Steris Q2 2027 Earnings Call Transcript

Steris (NYSE:STE) reported second-quarter financial results on Thursday. The transcript from the company’s second-quarter earnings call has been provided below.

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Summary

Steris plc reported a 9% increase in total revenue for Q2 2027, reaching $1.6 billion, driven by an 8% constant currency organic revenue growth.

Adjusted gross margin improved by 100 basis points to 45.3%, primarily due to tariff refunds, though underlying margins were slightly down due to inflation.

The company announced a restructuring plan with expected annualized savings of $9 million and an acquisition agreement with Exodus Medical to enhance its healthcare portfolio.

Healthcare segment saw a 7% organic revenue growth, with service and consumables each growing 10%, while Life Sciences achieved an 18% increase driven by capital equipment growth.

Steris updated its fiscal 2027 EPS outlook to $11.00-$11.55, citing second quarter outperformance and improved interest conditions, while maintaining an overall revenue growth expectation of 7-8%.

Full Transcript

OPERATOR

Good day and welcome to the Steris plc Second Quarter 2027 Financial Results 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 touchtone 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 Julie Winter, Investor Relations. Please go ahead.

Julie Winter (Investor Relations)

Thank you, Nick, and good morning everyone. Speaking on today’s call will be Karen Burton, our Senior Vice President and CFO, and Daniel Carestio, our President and CEO. I do have a few words of caution before we open for comments from management. 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 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. 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 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.

Karen Burton (VP & CAO)

Thank you, Julie, and good morning everyone. It is my pleasure to be with you this morning to review the highlights of our second quarter performance. For the second quarter, total as-reported revenue grew 9% to $1.6 billion. Constant currency organic revenue grew 8% in the quarter driven by volume as well as 230 basis points of price. Adjusted gross margin for the quarter was 45.3%, up 100 basis points versus the prior year. Margin expansion was driven primarily by tariff refunds of approximately $20 million during the quarter, which added 130 basis points year over year.

Underlying margins were down slightly as favorable price was more than offset by inflation. Gross tariff costs were approximately $15 million in the second quarter, flat with the prior year. For clarity, tariff refunds are not being allocated to our business segments but instead are booked to Corporate to enable business segment analysis. Adjusted EBIT margin was 24.6% for the quarter, up 150 basis points from the second quarter last year. Tariff refunds contributed 130 basis points to the increase. Underlying margin improvement benefited from favorable price and volume, partially offset by inflation and investments in the business, including the acceleration of R&D spending. We do not expect any material additional tariff refunds during the remainder of fiscal 2027. The adjusted effective tax rate in the quarter was 25.3%, an increase from 24.5% in the second quarter of last year.

The increase was primarily driven by unfavorable discrete items. Adjusted net income in the quarter was $286.8 million compared with $244.5 million in the prior year. Adjusted earnings per share were $2.94, a 19% increase over $2.47 in the second quarter of last year. Excluding tariff refunds, adjusted earnings per diluted share grew 13%. Capital expenditures for the second quarter were $76.1 million and depreciation and amortization totaled $125.6 million. We ended the quarter with a strong balance sheet reflecting $1.9 billion in total debt. Gross debt to EBITDA at quarter end was approximately 1.1 times. Free cash flow for the first six months was $492.5 million compared with $527.7 million in the prior year period. Cash flow from operations was $656.1 million compared with $707.8 million last year.

The decline in cash flow was driven primarily by significantly lower contribution from working capital as we utilized cash to build inventory in support of second half shipments, partially offset by higher net income. Share buybacks in the second quarter totaled $100 million, or $200 million for the year to date; we have $800 million remaining under our current authorization. During the quarter, we approved an additional restructuring plan covering targeted facility realignment, product rationalization, and select organizational realignment. We anticipate total charges of $45 million, including $10 million in cash expenditures and $35 million in non-cash charges. Approximately $25 million was recorded in the second quarter. The plan is expected to generate annualized savings of approximately $9 million, with a portion realized in fiscal 2028 and the full benefit in subsequent fiscal years.

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

Daniel Carestio (President and CEO)

Thanks, Karen, and good morning everyone. Thank you for joining us to hear more about our second quarter 2027 performance and our outlook for the remainder of the year. Karen covered the quarter at a high level, so I’ll add some commentary on our segments starting with Healthcare. Constant currency organic revenue grew 7% in the quarter. Our performance reflected solid underlying demand with continued strength in our GI business. The strength of our portfolio and commercial teams enables us to help our customers navigate a complex operating environment.

Service continued its streak of outperformance, growing 10% in the second quarter. Consumables grew 10%, benefiting from increased customer consumption and driven by share gains, procedural growth in endoscopy, and, to a lesser extent, a recent acquisition of GI products. Healthcare capital equipment revenue increased 4% in the quarter, also benefiting from a recent acquisition. Orders remained stable with 1% growth in the second quarter and our ending backlog increased to $456 million.

EBIT margins for Healthcare in the quarter decreased 110 basis points to 24%. Improvements in volume and price were more than offset by inflation, lower productivity and longer-term investments we have accelerated on the back of tariff refunds. Turning to AST, constant currency organic revenue grew 5% for the quarter, with 5% growth in services as reported or 6% constant currency. We ended the quarter on solid ground and early indications suggest that October is holding those gains. EBIT margins for AST were 44.7%, a decrease of approximately 60 basis points from the second quarter of last year. The decline reflected increased depreciation and inflation, somewhat offset by improved pricing.

Constant currency organic revenue increased 18% for Life Sciences for the quarter. Supporting that growth, capital equipment grew 53% and consumables increased 9%. Service revenue grew 5% reflecting strong shipments. Backlog was $93 million at quarter end, down a bit from prior year. Margins were a record 44.4%, an increase of approximately 310 basis points reflecting improvement in volume, price, productivity and favorable mix. Reshoring and localization of manufacturing are benefiting our Life Sciences segment.

Before we turn to the outlook, I do want to discuss our recently announced agreement to acquire Exodus Medical, a surgical specialties products business focused on patient and staff safety. Exodus Medical is a natural complement to our Healthcare portfolio, expanding our consumables offering in the way we support customers in the operating room. The business is well known for its flagship Pink Pad, a single-use surgical patient positioning product, but its portfolio is much broader.

The products span patient positioning, patient handling and transfer, patient warming and operating room essentials. This highly clinical, single-use portfolio will strengthen our recurring revenue and expand our direct commercial presence in the OR. Exodus has consistently demonstrated impressive growth, driven by a steady stream of innovation and a highly effective commercial model. Our go-forward model reflects maintaining revenue growth in the mid-teens and EBIT margins in the low to mid-50s.

The competitive clinical position is well defined and supported by clinical studies, AORN guidelines and a solid innovation pipeline, as well as intellectual property protection for core products. We are very excited about the opportunities ahead as our companies align to better serve customers. Shifting gears to outlook, based on our second quarter results and our expectations for the remainder of the year, we are updating our outlook for fiscal 2027. Our total company revenue growth expectations remain unchanged, including as-reported revenue growth of 7 to 8% and constant currency organic growth of 6 to 7%. Our fiscal 2027 earnings per diluted share outlook has been increased to $11.00 to $11.55 compared with our prior range of $11.10 to $11.30.

This includes approximately $0.18 per share benefit from tariff refunds year to date in fiscal 2027. The additional increase in outlook was driven by second quarter outperformance and lower interest. From a segment perspective, we continue to expect Healthcare constant currency organic revenue growth of 6 to 7%. We now expect AST growth of 6 to 7%, compared to 7 to 8% previously. Based on the strong first half, we are increasing Life Sciences’ constant currency organic growth outlook to 9 to 10% compared with 6 to 7 previously. This reflects a return to more normalized growth in the second half of the year and the outperformance in the first half led by capital equipment.

All other elements of our most recently provided outlook remain unchanged, but as a reminder, this outlook does not include Exodus Medical and we will update our expectations at close. This is a very exciting time at Steris. The business continues to perform very well and we are able to prioritize investments in the business that will support our growth for years to come. I want to thank all of our associates for continuing to do what they do best: focus on our customers and strive to do a little better each day. That concludes our prepared remarks for the call. Nick, would you please give the instructions and we can begin the Q&A.

OPERATOR

Thank you. We will now begin the question and answer session. To ask a question, you may press star one on your touchtone phone. If you are 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. At this time, we’ll pause momentarily to assemble the roster. The first question will come from Brett Fishman with KeyBank.

Please go ahead.

Brett Fishman (Analyst at KeyBank)

Hey guys, thank you so much for taking the questions and good morning. Maybe just starting with the acquisition of Exodus Medical. Definitely seems like a nice fit for Steris and was just curious if you could discuss a little bit more, you know, than what you provided on, you know, why this was particularly attractive for the company and then just more broadly how you think about this new call point as a longer term opportunity for the healthcare business.

Daniel Carestio (President and CEO)

Thanks, Brett, appreciate the question. Yeah, we’re very excited about the planned acquisition of Exodus and you mentioned it, but it gives us a new call point and a real clinical sales force, you know, in the OR, which we really don’t have today. I mean, when we sell our surgical infrastructure, our capital products, lights and tables and ORI, that’s more on a build-type, architectural-type sale. This really gives us an everyday call point and a reason to be in the operating room, which is, you know, the beginning of reprocessing or the end of reprocessing, depending on how you look at it in the total perioperative loop.

So they have great products, they’re high margin, high growth and consumable and have had a great trajectory of performance for seven, eight years now. I would say the product has a lot of customer acceptance and appreciation. It’s supported by AORN and we just think it’s going to be a great add for Steris.

Brett Fishman (Analyst at KeyBank)

All right, awesome, awesome. And then maybe just one more question on the guidance. I think, you know, the ASC topic has, or, sorry, the Applied Sterilization Technologies topic has just been a little bit of a conversation and you know, you had a competitor talking about some incremental headwinds in Europe around just overall activity levels. So I was curious if the change to guidance, the slight change to guidance is more to do with continued inventory dynamics or if you’re also seeing some type of slowdown or weakening in any particular geographies.

Thank you so much.

Daniel Carestio (President and CEO)

Sure thing, Brett. So what I would say is this. We had a slow start to the year based on really difficult comps as we started in the Q2, which we just ended. Obviously we saw that improve especially in September and those improvements continued through in October. So we feel pretty confident in the back half that we’re going to be, you know, somewhere in the 6 to 8% growth for that side of the business. And that’s supported by the numbers we’ve seen thus far.

I would not say there’s a region. In fact, we obviously do listen to the others’ reports and we actually had as good or better growth in Europe last quarter than we did in North America. So I think it’s just pockets of different customers and things that happen that cause some things. So I wouldn’t read too much into that. In terms of general volume in the U.S., you know, we said this before, we expect it to be procedural growth at the lower end of the range, which is somewhere around 3%, instead of the high end of that range, which can be 5%, which drives consumption of all of our businesses for the most part.

Brett Fishman (Analyst at KeyBank)

All right, thank you so much again. Appreciate it.

OPERATOR

The next question will come from Patrick Wood with UBS. Please go ahead.

Patrick Wood (Analyst at UBS)

Amazing. Thanks, guys. Maybe for the first one, just to jump on AST again, as volumes start coming back, where are we at very roughly or qualitatively in terms of utilization? I’m sure EO is pretty tight, but obviously things like Gamma, the fixed costs of the half-life, that side of things, you can get a lot of talk as volumes begin coming back, moving through the P&L on margins. So, like, are we going to see, as volumes begin to come back, a little bit of leverage coming through on those facilities?

I’m not sure where utilization sits today versus history. Thanks.

Daniel Carestio (President and CEO)

Thanks, Pat, this is Dan. Well, total utilization across the network is pretty high, but we have room effectively everywhere because the volumes are slightly less aggressive than what we thought they were going to be at the beginning of the year. So as volumes do come back on the existing infrastructure that we have in place and capacity that we have installed—because we never slowed our isotope loading or anything like that, because if you miss it, you miss it forever—so we’ve kept up with our loadings, we have adequate capacity to take on the increased demand as it flows through.

And yes, you’re right, the difference of a couple percentage points, it makes an awfully big difference in terms of drop-through at the margin line. And some of that’s offset that we’ve got some new facilities that are in ramp-up mode. So those obviously aren’t contributing margin at the same level as a very mature facility. So that has somewhat of a dilutive effect. But those are, for the most part, already in the P&L. And so any improvement in volume should show through.

Patrick Wood (Analyst at UBS)

Super clear. Thank you. And then just quickly on the healthcare business, obviously of the capital equipment line, a chunk of it is essentially not optional, obviously, because you’re going to have to be sterilizing, but you have some that’s a little bit more surgically connected on that side. And I guess maybe it’s a bit off the beaten path, but the 340B reform rules were kind of finalized—it looked like last night. We’re all debating on what effect that could have on hospitals or those hospitals’ P&Ls that were relying on it a little bit.

I don’t know. Have you heard anything from customers in terms of their CapEx outlook, whether that would affect them or is it just more of the same?

Daniel Carestio (President and CEO)

It’s more of the same. In fact, we actually had a really great order quarter on our surgical products this past quarter. So. And there’s a bit of a shift going on in healthcare today where the plan is, as our population ages here domestically anyways, hospitals are going to have to push healthy patients out to their ASC networks for procedures and they’re going to have to take higher acuity patients into the large acute care facilities, which are going to require more capacity in those locations.

So we haven’t seen any slowdown on the capital whatsoever. Our backlog in healthcare is pretty much near record if you exclude the supply chain crisis a few years ago, but so we feel pretty good about that. Thanks Todd. I’ll shut up now. Thanks Patrick.

OPERATOR

The next question will come from Mac ETOG with Stephens. Please go ahead.

Mac ETOG (Analyst at Stephens)

Hey, good morning and thank you for taking my questions. Maybe just starting on the Life Sciences segment, you previously disclosed that onshore could be more of a longer-term benefit. But given some of your prepared remarks, can you just expand on what you’re seeing today and how you’re thinking around some of these broader macro factors are developing versus maybe at the start of the year.

Daniel Carestio (President and CEO)

Yes, I think the difference today is that some of the plans that were previously announced by our customers for expansion in the U.S. and also some of the juxtaposition of manufacturing in Europe were just that. But now they’re starting to materialize and we’re starting to see orders from a capital equipment perspective, but also we’re starting to see requests for work on our chemistry side of the business as well. Now having said that, this past quarter was the outperformance there. You know, we had a great order shipments quarter, but there was one particular order that really made a big difference that was in excess of $10 million for a single customer. So that one won’t be replaced on a quarterly basis, but nonetheless, we expect great performance by Life Sciences throughout the end of the year.

Mac ETOG (Analyst at Stephens)

Got it. I appreciate that. And then maybe just quickly touching on tariffs as well. I think y’all cited 24 million as being the total pool of available tariff refunds for the year. Has that shifted at all? Is the available pool widened? I know you’re not factoring anything additional in the guide, obviously, but I just want to get a sense there.

Karen Burton (VP & CAO)

Thanks, Mac. Yeah, this is Karen. The tariffs that we have received of 24 million is what we expect to receive. The total IPA tariffs paid last year were 27. So we’ve got about 3 million where there’s just no refund program right now to recoup those. So we are not projecting receipt of those.

Mac ETOG (Analyst at Stephens)

Thank you for taking my questions

OPERATOR

If you have a question, please press star and then one. The next question will come from Michael Pollard with Wolfe Research. Please go ahead.

Michael Pollard (Analyst at Wolfe Research)

Good morning. Thank you for taking the questions. Dan, curious if you could bridge Healthcare consumables growth. I know there’s small M&A flowing through, but 7% last year—call it high single digits solidly year to date—with AST volumes being muted. What’s the disconnect there? Why is Healthcare consumables growth kind of growing at a much higher rate, and AST volumes still kind of seem tempered.

Daniel Carestio (President and CEO)

There’s an easy explanation, Mike. So the reality is, over the last few years, we’ve placed an awful lot of dedicated chemistry equipment out there. And, you know, those are things like V-PROs and our washers and obviously AERs. And as a result, that share gains that we’ve been delivering on the capital side is now converting into consumables growth. In addition to that, you know, a lot of our chemistries franchise and consumables in Healthcare is weighted towards endoscopy. It’s the chemistry that goes through our automatic endoscope processors. And we’ve had a really great year thus far on placements of new machines. And in addition to that, the general growth rate of endoscopy has remained strong. When I talk about general growth rate, I mean procedures has remained mid to high single digits consistently.

So there’s a bit of a bias in our Healthcare consumables business towards endoscopy.

Michael Pollard (Analyst at Wolfe Research)

I’ll follow up on that. That was one of my other topics. So heard. Yes. Just now and then in your prepared remarks the GI enthusiasm reaffirmed—there is a competitor there that has some challenges in the U.S., Olympus. I’ll say the name so you don’t have to. Obviously you don’t sell scopes, but they sell their processors and maybe some accessories. And has that been a benefit worth spiking out in your GI business or—

Daniel Carestio (President and CEO)

Mike, it’s been a benefit, but it’s minor. I mean, it’s been a quarter or two of improved AER sales, but, I mean, there’s an awful lot of those machines out there still. So over time we’ll continue to do well, I’m sure. But like I said, it’s incremental help, but it’s been insignificant in the grand scheme of things.

Michael Pollard (Analyst at Wolfe Research)

Thank you.

OPERATOR

The next question will come from Mike Mattson with Needham and Co. Please, go ahead.

Mike Mattson (Analyst at Needham & Co.)

Yeah, thanks. So, just want to ask another one on Exodus Medical. By our rough math, it seems like this could be a fairly accretive acquisition to EPS. I mean, we’re coming up with kind of 3 to 5% EPS accretion on an annual basis. I mean, this business has extremely high operating margins. I don’t know if you’re willing to comment on that or I assume maybe you’ll give us more information when you actually close the deal.

Karen Burton (VP & CAO)

Yes, Mike, this is Karen. We will give updated guidance once we close the deal. And certainly we expect it to be accretive, top to bottom, revenue, margins and EPS. I would encourage you to make sure you’re including all of the interest costs as we are funding this deal with debt.

Mike Mattson (Analyst at Needham & Co.)

Okay. Yeah, I mean, we were assuming around like a 6% interest rate. Does that sound in the ballpark?

Karen Burton (VP & CAO)

It certainly does.

Mike Mattson (Analyst at Needham & Co.)

Okay. All right. And then there was some commentary earlier in September at an investor conference about destocking in the AST business by your customers. So I think you’ve kind of addressed that in a way by saying you saw it get better in October, but just wanted to see if you could elaborate on that commentary a little bit. Thanks.

Daniel Carestio (President and CEO)

Yeah, sure, Mike. Thanks. Yeah, I think at this point we’re confident to say that destocking has ended. We think it washed itself out in the last quarter that we just completed. And then we’ve seen more normalized growth at the back end of that quarter. And then we have pretty good revenue growth in October, which we normally don’t hit on. But given it’s relevant as to what we’ve been saying for the last six months—first half’s going to be tough, and then we got easier comps in the second—we’re confident in delivering that message.

Mike Mattson (Analyst at Needham & Co.)

Okay, thank you.

OPERATOR

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

Jason Bednar (Analyst at Piper Sandler)

Hey, good morning everyone. Thanks for the questions. I’m going to try one here on AST. That’s a little bit of a follow-up to some other questions, but just for clarity. So your change in growth guidance here, it’s a function of some softer procedure volumes, I think. But can you put a finer point on what you’re expecting in guidance with respect to volume growth across your US and European customers? Are you assuming the better volume growth, the better performance in the business that you referenced, Dan, in September and October, that that persists for the rest of your fiscal year?

What’s the sensitivity on improving or softening from here, knowing that the macro still has a layer of uncertainty to it?

Michael Tokich (Sr. Vice President)

Yeah, honestly, Jason, thanks for the question. It’s kind of simple math. And what I mean by that is last year, first half of the year that we were comparing to, we grew over 10%. Right. And then that slowed significantly if you go back and look at the constant currency organic numbers to, you know, mid to low single digits. So just the comps and growth become a lot easier to get to as we started seeing destocking in the third quarter of last year.

So as a result of that, and based on what we think is a very stable healthcare operating environment right now, we’re confident that against those easier comps, we should be able to deliver much higher than we did in the first half.

Jason Bednar (Analyst at Piper Sandler)

All right, maybe one follow-up to that and then I got a separate question. But I think a lot of investors are really trying to understand like a little bit of the sell-in, sell-out dynamic and what you’re seeing and understanding you’re a layer removed from the sell-out, if you will, the actual procedure volumes. I mean, are you seeing anything different that’s shifting just because there is a lot of information that’s flowing out there suggesting some softer volume.

So I guess just again trying to understand if there’s anything there and then the separate question here, maybe. Karen, this is for you. Can you talk about what’s stimulated on the restructuring program? Just strategically it seems like these are maybe becoming a little bit more common the last few years. Is something changing with respect to how you’re approaching operations and your portfolio?

Daniel Carestio (President and CEO)

Thanks, Jason. I’ll start on your question on the volumes. You know, you used the word softer volumes. And I think this is way, way overplayed. I mean the fact of the matter is that there are some highly elective procedures that have been and will get deferred. And some of our peers in different segments of highly elective products have talked about that. Some have contradicted each other as well in terms of what they’re seeing. So I think that is what it is right now.

There’s still great growth going on in healthcare in terms of general procedures. I’ve said, and I’ve been clear that it’s at the low end of the range, meaning if we always sort of assume somewhere between 2.5, 3 and 5% procedure growth rate, especially from North America, we’re probably down towards 3% right now, you know, but it’s still growth rate. Right? It’s not negative or flat. And we have a mountain of data from all the sterile processing departments that we run across North America and the UK and other places in Europe that says that the number of trays and consumption is up.

So based on everything that we’re looking at, although there’s economic stress, clearly for our customers in particular in North America, there’s still high level of demand.

Karen Burton (VP & CAO)

All right, Jason, I will talk to you a bit about restructuring. So the new plan is targeted in terms of, you know, some smaller actions that would include some key components like elimination of a single-use urology scope from our product portfolio. So the costs include disposal of inventory, termination of supply contracts, impairment of intangible assets. Another key component is some small site consolidation, including transition of production of our sterility assurance products to the new Mentor manufacturing site that was announced early in fiscal 26.

The plan that was announced in August in conjunction with the announcement of the Formulated Chemistry Center of Excellence was 100% focused on that action and the impact of that Center of Excellence. So we kept these other actions separate so that it was clear, you know, what we were doing and the timing of those actions. And as you said, this is a little bit unusual for us. We’ve got two announced this year. We had the Bordeaux restructuring a couple of years ago now.

And I would say when you link those together, what you’re seeing is a focus on really challenging our portfolio and our manufacturing and distribution network. And that’s the key driver behind all three of these plans.

Jason Bednar (Analyst at Piper Sandler)

All right, thank you both.

OPERATOR

The next question is a follow-up from Michael Pollard of Wolfe Research. Please go ahead.

Michael Pollard (Analyst at Wolfe Research)

Thank you for taking the follow up. One more on life sciences. Look, I heard the comment, Dan. One large order, $10 million, loud and clear. But it was 18% segment growth, 50% in capital something was good. You said onshoring, localization of supply chains heard. We know that’s a megatrend. I would say the feedback from bioprocessing as an example somewhat mixed and still slow going. So I want to ask if you think there could be something else here.

And the other topic in tools land is these so-called self-driving labs as Claude starts doing experimentation. And my joke is Claude will make the beakers dirty too and someone will have to clean them. Do you see evidence that that kind of theme is an opportunity for life sciences beyond reshoring? Thank you.

Daniel Carestio (President and CEO)

Thanks, Mike. Yeah, we do see that as an opportunity clearly. But I would say it’s not something that’s registering yet in our order book or anything like that. But as that trend does continue, I think the way we produce aseptic pharmaceuticals will change over time and I think that Steris will be in a great position to adapt to that. So I think what we’re seeing on the life science order intake and shipments as it relates to capital is just some pent-up demand too from a couple years of under-buying in the pharmaceutical sector.

And now there’s just a little bit of catch up. So we’re getting a benefit from that.

OPERATOR

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Julie Winter for any closing remarks.

Julie Winter (Investor Relations)

Thank you all for taking the time to join us this morning to learn more about the quarter and our outlook for the year. We do have quite a few conferences coming up this fall and look forward to seeing many of you on the road.

OPERATOR

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.