DERBY, U.K. - (February 11, 2019) - STERIS
plc (NYSE: STE) ("STERIS" or the "Company") today announced
financial results for its fiscal 2019 third quarter ended December
31, 2018. Revenue as reported for the quarter increased 5% to
$696.2 million compared with $661.9 million in the third quarter of
fiscal 2018, with growth across all segments. Constant currency
organic revenue (see Non-GAAP Financial Measures) growth was 7% for
the third quarter of fiscal 2019.
"We are very pleased with our progress this year,
and we continue to see strong demand from the Customers we serve,"
said Walt Rosebrough, President and Chief Executive Officer of
STERIS. "We look forward to closing another record year in
fiscal 2019 with approximately 6% constant currency organic revenue
growth and double-digit adjusted EPS improvement."
As reported, net income for the third quarter was
$47.9 million, or $0.56 per diluted share, compared with net income
of $94.8 million, or $1.11 per diluted share in the third quarter
of fiscal 2018. Third quarter fiscal 2019 earnings were
negatively impacted by approximately $35.2 million in restructuring
expenses. During the quarter, the Company announced a restructuring
plan which included the closure of two manufacturing facilities as
well as other actions including product rationalization. In
addition, during the third quarter the Company adopted a branding
strategy that included phasing out the usage of a tradename
associated with certain products in the Healthcare Products
segment, which reduced earnings by approximately $16.2
million. Adjusted net income (see Non-GAAP Financial
Measures) for the third quarter of fiscal 2019 was $107.2 million,
or $1.26 per diluted share, compared with adjusted net income for
the previous year's third quarter of $96.3 million or $1.12 per
diluted share.
Segment Results
Healthcare Products revenue as reported grew
4% in the quarter to $338.3 million compared with $324.9 million in
the third quarter of fiscal 2018, driven by 7% growth in capital
equipment revenue and 4% growth in service revenue during the
quarter. Consumable revenue increased 1% in the third
quarter, with growth limited by divestitures. Constant
currency organic revenue growth for Healthcare Products was 7%
during the quarter. Healthcare Products operating income was
$82.8 million compared with $81.5 million in last year's third
quarter. The increase in profitability was primarily due to
the increased volume and favorable currency offset by the timing of
operating expenses.
Healthcare Specialty Services
as reported revenue grew 9% in the quarter to $127.8 million
compared with $117.4 million in the third quarter of fiscal
2018. Constant currency organic revenue growth was 10%.
Healthcare Specialty Services operating income was $16.0 million
compared with $13.7 million in last year's third quarter, as the
business leveraged the investments made over the last several
quarters, particularly in the United States.
Fiscal 2019 third quarter revenue for Applied Sterilization Technologies increased 6% as
reported to $136.8 million compared with $128.7 million in the same
period last year. Constant currency organic revenue increased
8%, primarily driven by increased volume from the segment's core
medical device Customers. Segment operating income increased
to $54.8 million in the third quarter of fiscal 2019 compared with
operating income of $48.2 million in the same period last year, due
primarily to the revenue growth.
Life Sciences third quarter
revenue as reported grew 3% to $93.5 million compared with $90.9
million in the third quarter of fiscal 2018, driven by 9% growth in
consumables and 5% growth in service revenue. Capital
equipment revenue declined 8% in the third quarter compared with a
strong quarter in the prior year. Constant currency organic
revenue grew 4% in the quarter. Operating income was $33.1 million
compared with $31.2 million in the prior year's third quarter,
driven by volume and favorable mix.
Cash Flow
Net cash provided by operations for the first nine months of fiscal
2019 was $360.6 million, compared with $327.9 million in the first
nine months of fiscal 2018. Free cash flow (see Non-GAAP
Financial Measures) for the first nine months of fiscal 2019 was
$252.9 million compared with $216.4 million in the prior year
period. The improvement in free cash flow is primarily due to
the improved cash from operations.
Fiscal 2019 Outlook
The Company is maintaining its full year expectations for as
reported revenue growth of approximately 5%, even though the impact
of currency and divestitures has increased to approximately $35
million, with the impact of divestitures being about $25 million,
and about $10 million of negative impact from currency based on the
forward rates as of December 31, 2018. In addition, constant
currency organic revenue growth is now expected to be approximately
6% for the full fiscal year 2019 reflecting the strong performance
to date and expectations for the fourth quarter. Adjusted
earnings per diluted share continue to be expected in the range of
$4.74 - $4.84.
Free cash flow for fiscal 2019 is now expected to
be approximately $330 million, and capital spending is anticipated
to be approximately $180 million.
Dividend
Announcement
STERIS's Board of Directors has authorized a quarterly interim
dividend of $0.34 per share. The dividend is payable March
21, 2019 to shareholders of record at the close of business on
February 27, 2019.
Ireland
Redomiciliation
As previously disclosed, the Company intends to redomicile from the
United Kingdom to Ireland prior to the end of March 2019. The
redomiciliation is subject to shareholder and U.K. Court
approval. As described in the Joint Definitive Proxy
Statement and Prospectus filed on January 31, 2019, a Court Meeting
and a General Meeting of the shareholders of STERIS plc will be
held on February 28, 2019. STERIS's Board of Directors has
determined that all proposals to be voted upon at the shareholder
meetings are in the best interests of the Company and its
shareholders and unanimously recommends that shareholders vote
"for" approval of the Scheme and other proposals at the shareholder
meetings.
All shareholder votes on the proposals are
important. Whether or not shareholders plan to attend the Court
Meeting and the General Meeting of shareholders, please vote as
promptly as possible. Details of how and when votes must be
submitted are described in the joint definitive proxy statement and
prospectus filed with the SEC on January 31, 2019.
Conference Call
As previously announced, STERIS management will
host a conference call tomorrow, February 12, 2019 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
1-833-535-2199 in the United States or 1-412-902-6776
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 on February 12, 2019, either over the Internet at
www.steris-ir.com or via phone. To access the replay of the
call, please use the access code 10127887 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, Senior Director, Investor Relations
and Corporate Communications
Julie_Winter@steris.com
+1 440 392 7245
Media Contact:
Stephen Norton, Senior Director, Corporate
Communications
Stephen_Norton@steris.com
+1 440 392 7482
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
No Offer or Solicitation
This document is provided for informational
purposes only and does not constitute an offer to sell, or an
invitation to subscribe for, purchase or exchange, any securities
or the solicitation of any vote or approval in any jurisdiction,
nor shall there be any sale, issuance, exchange or transfer of the
securities referred to in this document in any jurisdiction in
contravention of applicable law.
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, the re-measurement of deferred taxes and taxation of
prior unremitted earnings impacts of the TCJA, 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 significant 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 referenced 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, 2018. 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) the receipt of approval of STERIS's shareholders of the
redomiciliation transaction, (b) any regulatory or court approvals
required for the redomiciliation transaction not being obtained on
the terms expected or on the anticipated schedule, (c) the parties'
ability to meet expectations regarding the timing, completion and
accounting and tax treatments of the redomiciliation transaction,
(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 redomiciliation
transaction, (e) STERIS's ability to meet expectations regarding
the accounting and tax treatment of the Tax Cuts and Jobs Act
("TCJA") or the possibility that anticipated benefits resulting
from the TCJA will be less than estimated, (f) changes in tax
laws or interpretations that could increase our consolidated tax
liabilities, including, if the redomiciliation transaction is
consummated, changes in tax laws that would result in STERIS
Ireland 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, tariffs and/or other trade barriers, 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 of delays in receipt of orders, order
cancellations, or delays in the manufacture or shipment of ordered
products or in the provision of services, (m) 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, 2018 and other securities filings, may adversely
impact STERIS's performance, results, prospects or value,
(n) the impact on STERIS and its operations, or tax
liabilities, of Brexit or the exit of other member countries from
the EU, and the Company's ability to respond to such impacts,
(o) 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 U.S. administration or Congress, or of any
responses thereto, (p) the possibility that anticipated
financial results or benefits of recent acquisitions, or of
STERIS's restructuring efforts, or of recent divestitures, or of
the targeted restructuring plan will not be realized or will be
other than anticipated, and (q) the effects of contractions in
credit availability, as well as the ability of STERIS's Customers
and suppliers to adequately access the credit markets when
needed.
Additional Information and Where
to Find It
In connection with the issuance of ordinary shares
of STERIS Ireland to STERIS shareholders pursuant to the
redomiciliation transaction, both companies have filed and will
file relevant materials with the SEC, including a Registration
Statement on Form S-4 that contains a prospectus of STERIS Ireland
as well as a proxy statement of STERIS relating to the scheme of
arrangement that forms a part of the redomiciliation transaction,
which we refer to together as the Joint Proxy and Registration
Statement on Form S-4.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THE JOINT PROXY AND REGISTRATION STATEMENT ON FORM S-4 AND ANY
OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE
REDOMICILIATION TRANSACTION CAREFULLY AND IN THEIR ENTIRETY,
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE
REDOMICILIATION TRANSACTION, THE PARTIES TO THE REDOMICILIATION
TRANSACTION AND THE RISKS ASSOCIATED WITH THE REDOMICILIATION
TRANSACTION. Those documents, if and when filed, as well as
STERIS's and STERIS Ireland's other public filings with the SEC may
be obtained without charge at the SEC's website at www.sec.gov, at
STERIS's website at www.steris-ir.com or by contacting STERIS
Investor Relations at 440-392-7245.
Participants in the
Solicitation
STERIS, its directors and certain of its executive
officers may be considered participants in the solicitation of
proxies in connection with the transactions contemplated by the
Joint Proxy and Registration Statement on Form S-4. Information
about the directors and executive officers of STERIS is set forth
in its Annual Report on Form 10-K for the year ended March 31,
2018, which was filed with the SEC on May 30, 2018, and its proxy
statement for its 2018 annual meeting of shareholders, which was
filed with the SEC on June 5, 2018. Other information regarding
potential participants in the proxy solicitations and a description
of their direct and indirect interests, by security holdings or
otherwise, is contained in the Joint Proxy and Registration
Statement on Form S-4.
STERIS is organized under the laws of England and
Wales. STERIS Ireland will be organized under the laws of Ireland.
Some of the officers and directors of STERIS and STERIS IRELAND are
or will be residents of countries other than the United States. As
a result, it may not be possible to sue STERIS, STERIS Ireland or
such persons in a non-US court for violations of U.S. securities
laws. It may be difficult to compel STERIS, STERIS IRELAND and
their respective affiliates to subject themselves to the
jurisdiction and judgment of a U.S. court or for investors to
enforce against them the judgments of U.S. courts.
STERIS 3Q19 Financial
Tables
This
announcement is distributed by West Corporation on behalf of West
Corporation clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Steris Corporation via Globenewswire
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