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What You'll Want to Know About Steris' Solid Q4 Earnings Results

Keith Speights, The Motley Fool

The last time Steris (NYSE: STE) announced its quarterly results, investors had some reasons to smile. Revenue increased 5% year over year while adjusted earnings were up by 11%.

Those smiles should have gotten even bigger when Steris announced its Q4 results after the market closed on Monday. Here's what you need to know from the healthcare company's quarterly update.

A man and woman in lab coats and one woman in scrubs looking at a chart.

Image source: Getty Images.

By the numbers

Steris' top-line performance improved in the fourth quarter. Revenue jumped 7% year over year to $768.2 million. Analysts estimated that the company's revenue for the fourth quarter would come in at $738.5 million.

The company's bottom line looked good in the fourth quarter as well. Steris reported net income of $108.7 million, or $1.27 per share, on GAAP basis, compared to $73.6 million, or $0.86 per share, in the same period in 2018.

Steris' adjusted net income in the fourth quarter was $131.1 million, or $1.53 per share. This reflected a 23.9% jump over the prior-year period when the company announced adjusted net income of $105.8 million, or $1.24 per share. It was also better than the consensus analysts' adjusted earnings estimate of $1.43 per share.

Behind the numbers

All four of Steris' business segments performed well in Q4. Healthcare specialty services delivered the strongest growth, with sales jumping 11% to $135.5 million. The company attributed the solid increase to "additional volume and improved productivity."

Healthcare products segment revenue grew 7% year over year to $386.6 million. Increased volume, favorable mix, and operating efficiencies contributed to the segment's performance.

Revenue for Steris' applied sterilization technologies segment increased 7% over the prior-year period to $143.1 million, with growth due primarily to an increase in medical device customer volume. The company's life sciences segment sales grew the least, with sales up 1% year over year to $103 million. Steris stated that growth in consumables and service revenue drove the small revenue increase.

Free cash flow for the company in Q4 increased to $355.4 million compared to $294.3 million in the prior-year period. This increase was primarily due to improved cash from the company's operations, although higher capital expenditures offset this increase somewhat.

Looking ahead

Steris expects that constant currency revenue growth for fiscal 2020 will be between 5% and 6%. The company anticipates adjusted earnings per share (EPS) to be between $5.28 and $5.43.

CEO Walt Rosebrough stated that the company anticipates that fiscal 2020 will be "another record year resulting from underlying demand and new products and services." Steris also expects that cash from operations for fiscal 2020 will grow. The company plans to invest its cash significantly to expand global capacity in its applied sterilization technologies segment.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.