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. 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.

Thank you, Julie, and good morning, everyone. It is my pleasure to be with you this morning to review the highlights of our third quarter performance from continuing operations.

For the third quarter, 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. The adjusted effective tax rate in the quarter was 24.2%, a small decline from 24.5% in the third quarter 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.

Free cash flow for the first 9 months of fiscal 2026 was $737.6 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.

Thanks, Karen, and good morning, everyone. Thank you for joining us to hear more about our third quarter performance.

Karen covered the quarter at a high level, I will add some commentary on our segments. Starting with Healthcare, constant currency organic revenue grew 8% for the third quarter with growth across all categories.

Service continued its streak of outperformance, growing 11% in the third quarter. 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, 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 the third quarter of last year as the additional pricing and volume were more than able to offset increases in labor and 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. 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 pretax 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. We are pleased with our performance year-to-date, delivering constant currency organic revenue growth in high single digits and double-digit 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?

Hello, good morning. Thank you very much for taking the questions.

Just was hoping maybe at a high level, company-wide, you could just touch on how you're thinking about fourth quarter constant currency growth, just thinking about you're kind of tracking a little bit above the high end of the 7% to 8% FY '26 range and maintained 7% to 8% for the year. Just kind of wondering if there's any incremental concerns or temporary items impacting 4Q, or maybe if it sets up as we should be thinking about at the higher end or potential upside.

Thank you.

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, and 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, 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.

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 the third quarter. We would expect continued slowing in that business in the fourth quarter.

All right, perfect. Thank you very much.

Then maybe just one more from me. I was just interested to hear maybe a little bit more about what you're seeing around capital equipment backlog activity in both segments.

I think the Healthcare backlog is showing stability kind of in the same range it's been the last couple quarters, but seeing some pretty strong growth out of the Life Sciences backlog. Just any thoughts on kind of what's going on there would be appreciated.

Thanks again.

Brett, this is Dan. The Life Science one is easy because that's just a recovery comparison to where we were a little over a year ago when Pharma wasn't spending as much and we started booking strong orders Q3 last year and that's continued and it continues today and as those continue to flush out, we're just in a much better spot from a macro perspective than we were a little over a year ago.

That's positive. On the Healthcare side, we've had strong orders all year.

We're down 1% versus prior year, which was a blowout year in terms of order intake, we have not felt any meaningful slowdown as it relates to capital spending. I go back to what I've said many times is 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, etc.

We've been fairly resilient whereas I know maybe some others have seen some capital slowdown.

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 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.

I'd say in general, Matt, 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. Clearly there's been some pretty big announcements in the last few months in North Carolina and Pennsylvania and other states that have got commitments to build large new processing capacity.

Fortunately for us, a lot of that capacity is aseptic manufacturing type products, which tends to be our sweet spot. It's definitely a positive macro for us right now.

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. All in all, it's been a positive for us.

Appreciate that. Then obviously the $10 million increase in tariff-related costs that popped up on the press release, I'd just like to potentially get an update on your mitigation efforts and get your sense of how you will be able to maybe offset a majority of these costs in FY '27, if that's possible.

Sure. 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 shifting product movement, supplier negotiations, alternative suppliers. Honestly, the hardest work and the biggest part is looking for other cost reductions and ability to offset those costs with productivity improvements, efficiencies in our facilities and across the offices, back office as well.

Hey Matt, this is Julie, just to add on the third quarter and the $10 million for the year is mainly driven by metals, and we see an uptick in metals with more capital equipment sales. The mix shift to capital has a direct impact on the tariff exposure for this year.

I appreciate the color. Thank you all.

Good morning. Thank you.

I'll stay on tariffs and then I want to shift to AST. Just on tariffs, can you remind the $55 million that's now in the guidance, is that 6 months, just December and March, or was there an impact in the September quarter as well?

I ask just because I'm trying to understand how much we'll need to annualize

We were $16 million in the third quarter, Mike, and we would expect that to step up a little bit in the fourth. The $55 million is an annual run rate for fiscal '26 and we have been incurring tariffs every quarter.

Hi guys. Two kind of both on the macro regulatory side.

CMS had two different proposals. There was obviously the PPE sort of onshoring, 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 affect you guys in a positive way. Then the other one was another CMS 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 do you view that ASC shift as a good thing or a bad thing for you guys?

Sure Patrick. This is Dan.

Nice to hear from you. I would say that 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 largely be an AST play, right, in terms of PPE that needs that sterile drape and gown type stuff. I've read about it, but I haven't seen any impact from it at this point.

In terms of your question on the API relocation, I have not seen an impact on that yet either.

No, that's helpful. Then just very quickly as a follow-up, 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.

A more integrated model and competing a little bit more aggressively in EMEA, is that still something that's on the cards?

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.

Awesome. Thanks, Dan.

Thanks. I wanted to follow up on Mike Polark's question on the tariff exposure in '26.

I think maybe what he was trying to get at was what's the incremental exposure in '27. 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 '26, does that imply that kind of any incremental tariff impact in '27 will be small, less than a quarter's worth effectively or See,

I think that's a logical approach. Obviously the tariffs did fluctuate during the year, especially in the first half of our year as rates settled in.

We're seeing it come through and reflected in the different mix, but I think it's reasonable to say that it wouldn't be more than another quarter's worth kind of level. At least on current tariffs.

Thanks.

Yes,

[unclear] today. Understood.

Under current clarification

what's in place right now.

Okay. Then just your leverage ratio is at just over 1 times.

I think it's been a few years since you've done any acquisition, it used to be a pretty big part of the STERIS story. Maybe why haven't you been doing more deals and do you have a pipeline of things that you're looking at and can we expect to see more in the next few years?

We've been active on smaller sort of bolt-on product acquisitions and some channel acquisitions over the last couple years. 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. 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.

Okay. That's a good way to put it.

Thank you.

Good morning, everyone. I got to follow the frog kissing comment here.

I'm going to start with cash flow guidance here. You left that unchanged, but look based on where you're at for the first 9 months, that target just looks like a layup.

I guess why not bump that higher? 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?

Hi, Jason. I think you're right.

We are very confident with that guidance. A lot of times in the fourth quarter, timing really matters.

We've got a heavy capital quarter. Some of that activity will shift into next year in terms of cash collections.

It's a little bit harder to predict in the fourth quarter, especially since it is winter and weather can play a part. A little bit of conservatism there.

Okay. All right, fair enough.

Then for a follow-up, I did want to peek a little bit ahead to fiscal '27. 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 '26? I know heard today about tariffs and kind of the impact on tariffs in fiscal '27, but any other considerations we should have in mind, whether it's top-line or margin-related?

Obviously we're in the throes of our planning period right now, but I would say that general sense, the macros don't look negative to us right now. Obviously next quarter we're going to give you guys some solid guidance of where we think we're going to land in fiscal '27, but at this point I don't see a lot of downside or anything materially changing in the market today.

All right, perfect. Thanks.

Hey, good morning. Can you hear me?

Yes. Yes, now.

I'm so sorry. What happened earlier, I don't know.

It just dropped and took me a bit to get back. My follow-up I We thought we Yeah.

My follow-up was going to be on AST Services, if somebody asked this, and you answered it, I missed it. Just in the quarter, on constant FX, AST Services line up 6%, the prior two quarters was up 10% constant FX, if that makes some assumptions on the math.

Can we just get a little extra color on kind of how you've seen the fiscal year play out in AST, why that December quarter might have been a little bit below the prior two, and what's a good way to think about constant FX AST Services growth in this current March quarter? Thank you.

Sure. What I would say is, Mike, we kind of had a strange start to the quarter.

We don't get into talking about months sequentially, but October was really weak, and then it got better in November, and then we had a really strong December. There's nothing I can point to.

There wasn't anything uniquely geographic. There wasn't any customer subsegment 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 seems to have had righted itself by December.

If I can just follow up there and then I'll cede, for several quarters now we've been asking about just the tariff impact, 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 movements?

There was speculation and it's 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.

Thank you, Dan. I'm sorry again about the snafu earlier.

No issue.

Thank you, everyone, for taking the time to join us this morning to hear more about our performance in the quarter. We look forward to seeing many of you on the road in March.