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8-K - FORM 8-K - STERIS plcd472712d8k.htm

Exhibit 99.1

STERIS Announces Financial Results for Fiscal 2018 Second Quarter

 

    Second quarter as reported revenue declines 2% due to divestitures; grows 4% on a constant currency organic basis

 

    As reported and adjusted EPS grow 60% and 6%, respectively

 

    Cash from operations increases 15% in first half

 

    Fiscal 2018 outlook reconfirmed

LEICESTER, U.K. - (November 1, 2017) - STERIS plc (NYSE: STE) (“STERIS” or the “Company”) today announced financial results for its fiscal 2018 second quarter ended September 30, 2017. Fiscal 2018 second quarter revenue as reported was $634.2 million compared with $646.4 million in the second quarter of fiscal 2017. The decline in revenue was due to the impact of divestitures. Constant currency organic revenue (see Non-GAAP Financial Measures) growth was 4% for the second quarter of fiscal 2018.

“We are pleased with our second quarter and year-to-date performance, as our results were in-line with our expectations,” said Walt Rosebrough, President and Chief Executive Officer of STERIS. “Based on our first half results and our expectations for the remainder of the year, we expect to achieve our full year revenue and earnings targets for fiscal 2018, despite the anticipated impact of recent hurricanes.”

As reported, net income for the second quarter was $64.5 million, or $0.75 per diluted share, compared with net income of $40.4 million, or $0.47 per diluted share in the second quarter of fiscal 2017. Adjusted net income (see Non-GAAP Financial Measures) for the second quarter of fiscal 2018 was $80.3 million, or $0.94 per diluted share, compared with adjusted net income for the previous year’s second quarter of $76.4 million or $0.89 per diluted share.

First Half Results

As reported, fiscal 2018 first half revenue decreased 3% to $1,242.1 million compared with $1,284.8 million in the first half of fiscal 2017, due primarily to the impact of divestitures and changes in currency. Constant currency organic revenue growth was 5% for the first half of fiscal 2018. As reported, net income for the first half was $122.5 million, or $1.43 per diluted share, compared with net income of $88.8 million, or $1.03 per diluted share in the same period last fiscal year. Adjusted net income (see Non-GAAP Financial Measures) for the first half of fiscal 2018 was $153.5 million, or $1.79 per diluted share, compared with adjusted net income for the previous year’s first half of $144.8 million or $1.68 per diluted share.


Second Quarter Segment Results

Healthcare Products revenue as reported declined 2% in the quarter to $302.1 million compared with $306.7 million in the second quarter of fiscal 2017. Service revenue grew 8%, offset by an 8% decline in capital equipment revenue. Backlog for capital equipment increased 11% sequentially, reflecting solid underlying orders, while capital equipment shipments were delayed in part due to the Texas and Florida hurricanes during the quarter. Consumables revenue declined 1% in the second quarter as a result of divestitures. Healthcare Products constant currency organic revenue was flat during the quarter. Healthcare Products operating income was $47.5 million compared with $50.8 million in last year’s second quarter. The decline in profitability was primarily due to lower volume and the impact of changes in currency rates.

Healthcare Specialty Services as reported revenue in the quarter was $116.1 million compared with $137.7 million in the second quarter of fiscal 2017, reflecting the impact of the linen divestitures year-over-year. Constant currency organic revenue grew 10% in the quarter. Healthcare Specialty Services operating income was $9.3 million compared with $1.4 million in last year’s second quarter, primarily due to continued improvement within IMS in North America.

Fiscal 2018 second quarter revenue for Applied Sterilization Technologies increased 5% as reported to $126.5 million compared with $120.6 million in the same period last year. Constant currency organic revenue increased 5%, primarily due to increased volume from the segment’s core medical device Customers. Segment operating income increased to $43.4 million in the second quarter of fiscal 2018 compared with operating income of $41.5 million in the same period last year, due primarily to the revenue growth and changes in currency rates. Although there was limited financial impact to this segment during the second quarter from the Puerto Rico hurricane, the Company anticipates an approximately $3 million reduction in profit due to disruption from the storms in the second half of the fiscal year.

Life Sciences second quarter revenue as reported grew 10% to $89.5 million compared with $81.5 million in the second quarter of fiscal 2017. Service revenue grew 13%, capital equipment revenue increased 9% and consumable revenue grew 8%. Constant currency organic revenue grew 9% in the quarter. Operating income improved with the increase in volume to $27.6 million compared with $22.5 million in the prior year’s second quarter.


Cash Flow

Net cash provided by operations for the first six months of fiscal 2018 was $217.4 million, compared with $188.5 million in fiscal 2017. Free cash flow (see Non-GAAP Financial Measures) for the first six months of fiscal 2018 was $144.0 million compared with $119.4 million in the prior year. The improvement in cash flow is primarily due to improvements in net income and lower working capital requirements.

Dividend Announcement

STERIS’s Board of Directors has authorized a quarterly interim dividend of $0.31 per share. The dividend is payable December 20, 2017 to shareholders of record at the close of business on November 22, 2017.

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, then 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 10113526 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, 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 currency exchange rates and acquisitions and divestitures that affect the comparability and trends in revenue are removed. The impact of changes in currency exchange rates is calculated by translating current year results at prior year average 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,” “orders,” “backlog,” “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, 2017. 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, 2017 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     Six Months Ended  
     September 30,     September 30,  
     2017     2016     2017      2016  
     (Unaudited)     (Unaudited)     (Unaudited)      (Unaudited)  

Revenues

   $ 634,159     $ 646,415     $ 1,242,123      $ 1,284,793  

Cost of revenues

     367,398       398,507       719,241        796,895  
  

 

 

   

 

 

   

 

 

    

 

 

 

Gross profit

     266,761       247,908       522,882        487,898  

Operating expenses:

         

Selling, general, and administrative

     153,356       163,680       309,167        315,566  

Research and development

     13,974       14,617       27,978        29,045  

Restructuring expense

     27       48       78        202  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total operating expenses

     167,357       178,345       337,223        344,813  
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from operations

     99,404       69,563       185,659        143,085  

Non-operating expense, net

     12,057       10,640       24,058        21,217  

Income tax expense

     22,903       18,721       38,942        32,955  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income

   $ 64,444     $ 40,202     $ 122,659      $ 88,913  

Net income attributable to noncontrolling interest

     (15     (214     123        95  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income attributable to shareholders

   $ 64,459     $ 40,416     $ 122,536      $ 88,818  
  

 

 

   

 

 

   

 

 

    

 

 

 

Earnings per ordinary share (EPS) data:

         

Basic

   $ 0.76     $ 0.47     $ 1.44      $ 1.03  
  

 

 

   

 

 

   

 

 

    

 

 

 

Diluted

   $ 0.75     $ 0.47     $ 1.43      $ 1.03  
  

 

 

   

 

 

   

 

 

    

 

 

 

Cash dividends declared per share outstanding

   $ 0.31     $ 0.28     $ 0.59      $ 0.53  

Weighted average number of shares outstanding used in EPS computation:

         

Basic number of shares outstanding

     85,199       85,851       85,145        85,944  

Diluted number of shares outstanding

     85,869       86,333       85,795        86,426  

STERIS plc    

Consolidated Condensed Balance Sheets    

(In thousands)    

 

     September 30,      March 31,  
     2017      2017  
     (Unaudited)         

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 295,628      $ 282,918  

Accounts receivable, net

     449,371        483,451  

Inventories, net

     224,795        197,837  

Other current assets

     57,441        53,596  
  

 

 

    

 

 

 

Total Current Assets

     1,027,235        1,017,802  

Property, plant, and equipment, net

     962,515        915,908  

Goodwill and intangible assets, net

     3,091,095        2,956,190  

Other assets

     39,431        34,555  
  

 

 

    

 

 

 

Total Assets

   $ 5,120,276      $ 4,924,455  
  

 

 

    

 

 

 

Liabilities and Equity

     

Current liabilities:

     

Accounts payable

   $ 129,208      $ 133,479  

Other current liabilities

     238,262        248,104  
  

 

 

    

 

 

 

Total Current Liabilities

     367,470        381,583  

Long-term debt

     1,445,297        1,478,361  

Other liabilities

     266,704        254,478  

Equity

     3,040,805        2,810,033  
  

 

 

    

 

 

 

Total Liabilities and Equity

   $ 5,120,276      $ 4,924,455  
  

 

 

    

 

 

 


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 includes 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     Six Months Ended  
     September 30,     September 30,  
(In thousands)    2017     2016     2017     2016  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Segment Revenues:

        

Healthcare Products

   $ 302,094     $ 306,676     $ 591,158     $ 589,353  

Healthcare Specialty Services

     116,111       137,661       229,545       289,636  

Life Sciences

     89,461       81,519       170,396       162,917  

Applied Sterilization Technologies

     126,493       120,559       251,024       242,887  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

   $ 634,159     $ 646,415     $ 1,242,123     $ 1,284,793  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income:

        

Healthcare Products

   $ 47,493     $ 50,835     $ 89,730     $ 86,808  

Healthcare Specialty Services

     9,323       1,370       15,317       3,843  

Life Sciences

     27,646       22,471       49,461       46,715  

Applied Sterilization Technologies

     43,394       41,540       84,592       81,948  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     127,856       116,216       239,100       219,314  

Corporate

     (6,202     (5,149     (10,067     (6,723
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Operating Income

   $ 121,654     $ 111,067     $ 229,033     $ 212,591  

Less: Adjustments

        

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

     649       1,385       1,267       4,471  

Amortization of acquired intangible assets

     17,171       17,779       33,473       37,308  

Acquisition and integration related charges

     3,393       6,640       7,422       11,873  

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

     —         1,850       —         1,850  

Net loss on divestiture of businesses

     1,010       13,802       1,134       13,802  

Restructuring charges

     27       48       78       202  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income

   $ 99,404     $ 69,563     $ 185,659     $ 143,085  
  

 

 

   

 

 

   

 

 

   

 

 

 


STERIS plc    

Consolidated Condensed Statements of Cash Flows    

(In thousands)    

 

     Six Months Ended  
     September 30,  
     2017     2016  
     (Unaudited)     (Unaudited)  

Operating Activities:

    

Net income

   $ 122,659     $ 88,913  

Non-cash items

     106,033       129,598  

Changes in operating assets and liabilities

     (11,315     (30,010
  

 

 

   

 

 

 

Net cash provided by operating activities

     217,377       188,501  

Investing Activities:

    

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

     (75,420     (73,866

Proceeds from sale of property, plant, equipment and intangibles

     2,075       4,763  

Proceeds from the sale of businesses

     1,313       131,586  

Purchases of investments

     —         (6,356

Acquisition of businesses, net of cash acquired

     (29,509     (64,872
  

 

 

   

 

 

 

Net cash used in investing activities

     (101,541     (8,745

Financing Activities:

    

Payments on long-term obligations

     (15,000     (10,000

(Payments) proceeds under credit facilities, net

     (38,199     (47,646

Acquisition related deferred or contingent consideration

     (1,876     (6,000

Deferred financing fees and debt issuance costs

     (44     —    

Repurchases of shares

     (20,652     (59,895

Cash dividends paid to shareholders

     (50,280     (45,585

Stock option and other equity transactions, net

     6,706       2,494  

Proceeds from issuance of equity to minority shareholders

     —         5,022  
  

 

 

   

 

 

 

Net cash provided by financing activities

     (119,345     (161,610

Effect of exchange rate changes on cash and cash equivalents

     16,219       (12,636
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     12,710       5,510  

Cash and cash equivalents at beginning of period

     282,918       248,841  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 295,628     $ 254,351  
  

 

 

   

 

 

 

 

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.

 

     Six Months Ended  
     September 30,  
     2017     2016  
     (Unaudited)     (Unaudited)  

Calculation of Free Cash Flow:

    

Cash flows from operating activities

   $ 217,377     $ 188,501  

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

     (75,420     (73,866

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

     2,075       4,763  
  

 

 

   

 

 

 

Free Cash Flow

   $ 144,032     $ 119,398  
  

 

 

   

 

 

 

 

     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 September 30, (unaudited)  
    As reported, GAAP     Impact of
Acquisitions
    Impact of
Divestitures
    Impact of
Currency
Movements
    GAAP growth     Organic growth     Constant currency
organic growth
 
Segment Revenues:   2017     2016     2017     2016     2017     2017     2017     2017  

Healthcare Products

  $ 302,094     $ 306,676     $ 1,246     $ (6,057   $ 823       -1.5     0.1     -0.2

Healthcare Specialty Services

    116,111       137,661       —         (32,495     66       -15.7     10.4     10.3

Life Sciences

    89,461       81,519       —         —         466       9.7     9.7     9.2

Applied Sterilization Technologies

    126,493       120,559       —         (1,931     1,513       4.9     6.6     5.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 634,159     $ 646,415     $ 1,246     $ (40,483   $ 2,868       -1.9     4.5     4.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Six months ended September 30, (unaudited)  
    As reported, GAAP     Impact of
Acquisitions
    Impact of
Divestitures
    Impact of
Currency
Movements
    GAAP growth     Organic growth     Constant currency
organic growth
 
Segment Revenues:   2017     2016     2017     2016     2017     2017     2017     2017  

Healthcare Products

  $ 591,158     $ 589,353     $ 7,432     $ (15,292   $ (2,692     0.3     1.7     2.2

Healthcare Specialty Services

    229,545       289,636       —         (79,002     (3,032     -20.7     9.0     10.4

Life Sciences

    170,396       162,917       —         —         (596     4.6     4.6     5.0

Applied Sterilization Technologies

    251,024       242,887       —         (5,091     (720     3.4     5.6     5.9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,242,123     $ 1,284,793     $ 7,432     $ (99,385   $ (7,040     -3.3     4.2     4.8
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


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 currency exchange rates and acquisitions and divestitures that affect the comparability and trends in revenue are removed. The impact of changes in currency exchange rates is calculated by translating current year results at prior year average currency exchange rates.

 

    Three months ended September 30, (unaudited)  
    Gross Profit     Income from Operations     Net income attributable to
shareholders*
    Diluted EPS  
    2017     2016     2017     2016     2017     2016     2017     2016  

GAAP

  $ 266,761     $ 247,908     $ 99,404     $ 69,563     $ 64,459     $ 40,416     $ 0.75     $ 0.47  

Adjustments:

               

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

    671       1,395       649       1,385          

Amortization and impairment of purchased intangible assets

    28       46       17,171       17,779          

Acquisition and integration related charges

    213       (56     3,393       6,640          

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

    —         —         —         1,850          

Net loss on divestiture of businesses

    —         —         1,010       13,802          

Restructuring charges

      —         27       48          

Net impact of adjustments after tax

            15,836       36,029      

Net EPS impact

                0.19       0.42  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

  $ 267,673     $ 249,293     $ 121,654     $ 111,067     $ 80,295     $ 76,445     $ 0.94     $ 0.89  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Six months ended September 30, (unaudited)  
    Gross Profit     Income from Operations     Net income attributable to
shareholders*
    Diluted EPS  
    2017     2016     2017     2016     2017     2016     2017     2016  

GAAP

  $ 522,882     $ 487,898     $ 185,659     $ 143,085     $ 122,536     $ 88,818     $ 1.43     $ 1.03  

Adjustments:

               

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

    1,307       4,471       1,267       4,471          

Amortization and impairment of purchased intangible assets

    50       —         33,473       37,308          

Acquisition and integration related charges

    329       745       7,422       11,873          

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

    —         —         —         1,850          

Net loss on divestiture of businesses

    —         —         1,134       13,802          

Restructuring charges

    —         —         78       202          

Net impact of adjustments after tax

            30,960       56,018      

Net EPS impact

                0.36       0.65  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

  $ 524,568     $ 493,114     $ 229,033     $ 212,591     $ 153,496     $ 144,836     $ 1.79     $ 1.68  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* 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    

Unaudited Supplemental Financial Data     

Second Quarter Fiscal 2018    

For Periods Ending September 30, 2017 and 2016    

 

     FY 2018     FY 2017     FY 2018     FY 2017  

Total Company Revenues

   Q2     Q2     YTD     YTD  

Consumables

   $ 141,241     $ 139,576     $ 289,103     $ 285,241  

Service

   $ 347,602     $ 354,199     $ 681,961     $ 720,827  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

   $ 488,843     $ 493,775     $ 971,064     $ 1,006,068  
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital Equipment

   $ 145,316     $ 152,640     $ 271,059     $ 278,725  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues

   $ 634,159     $ 646,415     $ 1,242,123     $ 1,284,793  
  

 

 

   

 

 

   

 

 

   

 

 

 

United Kingdom Revenues

   $ 54,587     $ 53,369     $ 107,309     $ 123,808  

United Kingdom Revenues as a % of Total

     9     8     9     10

United States Revenues

   $ 446,708     $ 450,513     $ 869,667     $ 878,618  

United States Revenues as a % of Total

     70     70     70     68

International Revenues

   $ 132,864     $ 142,533     $ 265,147     $ 282,367  

International Revenues as a % of Total

     21     22     21     22

Segment Data

   Q2     Q2     YTD     YTD  

Healthcare Products

        

Revenues

        

Consumables

   $ 100,844     $ 101,493     $ 204,532     $ 206,492  

Service

     81,815       75,445       161,626       149,745  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     182,659       176,938       366,158       356,237  
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital Equipment

     119,435       129,738       225,000       233,116  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Healthcare Products Revenues

   $ 302,094     $ 306,676     $ 591,158     $ 589,353  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     47,493       50,835       89,730       86,808  
  

 

 

   

 

 

   

 

 

   

 

 

 

Healthcare Specialty Services

        

Healthcare Services Revenues

   $ 116,111     $ 137,661     $ 229,545     $ 289,636  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     9,323       1,370       15,317       3,843  
  

 

 

   

 

 

   

 

 

   

 

 

 

Life Sciences

        

Revenues

        

Consumables

   $ 37,639     $ 34,851     $ 75,958     $ 72,350  

Service

     28,347       25,192       52,682       48,408  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     65,986       60,043       128,640       120,758  
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital Equipment

     23,475       21,476       41,756       42,159  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Life Sciences Revenues

   $ 89,461     $ 81,519     $ 170,396     $ 162,917  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     27,646       22,471       49,461       46,715  
  

 

 

   

 

 

   

 

 

   

 

 

 

Applied Sterilization Technologies

        

Applied Sterilization Technologies Revenues

   $ 126,493     $ 120,559     $ 251,024     $ 242,887  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

   $ 43,394     $ 41,540     $ 84,592     $ 81,948  

Corporate

        

Operating Loss

   $ (6,202   $ (5,149   $ (10,067   $ (6,723
  

 

 

   

 

 

   

 

 

   

 

 

 
Other Data    Q2     Q2     YTD     YTD  

Healthcare Products Backlog

   $ 150,386     $ 152,107       n/a       n/a  

Life Sciences Backlog

     69,773       40,996       n/a       n/a  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Backlog

   $ 220,159     $ 193,103       n/a       n/a  

GAAP Income Tax Rate

     26.2     31.8     24.1     27.0

Adjusted Income Tax Rate

     26.7     24.1     25.1     24.3
  

 

 

   

 

 

   

 

 

   

 

 

 

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.