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Exhibit 99.1

STERIS CORPORATION

NEWS ANNOUNCEMENT

FOR IMMEDIATE RELEASE

STERIS CORPORATION ANNOUNCES FISCAL 2015 SECOND QUARTER RESULTS

21% Revenue Growth Fueled by Organic Growth and Acquisitions

Healthcare Revenue Grows 27%, 8% Organic

Diluted EPS Grows 4% on U.S. GAAP basis and 24% Adjusted

Board of Directors Approves Quarterly Dividend

Mentor, Ohio (November 4, 2014) - STERIS Corporation (NYSE: STE) today announced financial results for its fiscal 2015 second quarter ended September 30, 2014. As reported, fiscal 2015 second quarter revenue increased 21% to $462.7 million compared with $383.8 million in the second quarter of fiscal 2014. As reported, net income was $31.0 million, or $0.52 per diluted share, compared with net income of $29.7 million, or $0.50 per diluted share in the second quarter of fiscal 2014.

Adjusted Results

On an adjusted basis, net income for the second quarter of fiscal 2015 was $40.6 million, or $0.68 per diluted share, compared with adjusted net income of $32.6 million, or $0.55 per diluted share in the same prior year period. Please refer to the attached schedules for additional information, including reconciliations of adjusted “non-GAAP financial measures” to reported results.

“We are pleased to report that our business continues to perform well strategically, operationally, and financially,” said Walt Rosebrough, President and CEO of STERIS Corporation. “Our second quarter revenue grew 21% driven by acquisitions as well as strong organic growth in both Healthcare and Isomedix. We were able to leverage that revenue growth to drive a 24% improvement in adjusted earnings per diluted share. Given the strength of our first half and anticipated growth in the second half, we are revising our outlook for earnings for the full fiscal year to the upper end of our range, and now anticipate adjusted earnings per diluted share in the range of $2.86 - $2.91.”

Segment Results

As reported, Healthcare revenue in the quarter increased 27% to $351.2 million compared with $277.3 million in the second quarter of fiscal 2014. Healthcare organic revenue grew 8% in the quarter. Consumable revenue increased 13% and service revenue grew 65% driven by both organic growth and


STERIS Corporation

News Announcement

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the acquisition of IMS. In addition, capital equipment revenue grew 9% with growth in both infection prevention and surgical solutions. As reported, segment operating income was $29.9 million compared with $25.9 million in last year’s second quarter. Adjusted segment operating income increased 49% to $45.2 million in the second quarter of fiscal 2015 compared with $30.3 million in the same period last year. The increase in adjusted segment operating income year-over-year was primarily driven by improved gross margins, acquisitions and the increased volume.

Life Sciences second quarter revenue increased 1% to $59.1 million compared with $58.4 million in the second quarter of fiscal 2014. Contributing to the quarter, consumable revenue increased 14% and service revenue grew 4%, which were offset by a 15% decline in capital equipment revenue. As reported, segment operating income was $13.0 million compared with $14.0 million in last year’s second quarter. Adjusted segment operating income was $13.2 million compared with $14.1 million in the same period last year. The decline in operating income is primarily attributable to increased corporate allocation charges relating to incentive compensation as compared with the prior year period.

Fiscal 2015 second quarter revenue for Isomedix Services increased 9% to $51.9 million compared with $47.4 million in the second quarter of fiscal 2014. Revenue benefited from increased volumes from core medical device Customers. As reported, segment operating income was $14.4 million compared with $13.7 million in last year’s second quarter. Adjusted segment operating income increased slightly to $14.5 million in the quarter compared with $14.0 million in the second quarter of last year, as the increase in volume was somewhat offset by higher quality and regulatory expenses and increased corporate allocation charges relating to incentive compensation as compared with the prior year period.

Cash Flow

Net cash provided by operations for the first six months of fiscal 2015 was $104.9 million, compared with $80.0 million in the same period last year. Free cash flow (see note 1) for the first half of fiscal 2015 was $69.2 million, compared with $32.9 million in the first half of last year. The increase in free cash flow is primarily due to the impact of working capital improvements and lower capital expenditures.


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Dividend Announcement

The Company also announced today that STERIS’s Board of Directors has authorized a quarterly dividend of $0.23 per common share. The dividend is payable December 23, 2014 to shareholders of record at the close of business on November 26, 2014.

Outlook

Based upon current trends, the Company is affirming its original revenue growth outlook for fiscal 2015 of 15-17%. However, given the strength in the first half of the year and anticipated second half performance, the Company now anticipates adjusted earnings per diluted share in the range of $2.86 to $2.91 for the full fiscal year, which is at the high-end of the original outlook. STERIS’s outlook excludes any potential impact from the proposed Synergy Health acquisition described below.

Acquisition of Synergy Health

On October 13, 2014, the Company commenced a “recommended offer” to acquire Synergy Health plc in a cash and stock transaction valued at $1.9 billion. As indicated in the transaction announcement, the combined business is expected to have approximately $2.6 billion in annual revenues from over 60 countries, approximately 14,000 employees, and will combine STERIS’s strong presence in North America with Synergy Health’s strong positions across Europe.

Commenting on the transaction, Mr. Rosebrough stated, “STERIS’s recently announced proposed acquisition of Synergy Health is a strategic step in our goal to be a stronger global leader in infection prevention and sterilization. Together, we create a balanced portfolio of products and services that can be tailored to best serve the evolving needs of our global Customers. Once the transaction is completed, New STERIS will be a stronger global leader in infection prevention and sterilization, better-positioned to provide comprehensive solutions to medical device companies, pharma companies, and hospitals around the world.”

The transaction is subject to certain customary closing conditions, including approvals by STERIS and Synergy Health shareholders as well as regulatory approvals in the U.S. and U.K., and is anticipated to close by March 31, 2015.


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Conference Call

In conjunction with this release, STERIS Corporation management will host a conference call tomorrow at 10:00 a.m. Eastern Standard time. The conference call can be heard live over the Internet at www.steris-ir.com or via phone by dialing 1-800-369-8428 in the United States and Canada, and 1-773-799-3378 internationally, then referencing the password “STERIS”.

For those unable to listen to the conference call live, a replay will be available beginning at 12:00 p.m. Eastern Standard time on November 5, 2014 either over the Internet at www.steris-ir.com or via phone by calling 1-800-856-2254 in the United States and Canada, and 1- 402-280-9961 internationally.

U.K. Takeover Code Directors’ Confirmation

Under Rule 28.1 of the U.K.’s City Code on Takeovers and Mergers (the “Takeover Code”) which applies in light of our proposed acquisition of Synergy Health, our directors must provide a so-called “directors’ confirmation” in respect of our Consolidated Net Income for the three months ended September 30, 2014 reported in this announcement (the “Net Income Statement”) and the outlook contained in this announcement (the “Outlook”) since they constitute an unaudited profit estimate and profit forecast respectively for the purposes of the Takeover Code. Accordingly, our directors confirm that:

 

  (i) the Net Income Statement has been properly compiled on the basis of the assumptions contained or referred to in our Quarterly Report on Form 10-Q for the three months ended September 30, 2014;

 

  (ii) the Outlook has been properly compiled on the basis of the assumptions contained in our current report on Form 8-K dated May 8, 2014 under the section captioned “Outlook”, and the assumptions contained in our Annual Report on Form 10-K for the year ended March 31, 2014 dated May 29, 2014; and

 

  (iii) the basis of accounting used for the purposes of preparing Net Income Statement and the Outlook is consistent with our accounting policies.

About STERIS

The mission of STERIS Corporation is to help our Customers create a healthier and safer world by providing innovative healthcare and life science product and service solutions around the globe. The Company is listed on the New York Stock Exchange under the symbol STE. For more information, visit www.steris.com.


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(1) Free cash flow is a non-GAAP number used by the Company as a measure to gauge its ability to fund future debt principal repayments, growth outside of core operations, repurchase common shares, and pay cash dividends. Free cash flow is defined as cash flows from operating activities less purchases of property, plant, equipment and intangibles, net, plus proceeds from the sale of property, plant, equipment and intangibles. STERIS’s calculation of free cash flow may vary from other companies.

Contact: Julie Winter, Director, Investor Relations at 440-392-7245.

No Offer or Solicitation

This document is provided for informational purposes only and does not constitute an offer to sell, or an invitation to subscribe for, purchase or exchange, any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this document in any jurisdiction in contravention of applicable law.

Forward-Looking Statements

This document may contain statements concerning certain trends, expectations, forecasts, estimates, or other forward-looking information affecting or relating to Synergy or STERIS or its industry, products or activities that are intended to qualify for the protections afforded “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 and other laws and regulations. Forward-looking statements speak only as to the date of this document and may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “outlook,” “impact,” “potential,” “confidence,” “improve,” “optimistic,” “deliver,” “comfortable,” “trend”, and “seeks,” or the negative of such terms or other variations on such terms or comparable terminology. Many important factors could cause actual results to differ materially from those in the forward-looking statements including, without limitation, disruption of production or supplies, changes in market conditions, political events, pending or future claims or litigation, competitive factors, technology advances, actions of regulatory agencies, and changes in laws, government regulations, labeling or product approvals or the application or interpretation thereof. Other risk factors are described


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herein and in STERIS and Synergy’s other securities filings, including Item 1A of STERIS’s Annual Report on Form 10-K for the year ended March 31, 2014 dated May 29, 2014 and in Synergy’s annual report and accounts for the year ended 30 March 2014 (section headed “principal risks and uncertainties”). Many of these important factors are outside of STERIS’s or Synergy’s control. No assurances can be provided as to any result or the timing of any outcome regarding matters described herein or otherwise with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results. References to products and the consent decree are summaries only and should not be considered the specific terms of the decree or product clearance or literature. Unless legally required, STERIS and Synergy do not undertake to update or revise any forward-looking statements even if events make clear that any projected results, express or implied, will not be realized. Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the receipt of approval of both STERIS’s shareholders and Synergy’s shareholders, (b) the regulatory approvals required for the transaction not being obtained on the terms expected or on the anticipated schedule, (c) the parties’ ability to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction, (d) the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in connection with the transaction within the expected time-frames or at all and to successfully integrate Synergy’s operations into those of STERIS, (e) the integration of Synergy’s operations into those of STERIS being more difficult, time-consuming or costly than expected, (f) operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) being greater than expected following the transaction, (g) the retention of certain key employees of Synergy being difficult, (h) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including, if the transaction is consummated, changes in tax laws that would result in New STERIS being treated as a domestic corporation for United States federal tax purposes, (i) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (j) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (k) the possibility that application of or compliance with laws, court rulings, certifications, regulations, regulatory actions, including without limitation those relating to FDA warning notices or letters, government investigations, the outcome of any pending FDA requests, inspections or submissions, or


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other requirements or standards may delay, limit or prevent new product introductions, affect the production and marketing of existing products or services or otherwise affect Company performance, results, prospects or value, (l) the potential of international unrest, economic downturn or effects of currencies, tax assessments, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (m) the possibility of reduced demand, or reductions in the rate of growth in demand, for products and services, (n) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, or other issues or risks associated with STERIS and Synergy’s businesses, industry or initiatives including, without limitation, the consent decree or those matters described in STERIS’s Form 10-K for the year ended March 31, 2014 and other securities filings, may adversely impact Company performance, results, prospects or value, (o) the possibility that anticipated financial results or benefits of recent acquisitions, or of STERIS’s restructuring efforts will not be realized or will be other than anticipated, (p) the effects of the contractions in credit availability, as well as the ability of STERIS and Synergy’s customers and suppliers to adequately access the credit markets when needed, and (q) those risks described in STERIS’s Annual Report on Form 10-K for the year ended March 31, 2014, and other securities filings.

Important Additional Information Regarding the Transaction Will Be Filed With The SEC

It is expected that the shares of New STERIS to be issued by New STERIS to Synergy Shareholders in the U.K. law scheme of arrangement transaction that forms a part of the transaction will be issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 3(a)(10) thereof.

In connection with the issuance of New STERIS shares to STERIS shareholders pursuant to the merger that forms a part of the transaction, New STERIS will file with the SEC a registration statement on Form S-4 that will contain a prospectus of New STERIS as well as a proxy statement of STERIS relating to the merger that forms a part of the transaction, which we refer to together as the Form S-4/Proxy Statement.

INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE FORM S-4/PROXY STATEMENT, AND OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTION CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY WILL CONTAIN


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IMPORTANT INFORMATION ABOUT THE TRANSACTION, THE PARTIES TO THE TRANSACTION AND THE RISKS ASSOCIATED WITH THE TRANSACTION. Those documents, if and when filed, as well as STERIS’S and New STERIS’s other public filings with the SEC may be obtained without charge at the SEC’s website at www.sec.gov, at STERIS’s website at www.steris-ir.com. Security holders and other interested parties will also be able to obtain, without charge, a copy of the Form S-4/Proxy Statement and other relevant documents (when available) by directing a request by mail or telephone Julie_Winter@steris.com or (440) 392-7245. Security holders may also read and copy any reports, statements and other information filed with the SEC at the SEC public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at (800) 732-0330 or visit the SEC’s website for further information on its public reference room.

Synergy and New STERIS are each organised under the laws of England. Some of the officers and directors of Synergy and New STERIS are residents of countries other than the United States. As a result, it may not be possible to sue Synergy, New STERIS or such persons in a non-US court for violations of US securities laws. It may be difficult to compel Synergy, New STERIS and their respective affiliates to subject themselves to the jurisdiction and judgment of a US court or for investors to enforce against them the judgments of US courts.

Participants in the Solicitation

STERIS, its directors and certain of its executive officers may be considered participants in the solicitation of proxies in connection with the transactions contemplated by the Proxy Statement. Information about the directors and executive officers of STERIS is set forth in its Annual Report on Form 10-K for the year ended 31 March, 2014, which was filed with the SEC on 29 May, 2014, and its proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on 9 June, 2014. Other information regarding potential participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement/Prospectus when it is filed.


STERIS Corporation

Consolidated Condensed Statements of Operations

(In thousands, except per share data)

 

     Three Months Ended      Six Months Ended  
     September 30,      September 30,  
     2014     2013      2014     2013  
     (Unaudited)     (Unaudited)      (Unaudited)     (Unaudited)  

Revenues

   $ 462,729      $ 383,762       $ 875,372      $ 751,414   

Cost of revenues

     269,073        229,256         511,737        450,062   

Cost of revenues—Restructuring

     (336     —           (450     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Cost of revenues, net

     268,737        229,256         511,287        450,062   
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     193,992        154,506         364,085        301,352   

Operating expenses:

         

Selling, general, and administrative

     126,292        90,661         239,980        184,590   

Research and development

     13,006        13,527         25,415        25,380   

Restructuring expense

     1,271        18         1,099        70   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating expenses

     140,569        104,206         266,494        210,040   
  

 

 

   

 

 

    

 

 

   

 

 

 

Income from operations

     53,423        50,300         97,591        91,312   

Non-operating expense, net

     4,912        4,642         9,374        9,381   

Income tax expense

     17,507        15,915         32,676        19,871   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

   $ 31,004      $ 29,743       $ 55,541      $ 62,060   
  

 

 

   

 

 

    

 

 

   

 

 

 

Earnings per common share (EPS) data:

         

Basic

   $ 0.52      $ 0.50       $ 0.94      $ 1.05   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

   $ 0.52      $ 0.50       $ 0.93      $ 1.04   
  

 

 

   

 

 

    

 

 

   

 

 

 

Cash dividends declared per common share outstanding

   $ 0.23      $ 0.21       $ 0.44      $ 0.40   

Weighted average number of common shares outstanding used in EPS computation:

         

Basic number of common shares outstanding

     59,375        59,027         59,272        59,016   

Diluted number of common shares outstanding

     60,020        59,762         59,917        59,776   

STERIS Corporation

Consolidated Condensed Balance Sheets

(In thousands)

 

     September 30,      March 31,  
     2014      2014  
     (Unaudited)         

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 147,413       $ 152,802   

Accounts receivable, net

     288,587         313,686   

Inventories, net

     184,447         155,146   

Other current assets

     53,088         53,111   
  

 

 

    

 

 

 

Total Current Assets

     673,535         674,745   

Property, plant, and equipment, net

     474,967         454,410   

Goodwill and intangible assets, net

     869,022         747,715   

Other assets

     9,883         10,292   
  

 

 

    

 

 

 

Total Assets

   $ 2,027,407       $ 1,887,162   
  

 

 

    

 

 

 

Liabilities and Equity

     

Current liabilities:

     

Accounts payable

   $ 90,436       $ 102,430   

Other current liabilities

     154,444         152,076   
  

 

 

    

 

 

 

Total Current Liabilities

     244,880         254,506   

Long-term debt

     619,950         493,480   

Other liabilities

     94,717         97,930   

Equity

     1,067,860         1,041,246   
  

 

 

    

 

 

 

Total Liabilities and Equity

   $ 2,027,407       $ 1,887,162   
  

 

 

    

 

 

 


STERIS Corporation

Segment Data

(In thousands)

 

     Three Months Ended     Six Months Ended  
     September 30,     September 30,  
     2014     2013     2014     2013  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Segment Revenues:

        

Healthcare

   $ 351,169      $ 277,332      $ 653,979      $ 536,220   

Life Sciences

     59,148        58,382        117,762        118,297   

STERIS Isomedix Services

     51,850        47,411        103,043        95,635   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     462,167        383,125        874,784        750,152   

Corporate and Other

     562        637        588        1,262   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

   $ 462,729      $ 383,762      $ 875,372      $ 751,414   
  

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended     Six Months Ended  
     September 30,     September 30,  
     2014     2013     2014     2013  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Segment Operating Income:

        

Healthcare

   $ 29,943      $ 25,926      $ 47,909      $ 40,873   

Life Sciences

     13,048        14,041        24,993        26,580   

STERIS Isomedix Services

     14,399        13,712        30,590        28,430   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     57,390        53,679        103,492        95,883   

Corporate and Other

     (3,967     (3,379     (5,901     (4,571
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Income

   $ 53,423      $ 50,300      $ 97,591      $ 91,312   
  

 

 

   

 

 

   

 

 

   

 

 

 


STERIS Corporation

Consolidated Condensed Statements of Cash Flows

(In thousands)

 

     Six Months Ended  
     September 30,  
     2014     2013  
     (Unaudited)     (Unaudited)  

Operating Activities:

    

Net income

   $ 55,541      $ 62,060   

Non-cash items

     49,078        45,163   

Changes in operating assets and liabilities

     289        (27,178
  

 

 

   

 

 

 

Net cash provided by operating activities

     104,908        80,045   

Investing Activities:

    

Purchases of property, plant, equipment, and intangibles, net

     (36,527     (47,110

Proceeds from sale of property, plant, equipment and intangibles

     796        8   

Investments in businesses, net of cash acquired

     (179,380     (115
  

 

 

   

 

 

 

Net cash used in investing activities

     (215,111     (47,217

Financing Activities:

    

Payments on long-term obligations, net

     —          (30,000

Proceeds under credit facilities, net

     126,470        46,230   

Deferred financing fees and debt issuance costs

     —          (43

Repurchases of common shares

     (5,440     (18,653

Cash dividends paid to common shareholders

     (26,118     (23,644

Stock option and other equity transactions, net

     8,686        9,159   

Tax benefit from share-based compensation

     4,505        1,462   
  

 

 

   

 

 

 

Net cash provided by and used in financing activities

     108,103        (15,489

Effect of exchange rate changes on cash and cash equivalents

     (3,289     4,447   
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (5,389     21,786   

Cash and cash equivalents at beginning of period

     152,802        142,008   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 147,413      $ 163,794   
  

 

 

   

 

 

 

The following table presents a financial measure which is considered to be “non-GAAP financial measures” under Securities Exchange Commission rules. Free cash flow is defined by the Company as cash flows from operating activities less purchases of property, plant, equipment and intangibles, net (capital expenditures) plus proceeds from the sale of property, plant, equipment and intangibles. The Company uses free cash flow as a measure to gauge its ability to fund future principal debt repayments and growth outside of core operations, repurchase common shares, and pay cash dividends. STERIS’s calculation of free cash flow may vary from other companies.

 

     Six Months Ended  
     September 30,  
     2014     2013  
     (Unaudited)     (Unaudited)  

Calculation of Free Cash Flow:

    

Cash flows from operating activities

   $ 104,908      $ 80,045   

Purchases of property, plant, equipment, and intangibles, net

     (36,527     (47,110

Proceeds from the sale of property, plant, equipment, and intangibles

     796        8   
  

 

 

   

 

 

 

Free Cash Flow

   $ 69,177      $ 32,943   
  

 

 

   

 

 

 

 

     Twelve Months Ended  
     March 31,  
     2015  
     (Outlook)  

Calculation of free cash flow for outlook:

  

Cash flows from operating activities

   $ 230,000   

Purchases of property, plant, equipment, and intangibles, net

     (95,000
  

 

 

 

Free Cash Flow

   $ 135,000   
  

 

 

 


STERIS Corporation

Non-GAAP Earnings Per Share and Outlook

Non-GAAP financial measures are presented 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. These amounts are disclosed so that the reader has the same financial data that management uses with the belief that it will assist investors and other readers in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented.

We believe that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures and the reconciliation to the corresponding GAAP financial measures, provide the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. It is important for the reader to note that the non-GAAP financial measure used may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

 

     Three months ended      Six months ended  
     September 30,      September 30,  
     2014      2013      2014      2013  
     (Unaudited)      (Unaudited)      (Unaudited)      (Unaudited)  

Net Income per diluted share

   $ 0.52       $ 0.50       $ 0.93       $ 1.04   

Loss (gain) from fair value adjustment of acquistion related contingent consideration

     —           —           0.02         —     

Tax benefit, European restructuring

     —           —           —           (0.15

Inventory and property “step up” to fair value, net of tax

     —           —           0.02         —     

Amortization and impairment of purchased intangible assets, net of tax

     0.12         0.04         0.17         0.08   

Restructuring, net of tax

     0.01         —           0.01         —     

Acquisition related transaction and integration expenses, net of tax

     0.03         0.01         0.07         0.01   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income per diluted share

   $ 0.68       $ 0.55       $ 1.22       $ 0.98   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Twelve months ended  
     March 31,  
     2015  
     (Outlook)*  

Net Income per diluted share

   $ 2.48-$2.53   

Inventory “step up” to fair value, net of tax

     0.02   

Amortization and impairment of purchased intangible assets, net of tax

     0.24   

Acquisition related transaction and integration expenses, net of tax

     0.12   
  

 

 

 

Adjusted net income per diluted share

   $ 2.86-$2.91   
  

 

 

 

 

* All amounts are estimates.


STERIS Corporation

Non-GAAP Financial Measures

(In thousands, except per share data)

Non-GAAP financial measures are presented 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. These amounts are disclosed so that the reader has the same financial data that management uses with the belief that it will assist investors and other readers in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented.

We believe that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures and the reconciliation to the corresponding GAAP financial measures, provide the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. It is important for the reader to note that the non-GAAP financial measure used may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

 

     Three months ended     Six months ended  
     September 30,     September 30,  
     2014     2013     2014     2013  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Gross Profit

   $ 193,992      $ 154,506      $ 364,085      $ 301,352   

Amortization of inventory “step up” to fair value

     —          —          1,234        —     

Restructuring

     (336     —          (450     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted gross profit

   $ 193,656      $ 154,506      $ 364,869      $ 301,352   
  

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative expenses

   $ 126,292      $ 90,661      $ 239,980      $ 184,590   

Amortization and impairment of purchased intangible assets

     (11,518     (4,067     (16,718     (8,357

Amortization of property “step up” to fair value

     (31     —          (54     —     

Acquisition related transaction and integration costs

     (3,062     (633     (6,696     (1,341

(Loss) gain from fair value adjustment of acquistion related contingent consideration

     —          —          (1,998     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted selling, general and administrative expenses

   $ 111,681      $ 85,961      $ 214,514      $ 174,892   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 53,423      $ 50,300      $ 97,591      $ 91,312   

Amortization of inventory and property “step up” to fair value

     31        —          1,288        —     

Amortization and impairment of purchased intangible assets

     11,518        4,067        16,718        8,357   

Acquisition related transaction and integration costs

     3,062        633        6,696        1,341   

Loss (gain) from fair value adjustment of acquistion related contingent consideration

     —          —          1,998        —     

Restructuring

     935        18        649        70   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating income

   $ 68,969      $ 55,018      $ 124,940      $ 101,080   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common shareholders

   $ 31,004      $ 29,743      $ 55,541      $ 62,060   

Amortization of inventory and property “step up” to fair value

     25        —          1,030        —     

Amortization and impairment of purchased intangible assets, net of tax

     7,098        2,481        10,342        5,098   

Acquisition related transaction and integration costs

     1,868        386        4,085        818   

Loss (gain) from fair value adjustment of acquistion related contingent consideration

     —          —          1,219        —     

Tax benefit, European restructuring

     —          —          —          (9,245

Restructuring, net of tax

     570        11        396        43   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income attributable to common shareholders

   $ 40,565      $ 32,621      $ 72,613      $ 58,774   
  

 

 

   

 

 

   

 

 

   

 

 

 

Healthcare operating income

   $ 29,943      $ 25,926      $ 47,909      $ 40,873   

Amortization of inventory and property “step up” to fair value

     31        —          1,288        —     

Amortization and impairment of purchased intangible assets

     11,418        3,728        16,516        7,675   

Acquisition related transaction and integration costs

     2,970        633        6,604        1,341   

Loss (gain) from fair value adjustment of acquistion related contingent consideration

     —          —          1,998        —     

Restructuring

     808        18        561        70   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Healthcare operating income

   $ 45,170      $ 30,305      $ 74,876      $ 49,959   
  

 

 

   

 

 

   

 

 

   

 

 

 

Life Sciences operating income

   $ 13,048      $ 14,041      $ 24,993      $ 26,580   

Amortization and impairment of purchased intangible assets

     16        22        34        48   

Acquisition related transaction and integration costs

     50        —          50        —     

Restructuring

     124        —          110        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Life Sciences operating income

   $ 13,238      $ 14,063      $ 25,187      $ 26,628   
  

 

 

   

 

 

   

 

 

   

 

 

 

Isomedix operating income

   $ 14,399      $ 13,712      $ 30,590      $ 28,430   

Amortization and impairment of purchased intangible assets

     84        317        168        634   

Acquisition related transaction and integration costs

     42        —          42        —     

Restructuring

     3        —          (22     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Isomedix operating income

   $ 14,528      $ 14,029      $ 30,778      $ 29,064   
  

 

 

   

 

 

   

 

 

   

 

 

 


STERIS Corporation

Unaudited Supplemental Financial Data

Second Quarter Fiscal 2015

As of September 30, 2014

 

     FY 2015     FY 2014     FY 2015     FY 2014  

Total Company Revenues

   Q2     Q2     YTD     YTD  

Capital Equipment

   $ 143,488      $ 135,303      $ 263,883      $ 259,197   

Consumables

     113,357        100,006        223,402        199,040   

Service

     205,884        148,453        388,087        293,177   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     319,241        248,459        611,489        492,217   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues, net

   $ 462,729      $ 383,762      $ 875,372      $ 751,414   
  

 

 

   

 

 

   

 

 

   

 

 

 

United States Revenues

   $ 365,482      $ 297,650      $ 682,833      $ 586,003   
  

 

 

   

 

 

   

 

 

   

 

 

 

United States Revenues as a % of Total

     79     78     78     78

International Revenues

   $ 97,247      $ 86,112      $ 192,539      $ 165,411   

International Revenues as a % of Total

     21     22     22     22
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Data

   Q2     Q2     YTD     YTD  

Healthcare

        

Revenues

        

Capital Equipment

   $ 127,272      $ 116,331      $ 229,543      $ 218,005   

Consumables

     90,558        79,938        178,828        158,501   

Service

     133,339        81,063        245,608        159,714   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     223,897        161,001        424,436        318,215   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Healthcare Revenues, net

   $ 351,169      $ 277,332      $ 653,979      $ 536,220   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     29,943        25,926        47,909        40,873   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Operating Income (1)

     45,170        30,305        74,876        49,959   

Life Sciences

        

Revenues

        

Capital Equipment

   $ 16,216      $ 18,972      $ 34,340      $ 41,192   

Consumables

     22,799        20,068        44,574        40,539   

Service

     20,133        19,342        38,848        36,566   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     42,932        39,410        83,422        77,105   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Life Sciences Revenues

   $ 59,148      $ 58,382      $ 117,762      $ 118,297   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     13,048        14,041        24,993        26,580   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Operating Income (1)

     13,238        14,063        25,187        26,628   

Isomedix Services

        

Revenues

   $ 51,850      $ 47,411      $ 103,043      $ 95,635   

Operating Income

     14,399        13,712        30,590        28,430   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Operating Income (1)

     14,528        14,029        30,778        29,064   

Corporate and Other

        

Revenues

   $ 562      $ 637      $ 588      $ 1,262   

Operating Income (Loss)

     (3,967     (3,379     (5,901     (4,571
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Data

   Q2     Q2     YTD     YTD  

Product

        

Total product revenues

     256,845        235,309        487,285        458,237   

Total product cost of revenues

     142,991        133,629        272,966        263,166   

Restructuring expense

     (336     —          (450     —     

Amortization of inventory “step up” to fair value

     —          —          1,234        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total product cost of revenues, adjusted (1)

     143,327        133,629        272,182        263,166   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total product gross profit, adjusted (1)

     113,518        101,680        215,103        195,071   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage, adjusted (1)

     44.2     43.2     44.1     42.6

Service

        

Total service revenues

     205,884        148,453        388,087        293,177   

Total service cost of revenues

     125,746        95,627        238,321        186,896   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total service gross profit

     80,138        52,826        149,766        106,281   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage

     38.9     35.6     38.6     36.3

Total Company gross profit margin, adjusted (1)

     193,656        154,506        364,869        301,352   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage, adjusted (1)

     41.9     40.3     41.7     40.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Healthcare Backlog

   $ 117,178      $ 133,375      $ 117,178      $ 133,375   

Life Sciences Backlog

     46,102        47,813        46,102        47,813   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Backlog

   $ 163,280      $ 181,188      $ 163,280      $ 181,188   

Free Cash Flow

   $ 46,084      $ 21,979      $ 69,177      $ 32,943   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Debt

   $ 472,537      $ 344,726      $ 472,537      $ 344,726   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Non-GAAP financial measures are presented 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. These amounts are disclosed so that the reader has the same financial data that management uses with the belief that it will assist investors and other readers in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented.

We believe that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures and the reconciliation to the corresponding GAAP financial measures, provide the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. It is important for the reader to note that the non-GAAP financial measure used may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

This supplemental data is consistent with publicly disclosed information provided in quarterly conference calls, earnings releases and SEC filings, and is subject to all definitions, precautions and limitations contained in those disclosures. Please see the Company’s most recent 10-K for definitions (and reconciliation where appropriate) of adjusted measures, backlog, free cash flow and net debt.