Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 13, 2019

 

 

STERIS plc

(Exact Name of Registrant as Specified in Charter)

 

 

 

Ireland   001-38848   98-1455064
(State or Other Jurisdiction
of Incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

70 Sir John Rogerson’s Quay

Dublin 2 Ireland

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: +353 1 232 2000

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Ordinary Shares   STE   New York Stock Exchange

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On May 13, 2019, STERIS plc (the “Company”) issued a press release announcing financial results for the three and twelve month periods ending March 31, 2019 and an interim dividend. A copy of this press release is attached hereto as Exhibit 99.1.

The information contained in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished to the Securities and Exchange Commission and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. Furthermore, the information contained in this Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933.

 

Item 7.01

Regulation FD Disclosure.

On May 7, 2019, the Board of Directors of the Company authorized the continuation of the share repurchase program that had been approved on August 9, 2016 by the Board of Directors of the former U.K. parent. Pursuant to this authorization, under which there remains approximately $80 million (net of taxes, fees and commissions) of availability, the Company may repurchase its shares from time to time through open market purchases, including 10b5-1 plans. The repurchase program may be suspended or discontinued at any time.

The information contained in this Item 7.01 of this Current Report on Form 8-K is being furnished to the Securities and Exchange Commission and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. Furthermore, the information contained in this Item 7.01 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits:

 

Exhibit

No.

  

Description

99.1    Press Release issued by STERIS plc on May 13, 2019 announcing financial results for the three and twelve month periods ending March 31, 2019

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

STERIS plc
By  

/s/ J. Adam Zangerle

Name:   J. Adam Zangerle
Title:   Senior Vice President, General Counsel and Secretary

Dated: May 13, 2019

EX-99.1

Exhibit 99.1

STERIS Announces Financial Results for Fiscal 2019 Fourth Quarter and Full Year

 

   

Strong fourth quarter revenue growth

 

   

Fourth quarter earnings improve to $1.27 per diluted share as reported; adjusted earnings per diluted share increase to $1.53

 

   

Full year fiscal 2019 revenue growth and adjusted earnings per diluted share exceed outlook

 

   

Another record year anticipated in fiscal 2020

DUBLIN, IRELAND - (May 13, 2019) - STERIS plc (NYSE: STE) (“STERIS” or the “Company”) today announced financial results for its fiscal 2019 fourth quarter ended March 31, 2019. Revenue as reported for the quarter increased 7% to $768.2 million compared with $716.0 million in the fourth quarter of fiscal 2018, with growth across all segments. Constant currency organic revenue (see Non-GAAP Financial Measures) growth was 9% for the fourth quarter of fiscal 2019.

“We finished fiscal 2019 stronger than anticipated, with meaningful contributions from improved Customer demand, new products and services, as well as some Brexit-related inventory build-up by our Customers,” said Walt Rosebrough, President and Chief Executive Officer of STERIS. “We anticipate that fiscal 2020 will be another record year resulting from underlying demand and new products and services.”

Fourth Quarter and Full Year 2019 Operating Results

As reported, net income for the fourth quarter was $108.7 million, or $1.27 per diluted share, compared with net income of $73.6 million, or $0.86 per diluted share in the fourth quarter of fiscal 2018. Adjusted net income (see Non-GAAP Financial Measures) for the fourth quarter of fiscal 2019 was $131.1 million, or $1.53 per diluted share, compared with adjusted net income for the previous year’s fourth quarter of $105.8 million or $1.24 per diluted share. As reported, full year net income was $304.1 million, or $3.56 per diluted share, compared with $290.9 million, or $3.39 per diluted share. Adjusted net income increased 17% to $417.5 million, or $4.89 per diluted share, compared with adjusted net income of $355.6 million, or $4.15 per diluted share in fiscal 2018.

Fourth Quarter Segment Results

Healthcare Products revenue as reported grew 7% in the quarter to $386.6 million compared with $360.0 million in the fourth quarter of fiscal 2018, driven by 10% growth in capital equipment revenue, 7% growth in service revenue and 4% growth in consumable revenue in the fourth quarter. Constant currency organic revenue growth for Healthcare Products was 8% during the quarter. Healthcare Products operating income was $106.7 million compared with $86.4 million in last year’s fourth quarter. The increase in profitability was primarily due to the increased volume, favorable mix and operating efficiencies.


Fiscal 2019 fourth quarter revenue for Applied Sterilization Technologies increased 7% as reported to $143.1 million compared with $133.5 million in the same period last year. Constant currency organic revenue increased 10%, primarily driven by increased volume from the segment’s core medical device Customers. Segment operating income increased to $57.4 million in the fourth quarter of fiscal 2019 compared with operating income of $51.6 million in the same period last year, due primarily to the revenue growth.

Healthcare Specialty Services as reported revenue grew 11% in the quarter to $135.5 million compared with $122.1 million in the fourth quarter of fiscal 2018. Constant currency organic revenue growth was 13%. Healthcare Specialty Services operating income was $19.8 million compared with $14.4 million in last year’s fourth quarter, benefitting from the additional volume and improved productivity.

Life Sciences fourth quarter revenue as reported grew 3% to $103.0 million compared with $100.3 million in the fourth quarter of fiscal 2018, driven by 14% growth in consumables and 2% growth in service revenue. Capital equipment revenue declined 9% in the fourth quarter compared with a strong quarter in the prior year. Constant currency organic revenue grew 4% in the quarter. Operating income was $35.9 million compared with $34.5 million in the prior year’s fourth quarter, primarily driven by volume and disciplined expense management.

Cash Flow

Net cash provided by operations for fiscal 2019 was $539.5 million, compared with $457.6 million in fiscal 2018. Free cash flow (see Non-GAAP Financial Measures) for fiscal 2019 was $355.4 million compared with $294.3 million in the prior year period. The improvement in free cash flow is primarily due to the improved cash from operations partially offset by higher capital expenditures which fund future organic growth.

 

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Fiscal 2020 Outlook

STERIS expects constant currency organic revenue growth to be in the range of 5-6% for fiscal 2020. Reflecting March 29, 2019 forward rates, currency movements are anticipated to be neutral for fiscal 2020. Adjusted earnings per diluted share are anticipated to be in the range of $5.28 - $5.43, which assumes an adjusted effective tax rate in the range of 19-20%.

Free cash flow for fiscal 2020 is expected to be approximately $300 million, and capital spending is anticipated to be approximately $280 million. Growth in cash from operations in fiscal 2020 will be more than offset by significantly higher capital spending, limiting free cash flow for the year. In particular, growth capital of more than $110 million will be invested to expand global capacity in the Applied Sterilization Technologies segment. In addition, investments will continue to be made to expand outsourced instrument reprocessing within the Healthcare Specialty Services segment.

Dividend Announcement

STERIS’s Board of Directors has authorized a quarterly interim dividend of $0.34 per share. The dividend is payable June 28, 2019 to shareholders of record at the close of business on June 12, 2019.

Conference Call

As previously announced, STERIS management will host a conference call tomorrow, May 14, 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 May 14, 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 10129994 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.

 

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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

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.

 

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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 parties’ ability to meet expectations regarding the accounting and tax treatments of the redomiciliation transaction, (b) 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, (c) 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, (d) changes in tax laws or interpretations that could increase our

 

5


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, (e) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (f) 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, (g) 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, (h) 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, (i) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (j) 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, (k) 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, (l) 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, (m) 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, (n) 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 (o) 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.

 

6


STERIS plc

Consolidated Condensed Statements of Operations

(In thousands, except per share data)

 

     Three Months Ended     Twelve Months Ended  
     March 31,     March 31,  
     2019      2018     2019      2018  
     (Unaudited)      (Unaudited)     (Unaudited)      (Unaudited)  

Revenues

   $ 768,213      $ 715,973     $ 2,782,170      $ 2,619,996  

Cost of revenues

     432,872        423,608       1,597,022        1,527,250  

Cost of revenues - Restructuring

     625        —         9,721        —    
  

 

 

    

 

 

   

 

 

    

 

 

 

Cost of revenues, net

     433,497        423,608       1,606,743        1,527,250  
  

 

 

    

 

 

   

 

 

    

 

 

 

Gross profit

     334,716        292,365       1,175,427        1,092,746  

Operating expenses:

          

Selling, general, and administrative

     173,120        162,098       669,937        631,978  

Research and development

     15,878        17,609       63,038        60,782  

Restructuring expense

     4,840        (53     30,987        103  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total operating expenses

     193,838        179,654       763,962        692,863  
  

 

 

    

 

 

   

 

 

    

 

 

 

Income from operations

     140,878        112,711       411,465        399,883  

Non-operating expense, net

     7,478        11,266       41,995        44,901  

Income tax (benefit) expense

     24,523        27,822       64,394        63,360  
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

   $ 108,877      $ 73,623     $ 305,076      $ 291,622  

Net income attributable to noncontrolling interest

     132        25       1,025        707  
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income attributable to shareholders

   $ 108,745      $ 73,598     $ 304,051      $ 290,915  
  

 

 

    

 

 

   

 

 

    

 

 

 

Earnings per ordinary share (EPS) data:

          

Basic

   $ 1.29      $ 0.87     $ 3.59      $ 3.42  
  

 

 

    

 

 

   

 

 

    

 

 

 

Diluted

   $ 1.27      $ 0.86     $ 3.56      $ 3.39  
  

 

 

    

 

 

   

 

 

    

 

 

 

Cash dividends declared per share outstanding

   $ 0.34      $ 0.31     $ 1.33      $ 1.21  

Weighted average number of shares outstanding used in EPS computation:

          

Basic number of shares outstanding

     84,546        84,819       84,577        85,028  

Diluted number of shares outstanding

     85,447        85,544       85,468        85,713  

STERIS plc

Consolidated Condensed Balance Sheets

(In thousands)

 

     March 31,      March 31,  
     2019      2018  
     (Unaudited)         

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 220,633      $ 201,534  

Accounts receivable, net

     564,830        528,066  

Inventories, net

     208,243        205,731  

Other current assets

     60,029        54,326  
  

 

 

    

 

 

 

Total Current Assets

     1,053,735        989,657  

Property, plant, and equipment, net

     1,031,582        1,010,524  

Goodwill and intangible assets, net

     2,927,542        3,160,764  

Other assets

     60,212        39,389  
  

 

 

    

 

 

 

Total Assets

   $ 5,073,071      $ 5,200,334  
  

 

 

    

 

 

 

Liabilities and Equity

     

Current liabilities:

     

Accounts payable

   $ 152,913      $ 135,866  

Other current liabilities

     312,283        262,596  
  

 

 

    

 

 

 

Total Current Liabilities

     465,196        398,462  

Long-term debt

     1,183,227        1,316,001  

Other liabilities

     238,850        268,571  

Equity

     3,185,798        3,217,300  
  

 

 

    

 

 

 

Total Liabilities and Equity

   $ 5,073,071      $ 5,200,334  
  

 

 

    

 

 

 


STERIS plc

Segment Data

 

Financial information for each of the segments is presented in the following table. We disclose a measure of segment income that is consistent with the way management operates and views the business. The accounting policies for reportable segments are the same as those for the consolidated Company. Segment income is calculated as the segment’s gross profit less direct costs and indirect costs if the resources are dedicated to a single segment. Corporate costs include corporate and administrative functions, public company costs, legacy post-retirement benefits, and certain services and facilities related to distribution and research and development that are shared by multiple segments.

 

     Three Months Ended     Twelve Months Ended  
     March 31,     March 31,  
(In thousands)    2019     2018     2019     2018  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Segment Revenues:

        

Healthcare Products

   $ 386,649     $ 360,001     $ 1,338,428     $ 1,276,054  

Healthcare Specialty Services

     135,493       122,131       510,057       469,065  

Life Sciences

     102,987       100,299       378,558       361,590  

Applied Sterilization Technologies

     143,084       133,542       555,127       513,287  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

   $ 768,213     $ 715,973     $ 2,782,170     $ 2,619,996  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income:

        

Healthcare Products

   $ 106,673     $ 86,377     $ 323,684     $ 294,162  

Healthcare Specialty Services

     19,800       14,444       64,222       58,458  

Life Sciences

     35,869       34,471       132,129       123,889  

Applied Sterilization Technologies

     57,411       51,584       221,828       196,297  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segments

     219,753       186,876       741,863       672,806  

Corporate

     (49,847     (40,853     (184,900     (162,999
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Operating Income

   $ 169,906     $ 146,023     $ 556,963     $ 509,807  

Less: Adjustments

        

Amortization of property “step up” to fair value

     600       (296     2,440       1,599  

Amortization of acquired intangible assets

     17,971       17,620       86,878       67,793  

Acquisition and integration related charges

     2,704       4,361       8,901       16,211  

(Gain) on fair value adjustment of acquisition related contingent consideration

     —         (593     (842     (593

Net loss (gain) on divestiture of businesses

     (862     2,009       (1,370     14,547  

Impact from U.S. Tax Cuts and Jobs Act*

     —         10,264       —         10,264  

Redomiciliation costs

     3,150       —         8,783       —    

Restructuring charges

     5,465       (53     40,708       103  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income

   $ 140,878     $ 112,711     $ 411,465     $ 399,883  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

*

Represents a one-time special employee bonus paid to most U.S. employees and associated professional fees.


STERIS plc

Consolidated Condensed Statements of Cash Flows

(In thousands)

 

     Twelve Months Ended  
     March 31,  
     2019     2018  
     (Unaudited)     (Unaudited)  

Operating Activities:

    

Net income

   $ 305,076     $ 291,622  

Non-cash items

     224,532       225,155  

Changes in operating assets and liabilities

     9,897       (59,145
  

 

 

   

 

 

 

Net cash provided by operating activities

     539,505       457,632  

Investing Activities:

    

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

     (189,715     (165,457

Proceeds from sale of property, plant, equipment and intangibles

     5,567       2,094  

Proceeds from the sale of businesses, net of cash divested

     2,478       8,888  

Purchases of investments

     (4,955     —    

Acquisition of businesses, net of cash acquired

     (13,313     (46,271

Other

     (13,286     (3,083
  

 

 

   

 

 

 

Net cash used in investing activities

     (213,224     (203,829

Financing Activities:

    

Payments on long-term obligations

     (85,000     (222,500

Proceeds (payments) under credit facilities, net

     (27,087     29,065  

Acquisition related deferred or contingent consideration

     (1,327     (2,064

Deferred financing fees and debt issuance costs

     (488     (2,029

Repurchases of shares

     (81,494     (65,485

Cash dividends paid to shareholders

     (112,503     (102,929

Stock option and other equity transactions, net

     13,107       9,758  
  

 

 

   

 

 

 

Net cash provided by financing activities

     (294,792     (356,184

Effect of exchange rate changes on cash and cash equivalents

     (12,390     20,997  
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     19,099       (81,384

Cash and cash equivalents at beginning of period

     201,534       282,918  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 220,633     $ 201,534  
  

 

 

   

 

 

 

 

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 pay cash dividends, growth outside of core operations, fund future debt principal repayments, and repurchase shares. STERIS’s calculation of free cash flow may vary from other companies.

 

     Twelve Months Ended  
     March 31,  
     2019     2018  
     (Unaudited)     (Unaudited)  

Calculation of Free Cash Flow:

    

Cash flows from operating activities

   $ 539,505     $ 457,632  

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

     (189,715     (165,457

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

     5,567       2,094  
  

 

 

   

 

 

 

Free Cash Flow

   $ 355,357     $ 294,269  
  

 

 

   

 

 

 

 

     Twelve Months Ended  
     March 31,  
     2020  
     (Outlook)*  

Calculation of free cash flow for outlook:

  

Cash flows from operating activities

   $ 580,000  

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

     (280,000
  

 

 

 

Free Cash Flow

   $ 300,000  
  

 

 

 

 

*

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.

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 March 31, (unaudited)  
    As reported, GAAP     Impact of
Acquisitions
    Impact of
Divestitures
    Impact of
Currency
Movements
    GAAP growth     Organic growth     Constant currency
organic growth
 
Segment Revenues:   2019     2018     2019     2018     2019     2019     2019     2019  

Healthcare Products

  $ 386,649     $ 360,001     $ —       $ (363   $ (3,380     7.4     7.5     8.5

Healthcare Specialty Services

    135,493       122,131       —         —         (2,147     10.9     10.9     12.7

Life Sciences

    102,987       100,299       —         —         (1,732     2.7     2.7     4.4

Applied Sterilization Technologies

    143,084       133,542       —         —         (4,409     7.1     7.1     10.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 768,213     $ 715,973     $ —       $ (363   $ (11,668     7.3     7.4     9.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Twelve months ended March 31, (unaudited)  
    As reported, GAAP     Impact of
Acquisitions
    Impact of
Divestitures
    Impact of
Currency
Movements
    GAAP growth     Organic growth     Constant currency
organic growth
 
Segment Revenues:   2019     2018     2019     2018     2019     2019     2019     2019  

Healthcare Products

  $ 1,338,428     $ 1,276,054     $ —       $ (25,907   $ (4,690     4.9     7.1     7.4

Healthcare Specialty Services

    510,057       469,065       —         —         (1,286     8.7     8.7     9.0

Life Sciences

    378,558       361,590       —         —         (1,415     4.7     4.7     5.1

Applied Sterilization Technologies

    555,127       513,287       —         —         (2,328     8.2     8.2     8.6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 2,782,170     $ 2,619,996     $ —       $ (25,907   $ (9,719     6.2     7.3     7.6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    Three months ended March 31, (unaudited)  
    Gross Profit     Income from Operations     Net income attributable to
shareholders
    Diluted EPS  
    2019     2018     2019     2018     2019     2018     2019     2018  

GAAP

  $ 334,716     $ 292,365     $ 140,878     $ 112,711     $ 108,745     $ 73,598     $ 1.27     $ 0.86  

Adjustments:

               

Amortization of property “step up” to fair value

    648       666       600       (296        

Amortization of acquired intangible assets

    149       45       17,971       17,620          

Acquisition and integration related charges

    698       1,450       2,704       4,361          

(Gain) on fair value adjustment of acquisition related contingent consideration

    —         —         —         (593        

Net (gain) loss on divestiture of businesses

    —         —         (862     2,009          

Restructuring charges

    625       —         5,465       (53        

Redomiciliation costs

    —         —         3,150       —            

Impact from U.S. Tax Cuts and Jobs Act**

    —         5,542       —         10,264       —         12,083      

Net impact of adjustments after tax*

            22,308       20,164      

Net EPS impact

                0.26       0.38  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

  $ 336,836     $ 300,068     $ 169,906     $ 146,023     $ 131,053     $ 105,845     $ 1.53     $ 1.24  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Twelve months ended March 31, (unaudited)  
    Gross Profit     Income from Operations     Net income attributable
to shareholders
    Diluted EPS  
    2019     2018     2019     2018     2019     2018     2019     2018  

GAAP

  $ 1,175,427     $ 1,092,746     $ 411,465     $ 399,883     $ 304,051     $ 290,915     $ 3.56     $ 3.39  

Adjustments:

               

Amortization of property “step up” to fair value

    2,604       2,619       2,440       1,599          

Amortization of acquired intangible assets

    721       207       86,878       67,793          

Acquisition and integration related charges

    2,145       4,202       8,901       16,211          

(Gain) on fair value adjustment of acquisition related contingent consideration

    —         —         (842     (593        

Net (gain) loss on divestiture of businesses

    —         —         (1,370     14,547          

Restructuring charges

    9,721       —         40,708       103          

Redomiciliation costs

    —         —         8,783       —            

Impact from U.S. Tax Cuts and Jobs Act**

    —         5,542         10,264       —         (13,597    

Net impact of adjustments after tax*

            113,497       78,309      

Net EPS impact

                1.33       0.76  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

  $ 1,190,618     $ 1,105,316     $ 556,963     $ 509,807     $ 417,548     $ 355,627     $ 4.89     $ 4.15  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

The tax expense includes both the current and deferred income tax impact of the adjustments.

**

Represents the re-measurement of U.S. deferred tax balances and the related taxation of unremitted earnings of non-U.S. subsidiaries along with a one-time special employee bonus paid to most U.S. employees.

 

FY 2020 Outlook    Twelve
Months
Ended
March 31,

2020
 
     (Outlook)  

Net Income per diluted share

   $ 4.60-4.75  

Amortization of property “step up” to fair value

     0.02  

Amortization of acquired intangible assets

     0.63  

Acquisition and integration related charges

     0.02  

Restructuring charges

     0.01  
  

 

 

 

Adjusted net income per diluted share

   $ 5.28 - $5.43  
  

 

 

 

All amounts are estimates.


STERIS plc

Unaudited Supplemental Financial Data

Fourth Quarter Fiscal 2019

For Periods Ending March 31, 2019 and 2018

 

     FY 2019     FY 2018     FY 2019     FY 2018  

Total Company Revenues

   Q4     Q4     YTD     YTD  

Consumables

   $ 154,902     $ 144,944     $ 605,631     $ 581,563  

Service

   $ 393,276     $ 364,963     $ 1,486,145     $ 1,399,363  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

   $ 548,178     $ 509,907     $ 2,091,776     $ 1,980,926  
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital Equipment

   $ 220,035     $ 206,066     $ 690,394     $ 639,070  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues

   $ 768,213     $ 715,973     $ 2,782,170     $ 2,619,996  
  

 

 

   

 

 

   

 

 

   

 

 

 

Ireland Revenues

   $ 15,911     $ 12,711     $ 56,784     $ 48,246  

Ireland Revenues as a % of Total

     2     2     2     2

United States Revenues

   $ 553,713     $ 501,519     $ 1,976,814     $ 1,836,414  

United States Revenues as a % of Total

     72     70     71     70

International Revenues

   $ 198,589     $ 201,743     $ 748,572     $ 735,336  

International Revenues as a % of Total

     26     28     27     28

Segment Data

   Q4     Q4     YTD     YTD  

Healthcare Products

        

Revenues

        

Consumables

   $ 105,424     $ 101,557     $ 414,969     $ 412,495  

Service

     96,500       90,238       354,648       336,157  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     201,924       191,795       769,617       748,652  
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital Equipment

     184,725       168,206       568,811       527,402  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Healthcare Products Revenues

   $ 386,649     $ 360,001     $ 1,338,428     $ 1,276,054  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     106,673       86,377       323,684       294,162  
  

 

 

   

 

 

   

 

 

   

 

 

 

Healthcare Specialty Services

        

Healthcare Services Revenues

   $ 135,493     $ 122,131     $ 510,057     $ 469,065  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     19,800       14,444       64,222       58,458  
  

 

 

   

 

 

   

 

 

   

 

 

 

Life Sciences

        

Revenues

        

Consumables

   $ 41,936     $ 36,823     $ 161,780     $ 150,656  

Service

     30,626       30,014       114,064       110,379  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Recurring

     72,562       66,837       275,844       261,035  
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital Equipment

     30,425       33,462       102,714       100,555  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Life Sciences Revenues

   $ 102,987     $ 100,299     $ 378,558     $ 361,590  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     35,869       34,471       132,129       123,889  
  

 

 

   

 

 

   

 

 

   

 

 

 

Applied Sterilization Technologies

        

Applied Sterilization Technologies Revenues

   $ 143,084     $ 133,542     $ 555,127     $ 513,287  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

   $ 57,411     $ 51,584     $ 221,828     $ 196,297  

Corporate

        

Operating Loss

   $ (49,847   $ (40,853   $ (184,900   $ (162,999
  

 

 

   

 

 

   

 

 

   

 

 

 
Other Data    Q4     Q4     YTD     YTD  

Healthcare Products Backlog

   $ 154,480     $ 133,034       n/a       n/a  

Life Sciences Backlog

     60,702       60,837       n/a       n/a  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Backlog

   $ 215,182     $ 193,871       n/a       n/a  

GAAP Income Tax Rate

     18.4     27.4     17.4     17.8

Adjusted Income Tax Rate

     19.2     21.4     18.7     23.4
  

 

 

   

 

 

   

 

 

   

 

 

 

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.

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