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8-K - FORM 8-K - STERIS plcd374732d8k.htm

Exhibit 99.1

STERIS Announces Financial Results for Fiscal 2017 Fourth Quarter and Full Year

•    Full year revenue increases 17% to $2.6 billion

•    Divestitures reduce as reported fourth quarter results

•    Fourth quarter constant currency organic revenue increases 7%

•    Margin expansion continues, benefiting from strategic initiatives

LEICESTER, U.K. - (May 9, 2017) - STERIS plc (NYSE: STE) (“STERIS” or the “Company”) today announced financial results for its fiscal 2017 fourth quarter ended March 31, 2017. Fiscal 2017 fourth quarter revenue declined 1% to $681.2 million compared with $690.3 million in the fourth quarter of fiscal 2016 due to the impact of divested businesses and foreign currency movements. Constant currency organic revenue grew 7% in the fourth quarter of fiscal 2017. This measure excludes the impact of acquisitions, divestitures and foreign currency (see Non-GAAP Financial Measures). For the full fiscal year, revenue increased 17% to $2.6 billion, compared with $2.2 billion in fiscal 2016, or 5% on a constant currency organic basis.

“We are pleased to end this fiscal year on a high note,” said Walt Rosebrough, President and Chief Executive Officer of STERIS. “We expect solid results in fiscal 2018, as our strategic initiatives continue to drive improvement in both gross margins and operating margins, as well as strong cash generation. For fiscal 2018, constant currency organic revenue growth is anticipated to be in the range of 4-5%, and we look forward to our sixth consecutive year of record adjusted earnings.”

Fourth Quarter and Full Year 2017 Operating Results

As reported, net income for the fourth quarter was $26.1 million, or $0.31 per diluted share, compared with net income of $57.7 million, or $0.67 per diluted share in the fourth quarter of fiscal 2016. Adjusted net income (see Non-GAAP Financial Measures) for the fourth quarter of fiscal 2017 was $94.7 million, or $1.11 per diluted share, compared with adjusted net income for the previous year’s fourth quarter of $77.9 million or $0.90 per diluted share. As reported, full year net income was $110.0 million, or $1.28 per diluted share, compared with $110.8 million, or $1.56 per diluted share in fiscal 2016. Adjusted net income was $323.5 million, or $3.76 per diluted share, compared with adjusted net income of $241.5 million, or $3.39 per diluted share in fiscal 2016.


Fourth Quarter Segment Results

As reported, Healthcare Products revenue grew 5% in the quarter to $351.4 million compared with $333.8 million in the fourth quarter of fiscal 2016, driven by 12% growth in capital equipment and a 4% increase in service revenue, which were somewhat offset by a 4% decline in consumable revenue as a result of divestitures. Constant currency organic revenue grew 7% in the fourth quarter of fiscal 2017. Healthcare Products reported operating income of $74.6 million compared with $60.1 million in last year’s fourth quarter. The increase in profitability was primarily due to the increase in volume and improvement in gross margins.

Healthcare Specialty Services fourth quarter revenue as reported decreased 21% to $126.0 million compared with $159.3 million in the fourth quarter of fiscal 2016, primarily due to divestures. Constant currency organic revenue increased 8%. Healthcare Specialty Services operating income was $5.7 million compared with $7.0 million in last year’s fourth quarter, primarily due to the impact of divestitures and foreign currency movements.

Fiscal 2017 fourth quarter revenue as reported for Applied Sterilization Technologies increased 5% to $115.7 million compared with $110.4 million in the same period last year. Constant currency organic revenue increased 10%. Segment operating income increased to $39.2 million in the fourth quarter of fiscal 2017 compared with operating income of $38.4 million in the same period last year, as the increase in volume and cost savings from the combination with Synergy Health were largely offset by foreign currency movements.

Life Sciences fourth quarter revenue as reported increased 1% to $86.3 million compared with $85.5 million in the fourth quarter of fiscal 2016, driven by consumable revenue growth of 5% offset by a 2% decline in capital equipment revenue and a 1% decline in service revenue. Constant currency organic revenue increased 2%. Life Sciences operating income was $25.8 million, down from $27.0 million in the prior year’s fourth quarter, primarily due to increased spending on research and development and mix within capital equipment revenue.

Cash Flow

Net cash provided by operations for the full year fiscal 2017 was $424.1 million, compared with $254.7 million in fiscal 2016. Free cash flow (see Non-GAAP Financial Measures) for fiscal 2017 was $256.0 million compared with $129.1 million in the prior year. The increase in free cash flow is primarily due to higher cash from operations and a reduction in acquisition-related cash payments.


Dividend Announcement

STERIS’s Board of Directors has authorized a quarterly interim dividend of $0.28 per share. The dividend is payable June 29, 2017 to shareholders of record at the close of business on June 7, 2017.

Outlook

STERIS expects fiscal 2018 as reported revenues to decline 2-3% compared with as reported fiscal 2017 revenue, due to the impact of divested businesses and foreign currency movements. Based on twelve month forward rates, changes in foreign currency are expected to reduce revenue by approximately $15 million. Constant currency organic revenue growth is anticipated to be in the range of 4-5%. Adjusted net earnings per diluted share are anticipated to be in the range of $3.96 – $4.09 for the full fiscal year. Included in that earnings range is approximately $46 million in net interest expense for fiscal 2018, reflecting a shift from floating rate debt to fixed rate debt, and an adjusted effective tax rate in the range of 25-26%.

Fiscal 2018 free cash flow is anticipated to be approximately $280.0 million. Capital expenditures are anticipated to be approximately $180.0 million, reflecting continued facility expansions, integration of IT systems, new product development and general maintenance 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 1-877-317-6789 in the United States or 1-412-317-6789 internationally, and asking to join the conference call for STERIS plc.

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. To access the replay of the call, please use the access code 10103045 and dial 1-877-344-7529 in the United States or 1-412-317-0088 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, free cash flow and constant currency organic revenue 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 of 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.

To measure the percentage organic revenue growth, the Company removes the impact of acquisitions and divestitures that affect the comparability and trends in revenue. To measure the percentage constant currency organic revenue growth, the impact of changes in foreign currency exchange rates and acquisitions and divestitures that affect the comparability and trends in revenue are removed. The impact of changes in foreign currency exchange rates is calculated by translating current year results at prior year average foreign currency exchange rates.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales, gross profit, operating income, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures below, provide a more complete understanding of the business. The Company strongly encourage investors and shareholders to review its financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

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 the statement is made 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 in STERIS’s securities filings, including Item 1A of STERIS’s Annual Report on Form 10-K for the year ended March 31, 2016. 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 STERIS’s securities filings 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 (the “Combination”) with STERIS Corporation and Synergy Health plc (“Synergy”), (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 the operations of the companies, (c) the integration of the operations of the companies 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’s 10-K for the year ended March 31, 2016 and other securities filings, may adversely impact STERIS’s performance, results, prospects or value, (m) the impact on STERIS and its operations of the “Brexit” or the exit of other member countries from the EU, (n) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation, regulations or orders, that may be implemented by the new U.S. administration or Congress, or of any responses thereto, (o) the possibility that anticipated financial results or benefits of recent acquisitions, including the Combination, or of STERIS’s restructuring efforts, or of recent divestitures will not be realized or will be other than anticipated and (p) 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,  
     2017     2016      2017      2016  
     (Unaudited)     (Unaudited)      (Unaudited)      (Unaudited)  

Revenues

   $ 681,189     $ 690,277      $ 2,612,756      $ 2,238,764  

Cost of revenues

     401,064       426,388        1,587,124        1,342,964  

Cost of revenues—Restructuring

     —         —          —          319  
  

 

 

   

 

 

    

 

 

    

 

 

 

Cost of revenues, net

     401,064       426,388        1,587,124        1,343,283  
  

 

 

   

 

 

    

 

 

    

 

 

 

Gross profit

     280,125       263,889        1,025,632        895,481  

Operating expenses:

          

Selling, general, and administrative

     205,743       150,097        680,069        626,710  

Goodwill impairment loss

     —         —          58,356        —    

Research and development

     15,761       14,310        59,397        56,664  

Restructuring expense

     (5     156        215        (820
  

 

 

   

 

 

    

 

 

    

 

 

 

Total operating expenses

     221,499       164,563        798,037        682,554  
  

 

 

   

 

 

    

 

 

    

 

 

 

Income from operations

     58,626       99,326        227,595        212,927  

Non-operating expense, net

     11,291       10,847        42,949        41,043  

Income tax expense

     21,270       30,610        74,015        60,299  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income

   $ 26,065     $ 57,869      $ 110,631      $ 111,585  

Net (loss) income attributable to noncontrolling interest

     (78     129        666        822  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income attributable to shareholders

   $ 26,143     $ 57,740      $ 109,965      $ 110,763  
  

 

 

   

 

 

    

 

 

    

 

 

 

Earnings per common share (EPS) data:

          

Basic

   $ 0.31     $ 0.67      $ 1.29      $ 1.57  
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.31     $ 0.67      $ 1.28      $ 1.56  
  

 

 

   

 

 

    

 

 

    

 

 

 

Cash dividends declared per share outstanding

   $ 0.28     $ 0.25      $ 1.09      $ 0.98  

Weighted average number of shares outstanding used in EPS computation:

          

Basic number of shares outstanding

     84,934       85,907        85,473        70,698  

Diluted number of shares outstanding

     85,529       86,367        86,094        71,184  

STERIS plc

Consolidated Condensed Balance Sheets

(In thousands)

 

     March 31,      March 31,  
     2017      2016  
     (Unaudited)         

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 282,918      $ 248,841  

Accounts receivable, net

     483,451        471,523  

Inventories, net

     197,837        192,792  

Other current assets

     53,596        59,369  
  

 

 

    

 

 

 

Total Current Assets

     1,017,802        972,525  

Property, plant, and equipment, net

     915,908        1,064,319  

Goodwill and intangible assets, net

     2,956,190        3,279,942  

Other assets

     34,555        29,630  
  

 

 

    

 

 

 

Total Assets

   $ 4,924,455      $ 5,346,416  
  

 

 

    

 

 

 

Liabilities and Equity

     

Current liabilities:

     

Accounts payable

   $ 133,479      $ 139,572  

Other current liabilities

     248,104        261,034  
  

 

 

    

 

 

 

Total Current Liabilities

     381,583        400,606  

Long-term debt

     1,478,361        1,567,796  

Other liabilities

     254,478        339,122  

Equity

     2,810,033        3,038,892  
  

 

 

    

 

 

 

Total Liabilities and Equity

   $ 4,924,455      $ 5,346,416  
  

 

 

    

 

 

 


STERIS plc

Segment Data

Financial information for each of the 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     Twelve Months Ended  
     March 31,     March 31,  
(In thousands)    2017     2016     2017     2016  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Segment Revenues:

        

Healthcare Products

   $ 351,419     $ 333,760     $ 1,260,878     $ 1,202,820  

Healthcare Specialty Services

     126,027       159,256       560,175       427,198  

Life Sciences

     86,328       85,456       327,276       295,970  

Applied Sterilization Technologies

     115,656       110,367       458,231       310,120  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     679,430       688,839       2,606,560       2,236,108  

Corporate and Other

     1,759       1,438       6,196       2,656  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

   $ 681,189     $ 690,277     $ 2,612,756     $ 2,238,764  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income:

        

Healthcare Products

   $ 74,557     $ 60,140     $ 224,522     $ 180,263  

Healthcare Specialty Services

     5,746       7,034       13,450       25,197  

Life Sciences

     25,812       27,018       96,983       85,466  

Applied Sterilization Technologies

     39,154       38,422       156,010       99,224  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     145,269       132,614       490,965       390,150  

Corporate and Other

     (7,061     (2,908     (14,433     (11,488
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Operating Income

   $ 138,208     $ 129,706     $ 476,532     $ 378,662  

Less: Adjustments

        

Goodwill impairment loss

     —         —         58,356       —    

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

     386       5,816       4,743       9,907  

Amortization of acquired intangible assets

     23,490       19,507       66,398       47,704  

Acquisition and integration related charges

     11,189       5,637       30,082       82,891  

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

     719       (736     2,569       (736

Net loss on divestiture of businesses

     43,803       —         86,574       —    

Settlement of pension obligation

     —         —         —         26,470  

Restructuring charges

     (5     156       215       (501
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income

   $ 58,626     $ 99,326     $ 227,595     $ 212,927  
  

 

 

   

 

 

   

 

 

   

 

 

 


STERIS plc

Consolidated Condensed Statements of Cash Flows

(In thousands)

 

     Twelve Months Ended  
     March 31,  
     2017     2016  
     (Unaudited)     (Unaudited)  

Operating Activities:

    

Net income

   $ 110,631     $ 111,585  

Pension settlement expense

     —         26,470  

Pension contributions

     —         (4,641

Goodwill impairment loss

     58,356       —    

Non-cash items

     312,302       147,143  

Changes in operating assets and liabilities

     (57,203     (25,882
  

 

 

   

 

 

 

Net cash provided by operating activities

     424,086       254,675  

Investing Activities:

    

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

     (172,901     (126,407

Proceeds from sale of property, plant, equipment and intangibles

     4,846       844  

Proceeds from the sale of businesses

     135,713       —    

Purchases of investments

     (6,356     —    

Acquisition of businesses, net of cash acquired

     (65,557     (604,021
  

 

 

   

 

 

 

Net cash used in investing activities

     (104,255     (729,584

Financing Activities:

    

Proceeds from issuance of long-term obligations

     293,730       350,000  

Payments on long-term obligations

     (172,500     (92,567

(Payments) proceeds under credit facilities, net

     (196,613     369,451  

Acquisition related contingent consideration

     (9,918     —    

Deferred financing fees and debt issuance costs

     (1,073     (5,169

Repurchases of shares

     (97,509     (14,369

Cash dividends paid to shareholders

     (93,193     (65,203

Stock option and other equity transactions, net

     4,955       11,240  

Proceeds from issuance of equity to minority shareholders

     5,022       625  

Excess tax benefit from share-based compensation

     —         6,281  
  

 

 

   

 

 

 

Net cash provided by financing activities

     (267,099     560,289  

Effect of exchange rate changes on cash and cash equivalents

     (18,655     (4,228
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     34,077       81,152  

Cash and cash equivalents at beginning of period

     248,841       167,689  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 282,918     $ 248,841  
  

 

 

   

 

 

 

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 debt principal repayments, growth outside of core operations, repurchase shares, and pay cash dividends. STERIS’s calculation of free cash flow may vary from other companies.

 

     Twelve Months Ended  
     March 31,  
     2017      2016  
     (Unaudited)      (Unaudited)  

Calculation of Free Cash Flow:

     

Cash flows from operating activities

   $ 424,086      $ 254,675  

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

     (172,901      (126,407

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

     4,846        844  
  

 

 

    

 

 

 

Free Cash Flow

   $ 256,031      $ 129,112  
  

 

 

    

 

 

 

 

     Twelve Months Ended  
     March 31,  
     2018  
     (Outlook)*  

Calculation of free cash flow for outlook:

  

Cash flows from operating activities

   $ 460,000  

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

     (180,000
  

 

 

 

Free Cash Flow

   $ 280,000  
  

 

 

 

 

* 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.

Management and the Board of Directors 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)  
    As reported, GAAP     Impact of
Acquisitions
    Impact of
Divestitures
    Impact of
Foreign
Currency
Movements
    GAAP
growth
    Organic
growth
    Constant
currency
organic
growth
 
    2017     2016     2017     2016     2017     2017     2017     2017  

Segment Revenues:

               

Healthcare Products

  $ 351,419     $ 333,760     $ 6,302     $ (9,604   $ (2,962     5.3     6.5     7.4

Healthcare Specialty Services

    126,027       159,256       —         (38,834     (4,000     -20.9     4.7     8.0

Life Sciences

    86,328       85,456       —         —         (777     1.0     1.0     1.9

Applied Sterilization Technologies

    115,656       110,367       —         (2,956     (2,413     4.8     7.7     9.9

Corporate and Other

    1,759       1,438       —         —         —         22.3     22.3     22.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 681,189     $ 690,277     $ 6,302     $ (51,394   $ (10,152     -1.3     5.6     7.2
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Twelve months ended March 31, (unaudited)  
    As reported, GAAP     Impact of
Acquisitions
    Impact of
Divestitures
    Impact of
Foreign
Currency
Movements
    GAAP
growth
    Organic
growth
    Constant
currency
organic
growth
 
    2017     2016     2017     2016     2017     2017     2017     2017  

Segment Revenues:

               

Healthcare Products

  $ 1,260,878     $ 1,202,820     $ 39,727     $ (22,094   $ (10,489     4.8     3.4     4.3

Healthcare Specialty Services

    560,175       427,198       179,740       (58,414     (7,475     31.1     3.2     5.2

Life Sciences

    327,276       295,970       22,015       —         (3,324     10.6     3.1     4.3

Applied Sterilization Technologies

    458,231       310,120       135,677       (4,958     (4,008     47.8     5.7     7.0

Corporate and Other

    6,196       2,656       1,220       —         —         133.4     87.4     87.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 2,612,756     $ 2,238,764     $ 378,379     $ (85,466   $ (25,296     16.7     3.8     4.9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

To measure the percentage organic revenue growth, the Company removes the impact of acquisitions and divestitures that affect the comparability and trends in revenue. To measure the percentage constant currency organic revenue growth, the impact of changes in foreign currency exchange rates and acquisitions and divestitures that affect the comparability and trends in revenue are removed. The impact of changes in foreign currency exchange rates is calculated by translating current year results at prior year average foreign currency exchange rates.

 

    Three months ended March 31, (unaudited)  
    Gross Profit     Income from Operations     Net income
attributable to
shareholders*
    Diluted EPS  
    2017     2016     2017     2016     2017     2016     2017     2016  

GAAP

  $ 280,125     $ 263,889     $ 58,626     $ 99,326     $ 26,143     $ 57,740     $ 0.31     $ 0.67  

Adjustments:

               

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

    641       5,796       386       5,816          

Amortization and impairment of purchased intangible assets

    17       —         23,490       19,507          

Acquisition and integration related charges

    553       1,441       11,189       5,637          

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

    —         —         719       (736        

Net loss on divestiture of businesses

    —         —         43,803       —            

Restructuring charges

    —         —         (5     156          

Net impact of adjustments after tax

            68,507       20,144      

Net EPS impact

                0.80       0.23  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

  $ 281,336     $ 271,126     $ 138,208     $ 129,706     $ 94,650     $ 77,884     $ 1.11     $ 0.90  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Twelve months ended March 31, (unaudited)  
    Gross Profit     Income from Operations     Net income
attributable to
shareholders*
    Diluted EPS  
    2017     2016     2017     2016     2017     2016     2017     2016  

GAAP

  $ 1,025,632     $ 895,481     $ 227,595     $ 212,927     $ 109,965     $ 110,763     $ 1.28     $ 1.56  

Adjustments:

               

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

    6,580       9,826       4,743       9,907          

Amortization and impairment of purchased intangible assets

    33       —         66,398       47,704          

Acquisition and integration related charges

    1,589       2,979       30,082       82,891          

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

    —         —         2,569       (736        

Net loss on divestiture of businesses

    —         —         86,574       —            

Settlement of pension obligation

    —         —         —         26,470          

Goodwill impairment loss

    —         —         58,356       —            

Restructuring charges

    —         319       215       (501        

Net impact of adjustments after tax

            213,498       130,394      

Net EPS impact

                2.48       1.83  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

  $ 1,033,834     $ 908,605     $ 476,532     $ 378,662     $ 323,463     $ 241,157     $ 3.76     $ 3.39  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* The tax expense (benefit) includes both the current and deferred income tax impact of the adjustments.

FY 2018 Outlook

 

     Twelve Months Ended  
     March 31, 2018  
     (Outlook)**  

Net Income per diluted share

   $ 3.25-$3.38  

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

     0.02  

Amortization and impairment of purchased intangible assets

     0.61  

Acquisition and integration related charges

     0.08  
  

 

 

 

Adjusted net income per diluted share

   $ 3.96-$4.09  
  

 

 

 

 

** All amounts are estimates.


STERIS plc

Non-GAAP Financial Measures—Prior Periods

(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.

Management and the Board of Directors 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 June 30, (unaudited)  
     As reported, GAAP      Impact of
Acquisitions
     Impact of
Divestitures
    Impact of
Foreign
Currency
Movements
    GAAP
growth
    Organic
growth
    Constant
currency
organic
growth
 
     2016      2015      2016      2015     2016     2016     2016     2016  

Segment Revenues:

                   

Healthcare Products

   $ 281,298      $ 261,086      $ 11,669      $ —       $ (1,293     7.7     3.3     3.8

Healthcare Specialty Services

     157,888        68,241        86,553        —         (20     131.4     4.5     4.6

Life Sciences

     81,189        56,772        14,056        —         (382     43.0     18.3     18.9

Applied Sterilization Technologies

     116,573        53,689        59,093        —         (71     117.1     7.1     7.2

Corporate and Other

     1,430        114        1,220        —         —         1154.4     84.2     84.2
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 638,378      $ 439,902      $ 172,591      $ —       $ (1,766     45.1     5.9     6.3
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three months ended September 30, (unaudited)  
     As reported, GAAP      Impact of
Acquisitions
     Impact of
Divestitures
    Impact of
Foreign
Currency
Movements
    GAAP
growth
    Organic
growth
    Constant
currency
organic
growth
 
     2016      2015      2016      2015     2016     2016     2016     2016  

Segment Revenues:

                   

Healthcare Products

   $ 304,797      $ 291,724      $ 12,917      $ (2,699   $ (2,124     4.5     1.0     1.7

Healthcare Specialty Services

     142,775        70,565        69,570        —         (1     102.3     3.7     3.7

Life Sciences

     81,485        71,040        6,199        —         (1,060     14.7     6.0     7.5

Applied Sterilization Technologies

     115,601        55,839        58,015        —         (2     107.0     3.1     3.1

Corporate and Other

     1,757        729        —          —         —         141.1     141.1     141.0
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 646,415      $ 489,897      $ 146,701      $ (2,699   $ (3,187     32.0     2.6     3.2
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three months ended December 31, (unaudited)  
     As reported, GAAP      Impact of
Acquisitions
     Impact of
Divestitures
    Impact of
Foreign
Currency
Movements
    GAAP
growth
    Organic
growth
    Constant
currency
organic
growth
 
     2016      2015      2016      2015     2016     2016     2016     2016  

Segment Revenues:

                   

Healthcare Products

   $ 323,364      $ 316,251      $ 8,838      $ (9,791   $ (4,109     2.2     2.6     4.0

Healthcare Specialty Services

     133,485        129,135        23,617        (19,580     (3,453     3.4     0.3     3.4

Life Sciences

     78,274        82,702        1,760        —         (1,106     -5.4     -7.5     -6.1

Applied Sterilization Technologies

     110,401        90,225        18,569        (2,001     (1,518     22.4     4.1     5.8

Corporate and Other

     1,250        375        —          —         —         233.3     233.3     233.3
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 646,774      $ 618,688      $ 52,784      $ (31,372   $ (10,186     4.5     1.1     2.9
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


STERIS plc

Unaudited Supplemental Financial Data

Fourth Quarter Fiscal 2017

For Periods Ending March 31, 2017 and 2016

 

     FY 2017     FY 2016     FY 2017     FY 2016  

Total Company Revenues

   Q4     Q4     YTD     YTD  

Capital Equipment

   $ 193,228     $ 175,928     $ 640,757     $ 614,002  

Consumables

   $ 139,896     $ 142,510     $ 558,593     $ 516,044  

Service

   $ 348,065     $ 371,839     $ 1,413,406     $ 1,108,718  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     487,961       514,349       1,971,999       1,624,762  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues

   $ 681,189     $ 690,277     $ 2,612,756     $ 2,238,764  
  

 

 

   

 

 

   

 

 

   

 

 

 

United Kingdom Revenues

   $ 53,479     $ 71,195     $ 229,603     $ 144,577  

United Kingdom Revenues as a % of Total

     8     10     9     6

United States Revenues

   $ 477,267     $ 468,110     $ 1,803,457     $ 1,662,050  

United States Revenues as a % of Total

     70     68     69     74

International Revenues

   $ 150,443     $ 150,972     $ 579,696     $ 432,137  

International Revenues as a % of Total

     22     22     22     19

Other Data

   Q4     Q4     YTD     YTD  

Healthcare Products Backlog

   $ 109,692     $ 119,393       n/a       n/a  

Life Sciences Backlog

     53,178       45,281       n/a       n/a  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Backlog

   $ 162,870     $ 164,674       n/a       n/a  

GAAP Income Tax Rate

     44.9     34.6     40.1     35.2

Adjusted Income Tax Rate

     25.5     34.4     25.2     30.1

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.