ALPHARETTA, Ga., Feb. 27, 2018 /PRNewswire/ -- Halyard Health,
Inc. (NYSE: HYH) today reported fourth quarter and full-year 2017
results.
"2017 was a strong year and I'm proud of our team's execution
and accomplishments. Momentum in our Medical Device business
continued as we accelerated our growth, increased the number of
product launches and delivered earnings ahead of plan," said
Joe Woody, Halyard chief executive
officer. "With the divestiture of S&IP on track to close in
early second quarter and our playbook for growth, we are well
positioned to succeed in 2018. I'm confident about our outlook, and
through strategic investments in product innovation, commercial
excellence, and M&A we expect to be well positioned to
capitalize on the opportunities ahead."
2017 Financial Highlights
- Fourth quarter continuing operations, or Medical Device sales,
were $166 million, an 8 percent
increase from the prior year. For the year, sales were $612 million, an 8 percent increase from
2016.
- Net income for the fourth quarter was $33 million, compared to $10 million in the prior year. Additionally,
Medical Device operating profit for the fourth quarter increased 17
percent to $39 million.
- Fourth quarter diluted earnings per share totaled $0.69, compared to $0.21 a year ago. 2017 diluted earnings per share
were $1.69, compared to $0.85 a year ago.
- Adjusted diluted earnings per share were $0.73, up 43 percent compared to the prior year.
For the full year, adjusted diluted earnings per share were
$2.35, up 18 percent from a year
ago.
- For the year EBITDA was $183
million compared to $153
million in the prior year. Adjusted EBITDA for the year
increased 7 percent to $226 million,
compared to $211 million a year
ago.
Operational and Business Highlights
- Accelerated transformation into a pure-play Medical Device
business through the announced sale of Surgical and Infection
Prevention (S&IP) - the transaction remains on track to close
in early second quarter.
- Continued to invest in the R&D team and capabilities with
nine new Medical Device products launched, finishing the year ahead
of plan.
- Focused on establishing an enhanced organizational structure
for a pure-play Medical Device business, strengthening the
leadership team, including recent appointment of John Tushar, as President - Global
Franchises.
Fourth Quarter 2017 Operating Results From Continuing
Operations
Medical Device net sales totaled $166
million, an 8 percent increase compared to the fourth
quarter last year. Performance was driven by solid demand across
all product categories as volumes increased 9 percent, which was
partially offset by 1 percent lower selling prices.
Operating loss was $3 million
compared to a loss of $30 million in
2016. Volume growth and lower expenses related to excluded items
helped drive performance. On an adjusted basis, operating profit
was $7 million compared to a loss of
$11 million in 2016.
As a result of the previously announced divestiture, the
S&IP segment operating results are reflected as discontinued
operations for all periods presented. Treating S&IP as
discontinued operations results in significant shared overhead
costs previously allocated to the S&IP business that are now
included in continuing operations. Included in fourth quarter
continuing operations are costs previously allocated to S&IP of
$30 million in 2017 and $33 million in 2016.
Adjusted operating profit for the fourth quarter excludes
$5 million of restructuring charges,
$2 million for acquisition-related
charges, $3 million for litigation
matters and $5 million of intangible
amortization expense, offset by $6
million for a change in internal policies, as the company
begins the process of re-aligning its policies
post-divestiture.
Adjusted EBITDA for the fourth quarter, excluding
divestiture-related charges, restructuring charges,
acquisition-related charges, policy changes and litigation expenses
was $64 million, compared to
$51 million in the prior year.
Full-Year 2017 Results From Continuing Operations
Medical Device net sales totaled $612
million, an 8 percent increase compared to 2016. Organic
sales volumes increased 5 percent and Corpak-related sales
contributed an additional 3 percent of volume growth. Performance
was driven by solid demand across all four product categories.
Operating loss was $43 million,
compared to a loss of $107 million in
2016. Performance was impacted by higher volume and lower expenses
related to excluded items.
Shared overhead costs previously allocated to S&IP now
included in continuing operations were $116
million in 2017 and $114
million in 2016.
Cash Flow and Balance Sheet
Cash from operations less capital expenditures, or free cash
flow, for the quarter was $52 million
compared to $38 million a year ago.
For the year, free cash flow was $101
million compared to $160
million in the prior year. The decrease in 2017 was due
primarily to higher capital spending and a lower year-over-year
working capital benefit. At year-end 2017, the company's cash
balance was $220 million.
Discontinued Operations
Fourth quarter net sales from discontinued operations were
$262 million, a 2 percent increase,
compared to the fourth quarter a year ago. Two percent volume
growth was driven by continued strong demand for exam gloves and an
increase in facial protection due to the cold and flu season.
Volume growth was partially offset by 1 percent lower selling
prices, concentrated in exam gloves. Adjusted net income for the
quarter totaled $35 million, even
compared to the prior year.
For the year, net sales of $1,013
million were 1 percent lower compared to 2016, on a constant
currency basis. One percent volume growth was offset by 2 percent
lower selling prices. Adjusted net income for 2017 was $122 million, compared to $128 million in the prior year.
2018 Key Planning Assumptions
The company expects to provide its 2018 financial outlook
following the close of the Owens & Minor S&IP transaction.
The formal closing activities are expected to occur in early second
quarter.
The company provided the following key planning assumptions for
continuing operations:
- Medical Device sales are expected to increase 4 to 6 percent,
on a constant currency basis.
- We expect the foreign currency translation impact to be even
compared to the prior year.
- The adjusted effective tax rate is anticipated to be between 25
and 27 percent, as the company anticipates the new U.S. tax
regulations will have a positive impact on its adjusted effective
tax rate.
- Net dis-synergies from the S&IP divestiture are expected to
range between $15 to $20 million.
Non-GAAP Financial Measures
This press release and the accompanying tables include the
following financial measures that have not been calculated in
accordance with accounting principles generally accepted in the
U.S., or GAAP, and are therefore referred to as non-GAAP financial
measures:
- Adjusted net income
- Adjusted diluted earnings per share
- Adjusted gross and operating profit
- Adjusted effective tax rate
- Adjusted EBITDA
- Free cash flow
These non-GAAP financial measures exclude the following items,
as applicable, for the relevant time periods as indicated in the
accompanying non-GAAP reconciliations to the comparable GAAP
financial measures:
- Expenses associated with the divestiture of the S&IP
business and the corporate restructuring costs.
- Transition costs relating to the separation from Kimberly-Clark
Corporation, which include costs to establish Halyard Health's
capabilities as a stand-alone entity. These costs are related
primarily to rebranding and other supply chain transition costs.
Going forward, these costs are not expected to be material;
therefore, they will no longer be excluded from adjusted earnings.
- Expenses associated with the amortization of intangible assets
associated with prior business acquisitions.
- The positive or negative effect of changes in currency exchange
rates during the year.
- Expenses associated with certain litigation matters.
- Certain acquisition and integration charges related to the
acquisition of CORPAK MedSystems, Inc. Going forward, these costs
are not expected to be material; therefore, they will no longer be
excluded from adjusted earnings.
- Prior periods impact of tax regulatory changes.
- Charges of gain associated with policy changes.
The company provides these non-GAAP financial measures as
supplemental information to our GAAP financial measures. Management
and the company's Board of Directors use net sales on a constant
currency basis, adjusted net income, adjusted diluted earnings per
share, adjusted operating profit, adjusted EBITDA, and free cash
flow to (a) evaluate the company's historical and prospective
financial performance and its performance relative to its
competitors, (b) allocate resources and (c) measure the operational
performance of the company's business units and their managers.
Management also believes that the use of an adjusted effective tax
rate provides improved insight into the tax effects of our ongoing
business operations.
Additionally, the Compensation Committee of the company's Board
of Directors will use certain of the non-GAAP financial measures
when setting and assessing achievement of incentive compensation
goals. These goals are based, in part, on the company's net sales
on a constant currency basis, adjusted diluted earnings per share
and adjusted EBITDA, which will be determined by excluding certain
items that are used in calculating these non-GAAP financial
measures.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in the
attached financial tables.
Conference Call Webcast
Halyard Health, Inc. will host a conference call today at
9 a.m. ET. The conference call can be
accessed live over the internet at
https://halyardhealth.investorroom.com or via telephone by dialing
877-240-5772 in the United States.
A replay of the call will be available at noon ET today by calling 877-344-7529 in
the United States and entering
passcode 10116779. A webcast of the call will also be archived
in the Investors section on the Halyard website.
About Halyard Health
Halyard Health (NYSE: HYH) is a medical technology company
focused on eliminating pain, speeding recovery and preventing
infection for healthcare providers and their patients.
Headquartered in Alpharetta,
Georgia, Halyard is committed to addressing some of today's
most important healthcare needs, such as reducing the use of
opioids while helping patients move from surgery to recovery.
Halyard's Medical Device business develops, manufactures and
markets clinically superior solutions that improve medical outcomes
and business performance in more than 90 countries. For more
information, visit www.halyardhealth.com.
Forward-Looking Statements
This press release contains information that includes or is
based on "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on the current plans and expectations of
management and are subject to various risks and uncertainties that
could cause our actual results to differ materially from those
expressed or implied in such statements. Forward-looking statements
include all statements that do not relate solely to historical or
current facts, and can generally be identified by the use of words
such as "may", "believe", "will", "expect", "project", "estimate",
"anticipate", "plan", or "continue" and similar expressions, among
others. Such factors include, but are not limited to: weakening of
economic conditions that could adversely affect the level of demand
for our products; pricing pressures generally, including
cost-containment measures that could adversely affect the price of
or demand for our products; S&IP separation execution; changes
in foreign exchange markets; legislative and regulatory actions;
unanticipated issues arising in connection with clinical studies
and otherwise that affect U.S. Food and Drug Administration
approval of new products; changes in reimbursement levels from
third-party payors; a significant increase in product liability
claims; the impact of investigative and legal proceedings and
compliance risks; the impact of the federal legislation to reform
the United States healthcare
system; changes in financial markets; and changes in the
competitive environment. Additional information concerning these
and other factors that may impact future results is contained in
our filings with the U.S. Securities and Exchange Commission,
including our most recent Form 10-K and Quarterly Reports on Form
10-Q.
HALYARD HEALTH,
INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)
(in millions, except per share amounts)
|
|
|
Three Months
Ended
December 31,
|
|
|
|
Year Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Net
Sales
|
$
|
166.3
|
|
|
$
|
153.5
|
|
|
8.3
|
%
|
|
$
|
611.6
|
|
|
$
|
566.2
|
|
|
8.0
|
%
|
Cost of products
sold
|
76.4
|
|
|
75.5
|
|
|
1.2
|
|
|
274.7
|
|
|
269.0
|
|
|
2.1
|
|
Gross
Profit
|
89.9
|
|
|
78.0
|
|
|
15.3
|
|
|
336.9
|
|
|
297.2
|
|
|
13.4
|
|
Research and
development expenses
|
12.1
|
|
|
11.1
|
|
|
9.0
|
|
|
38.2
|
|
|
38.4
|
|
|
(0.5)
|
|
Selling and general
expenses
|
77.4
|
|
|
92.3
|
|
|
(16.1)
|
|
|
321.7
|
|
|
346.2
|
|
|
(7.1)
|
|
Other expense,
net
|
3.4
|
|
|
5.0
|
|
|
N.M.
|
|
|
20.1
|
|
|
19.7
|
|
|
N.M.
|
|
Operating
Loss
|
(3.0)
|
|
|
(30.4)
|
|
|
(90.1)
|
|
|
(43.1)
|
|
|
(107.1)
|
|
|
(59.8)
|
|
Interest
income
|
0.9
|
|
|
0.1
|
|
|
N.M.
|
|
|
2.5
|
|
|
0.6
|
|
|
N.M.
|
|
Interest
expense
|
(8.1)
|
|
|
(8.0)
|
|
|
1.3
|
|
|
(31.6)
|
|
|
(32.7)
|
|
|
(3.4)
|
|
Loss Before Income
Taxes
|
(10.2)
|
|
|
(38.3)
|
|
|
(73.4)
|
|
|
(72.2)
|
|
|
(139.2)
|
|
|
(48.1)
|
|
Income tax
benefit
|
14.6
|
|
|
16.4
|
|
|
(11.0)
|
|
|
40.1
|
|
|
55.9
|
|
|
(28.3)
|
|
Income (Loss) from
Continuing Operations
|
4.4
|
|
|
(21.9)
|
|
|
(120.1)
|
|
|
(32.1)
|
|
|
(83.3)
|
|
|
(61.5)
|
|
Income from
discontinued operations, net of tax
|
28.4
|
|
|
31.9
|
|
|
N.M.
|
|
|
111.4
|
|
|
123.1
|
|
|
N.M.
|
|
Net
Income
|
$
|
32.8
|
|
|
$
|
10.0
|
|
|
228.0
|
|
|
$
|
79.3
|
|
|
$
|
39.8
|
|
|
99.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
7.2
|
|
|
7.9
|
|
|
(8.9)
|
|
|
29.1
|
|
|
32.1
|
|
|
(9.3)
|
|
Income tax (benefit)
provision
|
(1.3)
|
|
|
(2.1)
|
|
|
(38.1)
|
|
|
14.6
|
|
|
15.5
|
|
|
(5.8)
|
|
Depreciation and
amortization
|
11.0
|
|
|
16.8
|
|
|
(34.5)
|
|
|
59.5
|
|
|
65.2
|
|
|
(8.7)
|
|
EBITDA
|
$
|
49.7
|
|
|
$
|
32.6
|
|
|
52.5
|
|
|
$
|
182.5
|
|
|
$
|
152.6
|
|
|
19.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings
(Loss) Per Share
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.09
|
|
|
$
|
(0.47)
|
|
|
(119.1)
|
|
|
$
|
(0.69)
|
|
|
$
|
(1.79)
|
|
|
(61.5)
|
|
Discontinued
operations
|
0.61
|
|
|
0.68
|
|
|
(10.3)
|
|
|
2.38
|
|
|
2.64
|
|
|
(9.8)
|
|
Net income
|
$
|
0.70
|
|
|
$
|
0.21
|
|
|
233.3
|
|
|
$
|
1.69
|
|
|
$
|
0.85
|
|
|
98.8
|
|
Diluted Earnings
(Loss) Per Share
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.09
|
|
|
$
|
(0.47)
|
|
|
(119.1)
|
|
|
$
|
(0.69)
|
|
|
$
|
(1.79)
|
|
|
(61.5)
|
|
Discontinued
operations
|
0.60
|
|
|
0.68
|
|
|
(11.8)
|
|
|
2.38
|
|
|
2.64
|
|
|
(9.8)
|
|
Net income
|
$
|
0.69
|
|
|
$
|
0.21
|
|
|
228.6
|
|
|
$
|
1.69
|
|
|
$
|
0.85
|
|
|
98.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
46.9
|
|
|
46.7
|
|
|
|
|
46.8
|
|
|
46.6
|
|
|
|
Diluted
|
47.7
|
|
|
46.7
|
|
|
|
|
46.8
|
|
|
46.6
|
|
|
|
HALYARD HEALTH,
INC.
DISCONTINUED OPERATIONS SUMMARY
(unaudited)
(in millions, except per share amounts)
|
|
|
Income from
Discontinued Operations
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net Sales
|
$
|
261.8
|
|
|
$
|
256.5
|
|
|
$
|
1,012.7
|
|
|
$
|
1,026.1
|
|
Cost of products
sold
|
195.4
|
|
|
191.8
|
|
|
762.5
|
|
|
765.4
|
|
Research and
development
|
0.9
|
|
|
0.9
|
|
|
2.9
|
|
|
2.7
|
|
Selling, general and
other expenses
|
23.8
|
|
|
17.6
|
|
|
81.2
|
|
|
63.5
|
|
Income before income
taxes
|
41.7
|
|
|
46.2
|
|
|
166.1
|
|
|
194.5
|
|
Tax
provision
|
(13.3)
|
|
|
(14.3)
|
|
|
(54.7)
|
|
|
(71.4)
|
|
Income on
Discontinued Operations, net of tax
|
$
|
28.4
|
|
|
$
|
31.9
|
|
|
$
|
111.4
|
|
|
$
|
123.1
|
|
|
|
|
|
|
|
|
|
Earning per share
from discontinued operations:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.61
|
|
|
$
|
0.68
|
|
|
$
|
2.38
|
|
|
$
|
2.64
|
|
Diluted
|
0.60
|
|
|
0.68
|
|
|
2.38
|
|
|
2.64
|
|
HALYARD HEALTH,
INC.
NON-GAAP RECONCILIATIONS
(unaudited)
(in millions)
|
|
|
Gross
Profit
|
|
Operating Profit
(Loss)(a)(b)
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
As
reported
|
$
|
89.9
|
|
|
$
|
78.0
|
|
|
$
|
336.9
|
|
|
$
|
297.2
|
|
|
$
|
(3.0)
|
|
|
$
|
(30.4)
|
|
|
$
|
(43.1)
|
|
|
$
|
(107.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
Acquisition-related
charges
|
1.3
|
|
|
0.7
|
|
|
3.6
|
|
|
5.6
|
|
|
2.4
|
|
|
3.0
|
|
|
7.6
|
|
|
17.6
|
|
Spin-related
transition charges
|
—
|
|
|
5.9
|
|
|
(0.3)
|
|
|
7.0
|
|
|
—
|
|
|
5.6
|
|
|
0.5
|
|
|
14.1
|
|
Litigation and
legal
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
|
5.0
|
|
|
20.5
|
|
|
20.1
|
|
Policy
changes
|
(1.3)
|
|
|
—
|
|
|
(1.3)
|
|
|
—
|
|
|
(6.0)
|
|
|
—
|
|
|
(6.0)
|
|
|
—
|
|
Intangibles
amortization
|
1.0
|
|
|
1.1
|
|
|
4.0
|
|
|
3.5
|
|
|
5.0
|
|
|
5.5
|
|
|
20.7
|
|
|
21.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
90.9
|
|
|
$
|
85.7
|
|
|
$
|
342.9
|
|
|
$
|
313.3
|
|
|
$
|
6.6
|
|
|
$
|
(11.3)
|
|
|
$
|
5.2
|
|
|
$
|
(33.9)
|
|
_________________________________
(a)
|
For the three and
twelve months ended December 31, 2017, operating profit
includes $30 million and $116 million, respectively, of costs no
longer allocated to the S&IP business and $9 million and $63
million of corporate and other expenses.
|
(b)
|
For the three and
twelve months ended December 31, 2016, operating profit
includes $33 million and $114 million, respectively, of costs no
longer allocated to the S&IP business and $26 million and $98
million, respectively of corporate and other expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Taxes
|
|
Income Tax
Benefit
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
As
reported
|
$
|
(10.2)
|
|
|
$
|
(38.3)
|
|
|
$
|
(72.2)
|
|
|
$
|
(139.2)
|
|
|
$
|
14.6
|
|
|
$
|
16.4
|
|
|
$
|
40.1
|
|
|
$
|
55.9
|
|
Effective tax
rate, as reported
|
|
|
|
|
|
|
|
|
143.1
|
%
|
|
42.8
|
%
|
|
55.5
|
%
|
|
40.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
charges
|
5.0
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|
(1.8)
|
|
|
—
|
|
|
(1.8)
|
|
|
—
|
|
Acquisition-related
charges
|
2.4
|
|
|
3.0
|
|
|
7.6
|
|
|
17.6
|
|
|
(0.9)
|
|
|
(1.2)
|
|
|
(2.9)
|
|
|
(6.7)
|
|
Spin-related
transition charges
|
—
|
|
|
5.6
|
|
|
0.5
|
|
|
14.1
|
|
|
—
|
|
|
(1.6)
|
|
|
(0.1)
|
|
|
(4.6)
|
|
Litigation and
legal
|
3.2
|
|
|
5.0
|
|
|
20.5
|
|
|
20.1
|
|
|
(1.3)
|
|
|
(1.8)
|
|
|
(7.7)
|
|
|
(7.5)
|
|
Policy
changes
|
(6.0)
|
|
|
—
|
|
|
(6.0)
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
Intangibles
amortization
|
5.0
|
|
|
5.5
|
|
|
20.7
|
|
|
21.4
|
|
|
(1.8)
|
|
|
(1.9)
|
|
|
(7.7)
|
|
|
(8.0)
|
|
Statutory tax
reform
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.1)
|
|
|
(2.4)
|
|
|
(10.1)
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
(0.6)
|
|
|
$
|
(19.2)
|
|
|
$
|
(23.9)
|
|
|
$
|
(66.0)
|
|
|
$
|
1.0
|
|
|
$
|
7.5
|
|
|
$
|
12.1
|
|
|
$
|
30.5
|
|
Effective tax
rate, as adjusted
|
|
|
|
|
|
|
|
|
166.7
|
%
|
|
39.1
|
%
|
|
50.6
|
%
|
|
46.2
|
%
|
HALYARD HEALTH,
INC.
NON-GAAP RECONCILIATIONS
(unaudited)
(in millions, except per share amounts)
|
|
|
Income (Loss) from
Continuing Operations
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
As
reported
|
$
|
4.4
|
|
|
$
|
(21.9)
|
|
|
$
|
(32.1)
|
|
|
$
|
(83.3)
|
|
Diluted EPS, as
reported
|
$
|
0.09
|
|
|
$
|
(0.47)
|
|
|
$
|
(0.69)
|
|
|
$
|
(1.79)
|
|
|
|
|
|
|
|
|
|
Restructuring
charges
|
3.2
|
|
|
—
|
|
|
3.2
|
|
|
—
|
|
Acquisition-related
charges
|
1.5
|
|
|
1.8
|
|
|
4.7
|
|
|
10.9
|
|
Spin-related
transition charges
|
—
|
|
|
4.0
|
|
|
0.4
|
|
|
9.5
|
|
Litigation and
legal
|
1.9
|
|
|
3.2
|
|
|
12.8
|
|
|
12.6
|
|
Policy
changes
|
(3.7)
|
|
|
—
|
|
|
(3.7)
|
|
|
—
|
|
Intangibles
amortization
|
3.2
|
|
|
3.6
|
|
|
13.0
|
|
|
13.4
|
|
Statutory tax
reform
|
(10.1)
|
|
|
(2.4)
|
|
|
(10.1)
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
0.4
|
|
|
$
|
(11.7)
|
|
|
$
|
(11.8)
|
|
|
$
|
(35.5)
|
|
Diluted EPS, as
adjusted
|
$
|
0.01
|
|
|
$
|
(0.25)
|
|
|
$
|
(0.25)
|
|
|
$
|
(0.76)
|
|
|
|
|
Income from
Discontinued Operations, net of tax
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
As
reported
|
$
|
28.4
|
|
|
$
|
31.9
|
|
|
$
|
111.4
|
|
|
$
|
123.1
|
|
Diluted EPS, as
reported
|
$
|
0.60
|
|
|
$
|
0.68
|
|
|
$
|
2.38
|
|
|
$
|
2.64
|
|
|
|
|
|
|
|
|
|
Divestiture-related
charges
|
7.4
|
|
|
—
|
|
|
12.4
|
|
|
—
|
|
Spin-related
transition charges
|
—
|
|
|
3.4
|
|
|
(1.0)
|
|
|
4.6
|
|
Policy
changes
|
(1.3)
|
|
|
—
|
|
|
(1.3)
|
|
|
|
Intangibles
amortization
|
0.1
|
|
|
0.1
|
|
|
0.4
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
34.6
|
|
|
$
|
35.4
|
|
|
$
|
121.9
|
|
|
$
|
128.2
|
|
Diluted EPS, as
adjusted
|
$
|
0.73
|
|
|
$
|
0.76
|
|
|
$
|
2.61
|
|
|
$
|
2.75
|
|
HALYARD HEALTH,
INC.
NON-GAAP RECONCILIATIONS
(unaudited)
(in millions, except per share amounts)
|
|
|
Net
Income
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
As
reported
|
$
|
32.8
|
|
|
$
|
10.0
|
|
|
$
|
79.3
|
|
|
$
|
39.8
|
|
Diluted EPS, as
reported
|
$
|
0.69
|
|
|
$
|
0.21
|
|
|
$
|
1.69
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
Restructuring
charges
|
3.2
|
|
|
—
|
|
|
3.2
|
|
|
—
|
|
Divestiture-related
charges
|
7.4
|
|
|
—
|
|
|
12.4
|
|
|
—
|
|
Acquisition-related
charges
|
1.5
|
|
|
1.8
|
|
|
4.7
|
|
|
10.9
|
|
Spin-related
transition charges
|
—
|
|
|
7.4
|
|
|
(0.6)
|
|
|
14.1
|
|
Litigation and
legal
|
1.9
|
|
|
3.2
|
|
|
12.8
|
|
|
12.6
|
|
Policy
changes
|
(5.0)
|
|
|
—
|
|
|
(5.0)
|
|
|
—
|
|
Intangibles
amortization
|
3.3
|
|
|
3.7
|
|
|
13.4
|
|
|
13.9
|
|
Regulatory tax
changes
|
(10.1)
|
|
|
(2.4)
|
|
|
(10.1)
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
35.0
|
|
|
$
|
23.7
|
|
|
$
|
110.1
|
|
|
$
|
92.7
|
|
Diluted EPS, as
adjusted
|
$
|
0.73
|
|
|
$
|
0.51
|
|
|
$
|
2.35
|
|
|
$
|
1.99
|
|
|
|
|
EBITDA
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
EBITDA, as
reported
|
$
|
49.7
|
|
|
$
|
32.6
|
|
|
$
|
182.5
|
|
|
$
|
152.6
|
|
|
|
|
|
|
|
|
|
Divestiture-related
charges
|
11.7
|
|
|
—
|
|
|
19.8
|
|
|
—
|
|
Restructuring
charges
|
5.0
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
Acquisition-related
charges
|
2.4
|
|
|
2.6
|
|
|
7.3
|
|
|
17.0
|
|
Spin-related
transition charges
|
—
|
|
|
10.3
|
|
|
(0.8)
|
|
|
21.0
|
|
Litigation and
legal
|
3.2
|
|
|
5.0
|
|
|
20.5
|
|
|
20.1
|
|
Policy
changes
|
(8.1)
|
|
|
—
|
|
|
(8.1)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
63.9
|
|
|
$
|
50.5
|
|
|
$
|
226.2
|
|
|
$
|
210.7
|
|
|
|
|
Free Cash
Flow
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cash provided by
operating activities
|
$
|
64.1
|
|
|
$
|
44.9
|
|
|
$
|
144.2
|
|
|
$
|
188.8
|
|
Capital
expenditures
|
(12.6)
|
|
|
(7.4)
|
|
|
(43.2)
|
|
|
(29.1)
|
|
Free Cash
Flow
|
$
|
51.5
|
|
|
$
|
37.5
|
|
|
$
|
101.0
|
|
|
$
|
159.7
|
|
HALYARD HEALTH,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions)
|
|
|
As of
December 31,
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
219.7
|
|
|
$
|
113.7
|
|
Accounts receivable,
net of allowances
|
203.0
|
|
|
188.5
|
|
Inventories
|
91.1
|
|
|
80.7
|
|
Prepaid expenses and
other current assets
|
14.4
|
|
|
16.6
|
|
Assets held for
sale
|
632.5
|
|
|
194.0
|
|
Total Current
Assets
|
1,160.7
|
|
|
593.5
|
|
Property, Plant
and Equipment, net
|
109.9
|
|
|
109.3
|
|
Goodwill
|
764.7
|
|
|
762.3
|
|
Other Intangible
Assets, net
|
148.9
|
|
|
168.2
|
|
Deferred Tax
Assets
|
7.6
|
|
|
8.6
|
|
Other
Assets
|
4.1
|
|
|
3.0
|
|
Assets Held for
Sale
|
—
|
|
|
426.9
|
|
TOTAL
ASSETS
|
$
|
2,195.9
|
|
|
$
|
2,071.8
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Current portion of
long-term debt
|
$
|
39.8
|
|
|
$
|
—
|
|
Trade accounts
payable
|
171.2
|
|
|
160.6
|
|
Accrued
expenses
|
144.9
|
|
|
138.4
|
|
Liabilities held for
sale
|
33.9
|
|
|
25.4
|
|
Total Current
Liabilities
|
389.8
|
|
|
324.4
|
|
Long-Term
Debt
|
541.1
|
|
|
579.0
|
|
Deferred Tax
Liabilities
|
17.8
|
|
|
35.4
|
|
Other Long-Term
Liabilities
|
31.8
|
|
|
23.8
|
|
Long-Term
Liabilities Held for Sale
|
—
|
|
|
6.7
|
|
TOTAL
LIABILITIES
|
980.5
|
|
|
969.3
|
|
Stockholders'
Equity
|
1,215.4
|
|
|
1,102.5
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
2,195.9
|
|
|
$
|
2,071.8
|
|
HALYARD HEALTH,
INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(unaudited)
(in millions)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Operating
Activities
|
|
|
|
|
|
|
|
Net income
|
$
|
32.8
|
|
|
$
|
10.0
|
|
|
$
|
79.3
|
|
|
$
|
39.8
|
|
Depreciation and
amortization
|
11.0
|
|
|
16.8
|
|
|
59.5
|
|
|
65.2
|
|
Net loss (income) on
asset dispositions
|
3.2
|
|
|
(0.1)
|
|
|
3.3
|
|
|
3.7
|
|
Changes in operating
assets and liabilities
|
32.2
|
|
|
47.8
|
|
|
(4.3)
|
|
|
91.6
|
|
Deferred income taxes
and other
|
(15.1)
|
|
|
(29.6)
|
|
|
6.4
|
|
|
(11.5)
|
|
Cash Provided by
Operating Activities
|
64.1
|
|
|
44.9
|
|
|
144.2
|
|
|
188.8
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
(12.6)
|
|
|
(7.4)
|
|
|
(43.2)
|
|
|
(29.1)
|
|
Acquisition of
business, net of cash acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
(175.0)
|
|
Proceeds from
dispositions of property
|
—
|
|
|
3.2
|
|
|
0.1
|
|
|
3.2
|
|
Cash Used in
Investing Activities
|
(12.6)
|
|
|
(4.2)
|
|
|
(43.1)
|
|
|
(200.9)
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Line of credit
facility proceeds
|
—
|
|
|
—
|
|
|
—
|
|
|
72.0
|
|
Line of credit
facility repayments
|
—
|
|
|
(10.0)
|
|
|
—
|
|
|
(72.0)
|
|
Debt issuance
costs
|
—
|
|
|
(0.9)
|
|
|
—
|
|
|
(0.9)
|
|
Purchase of treasury
stock
|
(0.5)
|
|
|
—
|
|
|
(2.5)
|
|
|
(0.9)
|
|
Proceeds from the
exercise of stock options
|
2.4
|
|
|
0.2
|
|
|
4.7
|
|
|
0.4
|
|
Cash Provided by
(Used in) Financing Activities
|
1.9
|
|
|
(10.7)
|
|
|
2.2
|
|
|
(1.4)
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
0.2
|
|
|
(3.0)
|
|
|
2.7
|
|
|
(2.3)
|
|
Increase
(Decrease) in Cash and Cash Equivalents
|
53.6
|
|
|
27.0
|
|
|
106.0
|
|
|
(15.8)
|
|
Cash and Cash
Equivalents - Beginning of Period
|
166.1
|
|
|
86.7
|
|
|
113.7
|
|
|
129.5
|
|
Cash and Cash
Equivalents - End of Period
|
$
|
219.7
|
|
|
$
|
113.7
|
|
|
$
|
219.7
|
|
|
$
|
113.7
|
|
HALYARD HEALTH,
INC.
SELECTED BUSINESS SEGMENT DATA
(unaudited)
(in millions)
|
|
|
Three Months
Ended
December 31,
|
|
|
|
Year Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Net sales
|
$
|
166.3
|
|
|
$
|
153.5
|
|
|
8.3
|
%
|
|
$
|
611.6
|
|
|
$
|
566.2
|
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Volume(a)
|
|
Pricing/Mix
|
|
Currency
|
|
|
|
|
Net Sales -
percentage change - QTD
|
8
|
%
|
|
9
|
%
|
|
(1)
|
%
|
|
—
|
%
|
|
|
|
|
Net Sales -
percentage change - YTD
|
8
|
%
|
|
8
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
_______________________________________________
(a)
|
YTD volume includes
incremental sales of Corpak products.
|
|
Three Months
Ended
December 31,
|
|
|
|
Year Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Devices operating
profit(a)
|
$
|
38.9
|
|
|
$
|
33.2
|
|
|
17.2
|
%
|
|
$
|
155.2
|
|
|
$
|
123.8
|
|
|
25.4
|
%
|
Corporate and other
costs(b)(c)
|
(38.7)
|
|
|
(58.6)
|
|
|
N.M.
|
|
|
(178.3)
|
|
|
(211.2)
|
|
|
N.M.
|
|
Other income and
(expense), net(d)
|
(3.2)
|
|
|
(5.0)
|
|
|
N.M.
|
|
|
(20.0)
|
|
|
(19.7)
|
|
|
N.M.
|
|
Operating
loss
|
$
|
(3.0)
|
|
|
$
|
(30.4)
|
|
|
N.M.
|
|
|
$
|
(43.1)
|
|
|
$
|
(107.1)
|
|
|
N.M.
|
|
_______________________________________________
(a)
|
Operating profit
includes $5 million and $21 million of amortization expense for the
three months and year ended December 31, 2017 compared to $6
million and $21 million of amortization expense for the three
months and year ended December 31, 2016.
|
(b)
|
For the three months
and year ended December 31, 2017, Corporate and other costs
included $30 million and $116 million, respectively, of costs no
longer allocated to the S&IP business, $8 million and $55
million, respectively, of general expenses, $5 million in each
period, respectively, of restructuring costs, $2 million and $8
million, respectively, of acquisition-related charges and $0
million and $1 million, respectively, of post spin-related costs
partially offset by a $6 million benefit in each period,
respectively, related to realignment of internal policies for our
post-divestiture business.
|
(c)
|
For the three months
and year ended December 31, 2016, Corporate and other costs
included $33 million and $114 million, respectively, of costs no
longer allocated to the S&IP business, $17 million and $66
million, respectively, of general expenses, $6 million and $14
million, respectively, of post spin-related costs, and $3 million
and $18 million, respectively, of acquisition-related
charges.
|
(d)
|
Other expense, net is
primarily costs related to litigation and legal matters.
|
|
N.M. - not
meaningful
|
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SOURCE Halyard Health, Inc.