Attached files
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| 8-K - Hill-Rom Holdings, Inc. | s231508k.htm |
Exhibit 99.1
CONTACT INFORMATION
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Investor Relations
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Contact:
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Blair A. (Andy) Rieth, Jr., Vice President, Investor Relations
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Phone:
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312-819-7259
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Email:
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andy.rieth@hill-rom.com
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Media
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Contact:
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Larry Baumann, Executive Director, Corporate Communications
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Phone:
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312-819-7248
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Email:
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larry.baumann@hill-rom.com
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HILL-ROM REPORTS FISCAL FIRST QUARTER
RESULTS; UPDATES FISCAL 2015 FINANCIAL OUTLOOK
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Reported revenue increased 18 percent versus prior year to $465 million, up 5 percent on an organic constant currency basis
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Adjusted diluted earnings per share of $0.49 compare to $0.36 in the prior year
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Reported diluted earnings per share of $0.21 compare to $0.22 in the prior year
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Operating cash flow of $31 million compares to $42 million in the prior year
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Fiscal year 2015 adjusted earnings per share are expected to be $2.44 to $2.50; Full-year reported revenue is expected to grow 11 to 12 percent
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CHICAGO, Ill., February 3, 2015 -- Hill-Rom Holdings, Inc. (NYSE: HRC) announced financial results for its fiscal first quarter ended December 31, 2014 and updated its fiscal year 2015 financial outlook. Adjusted earnings per diluted share of $0.49 increased 36 percent from $0.36 in the prior year, while reported earnings per diluted share of $0.21 decreased 5 percent from $0.22. Adjustments to reported earnings are detailed in the reconciliation schedules provided.
Hill-Rom’s quarterly revenue of $465 million increased 18 percent compared to last year, or 21 percent on a constant currency basis, primarily due to the Trumpf Medical acquisition and strong North America capital revenue growth. Excluding the benefit of Trumpf, our constant currency growth was 5 percent. Domestic revenue was $284 million, up 14 percent, while revenue outside the United States increased 34 percent on a constant currency basis to $181 million.
Management Comments
“We are pleased to report solid revenue and adjusted earnings growth for the quarter, while also accelerating investment in the future growth of the business,” said John Greisch, Hill-Rom President and Chief Executive Officer. “Both the North America capital and Surgical/Respiratory Care businesses performed well, while our International business continues to face a challenging environment. Despite incremental revenue headwinds of $40 to $50 million due to foreign exchange, we are raising our full-year adjusted earnings guidance. We are committed to driving revenue growth while improving operating margin and maintaining a disciplined approach to capital allocation.”
1
First Quarter Financial and Operational Results
-- Revenue:
-- North America. North America revenue increased 10 percent to $225 million. Capital sales increased 19 percent, while rental revenue declined 9 percent, or 1 percent excluding the impact of the previously exited third party reimbursed home care rental business.
-- International. International segment revenue declined 9 percent to $114 million (down 3 percent on a constant currency basis) with strength in Asia Pacific offset by lower revenue in Europe. Capital revenue declined 2 percent while rental revenue declined 6 percent on a constant currency basis.
-- Surgical/Respiratory Care. Surgical and Respiratory Care revenue doubled to $126 million reflecting 6 percent organic growth plus the addition of Trumpf Medical revenue.
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First quarter operating cash flow was $31 million compared to $42 million in the prior year.
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Share repurchases for the quarter amounted to approximately $57 million.
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Hill-Rom recently acquired access to two new technologies in our clinical focus areas of respiratory care and surgical safety and efficiency:
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-- We acquired an early-stage portable therapeutic device that provides chest physiotherapy (CPT). This device allows patient mobility during therapy and is an ideal complement to our Respiratory Care portfolio.
-- The Company obtained the exclusive distribution rights to the Thermedx FluidSmart™ System, a fluid management system used in minimally invasive gynecology, urology and arthroscopy surgical procedures.
Please see the attached schedules for additional information, including condensed financial information, a summary balance sheet, a cash flow statement and reconciliations of GAAP to adjusted financial measures.
For a more complete review of Hill-Rom’s results, please refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2014.
Financial Guidance Summary
Revenue: For fiscal 2015, Hill-Rom expects reported revenue growth of 11 to 12 percent compared to 11 to 13 percent previously. This reflects:
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low single-digit constant currency organic growth; and
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negative currency impact of approximately 4 percent compared to 1 to 2 percent previously.
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For the second quarter of fiscal 2015, Hill-Rom expects reported revenue growth of 13 to 15 percent. This reflects:
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low to mid-single-digit constant currency organic growth; and
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negative currency impact of approximately 4 percent.
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Adjusted Earnings per Diluted Share: The Company’s guidance for full year adjusted earnings per diluted share is $2.44 to $2.50 compared to $2.42 to $2.48 previously.
Second quarter adjusted earnings per diluted share are expected to be $0.57 to $0.60.
Cash Flow: Hill-Rom expects cash flow from operations for the full year to be approximately $250 million, unchanged from prior guidance.
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Discussion of Adjusted Financial Measures
Hill-Rom Holdings, Inc. routinely provides earnings per share results and guidance on an adjusted basis because the Company’s management believes that the presentation provides useful information to investors. This measure excludes strategic developments, special charges or other unusual events. Such items may be highly variable, difficult to predict and of a size that sometimes have substantial impact on the Company's reported operations for a period. Often, prospective quantification of such items is not feasible.
The Company also excludes expenses associated with the amortization of intangible assets associated with prior business acquisitions. This adjustment is made to allow investors to evaluate and understand operating trends excluding the non-cash impact of acquired intangible amortization on operating income, earnings per share and other measures.
Management uses these measures internally for planning, forecasting and evaluating the performance of the business. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
Reconciliations of GAAP measures to adjusted measures appear in the financial tables of this release.
Conference Call Webcast and Dial-in Information
As previously announced, the Company will host a conference call and webcast today at 8:00 a.m. ET.
Webcast: To join the live webcast with audio, go to http://ir.hill-rom.com/events.cfm or http://edge.media-server.com/m/p/gugxp3zm. The webcast slide deck will be posted to the Hill-Rom website prior to the webcast.
Conference Call Audio Only Dial-in information: To join the live conference call, dial 877-304-8969 domestic callers / 631-291-4543 international callers. The following Confirmation Code is required for both: 57960500. Callers will need to provide their name, company affiliation and telephone number to the conference operator. A recording of the webcast/call audio will be available for telephone replay through February 10, 2015, domestically at 855-859-2056 and internationally at 404-537-3406. For the replay, callers will need to use confirmation code 57960500. If you are unable to listen to the live webcast or the telephone replay, the webcast will be archived at http://ir.hill-rom.com/events.cfm.
About Hill-Rom Holdings, Inc.
Hill-Rom is a leading global medical technology company with more than 7,000 employees worldwide. We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency, and Respiratory Health. Around the world, Hill-Rom's people, products, and programs work towards one mission: Enhancing outcomes for patients and their caregivers.
www.hill-rom.com
Disclosure Regarding Forward Looking Statements
Certain statements herein contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the Company’s future plans, objectives, beliefs, expectations, representations and projections. It is important to note that forward-looking statements are not guarantees of future performance, and the Company’s actual results could differ materially from those set forth in any forward-looking statements. For a more in depth discussion of factors that could cause actual results to differ from those contained in forward-looking statements, see the discussions under the heading “Risk Factors” in the Company’s previously filed most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company assumes no obligation to update or revise any forward-looking statements.
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Hill-Rom Holdings, Inc. and Subsidiaries
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Condensed Consolidated Statements of Income
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(Dollars in millions except per share data)
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(unaudited)
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Quarter Ended December 31
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2014
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2013
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Net revenue
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Capital sales
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$ | 373.4 | $ | 295.5 | ||||
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Rental revenue
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91.6 | 97.9 | ||||||
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Total revenue
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465.0 | 393.4 | ||||||
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Cost of revenue
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Cost of goods sold
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220.5 | 171.2 | ||||||
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Rental expenses
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44.6 | 45.4 | ||||||
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Total cost of revenue
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265.1 | 216.6 | ||||||
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Gross profit
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Capital
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152.9 | 124.3 | ||||||
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Rental
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47.0 | 52.5 | ||||||
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Total gross profit
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199.9 | 176.8 | ||||||
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As a percentage of sales
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43.0% | 44.9% | ||||||
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Research and development expenses
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21.8 | 16.4 | ||||||
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Selling and administrative expenses
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155.1 | 138.0 | ||||||
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Special charges
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3.7 | 1.0 | ||||||
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Operating profit
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19.3 | 21.4 | ||||||
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Other income/(expense), net
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(2.3 | ) | (2.0 | ) | ||||
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Income tax expense
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4.9 | 6.2 | ||||||
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Net income
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$ | 12.1 | $ | 13.2 | ||||
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Diluted earnings per share:
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Earnings per share
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$ | 0.21 | $ | 0.22 | ||||
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Average common shares outstanding - diluted (thousands)
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58,154 | 59,142 | ||||||
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Dividends per common share
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$ | 0.1525 | $ | 0.1375 | ||||
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Non-GAAP Financial Disclosures and Reconciliations
While Hill-Rom reports financial results in accordance with U.S. GAAP, this press release includes non-GAAP measures. Hill-Rom uses non-GAAP measures to evaluate and manage its operations and provides the information to assist investors in performing financial analysis that is consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
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Hill-Rom Holdings, Inc. and Subsidiaries
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Revenue - Constant Currency
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(Dollars in millions)
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Quarter Ended December 31
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2014
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Foreign Exchange
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2014
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2013
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Constant Currency
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As Reported
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Impact
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Adjusted
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As Reported
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Change
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Capital sales
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$ | 373.4 | $ | (11.8 | ) | $ | 385.2 | $ | 295.5 | 30.4% | ||||||||||
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Rental revenue
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91.6 | (1.0 | ) | 92.6 | 97.9 | -5.4% | ||||||||||||||
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Total
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$ | 465.0 | $ | (12.8 | ) | $ | 477.8 | $ | 393.4 | 21.5% | ||||||||||
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North America
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$ | 225.2 | $ | (0.6 | ) | $ | 225.8 | $ | 205.5 | 9.9% | ||||||||||
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Surgical and Respiratory Care
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126.3 | (4.2 | ) | 130.5 | 63.3 | 106.2% | ||||||||||||||
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International
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113.5 | (8.0 | ) | 121.5 | 124.6 | -2.5% | ||||||||||||||
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Total
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$ | 465.0 | $ | (12.8 | ) | $ | 477.8 | $ | 393.4 | 21.5% | ||||||||||
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Hill-Rom Holdings, Inc. and Subsidiaries
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Reconciliation: Earnings Per Share
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(Dollars in millions except per share data)
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Quarter Ended December 31, 2014
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Quarter Ended December 31, 2013
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Income Before
Income Taxes
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Income Tax
Expense
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Diluted EPS
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Income Before
Income Taxes
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Income Tax
Expense
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Diluted EPS*
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GAAP Earnings
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$ | 17.0 | $ | 4.9 | $ | 0.21 | $ | 19.4 | $ | 6.2 | $ | 0.22 | ||||||||||||
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Adjustments:
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Acquisition and integration costs
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8.9 | 2.8 | 0.10 | 1.9 | 0.6 | 0.02 | ||||||||||||||||||
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Acquisition-related intangible asset amortization
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8.1 | 2.2 | 0.10 | 6.9 | 2.2 | 0.08 | ||||||||||||||||||
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FDA remediation expenses
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0.5 | 0.2 | 0.01 | 0.9 | 0.4 | 0.01 | ||||||||||||||||||
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Field corrective actions
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1.1 | 0.5 | 0.01 | 1.2 | 0.4 | 0.01 | ||||||||||||||||||
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Special charges
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3.7 | 0.2 | 0.06 | 1.0 | 0.4 | 0.01 | ||||||||||||||||||
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Adjusted Earnings
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$ | 39.3 | $ | 10.8 | $ | 0.49 | $ | 31.3 | $ | 10.2 | $ | 0.36 | ||||||||||||
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* Does not add due to rounding.
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Hill-Rom Holdings, Inc. and Subsidiaries
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Condensed Consolidated Balance Sheets
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(Dollars in millions)
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(unaudited)
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December 31, 2014
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September 30, 2014
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Assets
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Current Assets
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Cash and cash equivalents
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$ | 113.7 | $ | 99.3 | ||||
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Trade accounts receivable, net of allowances
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374.9 | 411.0 | ||||||
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Inventories, net
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171.3 | 176.2 | ||||||
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Other current assets
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96.3 | 92.8 | ||||||
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Total current assets
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756.2 | 779.3 | ||||||
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Property, plant and equipment, net
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287.4 | 261.5 | ||||||
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Goodwill
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395.7 | 399.8 | ||||||
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Other assets
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296.9 | 311.5 | ||||||
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Total Assets
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$ | 1,736.2 | $ | 1,752.1 | ||||
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Liabilities
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Current Liabilities
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Trade accounts payable
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$ | 100.7 | $ | 112.7 | ||||
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Short-term borrowings
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127.5 | 126.9 | ||||||
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Other current liabilities
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171.4 | 202.7 | ||||||
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Total current liabilities
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399.6 | 442.3 | ||||||
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Long-term debt
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454.8 | 364.9 | ||||||
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Other long-term liabilities
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139.5 | 138.4 | ||||||
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Total Liabilities
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993.9 | 945.6 | ||||||
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Shareholders' Equity
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742.3 | 806.5 | ||||||
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Total Liabilities and Shareholders' Equity
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$ | 1,736.2 | $ | 1,752.1 | ||||
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Hill-Rom Holdings, Inc. and Subsidiaries
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Condensed Consolidated Statements of Cash Flows
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(Dollars in millions)
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(unaudited)
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Quarter Ended December 31
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2014
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2013
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Operating Activities
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Net income
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$ | 12.1 | $ | 13.2 | ||||
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Adjustments to reconcile net income to net cash provided by
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operating activities:
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Depreciation
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17.3 | 16.9 | ||||||
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Amortization
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2.9 | 4.0 | ||||||
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Acquisition-related intangible asset amortization
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8.1 | 6.9 | ||||||
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Provision for deferred income taxes
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0.3 | (6.6 | ) | |||||
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Gain on disposal of property, equipment leased to others,
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intangible assets and impairments
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(0.3 | ) | (0.2 | ) | ||||
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Stock compensation
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4.7 | 3.6 | ||||||
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Excess tax benefits from employee stock plans
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(1.0 | ) | 0.8 | |||||
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Change in working capital excluding cash, current investments,
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current debt and acquisitions and dispositions:
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Trade accounts receivable
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36.1 | 35.5 | ||||||
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Inventories
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4.3 | (2.3 | ) | |||||
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Other current assets
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(3.2 | ) | 3.0 | |||||
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Trade accounts payable
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(16.0 | ) | (9.6 | ) | ||||
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Accrued expenses and other liabilities
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(30.6 | ) | (26.6 | ) | ||||
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Other, net
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(3.7 | ) | 3.7 | |||||
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Net cash provided by operating activities
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31.0 | 42.3 | ||||||
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Investing Activities
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Capital expenditures and purchases of intangibles
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(44.9 | ) | (16.8 | ) | ||||
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Proceeds on sale of property and equipment leased to others
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0.5 | 0.5 | ||||||
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Payment for acquisition of businesses, net of cash acquired
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- | (1.3 | ) | |||||
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Refund on acquisition of businesses
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- | 4.6 | ||||||
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Net cash used in investing activities
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(44.4 | ) | (13.0 | ) | ||||
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Financing Activities
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Net change in short-term debt
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(0.7 | ) | (0.1 | ) | ||||
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Borrowings on revolving credit facility
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95.0 | 7.0 | ||||||
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Proceeds from long-term debt
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- | 0.6 | ||||||
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Payment of long-term debt
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(3.8 | ) | (2.5 | ) | ||||
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Purchase of noncontrolling interest
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(1.0 | ) | (0.7 | ) | ||||
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Payment of cash dividends
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(8.6 | ) | (7.9 | ) | ||||
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Proceeds on exercise of stock options
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4.7 | 6.5 | ||||||
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Proceeds from stock issuance
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0.7 | 0.7 | ||||||
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Excess tax benefits from employee stock plans
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1.0 | (0.8 | ) | |||||
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Treasury stock acquired
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(56.9 | ) | (42.1 | ) | ||||
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Net cash provided by (used in) financing activities
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30.4 | (39.3 | ) | |||||
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Effect of exchange rate changes on cash
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(2.6 | ) | 0.2 | |||||
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Net Cash Flows
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14.4 | (9.8 | ) | |||||
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Cash and Cash Equivalents:
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At beginning of period
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99.3 | 127.4 | ||||||
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At end of period
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$ | 113.7 | $ | 117.6 | ||||
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