: wouldn't be typical maintain your able to Is 711 growth algorithm beyond fiscal 26 ? I know a lot of aspects here today about tariffs and kind of the impact on tariffs in fiscal 27 , other but any considerations we should have in mind , whether it's top line or margin related .
Dan Carestio: I mean, obviously, we're in the throes of our planning period right now. But I would say in a general sense, the macros don't look negative to us right now. You know, obviously, next quarter, we're gonna give you guys some solid guidance of where we think we're gonna land, in fiscal 27. But at this point, I don't see a lot of downside or anything materially changing in the market today.
Dan Carestio: I mean, obviously, we're in the throes of our planning period right now. But I would say in a general sense, the macros don't look negative to us right now. You know, obviously, next quarter, we're gonna give you guys some solid guidance of where we think we're gonna land, in fiscal 27. But at this point, I don't see a lot of downside or anything materially changing in the market today.
Speaker #3: I mean , obviously we're throes of our planning period right now in the would say in a general sense , the macro don't look negative to us right now , you know , and when next quarter we're going to give you guys obviously some solid guidance of where we think we're going to land in fiscal 27 .
Jason Bednar: All right. Perfect. Thank you.
Jason Bednar: All right. Perfect. Thank you.
Speaker #3: But at this point , I downside or a lot of materially change in the today market . Okay .
Operator: And the next question is a follow-up from Michael Polark with Wolfe. Please go ahead.
Operator: And the next question is a follow-up from Michael Polark with Wolfe. Please go ahead.
Speaker #8: Thanks Perfect .
Michael Polark: Hey, good morning. Can you hear me?
Michael Polark: Hey, good morning. Can you hear me?
Speaker #1: And the next
Speaker #1: question is a from . Michael Wolfe . with ahead follow up .
Karen Burton: Yes.
Karen Burton: Yes.
Operator: Yes.
Operator: Yes.
Michael Polark: I'm so sorry, what happened earlier. I don't know. It just dropped and took me a bit to get back in.
Michael Polark: I'm so sorry, what happened earlier. I don't know. It just dropped and took me a bit to get back in.
Speaker #6: Hey good morning . Can you hear me
Speaker #6: ?
Speaker #2: yes Yes , .
Operator: We thought we had-
Operator: We thought we had-
Michael Polark: So, my follow-up was gonna be on AST Services. If somebody asked this, and you answered it, I missed it. But just in the quarter, you know, in constant FX, AST Services line up 6%. You know, the prior two quarters was up 10%, constant FX, if I make some assumptions on the math. So, can we just get a little extra color on kind of how you've seen the fiscal year play out in AST? You know, why the December quarter might have been a little bit below the prior two, and you know, what's a good way to think about constant FX AST Services growth in this current March quarter? Thank you.
Michael Polark: So, my follow-up was gonna be on AST Services. If somebody asked this, and you answered it, I missed it. But just in the quarter, you know, in constant FX, AST Services line up 6%. You know, the prior two quarters was up 10%, constant FX, if I make some assumptions on the math. So, can we just get a little extra color on kind of how you've seen the fiscal year play out in AST? You know, why the December quarter might have been a little bit below the prior two, and you know, what's a good way to think about constant FX AST Services growth in this current March quarter? Thank you.
Speaker #6: I'm so sorry I . What happened earlier ? I don't know , it just dropped and took get back . me a bit to So my follow up on Polak .
Speaker #6: going to be on ASP Yeah , my services . If follow up was somebody asked this and you answered it , I missed it .
Speaker #6: But just in the quarter , you know , in constant FX , AST services line up 6% . You know , the prior two quarters was up 10% , constant FX .
Speaker #6: If that makes some assumptions on the math . So can a little kind color on of how we just get you've seen fiscal the year play out in ?
Speaker #6: You extra know , why the December quarter might have been a little bit below the prior two ? And you know , what's what's a good way to AST constant FX , AST services growth in this current March quarter ?
Dan Carestio: Sure. Yeah. What I would say is, like, we kind of had a strange start to the quarter. You know, we don't get in and talk about months sequentially, but October was really weak, and then it got better in November, and then we had a really strong December. So, and there's nothing I can point to. There wasn't anything uniquely geographic. There wasn't any customer sub-segment that we look at that was off. It was just a general softness in the volumes that we were seeing across the global network, that seemed to have righted itself by December.
Dan Carestio: Sure. Yeah. What I would say is, like, we kind of had a strange start to the quarter. You know, we don't get in and talk about months sequentially, but October was really weak, and then it got better in November, and then we had a really strong December. So, and there's nothing I can point to. There wasn't anything uniquely geographic. There wasn't any customer sub-segment that we look at that was off. It was just a general softness in the volumes that we were seeing across the global network, that seemed to have righted itself by December.
Speaker #6: Thank you .
Speaker #3: Sure . What I would say is , Mike , had a strange start to the we got quarter . You know , we don't months about get in to sequentially .
Speaker #3: really weak . And then it got But better in October was November . And then we had a really strong December . So and there's nothing I can point to .
Speaker #3: wasn't There anything uniquely geographic . There wasn't any customer subsegment that we look at . That was off . It was general just a softness in the volumes that we were seeing across the global network that that seemed to have have had righted itself by December .
Michael Polark: If I can just follow up there, and then I'll cede. Any, you know, for several quarters now, we've been asking about just the tariff impact, you know, customers changing order flows as part of their tariff mitigation. Any fresh view as to whether that could explain some of this kind of quarter to quarter to quarter movement?
Michael Polark: If I can just follow up there, and then I'll cede. Any, you know, for several quarters now, we've been asking about just the tariff impact, you know, customers changing order flows as part of their tariff mitigation. Any fresh view as to whether that could explain some of this kind of quarter to quarter to quarter movement?
Speaker #6: If I can just follow up there and then I'll feed , you know , for several quarters now , we've been asking about the just tariff impact , you know , changing customers order flows of their tariff mitigation .
Speaker #6: Any , any fresh view as to whether that could explain some of this kind of quarter to quarter movement , there was .
Dan Carestio: There was speculation, and this is somewhat anecdotal, but we have heard from some customers. They built ahead of tariffs a bit and got product into different locations. I can't say definitively that was a material impact on the volumes, and maybe that's why there was a slight inventory adjustment that we saw in the fall. But we haven't seen any movements that have impacted us negatively, because we're well-positioned all around the globe, to work with our customers for sterilization.
Dan Carestio: There was speculation, and this is somewhat anecdotal, but we have heard from some customers. They built ahead of tariffs a bit and got product into different locations. I can't say definitively that was a material impact on the volumes, and maybe that's why there was a slight inventory adjustment that we saw in the fall. But we haven't seen any movements that have impacted us negatively, because we're well-positioned all around the globe, to work with our customers for sterilization.
Speaker #3: Speculation and and this is somewhat anecdotal , but we have heard from some customers . They built ahead of tariffs a bit different and got into locations .
Speaker #3: can't I say a material definitively that was the , and maybe impact on was some a slight adjustment saw inventory in the that we , but haven't seen any we movements that have impacted negatively because we're well positioned all around the globe to to work with our customers for us sterilization .
Michael Polark: Thank you, Dan, and I'm sorry again about the snafu earlier.
Michael Polark: Thank you, Dan, and I'm sorry again about the snafu earlier.
Dan Carestio: No issue.
Dan Carestio: No issue.
Speaker #6: Thank you , Dan , and I'm sorry again snafu earlier .
Operator: This concludes our question and answer session. I would like to turn the conference back over to Ms. Julie Winter for any closing remarks. Please go ahead.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Ms. Julie Winter for any closing remarks. Please go ahead.
Speaker #3: No issue .
Speaker #1: This concludes our question and answer session . I would like to turn the conference back over to Miss Julie Winter closing go ahead remarks .
Julie Winter: Thank you, everyone, for taking the time to join us this morning to hear more about our performance in the quarter, and we look forward to seeing many of you on the road in March.
Julie Winter: Thank you, everyone, for taking the time to join us this morning to hear more about our performance in the quarter, and we look forward to seeing many of you on the road in March.
Speaker #1: for any Please .
Speaker #2: Thank you , everyone for taking the time to join us to hear this morning more performance in the quarter . And we look forward to seeing many about our on of you the road in March .
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
