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8-K - FORM 8-K - Hill-Rom Holdings, Inc. | c16134e8vk.htm |
Exhibit 99.1
CONTACT INFORMATION
Investor Relations | ||
Contact:
|
Blair A. (Andy) Rieth, Jr., Vice President, Investor Relations | |
Phone:
|
812-931-2199 | |
Email:
|
andy.rieth@hill-rom.com | |
Media | ||
Contact:
|
Marylou McNally | |
Phone:
|
312-819-7233 | |
Email:
|
marylou.mcnally@hill-rom.com |
HILL-ROM REPORTS 64 PERCENT GROWTH IN
SECOND QUARTER ADJUSTED EARNINGS PER SHARE
SECOND QUARTER ADJUSTED EARNINGS PER SHARE
| Revenue of $402 million grew 13 percent versus prior year | ||
| Adjusted diluted earnings per share were $0.54 compared to $0.33 in the prior year, an increase of 64 percent | ||
| Reported diluted earnings per share were $0.52 compared to $0.38 in the prior year, an increase of 37 percent | ||
| Adjusted operating margin increased 250 basis points to 12.7 percent | ||
| Fiscal year 2011 financial guidance increased: Constant currency revenue is now expected to grow 7 to 8 percent and earnings are expected to be $2.26 to $2.32 per diluted share, excluding special items |
BATESVILLE, Ind., April 27, 2011 /PRNewswire-FirstCall/ Hill-Rom Holdings, Inc. (NYSE: HRC),
announced strong financial results for its fiscal second quarter ended March 31, 2011 and updated
its outlook for 2011. Net income increased 37 percent to $33 million compared to $24 million in the
second quarter of the prior year. Earnings per diluted share also increased 37 percent in the same
period, to $0.52 from $0.38. Adjusted earnings per diluted share increased 64 percent during the
period, to $0.54 from $0.33. The improved financial performance was primarily the result of
increased revenue, gross margin expansion, selling and administrative expense leverage and a lower
tax rate.
Hill-Roms quarterly revenue of $402 million increased 13 percent on a reported basis and 12
percent on a constant currency basis compared to last year. Domestic revenue increased 5 percent
to $266 million and international revenue increased 31 percent to $136 million in the same period.
Excluding the impact of foreign currency, Hill-Roms international revenue increased 27 percent.
Management Comments
We are pleased to report another quarter with strong sales and earnings growth, along with
continued operating margin expansion compared to last year stated John J. Greisch, President and
CEO of Hill-Rom. This quarters results include a number of one-time expense items as well as a
13 percent increase in R&D spending, reflecting our commitment to increased investment in
innovation. We have raised our outlook for the full year based on the strong momentum in our North
America Acute Care business.
Second quarter revenue highlights include:
North America Acute Care. North America Acute Care revenue grew 15 percent to $251
million. Capital sales increased 22 percent due primarily to higher sales of patient
support systems, which grew 39 percent. Rental revenue was equivalent to the prior year.
International. International segment revenue, which excludes Canada, increased 12
percent to $99 million. On a constant currency basis, revenue increased 10 percent,
primarily due to volume growth in Europe.
North America Post-Acute Care. North America Post-Acute Care revenue increased 2
percent to $52 million. Capital sales were flat while rental revenue increased 3 percent
versus the prior year. Capital sales were impacted by a decline in our extended care
business while rental revenue increased due to higher sales in our respiratory care
business.
Second Quarter Financial and Operational Highlights
| Adjusted operating margin increased 250 basis points to 12.7 percent, compared to 10.2 percent in the second quarter of last year. Improved gross margin and expense management contributed to the improvement versus the prior year period. | |
| Operating cash flow was $84 million, compared to $28 million in the second quarter of the prior year, driven primarily by increased net income, improved days sales outstanding and timing of tax payments. | |
| The Companys respiratory care business launched the MetaNeb® system for the mobilization of pulmonary secretions and lung expansion therapy. The MetaNeb system has three distinct therapy modes and complements The Vest®, our popular airway clearance system. | |
| A new hip distractor system was recently introduced to facilitate patient positioning and surgical accessibility for hip arthroscopy procedures. | |
| In addition to several one-time expense items, we recognized a special charge of $2.6 million related to changes in original estimates associated with our 2010 fourth quarter restructuring action. |
Please see the attached schedules for additional information, including condensed financial
information, summary balance sheet, cash flow statement and segment sales summaries.
For a more complete review of Hill-Roms results, please refer to our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2011, which will be filed later this week.
Financial Guidance Summary for 2011
The Company increased 2011 financial guidance as follows: Hill-Rom now expects constant currency
revenue growth of 7 to 8 percent, compared to the Companys previous guidance of 5 to 7 percent.
This excludes a currency benefit of approximately 1 percent for the full year if exchange rates
hold near recent levels. The Company is increasing adjusted earnings guidance to $2.26 to $2.32
per diluted share, compared to the Companys previous guidance of $2.18 to $2.26. Cash flow from
operations for the full year is expected to be $230 to $240 million, compared to the prior range of
$225 to $235 million.
Hill-Rom Holdings, Inc. routinely provides earnings per share results and guidance on an adjusted
basis because the Companys management believes that the presentation provides useful information
to investors. These measures exclude strategic developments, special
charges and the impact of significant litigation or other unusual events. Such items may be highly
variable, difficult to predict and of a size that sometimes have substantial impact on the
Companys reported operations for a period. Often, prospective quantification of such items is not
feasible. Management uses these measures internally for planning, forecasting and evaluating the
performance of the business. Investors should consider non-GAAP measures in addition to, not as a
substitute for, or as superior to, measures of financial performance prepared in accordance with
GAAP.
2
Additional assumptions and discussion will be provided during the Companys conference call to be
held tomorrow morning. Information to access the webcast is provided below.
Conference Call Replay and Webcast
The Company will sponsor a conference call and webcast for the investing public at 8:00 a.m. ET, on
Thursday, April 28, 2011. The webcast is available at http://ir.hill-rom.com/events.cfm or
http://ir.hill-rom.com/eventdetail.cfm?eventid=95245 and will be archived on the Companys website
for those who are unable to listen live. A replay of the call is also available through May 6, 2011
at 800-642-1687 (706-645-9291 International). Code 57849293 is needed to access the replay.
ABOUT HILL-ROM HOLDINGS, INC.
Hill-Rom is a leading worldwide manufacturer and provider of medical technologies and related
services for the health care industry, including patient support systems, safe mobility and
handling solutions, non-invasive therapeutic products for a variety of acute and chronic medical
conditions, medical equipment rentals and information technology solutions. Hill-Roms
comprehensive product and service offerings are used by health care providers across the health
care continuum and around the world in hospitals, extended care facilities and home care settings
to enhance the safety and quality of patient care.
Hill-Rom...enhancing outcomes for patients and their caregivers.
www.hill-rom.com
Disclosure Regarding Forward-Looking Statements
Certain statements in this press release contain forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995, regarding the Companys future plans,
objectives, beliefs, expectations, representations and projections. The Company has tried,
wherever possible, to identify these forward-looking statements using words such as intend,
anticipate, believe, plan, encourage, expect, may, goal, become, pursue,
estimate, strategy, will, projection, forecast, continue, accelerate, promise,
increase, higher, lower, reduce, improve, expand, progress, potential or the
negative of those terms or other variations of them or by comparable terminology. The absence of
such terms, however, does not mean that the statement is not forward-looking. It is important to
note that forward-looking statements are not guarantees of future performance, and the Companys
actual results could differ materially from those set forth in any forward-looking statements.
Factors that could cause actual results to differ from forward-looking statements include but are
not limited to: the Companys dependence on its relationships with several large group purchasing
organizations, whether the Companys new products are successful in the marketplace, impacts of
healthcare reform, compliance with federal healthcare programs, collections of accounts receivable,
compliance with FDA regulations, antitrust and other litigation, potential exposure to product
liability or other claims, failure of the Companys announced or future strategic initiatives and
restructuring and realignment activities to achieve expected growth, efficiencies or cost
reductions, adverse consequences resulting from the spin-off of the funeral services business,
failure of the Company to execute its acquisition and business alliance strategy through the
consummation and successful integration of acquisitions or entry into joint ventures or other
business alliances, increased costs or unavailability of raw materials, adverse changes in global
economic conditions or disruptions of credit markets, labor disruptions, the
ability to retain executive officers and other key personnel, and certain tax-related matters. For
a more in depth discussion of these and other factors that could cause actual results to differ
from those contained in forward-looking statements, see the discussions under the heading Risk
Factors in the Companys previously filed most recent Annual Report on Form 10-K and subsequent
Quarterly Reports on Form 10-Q. The Company assumes no obligation to update or revise any
forward-looking statements.
###
3
Hill-Rom Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Dollars in millions except per share data)
Condensed Consolidated Statements of Income
(Dollars in millions except per share data)
Quarterly Period Ended March 31 | Year To Date Period Ended March 31 | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net revenues |
||||||||||||||||
Capital sales |
$ | 278.8 | $ | 236.2 | $ | 535.5 | $ | 467.8 | ||||||||
Rental revenues |
123.3 | 120.9 | 240.8 | 244.6 | ||||||||||||
Total revenues |
402.1 | 357.1 | 776.3 | 712.4 | ||||||||||||
Cost of revenues |
||||||||||||||||
Cost of goods sold |
151.0 | 134.4 | 290.6 | 264.9 | ||||||||||||
Rental expenses |
52.5 | 50.9 | 102.6 | 104.9 | ||||||||||||
Total cost of revenues |
203.5 | 185.3 | 393.2 | 369.8 | ||||||||||||
Gross profit |
||||||||||||||||
Capital |
127.8 | 101.8 | 244.9 | 202.9 | ||||||||||||
Rental |
70.8 | 70.0 | 138.2 | 139.7 | ||||||||||||
Total gross profit |
198.6 | 171.8 | 383.1 | 342.6 | ||||||||||||
As a percentage of sales |
49.4 | % | 48.1 | % | 49.3 | % | 48.1 | % | ||||||||
Research and development expenses |
16.2 | 14.4 | 31.0 | 29.3 | ||||||||||||
Selling and administrative expenses |
130.5 | 120.8 | 250.5 | 242.4 | ||||||||||||
Special charges |
2.6 | 5.0 | 2.6 | 5.0 | ||||||||||||
Operating profit |
49.3 | 31.6 | 99.0 | 65.9 | ||||||||||||
Other income/(expense), net |
(1.4 | ) | (1.9 | ) | (3.5 | ) | (3.5 | ) | ||||||||
Income tax expense |
14.8 | 5.2 | 27.0 | 18.0 | ||||||||||||
Net income |
33.1 | 24.5 | 68.5 | 44.4 | ||||||||||||
Less: Net income attributable to
noncontrolling interest |
| 0.3 | 0.2 | 0.4 | ||||||||||||
Net income attributable to common shareholders |
$ | 33.1 | $ | 24.2 | $ | 68.3 | $ | 44.0 | ||||||||
Diluted earnings per share: |
||||||||||||||||
Earnings per share |
$ | 0.52 | $ | 0.38 | $ | 1.07 | $ | 0.69 | ||||||||
Average common shares outstanding diluted (thousands) |
63,911 | 63,500 | 64,056 | 63,324 | ||||||||||||
Dividends per common share |
$ | 0.1025 | $ | 0.1025 | $ | 0.2050 | $ | 0.2050 |
4
Non-GAAP Financial Disclosures and Reconciliations
While Hill-Rom reports financial results in accordance with U.S. GAAP, this press release includes
non-GAAP measures. These non-GAAP measures are not in accordance with, nor are they a substitute
for, GAAP measures. Hill-Rom uses the non-GAAP measures to evaluate and manage its operations and
provides the information to assist investors in performing financial analysis that is consistent
with financial models developed by research analysts. Investors should consider non-GAAP measures
in addition to, not as a substitute for, or as superior to, measures of financial performance
prepared in accordance with GAAP.
Hill-Rom Holdings, Inc. and Subsidiaries
Revenues Constant Currency
(Dollars in millions)
Revenues Constant Currency
(Dollars in millions)
Quarterly Period Ended March 31 | ||||||||||||||||||||
2011 | Foreign Exchange | 2011 | 2010 | Constant Currency | ||||||||||||||||
As Reported | Impact | Adjusted | As Reported | Change | ||||||||||||||||
Capital sales |
$ | 278.8 | $ | 3.1 | $ | 275.7 | $ | 236.2 | 16.7 | % | ||||||||||
Rental revenues |
123.3 | 0.2 | 123.1 | 120.9 | 1.8 | % | ||||||||||||||
Total |
$ | 402.1 | $ | 3.3 | $ | 398.8 | $ | 357.1 | 11.7 | % | ||||||||||
Acute Care |
$ | 251.3 | $ | 1.7 | $ | 249.6 | $ | 217.7 | 14.7 | % | ||||||||||
Post-Acute Care |
52.2 | | 52.2 | 51.1 | 2.2 | % | ||||||||||||||
International |
98.6 | 1.6 | 97.0 | 88.3 | 9.9 | % | ||||||||||||||
Total |
$ | 402.1 | $ | 3.3 | $ | 398.8 | $ | 357.1 | 11.7 | % | ||||||||||
Year To Date Period Ended March 31 | ||||||||||||||||||||
2011 | Foreign Exchange | 2011 | 2010 | Constant Currency | ||||||||||||||||
As Reported | Impact | Adjusted | As Reported | Change | ||||||||||||||||
Capital sales |
$ | 535.5 | $ | 0.4 | $ | 535.1 | $ | 467.8 | 14.4 | % | ||||||||||
Rental revenues |
240.8 | (0.6 | ) | 241.4 | 244.6 | -1.3 | % | |||||||||||||
Total |
$ | 776.3 | $ | (0.2 | ) | $ | 776.5 | $ | 712.4 | 9.0 | % | |||||||||
Acute Care |
$ | 469.4 | $ | 2.2 | $ | 467.2 | $ | 423.3 | 10.4 | % | ||||||||||
Post-Acute Care |
104.5 | | 104.5 | 103.7 | 0.8 | % | ||||||||||||||
International |
202.4 | (2.4 | ) | 204.8 | 185.4 | 10.5 | % | |||||||||||||
Total |
$ | 776.3 | $ | (0.2 | ) | $ | 776.5 | $ | 712.4 | 9.0 | % | |||||||||
5
Hill-Rom Holdings, Inc. and Subsidiaries
Reconciliation: Earnings Per Share
(Dollars in millions except per share data)
Reconciliation: Earnings Per Share
(Dollars in millions except per share data)
Quarterly Period Ended March 31, 2011 | Quarterly Period Ended March 31, 2010 | |||||||||||||||||||||||
Income Before | ||||||||||||||||||||||||
Income Before | Income Tax | Income Taxes | Income Tax | |||||||||||||||||||||
Income Taxes | Expense | Diluted EPS* | and NCI | Expense | Diluted EPS* | |||||||||||||||||||
GAAP Earnings |
$ | 47.9 | $ | 14.8 | $ | 0.52 | $ | 29.7 | $ | 5.2 | $ | 0.38 | ||||||||||||
Adjustments: |
||||||||||||||||||||||||
Vendor product recall |
(0.8 | ) | (0.3 | ) | (0.01 | ) | | | | |||||||||||||||
Special charges |
2.6 | 1.0 | 0.03 | 5.0 | 1.7 | 0.05 | ||||||||||||||||||
Tax settlement |
| | | | 6.5 | (0.10 | ) | |||||||||||||||||
Adjusted Earnings |
$ | 49.7 | $ | 15.5 | $ | 0.54 | $ | 34.7 | $ | 13.4 | $ | 0.33 | ||||||||||||
Year To Date Period Ended March 31, 2011 | Year To Date Period Ended March 31, 2010 | |||||||||||||||||||||||
Income Before | Income Before | |||||||||||||||||||||||
Income Taxes | Income Tax | Income Taxes | Income Tax | |||||||||||||||||||||
and NCI | Expense | Diluted EPS* | and NCI | Expense | Diluted EPS* | |||||||||||||||||||
GAAP Earnings |
$ | 95.5 | $ | 27.0 | $ | 1.07 | $ | 62.4 | $ | 18.0 | $ | 0.69 | ||||||||||||
Adjustments: |
||||||||||||||||||||||||
Vendor product recall |
(0.8 | ) | (0.3 | ) | (0.01 | ) | | | | |||||||||||||||
Special charges |
2.6 | 1.0 | 0.03 | 5.0 | 1.7 | 0.05 | ||||||||||||||||||
Tax settlement |
| | | | 6.5 | (0.10 | ) | |||||||||||||||||
Adjusted Earnings |
$ | 97.3 | $ | 27.7 | $ | 1.08 | $ | 67.4 | $ | 26.2 | $ | 0.64 | ||||||||||||
* | May not add due to rounding. |
6
Hill-Rom Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in millions)
Condensed Consolidated Balance Sheets
(Dollars in millions)
March 31, 2011 | September 30, 2010 | |||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 235.2 | $ | 184.5 | ||||
Trade accounts receivable, net of allowances |
366.6 | 353.1 | ||||||
Inventories |
115.8 | 108.5 | ||||||
Other current assets |
78.1 | 93.1 | ||||||
Total current assets |
795.7 | 739.2 | ||||||
Property, plant and equipment, net |
230.2 | 243.7 | ||||||
Goodwill |
81.1 | 81.1 | ||||||
Other assets |
173.8 | 181.6 | ||||||
Total Assets |
$ | 1,280.8 | $ | 1,245.6 | ||||
Liabilities |
||||||||
Current Liabilities |
||||||||
Trade accounts payable |
$ | 72.5 | $ | 80.6 | ||||
Short-term borrowings |
104.3 | 53.1 | ||||||
Other current liabilities |
148.1 | 155.0 | ||||||
Total current liabilities |
324.9 | 288.7 | ||||||
Long-term debt |
50.0 | 98.5 | ||||||
Other long-term liabilities |
145.1 | 142.6 | ||||||
Total Liabilities |
520.0 | 529.8 | ||||||
Noncontrolling interest |
| 8.3 | ||||||
Shareholders Equity |
760.8 | 707.5 | ||||||
Total Liabilities, Noncontrolling Interest
and Shareholders Equity |
$ | 1,280.8 | $ | 1,245.6 | ||||
7
Hill-Rom Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in millions)
Condensed Consolidated Statements of Cash Flows
(Dollars in millions)
Year To Date Period Ended March 31 | ||||||||
2011 | 2010 | |||||||
Operating Activities |
||||||||
Net income |
$ | 68.5 | $ | 44.4 | ||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||
Depreciation and amortization |
51.6 | 49.5 | ||||||
Provision for deferred income taxes |
(1.3 | ) | (8.4 | ) | ||||
Loss on disposal of property, equipment leased to others,
intangible assets and impairments |
1.0 | 1.8 | ||||||
Stock compensation |
6.7 | 7.2 | ||||||
Tax settlement |
| (6.5 | ) | |||||
Excess tax benefits from employee stock plans |
(4.1 | ) | | |||||
Change in working capital excluding cash, current investments,
current debt and acquisitions and dispositions: |
||||||||
Trade accounts receivable |
(12.5 | ) | 3.9 | |||||
Inventories |
(7.3 | ) | (13.4 | ) | ||||
Other current assets |
15.1 | (22.4 | ) | |||||
Trade accounts payable |
(8.1 | ) | (4.7 | ) | ||||
Accrued expenses and other liabilities |
(8.1 | ) | 1.8 | |||||
Other, net |
6.1 | (4.1 | ) | |||||
Net cash provided by operating activities |
107.6 | 49.1 | ||||||
Investing Activities |
||||||||
Capital expenditures and purchase of intangibles |
(30.9 | ) | (27.5 | ) | ||||
Proceeds on sales of property and equipment leased to others |
4.3 | 1.0 | ||||||
Acquisitions of businesses, net of cash acquired |
| (7.1 | ) | |||||
Proceeds on investment sales/maturities |
0.2 | 5.0 | ||||||
Net cash used in investing activities |
(26.4 | ) | (28.6 | ) | ||||
Financing Activities |
||||||||
Change in short-term debt |
3.2 | (0.2 | ) | |||||
Payment on revolver |
| (45.0 | ) | |||||
Purchase of noncontrolling interest |
(11.2 | ) | | |||||
Payment of cash dividends |
(12.9 | ) | (12.9 | ) | ||||
Proceeds on exercise of options |
23.1 | 2.9 | ||||||
Proceeds from stock issuance |
1.5 | 1.3 | ||||||
Excess tax benefits from employee stock plans |
4.1 | | ||||||
Treasury stock acquired |
(41.6 | ) | (1.0 | ) | ||||
Net cash used in financing activities |
(33.8 | ) | (54.9 | ) | ||||
Effect of exchange rate changes on cash |
3.3 | (1.0 | ) | |||||
Total Cash Flows |
50.7 | (35.4 | ) | |||||
Cash and Cash Equivalents: |
||||||||
At beginning of period |
184.5 | 170.6 | ||||||
At end of period |
$ | 235.2 | $ | 135.2 | ||||
8