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8-K - FORM 8-K - STERIS plcd138258d8k.htm

Exhibit 99.1

STERIS plc Announces Financial Results for Fiscal 2016 Fourth Quarter and Full Year;

Provides Fiscal 2017 Outlook

38% revenue growth in fourth quarter, with 5% constant currency organic growth

• Fourth quarter adjusted EPS trimmed by a 34% tax rate; FY17 tax rate expectations remain unchanged at 25%

Record revenue and adjusted earnings for the full year fiscal 2016

• Synergy Health integration and cost synergies on track

FY17 revenue outlook up 25-26% and adjusted EPS of $3.85-$4.00

LEICESTER, U.K. – (May 18, 2016) – STERIS plc (NYSE: STE) (“STERIS” or the “Company”) today announced financial results for its fiscal 2016 fourth quarter and full year ended March 31, 2016. Fiscal 2016 fourth quarter revenue increased 38% to $690.3 million compared with $501.6 million for STERIS Corporation (“Old STERIS”) in the fourth quarter of fiscal 2015, driven by growth in all four segments. Constant currency organic revenue growth was 5% for the fourth quarter of fiscal 2016. For the full fiscal year, revenue increased 21% to $2.24 billion, compared with $1.85 billion for Old STERIS in fiscal 2015. All succeeding references to results from prior year periods are for Old STERIS.

“Our people delivered an extraordinary year, with strong operating performance and meaningful progress in achieving our long-term strategic goals,” said Walt Rosebrough, President and Chief Executive Officer of STERIS. “We closed the combination with Synergy Health during the year, and are pleased with our progress. We begin fiscal 2017 as one team and are looking forward to our fifth consecutive year of record performance.”

Fourth Quarter and Full Year 2016 Operating Results

As reported, net income for the fourth quarter was $57.7 million, or $0.67 per diluted share, compared with net income of $41.4 million, or $0.69 per diluted share in the fourth quarter of fiscal 2015. Adjusted net income (see Non-GAAP Financial Measures) for the fourth quarter of fiscal 2016 was $77.9 million, or $0.90 per diluted share, compared with adjusted net income for the previous year fourth quarter of $59.3 million or $0.98 per diluted share. Despite strong operating results, adjusted earnings per diluted share declined year-over-year due to an increase in the share count and a 34.4% adjusted effective tax rate. The higher tax rate was caused by geographic income mix and discrete item adjustments, which more than offset the tax benefit from the combination with Synergy.


As reported, net income for the full year fiscal 2016 was $110.8 million or $1.56 per diluted share, compared with net income of $135.1 million or $2.25 per diluted share in fiscal 2015. Adjusted net income for the full year fiscal 2016 increased 34% to $241.5 million or $3.39 per diluted share compared with $179.6 million or $2.99 per diluted share in fiscal 2015. Fiscal 2016 earnings per diluted share included approximately $5 million in cost synergies as a result of the combination with Synergy.

Fourth Quarter Segment Results

Healthcare Products revenue grew 5% in the quarter to $335.1 million compared with $319.4 million in the fourth quarter of fiscal 2015. Consumable revenue grew 25% and service revenue increased 6% respectively during the quarter. Those gains were partially offset by a 6% decline in capital equipment revenue, which was a result of level loading of shipments during the year and soft shipments outside of the U.S. Healthcare Products operating income was $60.6 million compared with $56.8 million in last year’s fourth quarter. The increase in profitability was primarily due to increased volume, favorable foreign currency exchange rates and the suspension of the Medical Device Excise Tax.

Healthcare Specialty Services revenue in the quarter was $157.9 million compared with $65.3 million in the fourth quarter of fiscal 2015, reflecting the addition of Synergy Health and organic volume growth. Healthcare Specialty Services operating income increased to $6.5 million compared with $5.6 million in last year’s fourth quarter, primarily due to the increased volume.

Fiscal 2016 fourth quarter revenue for Applied Sterilization Technologies increased to $110.4 million compared with $51.7 million in the same period last year. Revenue benefited from the addition of Synergy Health and increased volume from the segment’s core medical device Customers. Segment operating income increased to $38.4 million in the fourth quarter of fiscal 2016 compared with operating income of $14.7 million in the same period last year, due primarily to the addition of Synergy Health and high-single digit organic volume growth.

Life Sciences fourth quarter revenue grew 31% to $85.5 million compared with $65.1 million in the fourth quarter of fiscal 2015. Contributing to growth, consumable revenue grew 51%, service revenue increased 34% and capital equipment revenue grew 8%. Life Sciences operating income was $27.0 million compared with $14.5 million in the prior year’s fourth quarter, driven by double digit organic growth and recent acquisitions.


Cash Flow

Net cash provided by operations for fiscal 2016 was $254.7 million, compared with $246.0 million in fiscal 2015. Free cash flow (see Non-GAAP Financial Measures) for fiscal 2016 was $129.1 million compared with $161.6 million in the prior year. The decline in free cash flow is primarily due to expenses related to the combination with Synergy Health and other acquisitions as well as a contribution made for the settlement of a legacy pension obligation. The total of these non-recurring items, which reduced free cash flow year-over-year, is approximately $100 million.

Dividend Announcement

The Company announced today that STERIS’s Board of Directors has authorized a quarterly dividend of $0.25 per common share. The dividend is payable June 29, 2016 to shareholders of record at the close of business on June 8, 2016.

Outlook

STERIS expects fiscal 2017 revenue growth in the range of 25% to 26%, including approximately 7% organic revenue growth. Adjusted net earnings per diluted share are anticipated to be in the range of $3.85 – $4.00 for the full fiscal year. The Company has based its outlook on twelve month forward rates as of March 31, 2016, which suggests that changes in foreign currency will not have a material impact on the Company’s fiscal 2017 financial results. The Company continues to expect $15 million in cost synergies as a result of the combination with Synergy and an adjusted effective tax rate of approximately 25% in fiscal 2017.

Fiscal 2017 free cash flow is anticipated to be approximately $250 million, including approximately $50 million in additional cash expenses related to the integration of Synergy Health. Capital expenditures are anticipated to be approximately $190 million, reflecting the impact of acquisitions, continued expansion within Applied Sterilization Technologies, IT system upgrades, new product development and general maintenance and repair for existing facilities.


Conference Call

As previously announced, STERIS management will host a conference call today at 10:00 a.m. Eastern 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 time today, either over the Internet at www.steris-ir.com or via phone by calling 1-888-402-8742 in the United States and Canada, and 1-203-369-3723 internationally.

About STERIS

STERIS’s mission 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. For more information, visit www.steris.com.

Investor Contact:

Julie Winter, Director, Investor Relations

Julie_Winter@steris.com

+1 440 392 7245

Media Contact:

Stephen Norton, Senior Director, Corporate Communications

Stephen_Norton@steris.com

+1 440 392 7482

Non-GAAP Financial Measures

Adjusted net income and free cash flow are non-GAAP measures that may be used from time to time and should not be considered replacements for GAAP results. Non-GAAP financial measures are presented in this release 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. The Company believes that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures, provides a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure.

Adjusted net income excludes the amortization of intangible assets acquired in business combinations, acquisition-related transaction costs, integration costs related to acquisitions, and certain other unusual or non-recurring items. STERIS believes this measure is useful because it excludes items that may not be indicative of or are unrelated to our core operating results and provides a baseline for analyzing trends in our underlying businesses.

The Company defines free cash flow as cash flows from operating activities less purchases of property, plant, equipment and intangibles, net capital expenditures, plus proceeds from the sale or property, plant, equipment, and intangibles. STERIS believes that free cash flow is a useful measure of the Company’s ability to fund future principal debt repayments and growth outside of core operations, pay cash dividends, and repurchase ordinary shares.

Forward-Looking Statements

This release and the conference call may contain statements concerning certain trends, expectations, forecasts, estimates, or other forward-looking information affecting or relating to 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 specified in this release 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 herein and in STERIS’s, STERIS Corporation’s and Synergy’s other securities filings, including Item 1A of STERIS Corporation’s Annual Report on Form 10-K for the year ended March 31, 2015 and in Synergy’s annual report and accounts for the year ended 29 March 2015 (section headed “principal risks and uncertainties”). Many of these important factors are outside of STERIS’s control. No assurances can be provided as to any result or the timing of any outcome regarding matters described in the press release or otherwise with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, cost reductions, business strategies, earnings or revenue trends or future financial results. References to products are summaries only and should not be considered the specific terms of the product clearance or literature. Unless legally required, STERIS does 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) STERIS’s ability to meet expectations regarding the accounting and tax treatments of the Combination, (b) the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in connection with the Combination within the expected time-frames or at all and to successfully integrate Synergy’s operations with those of STERIS Corporation, (c) the integration of Synergy’s operations with those of STERIS Corporation being more difficult, time-consuming or costly than expected, (d) 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, (e) the retention of certain key employees of Synergy being difficult, (f) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including, changes in tax laws that would result in STERIS being treated as a domestic corporation for United States federal tax purposes, (g) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (h) 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, (i) 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 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 STERIS’s performance, results, prospects or value, (j) 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, (k) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (l) 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’s businesses, industry or initiatives including, without limitation, those matters described in STERIS Corporation’s Form 10-K for the year ended March 31, 2015 and Synergy’s annual report and accounts for the year ended 29 March 2015 and other securities filings, may adversely impact STERIS’s performance, results, prospects or value, (m) the possibility that anticipated financial results or benefits of recent acquisitions, including the Combination, or of STERIS’s restructuring efforts will not be realized or will be other than anticipated and (n) the effects of the contractions in credit availability, as well as the ability of STERIS’s Customers and suppliers to adequately access the credit markets when needed.


STERIS plc

Consolidated Condensed Statements of Operations

(In thousands, except per share data)

 

     Three Months Ended     Twelve Months Ended  
     March 31,     March 31,  
     2016      2015     2016     2015  
     (Unaudited)            (Unaudited)        

Revenues

   $ 690,277       $ 501,647      $ 2,238,764      $ 1,850,263   

Cost of revenues

     426,388         288,538        1,342,964        1,076,330   

Cost of revenues—Restructuring

     —           49        319        (368
  

 

 

    

 

 

   

 

 

   

 

 

 

Cost of revenues, net

     426,388         288,587        1,343,283        1,075,962   
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     263,889         213,060        895,481        774,301   

Operating expenses:

         

Selling, general, and administrative

     150,097         130,992        626,710        493,342   

Research and development

     14,310         14,175        56,664        54,139   

Restructuring expense

     156         (381     (820     (391
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     164,563         144,786        682,554        547,090   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income from operations

     99,326         68,274        212,927        227,211   

Non-operating expense, net

     10,847         4,612        41,043        18,391   

Income tax expense

     30,610         22,263        60,299        73,756   
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     57,869         41,399        111,585        135,064   

Net income attributable to noncontrolling interest

     129         —          822        —     
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to shareholders

   $ 57,740       $ 41,399      $ 110,763      $ 135,064   
  

 

 

    

 

 

   

 

 

   

 

 

 

Earnings per common share (EPS) data:

         

Basic

   $ 0.67       $ 0.69      $ 1.57      $ 2.27   
  

 

 

    

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.67       $ 0.69      $ 1.56      $ 2.25   
  

 

 

    

 

 

   

 

 

   

 

 

 

Cash dividends declared per share outstanding

   $ 0.25       $ 0.23      $ 0.98      $ 0.90   

Weighted average number of shares outstanding used in EPS computation:

         

Basic number of shares outstanding

     85,907         59,634        70,698        59,413   

Diluted number of shares outstanding

     86,367         60,201        71,184        60,045   

STERIS plc

Consolidated Condensed Balance Sheets

(In thousands)

 

     March 31,      March 31,  
     2016      2015  
     (Unaudited)         

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 248,841       $ 167,689   

Accounts receivable, net

     471,523         325,289   

Inventories, net

     192,792         160,818   

Other current assets

     59,369         66,636   
  

 

 

    

 

 

 

Total Current Assets

     972,525         720,432   

Property, plant, and equipment, net

     1,064,319         493,053   

Goodwill and intangible assets, net

     3,279,942         860,645   

Other assets

     29,630         23,161   
  

 

 

    

 

 

 

Total Assets

   $ 5,346,416       $ 2,097,291   
  

 

 

    

 

 

 

Liabilities and Equity

     

Current liabilities:

     

Accounts payable

   $ 139,572       $ 99,340   

Other current liabilities

     261,034         183,991   
  

 

 

    

 

 

 

Total Current Liabilities

     400,606         283,331   

Long-term debt

     1,567,796         621,075   

Other liabilities

     339,122         119,239   

Equity

     3,038,892         1,073,646   
  

 

 

    

 

 

 

Total Liabilities and Equity

   $ 5,346,416       $ 2,097,291   
  

 

 

    

 

 

 


STERIS plc

Segment Data

As a result of our recent combination with Synergy Health plc, which was completed on November 2, 2015, we have reassessed the organization of our business. Management will evaluate performance and allocate resources based on a segment operating income measure defined below. We have concluded that we operate and report in four reportable business segments: Healthcare Products, Healthcare Specialty Services, Life Sciences, and Applied Sterilization Technologies. Corporate and other, which is presented separately, contains the Defense and Industrial business unit plus costs that are associated with being a publicly traded company and certain other corporate costs.

Financial information for each of our segments is presented in the following table. The accounting policies for reportable segments are the same as those for the consolidated Company. Operating income (loss) for each segment is calculated as the segment’s gross profit less direct expenses and indirect cost allocations, which results in the full allocation of all distribution and research and development expenses, and the partial allocation of corporate costs. These allocations are based upon variables such as segment headcount and revenues. In addition, the Healthcare Products segment is responsible for the management of all but two manufacturing facilities and uses standard cost to sell products to the other segments. Corporate and other includes the gross profit and direct expenses of the Defense and Industrial business unit, as well as certain unallocated corporate costs related to being a publicly traded company and legacy pension and post-retirement benefits. Adjustments include acquisition related costs, amortization of acquired intangibles, restructuring costs and other charges that management believes may or may not recur with similar materiality or impact on operating income in future periods. Management believes that by adjusting for these items they gain better insight and greater transparency of the operating performance of the segments, thus aiding them in more meaningful financial trend analysis and operational decision making.

 

     Three Months Ended
March 31,
    Twelve Months Ended
March 31,
 
(In thousands)    2016     2015     2016     2015  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Segment Revenues:

        

Healthcare Products

   $ 335,130      $ 319,379      $ 1,207,158      $ 1,143,336   

Healthcare Specialty Services

     157,886        65,319        422,860        248,538   

Life Sciences

     85,456        65,086        295,970        250,845   

Applied Sterilization Technologies

     110,367        51,672        310,120        205,675   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     688,839        501,456        2,236,108        1,848,394   

Corporate and Other

     1,438        191        2,656        1,869   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

   $ 690,277      $ 501,647      $ 2,238,764      $ 1,850,263   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income:

        

Healthcare Products

   $ 60,629      $ 56,751      $ 181,295      $ 166,515   

Healthcare Specialty Services

     6,545        5,555        24,165        16,629   

Life Sciences

     27,018        14,457        85,466        56,072   

Applied Sterilization Technologies

     38,422        14,666        99,224        59,458   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     132,614        91,429        390,150        298,674   

Corporate and Other

     (2,908     (2,232     (11,488     (7,542
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Operating Income

   $ 129,706      $ 89,197      $ 378,662      $ 291,132   

Less: Adjustments

        

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

     5,816        21        9,907        1,330   

Amortization and impairment of acquired intangible assets

     19,507        5,754        47,704        28,317   

Acquisition related transaction and integration costs

     5,637        15,206        82,891        32,762   

Loss (gain) on fair value adjustment of acquisition related contingent consideration

     (736     274        (736     2,271   

Settlement of pension obligation

     —          —          26,470        —     

Restructuring charges

     156        (332     (501     (759
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income

   $ 99,326      $ 68,274      $ 212,927      $ 227,211   
  

 

 

   

 

 

   

 

 

   

 

 

 


STERIS plc

Consolidated Condensed Statements of Cash Flows

(In thousands)

 

     Twelve Months Ended
March 31,
 
     2016     2015  
     (Unaudited)     (Unaudited)  

Operating Activities:

    

Net income

   $ 111,585      $ 135,064   

Pension settlement expense

     26,470        —     

Pension contributions

     (4,641     —     

Non-cash items

     147,143        80,631   

Changes in operating assets and liabilities

     (25,882     30,345   
  

 

 

   

 

 

 

Net cash provided by operating activities

     254,675        246,040   

Investing Activities:

    

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

     (126,407     (85,255

Proceeds from sale of property, plant, equipment and intangibles

     844        829   

Investments in businesses, net of cash acquired

     (604,021     (194,662

Purchases of investments

     —          (4,681
  

 

 

   

 

 

 

Net cash used in investing activities

     (729,584     (283,769

Financing Activities:

    

Proceeds from issuance of long-term obligations

     350,000        —     

Payments on long-term obligations

     (24,000     —     

(Payments) proceeds under credit facilities, net

     300,884        129,770   

Acquisition related contingent consideration

     —          (1,250

Deferred financing fees and debt issuance costs

     (5,169     (14,370

Repurchases of shares

     (14,369     (30,687

Cash dividends paid to shareholders

     (65,203     (53,513

Stock option and other equity transactions, net

     11,240        28,274   

Proceeds from issuance (purchase) of equity to minority interest holders

     625        —     

Excess tax benefit from share-based compensation

     6,281        11,526   
  

 

 

   

 

 

 

Net cash provided by financing activities

     560,289        69,750   

Effect of exchange rate changes on cash and cash equivalents

     (4,228     (17,134
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     81,152        14,887   

Cash and cash equivalents at beginning of period

     167,689        152,802   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 248,841      $ 167,689   
  

 

 

   

 

 

 

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.

 

     Twelve Months Ended  
     March 31,  
     2016      2015  
     (Unaudited)      (Unaudited)  

Calculation of Free Cash Flow:

     

Cash flows from operating activities

   $ 254,675       $ 246,040   

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

     (126,407      (85,255

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

     844         829   
  

 

 

    

 

 

 

Free Cash Flow

   $ 129,112       $ 161,614   
  

 

 

    

 

 

 

 

     Twelve Months Ended
March 31,
2017
 
     (Outlook)*  

Calculation of free cash flow for outlook:

  

Cash flows from operating activities

   $ 440,000   

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

     (190,000
  

 

 

 

Free Cash Flow

   $ 250,000   
  

 

 

 

 

* All amounts are estimates.


STERIS plc

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 March 31, (unaudited)  
     Gross Profit      Income from Operations     Net income attributable to
shareholders
    Diluted EPS  
     2016      2015      2016     2015     2016     2015     2016     2015  

GAAP

   $ 263,889       $ 213,060       $ 99,326      $ 68,274      $ 57,740      $ 41,399      $ 0.67      $ 0.69   

Adjustments:

                  

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

     5,796         —           5,816        21        4,520        17        0.05        —     

Amortization and impairment of acquired intangible assets

     —           —           19,507        5,754        14,001        3,575        0.16        0.06   

Acquisition related transaction and integration costs

     1,441         —           5,637        15,206        1,976        14,330        0.03        0.23   

Restructuring charges

     —           49         156        (332     96        (203     —          —     

Loss (gain) on fair value adjustment of acquisition related contingent consideration

     —           —           (736     274        (449     167        (0.01     —     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

   $ 271,126       $ 213,109       $ 129,706      $ 89,197      $ 77,884      $ 59,285      $ 0.90      $ 0.98   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    Twelve months ended March 31, (unaudited)  
    Gross Profit     Income from Operations     Net income attributable to
shareholders
    Diluted EPS  
    2016     2015     2016     2015     2016     2015     2016     2015  

GAAP

  $ 895,481      $ 774,301      $ 212,927      $ 227,211      $ 110,763      $ 135,064      $ 1.56      $ 2.25   

Adjustments:

               

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

    9,826        1,234        9,907        1,330        7,700        1,064        0.11        0.02   

Amortization and impairment of purchased intangible assets

    —          —          47,704        28,317        32,821        17,551        0.46        0.29   

Acquisition related transaction and integration costs

    2,979        —          82,891        32,762        67,999        25,040        0.95        0.41   

Loss (gain) on fair value adjustment of acquisition related contingent consideration

    —          —          (736     2,271        (449     1,385        (0.01     0.02   

Settlement of pension obligation

    —          —          26,470        —          16,337        —          0.23        —     

Restructuring charges

    319        (368     (501     (759     (305     (463     —          —     

Make whole payments (interest expense)

    —          —          —          —          6,591        —          0.09        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

  $ 908,605      $ 775,167      $ 378,662      $ 291,132      $ 241,457      $ 179,641      $ 3.39      $ 2.99   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

FY 2017 Outlook

 

     Twelve months ended
March 31, 2017
 
     (Outlook)*  

Net Income per diluted share

   $ 2.86 - 3.01   

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

     0.07   

Amortization and impairment of purchased intangible assets

     0.65   

Acquisition related transaction and integration costs

     0.27   
  

 

 

 

Adjusted net income per diluted share

   $ 3.85 - 4.00   
  

 

 

 

 

* All amounts are estimates.


STERIS plc

Unaudited Supplemental Financial Data

Fourth Quarter Fiscal 2016

As of March 31, 2016

 

     FY 2016     FY 2015     FY 2016     FY 2015  

Total Company Revenues

   Q4     Q4     YTD     YTD  

Capital Equipment

   $ 175,928      $ 182,709      $ 613,904      $ 597,809   

Consumables

     142,510        110,526        516,142        449,996   

Service

     371,839        208,412        1,108,718        802,459   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     514,349        318,938        1,624,860        1,252,455   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues

   $ 690,277      $ 501,647      $ 2,238,764      $ 1,850,264   
  

 

 

   

 

 

   

 

 

   

 

 

 

United Kingdom Revenues

   $ 71,195      $ 13,664      $ 144,577      $ 51,889   

United Kingdom Revenues as a % of Total

     10     3     6     3

United States Revenues

   $ 468,110      $ 399,331      $ 1,662,050      $ 1,449,223   

United States Revenues as a % of Total

     68     80     74     78

International Revenues

   $ 150,972      $ 88,652      $ 432,137      $ 349,151   

International Revenues as a % of Total

     22     18     19     19
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Data

   Q4     Q4     YTD     YTD  

Healthcare Products

        

Revenues

        

Capital Equipment

   $ 150,963      $ 160,662      $ 524,992      $ 513,874   

Consumables

     103,922        83,225        381,477        340,559   

Service

     80,245        75,492        300,689        288,903   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     184,167        158,717        682,166        629,462   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Healthcare Products Revenues

   $ 335,130      $ 319,379      $ 1,207,158      $ 1,143,336   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     60,629        56,751        181,295        166,515   
  

 

 

   

 

 

   

 

 

   

 

 

 

Healthcare Specialty Services

        

Healthcare Services Revenues

   $ 157,886      $ 65,319      $ 422,860      $ 248,538   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     6,545        5,555        24,165        16,629   
  

 

 

   

 

 

   

 

 

   

 

 

 

Life Sciences

        

Revenues

        

Capital Equipment

   $ 23,387      $ 21,729      $ 84,843      $ 80,802   

Consumables

     35,225        23,321        121,032        90,506   

Service

     26,844        20,036        90,095        79,537   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     62,069        43,357        211,127        170,043   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Life Sciences Revenues

   $ 85,456      $ 65,086      $ 295,970      $ 250,845   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     27,018        14,457        85,466        56,072   
  

 

 

   

 

 

   

 

 

   

 

 

 

Applied Sterilization Technologies

        

Service Revenues

   $ 110,367      $ 51,672      $ 310,120      $ 205,675   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

   $ 38,422      $ 14,666      $ 99,224      $ 59,458   

Corporate and Other

        

Revenues

   $ 1,438      $ 191      $ 2,656      $ 1,869   

Operating Income (Loss)

     (2,908     (2,232     (11,488     (7,542
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Data

   Q4     Q4     YTD     YTD  

Healthcare Products Backlog

   $ 119,393      $ 97,650        n/a        n/a   

Life Sciences Backlog

     45,281        45,496        n/a        n/a   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Backlog

   $ 164,674      $ 143,146        n/a        n/a   

GAAP Income Tax Rate

     34.6     35.0     35.2     35.3

Adjusted Income Tax Rate

     34.4     29.9     30.1     34.1

Free Cash Flow

   $ 106,210      $ 52,349      $ 129,112      $ 161,614   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Debt

   $ 1,318,955      $ 453,386        n/a        n/a   
  

 

 

   

 

 

   

 

 

   

 

 

 

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.


STERIS plc

Segment Data by Quarter and Full Year

Fiscal 2016

The following table includes historical data for STERIS in categories consistent with the current reporting segments.

Financial information for each of our segments is presented in the following table. The accounting policies for reportable segments are the same as those for the consolidated Company. Operating income (loss) for each segment is calculated as the segment’s gross profit less direct expenses and indirect cost allocations, which results in the full allocation of all distribution and research and development expenses, and the partial allocation of corporate costs. These allocations are based upon variables such as segment headcount and revenues. In addition, the Healthcare Products segment is responsible for the management of all but two manufacturing facilities and uses standard cost to sell products to the other segments. Corporate and other includes the gross profit and direct expenses of the Defense and Industrial business unit, as well as certain unallocated corporate costs related to being a publicly traded company and legacy pension and post-retirement benefits. Adjustments include acquisition related costs, amortization of acquired intangibles, restructuring costs and other charges that management believes may or may not recur with similar materiality or impact on operating income in future periods. Management believes that by excluding these items they gain better insight and greater transparency of the operating performance of the segments, thus aiding them in more meaningful financial trend analysis and operational decision making.

 

(In thousands)    STERIS
Three months
ended
June 30, 2015
    STERIS
Three months
ended
September 30, 2015
    STERIS plc
Three months
ended
December 31, 2015
    STERIS plc
Three months
ended
March 31, 2016
    STERIS plc
Twelve months
ended
March 31, 2016
 
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Segment Revenues:

          

Healthcare Products

   $ 262,211      $ 292,757      $ 317,060      $ 335,130      $ 1,207,158   

Healthcare Specialty Services

     67,116        69,532        128,326        157,886        422,860   

Life Sciences

     56,772        71,040        82,702        85,456        295,970   

Applied Sterilization Technologies

     53,689        55,839        90,225        110,367        310,120   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     439,788        489,168        618,313        688,839        2,236,108   

Corporate and Other

     114        729        375        1,438        2,656   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

   $ 439,902      $ 489,897      $ 618,688      $ 690,277      $ 2,238,764   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income:

          

Healthcare Products

   $ 27,813      $ 40,712      $ 52,141      $ 60,629      $ 181,295   

Healthcare Specialty Services

     5,437        4,794        7,389        6,545        24,165   

Life Sciences

     13,450        20,883        24,115        27,018        85,466   

Applied Sterilization Technologies

     16,543        17,493        26,766        38,422        99,224   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     63,243        83,882        110,411        132,614        390,150   

Corporate and Other

     (1,898     (4,034     (2,648     (2,908     (11,488
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Operating Income

   $ 61,345      $ 79,848      $ 107,763      $ 129,706      $ 378,662   

Less: Adjustments

          

Amortization of inventory and property step up to fair value

     10        21        4,060        5,816        9,907   

Amortization and impairment of acquired intangible assets

     6,021        6,682        15,494        19,507        47,704   

Acquisition related transaction and integration costs

     11,546        23,982        41,726        5,637        82,891   

Loss (gain) on fair value adjustment of acquisition related contingent consideration

     —          —          —          (736     (736

Settlement of pension obligation

     —          26,516        (46     —          26,470   

Restructuring charges

     (449     (15     (193     156        (501
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income

   $ 44,217      $ 22,662      $ 46,722      $ 99,326      $ 212,927