Fiscal 2010 Outlook Unchanged Board of Directors Approves Regular
Quarterly Dividend MENTOR, Ohio, July 30 /PRNewswire-FirstCall/ --
STERIS Corporation (NYSE: STE) today announced financial results
for its fiscal 2010 first quarter ended June 30, 2009. Fiscal 2010
first quarter revenues were $283.5 million compared with $311.6
million in the first quarter of fiscal 2009, a decline of 9%. On a
constant currency basis, revenues decreased 7%. Operating profit
increased 22% to $42.9 million, or 15.1% of revenues, compared with
$35.0 million, or 11.2% of revenues in the first quarter of fiscal
2009. Fiscal 2010 first quarter net income was $25.5 million, or
$0.43 per diluted share, compared with net income of $25.5 million,
or $0.43 per diluted share, in the first quarter of fiscal 2009.
"While our first quarter proved to be challenging from a top-line
perspective, we are pleased with our solid operating performance,"
said Walt Rosebrough, President and Chief Executive Officer of
STERIS. "In particular, capital equipment in our Healthcare segment
was impacted by challenging market dynamics as well as the timing
of shipments. However, we are cautiously optimistic that our
year-over-year growth rates will improve in the coming quarters,
and are increasingly comfortable with our earnings per share
guidance. As a result, our outlook for the full fiscal year is
unchanged." Segment Results Healthcare revenues in the quarter were
$200.6 million compared with $224.1 million in the first quarter of
fiscal 2009, a decline of 10%. Strength in consumables was more
than offset by declines in capital equipment and service,
reflecting lower spending by hospital Customers across most major
product categories. Backlog levels at quarter end were $132.4
million, an increase of 16% compared with the same time last year.
Operating income was $32.1 million, an increase of 10% compared
with the prior year period, driven by efficiency initiatives across
the segment. Life Sciences first quarter revenues were $46.1
million compared with $48.0 million in the first quarter of fiscal
2009, a decline of 4%. Strength in consumables was more than offset
by a decline in capital equipment and service revenues. Backlog
levels at quarter end were $46.3 million, a decline of 7% compared
with the prior year period. Life Sciences operating income was $4.8
million, an increase of $3.7 million compared with the prior year
period, driven by our focus on higher margin capital equipment and
overall operating efficiencies. Fiscal 2010 first quarter revenues
for Isomedix Services were $35.4 million compared with $36.9
million in the same period last year, a decline of 4%. Revenues
were affected by the previously disclosed sale of two facilities
during fiscal 2009, which were partially offset by a modest
improvement in demand from medical device Customers. Operating
income was $8.3 million in the quarter compared with $8.2 million
in the first quarter of last year. Cash Flow Net cash provided by
operations for the first quarter of fiscal 2010 was $32.6 million,
compared with net cash provided by operations of $28.7 million in
the same period last year. Free cash flow (see note 1) for the
first quarter of fiscal 2010 was $24.4 million, compared with free
cash flow of $18.1 million in the prior year quarter. The growth in
free cash flow was driven by improved working capital management
and lower capital spending. Regular Quarterly Dividend Announced
The Company also announced today that STERIS's Board of Directors
has authorized a regular quarterly dividend in the amount of $0.11
per common share. The dividend is payable September 17, 2009 to
shareholders of record at the close of business on August 20, 2009.
Outlook Based upon first quarter results and current anticipated
trends, the Company's expectations are unchanged for the full
fiscal year, with revenues flat to down mid-single digits and
earnings per diluted share of $1.80 to $2.00. This outlook assumes
the average forward exchange rates for the U.S. dollar and key
international currencies as of June 30, 2009. Refer to the earnings
announcement dated May 7, 2009 for the detailed full year outlook
and other assumptions. Conference Call In conjunction with this
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 1-800-369-8428 in the United States and Canada, and
1-773-799-3378 internationally, then referencing the password
"STERIS". For those unable to listen to the conference call live, a
replay will be available from 12:00 p.m. Eastern time on July 30,
2009, until 5:00 p.m. Eastern time on August 13, 2009, either over
the Internet at http://www.steris-ir.com/ or via phone by calling
1-866-416-1187 in the United States and Canada, and 1-203-369-0718
internationally. About STERIS The mission of STERIS Corporation is
to provide a healthier today and safer tomorrow through
knowledgeable people and innovative infection prevention,
decontamination and health science technologies, products and
services. The Company has approximately 5,000 dedicated employees
around the world working together to supply a broad array of
solutions by offering a combination of equipment, consumables and
services to healthcare, pharmaceutical, industrial and government
Customers. 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,"
"outlook," "potential," "confidence," "improve," "optimistic,"
"comfortable," 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 or dividends, 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 previously disclosed FDA
warning letters and government investigations, 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, 2009, filed with the SEC on
May 30, 2009, under Item 1A, "Risk Factors." STERIS Corporation
Consolidated Condensed Statements of Income (In thousands, except
per share data) Three Months Ended June 30, ---------- 2009 2008
---- ---- (Unaudited) (Unaudited) Revenues $283,543 $311,565 Cost
of revenues 158,707 181,064 ------- ------- Gross profit 124,836
130,501 Operating expenses: Selling, general, and administrative
74,605 87,348 Research and development 7,580 8,279 Restructuring
expense (211) (166) ---- ---- Total operating expenses 81,974
95,461 ------ ------ Income from operations 42,862 35,040
Non-operating expense, net 2,865 1,385 Income tax expense 14,455
8,155 ------ ----- Net income $25,542 $25,500 ======= =======
Earnings per common share (EPS) data: Basic $0.44 $0.43 ===== =====
Diluted $0.43 $0.43 ===== ===== Cash dividends declared per common
share outstanding $0.11 $0.06 Weighted average number of common
shares outstanding used in EPS computation: Basic number of common
shares outstanding 58,517 58,694 Diluted number of common shares
outstanding 58,984 59,647 STERIS Corporation Consolidated Condensed
Balance Sheets (In thousands) June 30, March 31, 2009 2009 ----
---- Assets (Unaudited) Current assets: Cash and cash equivalents
$176,072 $154,180 Accounts receivable, net 205,327 238,438
Inventories, net 137,533 130,218 Other current assets 25,053 30,294
------ ------ Total Current Assets 543,985 553,130 Property, plant,
and equipment, net 350,171 350,996 Goodwill and intangible assets,
net 312,991 305,189 Other assets 8,050 7,624 ----- ----- Total
Assets $1,215,197 $1,216,939 ========== ========== Liabilities and
Equity Current liabilities: Accounts payable $51,514 $68,573 Other
current liabilities 113,309 133,453 ------- ------- Total Current
Liabilities 164,823 202,026 Long-term debt 210,000 210,000 Other
liabilities 76,632 86,748 Equity 763,742 718,165 ------- -------
Total Liabilities and Equity $1,215,197 $1,216,939 ==========
========== STERIS Corporation Consolidated Condensed Statements of
Cash Flows (In thousands) Three Months Ended June 30, ----------
2009 2008 ---- ---- (Unaudited) (Unaudited) Operating Activities:
Net income $25,542 $25,500 Non-cash items 11,568 20,971 Working
capital adjustments (4,490) (17,744) ------ ------- Net cash
provided by operating activities 32,620 28,727 Investing
Activities: Purchases of property, plant, equipment, and
intangibles, net (8,355) (10,615) Proceeds from sale of property,
plant, equipment and intangibles 175 7 --- - Net cash used in
investing activities (8,180) (10,608) Financing Activities:
(Payments) proceeds under credit facilities, net - (1,720)
Repurchases of common shares - (31,584) Cash dividends paid to
common shareholders (6,441) (3,513) Tax benefit from stock options
exercised 47 1,413 Stock options and other equity transactions, net
152 14,302 --- ------ Net cash used in financing activities (6,242)
(21,102) Effect of exchange rate changes on cash and cash
equivalents 3,694 153 ----- --- Increase in cash and cash
equivalents 21,892 (2,830) Cash and cash equivalents at beginning
of period 154,180 51,868 ------- ------ Cash and cash equivalents
at end of period $176,072 $49,038 ======== ======= STERIS
Corporation Segment Data (In thousands) Three Months Ended June 30,
---------- 2009 2008 ---- ---- (Unaudited) (Unaudited) Segment
Revenues: Healthcare $200,604 $224,065 Life Sciences 46,116 48,039
STERIS Isomedix Services 35,407 36,863 ------ ------ Total
Reportable Segments 282,127 308,967 Corporate and Other 1,416 2,598
----- ----- Total Segment Revenues $283,543 $311,565 ========
======== Segment Operating Income (Loss): Healthcare $32,102
$29,230 Life Sciences 4,779 1,047 STERIS Isomedix Services 8,339
8,187 ----- ----- Total Reportable Segments 45,220 38,464 Corporate
and Other (2,358) (3,424) ------ ------ Total Segment Operating
Income $42,862 $35,040 ======= ======= STERIS Corporation Non-GAAP
Disclosures (Unaudited) (In thousands, except per share data) The
following table presents financial measures which are considered to
be "non-GAAP financial measures" under Securities Exchange
Commissions 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 growth opportunities, repurchase common
shares, and pay cash dividends. STERIS's calculation of free cash
flow may vary from other companies. Three Months Ended June 30,
---------- 2009 2008 ---- ---- (Unaudited) (Unaudited) Calculation
of Free Cash Flow: Cash flows from operating activities $32,620
$28,727 Purchases of property, plant, equipment, and intangibles,
net (8,355) (10,615) Proceeds from the sale of property, plant,
equipment, and intangibles 175 7 --- - Free Cash Flow $24,440
$18,119 ======= ======= DATASOURCE: STERIS Corporation CONTACT:
Julie Winter, Director, Investor Relations of STERIS Corporation,
+1-440-392-7245 Web Site: http://www.steris.com/
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