MENTOR, Ohio, Oct. 30 /PRNewswire-FirstCall/ -- STERIS Corporation
(NYSE: STE) today announced financial results for its fiscal 2009
second quarter ended September 30, 2008. Fiscal 2009 second quarter
revenues increased 10% to $323.1 million compared with $295.0
million in the second quarter of fiscal 2008, driven by strong
growth in all three business segments. Fiscal 2009 second quarter
net income was $28.8 million, or $0.48 per diluted share, compared
with net income of $16.0 million, or $0.25 per diluted share, in
the second quarter of fiscal 2008. Net income growth was a result
of increased volumes, higher gross margins, improved operating
expense leverage and the sale of an Isomedix facility in the
Chicago area during the quarter. For the first half of fiscal 2009,
revenues increased 10% to $634.7 million compared with $575.9
million in the first half of fiscal 2008. Net income for the first
half of fiscal 2009 was $54.3 million, or $0.90 per diluted share,
compared with net income of $29.2 million, or $0.45 per diluted
share in the first half of fiscal 2008. "STERIS has had a strong
start to this fiscal year, with double-digit revenue growth and
solid earnings performance in the first half of the year," said
Walt Rosebrough, President and Chief Executive Officer of STERIS.
"We are pleased to see our strategies taking hold, with new
products contributing nicely to our growth and cost reduction
efforts driving operating leverage. As we look out at the remainder
of the year, we anticipate that our growth rates will moderate
compared with first half levels, driven in part by our efforts to
reduce the historic seasonality in our business in order to level
out our production. In addition, the current political and economic
uncertainties cause us to remain somewhat conservative about our
performance for the balance of this year." Quarterly Segment
Results Healthcare revenues in the quarter increased 10% to $227.8
million compared with the second quarter of fiscal 2008. In
particular, sales of capital equipment increased 14%, driven in
part by increased demand for the Company's new product offerings.
Consumables and service also reported strong growth in the quarter
of 7% each compared to the prior year. Order backlog levels at
quarter end were a record $124.1 million. Operating income was
$32.7 million, an increase of 51% compared with the prior year
period, driven by increased volumes, higher gross margins and
improved operating expense leverage. Life Sciences second quarter
revenues were $57.2 million, an increase of 9% compared with the
second quarter of fiscal 2008. Revenue growth was primarily driven
by an increase in capital equipment sales of 17%, as well as an 8%
improvement in consumables compared with the prior year quarter.
Order backlog declined 16% to $48.7 million compared with the prior
year period. Life Sciences operating income was $6.2 million in the
quarter compared with $3.4 million in the second quarter of fiscal
2008. Operating income benefited from increased volumes and
improved operating expense leverage. Fiscal 2009 second quarter
revenues for Isomedix Services were $37.0 million, an increase of
6% compared with the same period last year. Revenue growth was
driven by increased demand from medical device Customers and modest
pricing improvements to offset increased costs. Operating income
was $10.2 million compared with $7.1 million in the prior year
quarter. During the second quarter, Isomedix completed the sale of
a facility located in the Chicago area to a privately-held
Customer, which added $2.1 million to operating income during the
quarter. Cash Flow Net cash provided by operations and free cash
flow (see note 1) for the first half of fiscal 2009 were $68.8
million and $57.3 million, respectively. These compare favorably
with $53.2 million and $31.6 million in the same period last year,
primarily reflecting the increase in earnings and the impact of the
Isomedix facility sale, which added $9.5 million to free cash flow.
During the second quarter and through October 29, 2008, the Company
repurchased 1,065,277 shares of its common stock at an average
price of $33.78 per common share for a total amount of $36.0
million. Approximately $217 million remains under the current share
repurchase authorization. Outlook Based upon first half performance
and current anticipated trends in the second half of the year, the
Company is updating its outlook for fiscal 2009. The Company
currently anticipates revenue growth for the full year to be toward
the high-end of the previously announced range of 4-6%. Earnings
may exceed the high-end of the previously announced range by as
much as $0.15, potentially resulting in earnings per diluted share
of up to $1.80 for the full year. This outlook reflects certain
assumptions and is subject to numerous uncertainties, some of which
are listed below: -- Revenue growth is expected to be in the high
single digits in Healthcare, and in the low single digits for both
Life Sciences and Isomedix. -- The Company is assuming that the
recent strength in the United States dollar will not hold relative
to international currencies. -- The Company is assuming a modest
increase in material costs in the second half of the year compared
with the first half of the fiscal year. -- Operating margin is
currently anticipated to be approximately 12.5% for the full year.
-- The anticipated effective tax rate is approximately 35% for the
full year. For the full year, free cash flow (see note 1) is now
anticipated to be approximately $100 million, reflecting the sale
of the Isomedix facility during the second quarter. Capital
expenditures are anticipated to be approximately $55 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
1-888-392-9976 in the United States and Canada, and 1-517-645-6486
internationally, then referencing the password "STERIS" and the
conference leader's name, "Julie Winter." For those unable to
listen to the conference call live, a replay will be available from
12:00 p.m. Eastern time on October 30, 2008, until 5:00 p.m.
Eastern time on November 13, 2008, either over the Internet at
http://www.steris-ir.com/ or via phone by calling 1-800-756-3940 in
the United States and Canada, and 1-402-998-0796 internationally.
About STERIS STERIS Corporation is a leading provider of infection
prevention and surgical products and services, focused primarily on
the critical markets of healthcare, pharmaceutical and research.
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 that enhance
Customer productivity and quality, and help make the world a safer
place. 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," "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 the previously disclosed FDA warning letter,
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 Six Months
Ended September 30, September 30, 2008 2007 2008 2007 (Unaudited)
(Unaudited) (Unaudited) (Unaudited) Revenues $323,127 $295,002
$634,692 $575,946 Cost of revenues 190,764 174,794 371,828 340,138
Gross profit 132,363 120,208 262,864 235,808 Operating expenses:
Selling, general, and administrative 77,290 84,531 164,638 167,914
Research and development 8,068 8,531 16,347 17,790 Restructuring
expense 37 698 (129) 2,089 Total operating expenses 85,395 93,760
180,856 187,793 Income from operations 46,968 26,448 82,008 48,015
Non-operating expense, net 1,978 864 3,363 1,637 Income tax expense
16,196 9,566 24,351 17,157 Net income $28,794 $16,018 $54,294
$29,221 Earnings per common share (EPS) data: Basic $0.49 $0.25
$0.92 $0.45 Diluted $0.48 $0.25 $0.90 $0.45 Cash dividends declared
per common share outstanding $0.08 $0.06 $0.14 $0.11 Weighted
average number of common shares outstanding used in EPS
computation: Basic number of common shares outstanding 59,312
64,207 59,003 64,612 Diluted number of common shares outstanding
60,376 65,047 60,012 65,478 STERIS Corporation Consolidated
Condensed Balance Sheets (In thousands) September 30, March 31,
2008 2008 Assets (Unaudited) Current assets: Cash and cash
equivalents $160,219 $51,868 Accounts receivable, net 210,997
249,814 Inventories, net 161,298 147,210 Other current assets
46,124 64,484 Total Current Assets 578,638 513,376 Property, plant,
and equipment, net 371,327 384,642 Goodwill and intangible assets,
net 321,120 337,980 Other assets 3,564 3,294 Total Assets
$1,274,649 $1,239,292 Liabilities and Shareholders' Equity Current
liabilities: Accounts payable $65,684 $75,532 Other current
liabilities 119,905 154,827 Total Current Liabilities 185,589
230,359 Long-term debt 250,000 179,280 Other liabilities 94,310
123,501 Shareholders' equity 744,750 706,152 Total Liabilities and
Shareholders' Equity $1,274,649 $1,239,292 STERIS Corporation
Segment Data (In thousands) Three Months Ended Six Months Ended
September 30, September 30, 2008 2007 2008 2007 (Unaudited)
(Unaudited) (Unaudited) (Unaudited) Segment Revenues: Healthcare
$227,836 $206,684 $451,901 $402,375 Life Sciences 57,151 52,323
105,190 99,025 STERIS Isomedix Services 36,971 34,793 73,834 70,265
Total Reportable Segments 321,958 293,800 630,925 571,665 Corporate
and Other 1,169 1,202 3,767 4,281 Total Segment Revenues $323,127
$295,002 $634,692 $575,946 Segment Operating Income (Loss):
Healthcare $32,698 $21,598 $61,928 $39,530 Life Sciences 6,228
3,369 7,275 3,638 STERIS Isomedix Services 10,211 7,081 18,398
14,802 Total Reportable Segments 49,137 32,048 87,601 57,970
Corporate and Other (2,169) (5,600) (5,593) (9,955) Total Segment
Operating Income $46,968 $26,448 $82,008 $48,015 STERIS Corporation
Consolidated Condensed Statements of Cash Flows (In thousands) Six
Months Ended September 30, 2008 2007 (Unaudited) (Unaudited)
Operating Activities: Net income $54,294 $29,221 Non-cash items
34,607 33,791 Working capital adjustments (20,210) (9,844) Net cash
provided by operating activities 68,691 53,168 Investing
Activities: Purchases of property, plant, equipment, and
intangibles, net (20,872) (21,591) Proceeds from sale of property,
plant, equipment and intangibles 9,506 31 Net cash used in
investing activities (11,366) (21,560) Financing Activities:
Proceeds from the issuance of long-term obligations 150,000 -
(Payments) proceeds under credit facilities, net (79,180) 24,090
Deferred financing fees and debt issuance costs (476) (443)
Repurchases of common shares (50,210) (54,476) Cash dividends paid
to common shareholders (8,275) (7,112) Stock options and other
equity transactions, net 41,688 13,008 Net cash provided by (used
in) financing activities 53,547 (24,933) Effect of exchange rate
changes on cash and cash equivalents (2,521) 2,592 Increase in cash
and cash equivalents 108,351 9,267 Cash and cash equivalents at
beginning of period 51,868 52,296 Cash and cash equivalents at end
of period $160,219 $61,563 Six Months Ended September 30, 2008 2007
(Unaudited) (Unaudited) Calculation of Free Cash Flow from
continuing operations: Cash flows from operating activities $68,691
$53,168 Purchases of property, plant, equipment, and intangibles,
net (20,872) (21,591) Proceeds from the sale of property, plant,
equipment, and intangibles 9,506 31 Free Cash Flow from Continuing
Operations $57,325 $31,608 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. Free cash flow is a non-GAAP figure under Securities
and Exchange Commission rules. 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.
DATASOURCE: STERIS Corporation CONTACT: Julie Winter, Manager,
Investor Relations, STERIS Corporation, +1-440-392-7245 Web site:
http://www.steris.com/ http://www.steris-ir.com/
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