-- Fourth quarter earnings per share of $0.47 MENTOR, Ohio, May 7
/PRNewswire-FirstCall/ -- STERIS Corporation (NYSE: STE) today
announced financial results for its fiscal 2009 year ended March
31, 2009. Revenues for fiscal 2009 increased 3% to $1.3 billion
compared with $1.27 billion in the prior year. On a constant
currency basis, revenues increased 4%. Healthcare and Isomedix grew
revenues 5% and 1%, respectively, while Life Sciences revenues
declined 5%. For fiscal 2009, net income was $110.7 million, or
$1.86 per diluted share, compared with $77.1 million, or $1.20 per
diluted share in fiscal 2008. Included in net income for fiscal
2009 are restructuring charges related to the third quarter 2009
cost reduction program, as well as the impact of changes to certain
benefit policies which resulted in additional pre-tax income during
the third quarter. Combined, these two factors resulted in a net
pre-tax charge of $6.1 million during the year. For fiscal 2008,
pre-tax restructuring charges totaled $19.5 million, associated
with our fourth quarter 2008 cost reduction program. Excluding the
restructuring charges and the benefit policy change, net of tax,
net income for fiscal 2009 increased 28% to $114.5 million, or
$1.92 per diluted share, compared with fiscal 2008 net income of
$89.3 million, or $1.39 per diluted share. A detailed
reconciliation of these items can be found in the attached
financial tables. "We are very pleased with the year we were able
to deliver, particularly in what turned out to be a more difficult
environment for our Customers in the second half of our fiscal
year," said Walt Rosebrough, President and Chief Executive Officer
of STERIS. "We improved profitability and cash flow, even beyond
our expectations, because our people continued to improve
efficiencies. Looking ahead, we anticipate that fiscal 2010 will
continue to be a challenging environment, but we remain encouraged
by Customer response to our new products. In addition, the cost
reduction actions already taken will continue to benefit our
profitability. We believe that out new products, past cost control
efforts, and continued efficiency gains will allow us to offset
marketplace challenges." Fourth Quarter Results As anticipated,
fourth quarter revenues were lower than the previous year,
primarily reflecting lower overall market demand, as well as the
Company's efforts to reduce seasonality. Fiscal 2009 fourth quarter
revenues were $344.4 million compared with $375.2 million in the
fourth quarter of fiscal 2008, a decline of 8%. On a constant
currency basis, fourth quarter revenues declined 5%. Fiscal 2009
fourth quarter net income was $27.8 million, or $0.47 per diluted
share, compared with net income of $26.1 million, or $0.42 per
diluted share, in the fourth quarter of fiscal 2008. Included in
net income for the fourth quarter of fiscal 2009 are pre-tax
restructuring charges totaling $1.8 million related to the third
quarter 2009 cost reduction program. On the consolidated statements
of income, $0.8 million of these charges were recorded as
restructuring expenses and $1.0 million were recorded in cost of
goods sold. Included in net income for the fourth quarter of fiscal
2008 are pre-tax restructuring charges totaling $16.5 million
associated with the 2008 cost reduction program. On the
consolidated statements of income, $12.4 million of these charges
were recorded as restructuring expenses and $4.1 million were
recorded in cost of goods sold. Excluding these restructuring
charges net of tax, fiscal 2009 fourth quarter net income was $28.9
million, or $0.49 per diluted share, compared with net income of
$36.4 million, or $0.59 per diluted share in the fourth quarter of
fiscal 2008. Segment Results Healthcare revenues in the quarter
were $249.2 million compared with $264.2 million in the fourth
quarter of fiscal 2008, a decline of 6%. Strength in new products
was more than offset by a slowdown in U.S. hospital spending, as
well as the Company's efforts to reduce seasonality. Backlog levels
at quarter end were $119.8 million, an increase of 22% compared
with the same time last year. Operating income was $38.3 million,
compared with $34.6 million in the fourth quarter of fiscal 2008.
Excluding restructuring charges, segment operating income was $39.9
million compared with $48.4 million in the prior year quarter
driven by lower revenues. Life Sciences fourth quarter revenues
were $58.7 million compared with $73.0 million in the fourth
quarter of fiscal 2008, a decline of 20%. Capital equipment sales
declined 34% compared with a very strong fourth quarter of last
year. Backlog levels at quarter end were $45.2 million, an increase
of 2% compared with the prior year period. Life Sciences operating
income was $4.0 million in the quarter compared with $5.6 million
in the fourth quarter of fiscal 2008. Excluding restructuring
charges, segment operating income was $4.2 million compared with
$7.1 million in the prior year quarter driven by lower revenues.
Fiscal 2009 fourth quarter revenues for Isomedix Services were
$34.2 million compared with $35.7 million in the same period last
year, a decline of 4%. Revenues were affected by the previously
disclosed sale of a Chicago-area facility in the second quarter of
fiscal 2009 as well as some slowdown in spending by medical device
Customers. Operating income was $7.9 million in the quarter
compared with $7.1 million in the fourth quarter of last year.
Included in operating income for the fourth quarter was a gain of
$1.7 million related to the sale of the segment's Rhode Island
facility to a Customer. Excluding restructuring charges, segment
operating income was $7.9 million in the fourth quarter of fiscal
2009 compared with $7.5 million in the prior year quarter. Cash
Flow Net cash provided by operations for fiscal 2009 was $167.4
million, compared with net cash provided by operations of $143.4
million in fiscal 2008. Free cash flow (see note 1) for fiscal 2009
was $145.8 million, compared with free cash flow of $91.6 million
in fiscal 2008. Free cash flow for fiscal 2009 benefited from the
increase in earnings, lower capital spending and the sale of the
two Isomedix facilities, which combined added $17.5 million to free
cash flow. As a result of strong cash flow, the Company ended
fiscal 2009 with a cash position of $154.2 million. During fiscal
2009, the Company repurchased 2,421,177 shares of its common stock
at an average price of $30.74 for a total amount of $74.4 million.
Approximately $204 million remains under the current share
repurchase authorization. Outlook Based upon current trends, the
Company expects fiscal 2010 revenues to be flat to down mid-single
digits from fiscal 2009 levels, and earnings per diluted share of
$1.80 to $2.00 for the full fiscal year 2010. This outlook reflects
certain key assumptions, some of which are listed below: --
Healthcare revenues are anticipated to be flat to down mid-single
digits, including the previously announced impact of reduced
revenues from SYSTEM 1. -- Life Sciences revenues are anticipated
to be flat. -- Isomedix revenues are anticipated to decline in the
mid-single digits. -- The Company has assumed the average forward
exchange rates for the U.S. dollar and key international currencies
as of April 2, 2009. -- The Company has assumed a slight increase
in raw material costs. -- EBIT as a percent of revenue is
anticipated to be approximately 14%. -- The anticipated effective
tax rate is approximately 35%. For the full fiscal year 2010, free
cash flow (see note 1) is anticipated to be approximately $100
million and capital expenditures are anticipated to be
approximately $60 million. Conference Call In conjunction with this
press release, STERIS Corporation 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 http://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 from 12:00 p.m. Eastern time on May 7,
2009, until 5:00 p.m. Eastern time on May 21, 2009, either over the
Internet at http://www.steris-ir.com/ or via phone by calling
1-866-419-8655 in the United States and Canada, and 1-203-369-0784
internationally. Annual Meeting of Shareholders The Company will
hold its annual meeting of shareholders on July 23, 2009. Further
information regarding the time and location will be provided in the
Company's annual report and proxy materials. About STERIS The
mission of STERIS Corporation is to provide a healthier today and
safer tomorrow through knowledgeable people and innovative
infection prevention, decontamination and health science
technologies, products and services. The Company's more than 5,000
dedicated employees around the world work together to supply a
broad array of solutions by offering a combination of equipment,
consumables and services to healthcare, pharmaceutical, industrial
and government customers. The Company is listed on the New York
Stock Exchange under the symbol STE. For more information, visit
http://www.steris.com/. (1) Free cash flow is a non-GAAP number
used by the Company as a measure to gauge its ability to fund
future growth opportunities, 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. This news release, and the
conference call referenced here, may contain statements concerning
certain trends, expectations, forecasts, estimates, or other
forward-looking information affecting or relating to the Company or
its industry 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
report, and may be identified by the use of forward-looking terms
such as "may," "will," "expects," "believes," "anticipates,"
"plans," "estimates," "projects," "targets," "forecasts,"
"outlook," "potential," "confidence," 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 government
regulations or the application or interpretation thereof. Other
risk factors are described in the Company's Form 10-K and other
securities filings. Many of these important factors are outside
STERIS's control. No assurances can be provided as to any outcome
from litigation, regulatory action, administrative proceedings,
government investigations, warning letters, cost reductions,
business strategies, level of share repurchases, earnings and
revenue trends, expense reduction or other future financial
results. Unless legally required, the Company 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) the
potential for increased pressure on pricing that leads to erosion
of profit margins, (b) the possibility that market demand will not
develop for new technologies, products or applications, or the
Company's business initiatives will take longer, cost more or
produce lower benefits than anticipated, (c) the possibility that
application of or compliance with laws, court rulings, regulations,
regulatory actions, including without limitation previously
disclosed FDA warning letters and government investigations,
certifications or other requirements or standards may delay or
prevent new product introductions, affect the production and
marketing of existing products, or otherwise affect Company
performance, results, or value, (d) the potential of international
unrest or effects of fluctuations in currencies, tax assessments or
rates, raw material costs, benefit or retirement plan costs, or
other regulatory compliance costs, (e) the possibility of reduced
demand, or reductions in the rate of growth in demand, for the
Company's products and services, (f) the possibility that
anticipated cost savings or other results may not be achieved, or
that transition, labor, competition, timing, execution, regulatory,
governmental, or other issues or risks associated with the matters
described in this release, and the conference call referenced here,
may adversely impact Company performance, results, or value, (g)
the effect of the credit crisis on our ability, as well as the
ability of our customers and suppliers, to adequately access the
credit markets when needed, and (h) those risks described in our
Annual Report on Form 10-K for the year ended March 31, 2008, filed
with the SEC on May 30, 2008, under Item 1A, "Risk Factors." STERIS
Corporation Consolidated Condensed Statements of Income (In
thousands, except per share data) Three Months Ended Twelve Months
Ended March 31, March 31, ---------------- ---------------- 2009
2008 2009 2008 ---- ---- ---- ---- (Unaudited) (Unaudited)
(Unaudited) Revenues $344,366 $375,170 $1,298,525 $1,265,090 Cost
of revenues 204,555 226,977 771,783 754,487 ------- ------- -------
------- Gross profit 139,811 148,193 526,742 510,603 Operating
expenses: Selling, general, and administrative 83,073 84,752
314,983 334,681 Research and development 8,291 8,953 32,760 36,916
Restructuring expense 828 12,420 3,554 15,461 --- ------ -----
------ Total operating expenses 92,192 106,125 351,297 387,058
------ ------- ------- ------- Income from operations 47,619 42,068
175,445 123,545 Non-operating expense, net 2,749 1,174 8,960 3,746
Income tax expense 17,054 14,785 55,800 42,693 ------ ------ ------
------ Net income $27,816 $26,109 $110,685 $77,106 ======= =======
======== ======= Earnings per common share (EPS) data: Basic $0.48
$0.43 $1.88 $1.22 ===== ===== ===== ===== Diluted $0.47 $0.42 $1.86
$1.20 ===== ===== ===== ===== Cash dividends declared per common
share outstanding $0.08 $0.06 $0.30 $0.23 Weighted average number
of common shares outstanding used in EPS computation: Basic number
of common shares outstanding 58,445 60,982 58,778 63,300 Diluted
number of common shares outstanding 58,807 61,704 59,544 64,124
STERIS Corporation Consolidated Condensed Balance Sheets (In
thousands) March 31, March 31, 2009 2008 ---- ---- Assets
(Unaudited) Current assets: Cash and cash equivalents $154,180
$51,868 Accounts receivable, net 238,438 249,814 Inventories, net
130,218 147,210 Other current assets 30,294 64,484 ------ ------
Total Current Assets 553,130 513,376 Property, plant, and
equipment, net 350,996 384,642 Goodwill and intangible assets, net
305,189 337,980 Other assets 7,624 3,294 ----- ----- Total Assets
$1,216,939 $1,239,292 ========== ========== Liabilities and
Shareholders' Equity Current liabilities: Accounts payable $68,573
$75,532 Other current liabilities 133,453 154,827 ------- -------
Total Current Liabilities 202,026 230,359 Long-term debt 210,000
179,280 Other liabilities 87,177 123,501 Shareholders' equity
717,736 706,152 ------- ------- Total Liabilities and Shareholders'
Equity $1,216,939 $1,239,292 ========== ========== STERIS
Corporation Consolidated Condensed Statements of Cash Flows (In
thousands) Twelve Months Ended March 31, ----------- 2009 2008 ----
---- (Unaudited) Operating Activities: Net income $110,685 $77,106
Non-cash items 73,834 67,540 Working capital adjustments (17,135)
(1,245) ------- ------ Net cash provided by operating activities
167,384 143,401 Investing Activities: Purchases of property, plant,
equipment, and intangibles, net (40,889) (56,974) Proceeds from
sale of property, plant, equipment and intangibles 19,341 5,154
Equity investment in joint venture (4,150) - ------ ------ Net cash
used in investing activities (25,698) (51,820) Financing
Activities: Proceeds from the issuance of long-term obligations
150,000 - (Payments) proceeds under credit facilities, net (79,180)
79,180 Payments on long-term obligations (40,800) (700) Deferred
financing fees and debt issuance costs (476) (443) Repurchases of
common shares (80,466) (177,171) Cash dividends paid to common
shareholders (17,657) (14,609) Tax benefit from stock options
exercised 6,982 3,194 Stock options and other equity transactions,
net 33,621 14,619 ------ ------ Net cash provided by (used in)
financing activities (27,976) (95,930) Effect of exchange rate
changes on cash and cash equivalents (11,398) 3,921 ------- -----
Increase in cash and cash equivalents 102,312 (428) Cash and cash
equivalents at beginning of period 51,868 52,296 ------ ------ Cash
and cash equivalents at end of period $154,180 $51,868 ========
======= STERIS Corporation Segment Data (In thousands) Three Months
Ended Twelve Months Ended March 31, December 31, -----------
-------------- 2009 2008 2009 2008 ---- ---- ---- ---- (Unaudited)
(Unaudited) (Unaudited) Segment Revenues: Healthcare $249,185
$264,247 $931,263 $887,073 Life Sciences 58,724 73,020 216,701
228,350 STERIS Isomedix Services 34,169 35,738 142,645 140,558
------ ------ ------- ------- Total Reportable Segments 342,078
373,005 1,290,609 1,255,981 Corporate and Other 2,288 2,165 7,916
9,109 ----- ----- ----- ----- Total Segment Revenues $344,366
$375,170 $1,298,525 $1,265,090 ======== ======== ==========
========== Segment Operating Income (Loss): Healthcare $38,267
$34,574 $132,601 $103,447 Life Sciences 3,987 5,560 18,413 11,535
STERIS Isomedix Services 7,912 7,137 34,763 28,964 ----- -----
------ ------ Total Reportable Segments 50,166 47,271 185,777
143,946 Corporate and Other (2,547) (5,203) (10,332) (20,401)
------ ------ ------- ------- Total Segment Operating Income
$47,619 $42,068 $175,445 $123,545 ======= ======= ======== ========
STERIS Corporation Non-GAAP Disclosures (Unaudited) (In thousands,
except per share data) The following tables present financial
measures which are considered to be "non-GAAP financial measures"
under Securities Exchange Commissions rules. The Company has
referred to results of operations excluding restructuring charges
and a change in a benefit policy in order to provide meaningful
comparative analysis between the periods presented. 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 growth
opportunities, repurchase common shares, and pay cash dividends.
STERIS's calculation of free cash flow may vary from other
companies. Twelve Months Ended Plan March 31, Fiscal -----------
2009 2008 2010 ---- ---- ---- (Unaudited) (Unaudited) Calculation
of Free Cash Flow from continuing operations: Cash flows from
operating activities $167,384 $143,401 $160,000 Purchases of
property, plant, equipment, and intangibles, net $(40,889)
$(56,974) $(60,000) Proceeds from the sale of property, plant,
equipment, and intangibles $19,341 $5,154 $- ------- ------ ------
Free Cash Flow from Continuing Operations $145,836 $91,581 $100,000
======== ======= ======== The following tables reconcile reported
net income to net income excluding restructuring charges and a
change in benefit policy: Three Months Ended March 31,
---------------------------------------- 2009 2008 ---- ---- Amount
Diluted EPS Amount Diluted EPS ------ ----------- ------
----------- Net Income as Reported $27,816 $0.47 $26,109 $0.42
Restructuring, Net of Tax $1,111 $0.02 $10,341 $0.17 ------ -----
------- ----- $28,927 $0.49 $36,450 $0.59 ======= ===== =======
===== Twelve Months Ended March 31,
----------------------------------------- 2009 2008 ---- ----
Amount Diluted EPS Amount Diluted EPS ------ ----------- ------
----------- Net Income as Reported $110,685 $1.86 $77,106 $1.20
Restructuring, Net of Tax $8,750 $0.14 $12,216 $0.19 Change in
Benefit Policy, Net of Tax $(4,948) $(0.08) $- $- ------- ------
------- ------ $114,487 $1.92 $89,322 $1.39 ======== ===== =======
===== Three Months Ended March 31, -------------------------------
Segment Operating Income (Loss) Excluding 2009 2008 Restructuring
---- ---- Charges: As Restructuring As Restructuring Reported
Charges Total Reported Charges Total -------- ------------- -----
-------- ----------- ----- Healthcare $38,267 $1,606 $39,873
$34,574 $13,831 $48,405 Life Sciences $3,987 $172 $4,159 $5,560
$1,531 $7,091 STERIS Isomedix Services $7,912 $- $7,912 $7,137 $389
$7,526 ------ ------ ------ ------ ------ ------ Total Reportable
Segments $50,166 $1,778 $51,944 $47,271 $15,751 $63,022 Corporate
and Other $(2,547) $- $(2,547) $(5,203) $753 $(4,450) ------ ------
------- ------- ------- ------- Total Segment Operating Income
$47,619 $1,778 $49,397 $42,068 $16,504 $58,572 ======= ======
======= ======= ======= ======= DATASOURCE: STERIS Corporation
CONTACT: Julie Winter, Manager, Investor Relations of STERIS
Corporation, +1-440-392-7245 Web Site: http://www.steris.com/
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