May 5, 2015

Hill-Rom Reports Second Quarter Results Ahead Of Guidance; Increases 2015 Adjusted Earnings Outlook

- Reported revenue increased 14 percent versus prior year to $475 million, up 6 percent on an organic constant currency basis
- Adjusted diluted earnings per share of $0.64 compare to $0.57 in the prior year
- Reported diluted earnings per share of $0.45 compare to a loss of $0.06 in the prior year
- Year to date operating cash flow of $87 million compares to $78 million in the prior year
- Full year adjusted earnings per share are now expected to be $2.50 to $2.54; Full-year reported revenue is now expected to grow 10 to 11 percent

 

CHICAGO, May 5, 2015 /PRNewswire/ -- Hill-Rom Holdings, Inc. (NYSE: HRC) announced financial results for its second quarter ended March 31, 2015, and increased its 2015 financial outlook.  Adjusted earnings per diluted share of $0.64 increased 12 percent from $0.57 in the prior year, while reported earnings per diluted share of $0.45 increased from a loss of $0.06.  Adjustments to reported earnings are detailed in the reconciliation schedules provided.

Hill-Rom's quarterly revenue of $475 million increased 14 percent compared to last year, or 21 percent on a constant currency basis, primarily due to the Trumpf Medical acquisition and strong North America capital revenue growth.  Excluding the benefit of Trumpf, constant currency growth was 6 percent, driven primarily by 16 percent growth in the North America capital business.  Domestic revenue was $297 million, up 13 percent, while revenue outside the United States of $178 million increased 36 percent on a constant currency basis.     

Management Comments

"We are pleased to report another quarter of strong revenue and adjusted earnings growth.  Organic revenue growth was the strongest in three years, as our North America and Surgical/Respiratory Care businesses performed well. In addition, we launched several important new products," said John Greisch, Hill-Rom President and Chief Executive Officer.  "Despite incremental currency headwinds, we are raising our full-year outlook, reflecting our improved operational execution."

Second Quarter Financial Results and Operational Highlights

-- Revenue:

-- North America.  North America revenue increased 10 percent to $247 million.  Capital sales increased 16 percent, while rental revenue increased 5 percent, excluding the impact of the previously exited third party reimbursed home care rental business.  As reported, rental revenue declined 2 percent.

-- International.  International segment revenue was flat on a constant currency basis and down 14 percent on a reported basis to $108 million.  On a constant currency basis, capital revenue was flat with the prior year while rental revenue increased 2 percent.

-- Surgical/Respiratory Care.  Surgical and Respiratory Care revenue increased 83 percent to $120 million, reflecting 1 percent organic constant currency growth plus the addition of Trumpf Medical. 

-- Year-to-date operating cash flow was $87 million compared to $78 million in the prior year.

-- Hill-Rom's investment in innovation resulted in the launch of two new bariatric products during the quarter: 

-- Compella™ Bariatric Bed, Hill-Rom's latest advance in bariatric care, streamlines workflow, delivers safe patient care and enhances patient dignity.  Features include the exclusive powered width expansion and IntelliDrive® XL powered transport system.

-- LikoGuard™ L/XL Overhead Lift System facilitates safe mobilization for patients up to 800 pounds/363 kg.  Innovations such as a patented emergency lowering mechanism and a newly-designed slingbar provide confidence for the caregiver and security for the patient. 

Please see the attached schedules for additional information, including condensed financial information, a summary balance sheet, a cash flow statement and reconciliations of GAAP to adjusted financial measures. 

For a more complete review of Hill-Rom's results, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.

Financial Guidance Summary

Revenue:  For fiscal 2015, Hill-Rom expects reported revenue growth of 10 to 11 percent compared to 11 to 12 percent previously.  This reflects:

  • low to mid-single-digit constant currency organic growth; and
  • negative currency impact of approximately 6 percent compared to 4 percent previously.

For the third quarter of fiscal 2015, Hill-Rom expects reported revenue growth of 13 to 15 percent.  This reflects:

  • mid-single-digit constant currency organic growth; and
  • negative currency impact of approximately 8 percent.

Adjusted Earnings per Diluted Share:  The Company expects full-year adjusted earnings per diluted share to be $2.50 to $2.54, compared to $2.44 to $2.50 previously.  

Third quarter adjusted earnings per diluted share are expected to be $0.58 to $0.61

Cash FlowHill-Rom expects cash flow from operations for the full year to be approximately $250 million, unchanged from prior guidance.

Discussion of Adjusted Financial Measures

Hill-Rom Holdings, Inc. routinely provides earnings per share results and guidance on an adjusted basis because the Company's management believes that the presentation provides useful information to investors.  This measure excludes strategic developments, special charges or other unusual events.  Such items may be highly variable, difficult to predict and of a size that sometimes have substantial impact on the Company's reported operations for a period. Often, prospective quantification of such items is not feasible. 

The Company also excludes expenses associated with the amortization of intangible assets associated with prior business acquisitions.  This adjustment is made to allow investors to evaluate and understand operating trends excluding the non-cash impact of acquired intangible amortization on operating income, earnings per share and other measures.    

Management uses these measures internally for planning, forecasting and evaluating the performance of the business. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.

Reconciliations of GAAP measures to adjusted measures appear in the financial tables of this release.

Conference Call Webcast and Dial-in Information

As previously announced, the Company will host a conference call and webcast today at 8:00 a.m. ET.

Webcast: To join the live webcast with audio, go to http://ir.hill-rom.com/events.cfm or http://edge.media-server.com/m/p/nprwokdc. The webcast slide deck will be posted to the Hill-Rom website prior to the webcast.

Conference Call Audio Only Dial-in information: To join the live conference call, dial 877-304-8969 domestic callers / 631-291-4543 international callers.  The following Confirmation Code is required for both: 19694449. Callers will need to provide their name, company affiliation and telephone number to the conference operator.  A recording of the webcast/call audio will be available for telephone replay through May 11, 2015, domestically at 855-859-2056 and internationally at 404-537-3406. For the replay, callers will need to use confirmation code 19694449. If you are unable to listen to the live webcast or the telephone replay, the webcast will be archived at http://ir.hill-rom.com/events.cfm.

About Hill-Rom Holdings, Inc.

Hill-Rom is a leading global medical technology company with more than 7,000 employees worldwide.  We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency, and Respiratory Health. Hill-Rom's people, products, and programs work towards one mission: Every day, around the world, we enhance outcomes for patients and their caregivers.

www.hill-rom.com

Disclosure Regarding Forward Looking Statements

Certain statements herein contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the Company's future plans, objectives, beliefs, expectations, representations and projections. It is important to note that forward-looking statements are not guarantees of future performance, and the Company's actual results could differ materially from those set forth in any forward-looking statements. For a more in depth discussion of factors that could cause actual results to differ from those contained in forward-looking statements, see the discussions under the heading "Risk Factors" in the Company's previously filed most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company assumes no obligation to update or revise any forward-looking statements.

 Hill-Rom Holdings, Inc. and Subsidiaries 

 Condensed Consolidated Statements of Income (Loss) 

 (Dollars in millions, except per share data) 

 (unaudited) 

           
       

 Quarter Ended March 31 

 

 Year To Date Ended March 31 

                     
       

2015

 

2014

 

2015

 

2014

Net revenue

               
 

Capital sales

 

$                375.7

 

$                313.6

 

$                749.1

 

$                609.1

 

Rental revenue

 

99.1

 

101.7

 

190.7

 

199.6

   

Total revenue

 

474.8

 

415.3

 

939.8

 

808.7

Cost of revenue

               
 

Cost of goods sold

 

213.9

 

169.5

 

434.4

 

340.7

 

Rental expenses

 

46.7

 

43.1

 

91.3

 

88.5

   

Total cost of revenue

 

260.6

 

212.6

 

525.7

 

429.2

Gross profit

               
 

Capital

 

161.8

 

144.1

 

314.7

 

268.4

 

Rental

 

52.4

 

58.6

 

99.4

 

111.1

   

Total gross profit

 

214.2

 

202.7

 

414.1

 

379.5

As a percentage of sales

 

45.1%

 

48.8%

 

44.1%

 

46.9%

                     

Research and development expenses

 

22.2

 

16.4

 

44.0

 

32.8

Selling and administrative expenses

 

149.9

 

130.1

 

305.0

 

268.1

Special charges

 

3.8

 

28.4

 

7.5

 

29.4

                     

Operating profit

 

38.3

 

27.8

 

57.6

 

49.2

                     

Other income/(expense), net

 

(1.7)

 

(2.5)

 

(4.0)

 

(4.5)

                     

Income tax expense

 

10.5

 

28.6

 

15.4

 

34.8

                     
                     

Net income (loss)

 

$                  26.1

 

$                  (3.3)

 

$                  38.2

 

$                   9.9

                     

Diluted earnings (loss) per share:

               
 

Earnings (loss) per share 

 

$                  0.45

 

$                 (0.06)

 

$                  0.66

 

$                  0.17

                     

Average common shares outstanding - diluted (thousands)

57,610

 

57,303

 

57,894

 

58,612

                     

Dividends per common share

 

$              0.1600

 

$              0.1525

 

$              0.3125

 

$              0.2900

                     

 

Non-GAAP Financial Disclosures and Reconciliations

While Hill-Rom reports financial results in accordance with U.S. GAAP, this press release includes non-GAAP measures. Hill-Rom uses non-GAAP measures to evaluate and manage its operations and provides the information to assist investors in performing financial analysis that is consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.

Hill-Rom Holdings, Inc. and Subsidiaries

Revenue - Constant Currency

(Dollars in millions)

                     
   

Quarter Ended March 31

   

2015

 

Foreign Exchange 

 

2015

 

2014

 

Constant Currency

   

As Reported

 

Impact

 

Adjusted

 

As Reported

 

Change

                     

Capital sales

 

$                375.7

 

$                 (26.7)

 

$                402.4

 

$                313.6

 

28.3%

Rental revenue

 

99.1

 

(2.3)

 

101.4

 

101.7

 

-0.3%

Total

 

$                474.8

 

$                 (29.0)

 

$                503.8

 

$                415.3

 

21.3%

                     
                     

North America 

 

$                246.9

 

$                  (1.9)

 

$                248.8

 

$                224.5

 

10.8%

Surgical and Respiratory Care

 

120.0

 

(9.9)

 

129.9

 

65.6

 

98.0%

International 

 

107.9

 

(17.2)

 

125.1

 

125.2

 

-0.1%

Total 

 

$                474.8

 

$                 (29.0)

 

$                503.8

 

$                415.3

 

21.3%

                     
                     
   

Year To Date Ended March 31

   

2015

 

Foreign Exchange 

 

2015

 

2014

 

Constant Currency

   

As Reported

 

Impact

 

Adjusted

 

As Reported

 

Change

                     

Capital sales

 

$                749.1

 

$                 (38.5)

 

$                787.6

 

$                609.1

 

29.3%

Rental revenue

 

190.7

 

(3.3)

 

194.0

 

199.6

 

-2.8%

Total

 

$                939.8

 

$                 (41.8)

 

$                981.6

 

$                808.7

 

21.4%

                     
                     

North America 

 

$                472.1

 

$                  (2.5)

 

$                474.6

 

$                430.0

 

10.4%

Surgical and Respiratory Care

 

246.3

 

(14.1)

 

260.4

 

128.9

 

102.0%

International 

 

221.4

 

(25.2)

 

246.6

 

249.8

 

-1.3%

Total 

 

$                939.8

 

$                 (41.8)

 

$                981.6

 

$                808.7

 

21.4%

                     

 

 

 

Hill-Rom Holdings, Inc. and Subsidiaries

Reconciliation: Earnings (Loss) Per Share

(Dollars in millions, except per share data)

                         
   

Quarter Ended March 31, 2015

 

Quarter Ended March 31, 2014

   

Income Before

Income Taxes

 

Income Tax

Expense

 

Diluted EPS*

 

Income Before

Income Taxes

 

Income Tax

Expense

 

Diluted EPS*

                         

GAAP Earnings

 

$             36.6

 

$            10.5

 

$               0.45

 

$             25.3

 

$            28.6

 

$           (0.06)

Adjustments:

                       

Acquisition and integration costs

 

3.8

 

1.2

 

0.05

 

1.7

 

0.6

 

0.02

Acquisition-related intangible asset amortization

 

7.6

 

2.2

 

0.10

 

6.9

 

2.0

 

0.09

Employee benefits change

 

-

 

-

 

-

 

(12.2)

 

(4.7)

 

(0.13)

FDA remediation expenses

 

1.2

 

0.4

 

0.01

 

0.8

 

0.2

 

0.01

Field corrective actions

 

1.2

 

0.2

 

0.02

 

(1.9)

 

(1.2)

 

(0.01)

Litigation credit

 

(0.9)

 

(0.3)

 

(0.01)

 

-

 

-

 

-

Special charges

 

3.8

 

0.1

 

0.06

 

28.4

 

9.9

 

0.32

Foreign valuation allowance

 

-

 

1.9

 

(0.03)

 

-

 

(19.6)

 

0.34

Adjusted Earnings

 

$             53.3

 

$            16.2

 

$               0.64

 

$             49.0

 

$            15.8

 

$            0.57

                         
                         
                         
   

Year to Date Ended March 31, 2015

 

Year to Date Ended March 31, 2014

   

Income Before

Income Taxes

 

Income Tax

Expense

 

Diluted EPS*

 

Income Before

Income Taxes

 

Income Tax

Expense

 

Diluted EPS

                         

GAAP Earnings

 

$             53.6

 

$            15.4

 

$               0.66

 

$             44.7

 

$            34.8

 

$            0.17

Adjustments:

                       

Acquisition and integration costs

 

12.7

 

4.0

 

0.15

 

3.6

 

1.2

 

0.04

Acquisition-related intangible asset amortization

 

15.7

 

4.4

 

0.20

 

13.8

 

4.2

 

0.16

Employee benefits change

 

-

 

-

 

-

 

(12.2)

 

(4.7)

 

(0.13)

FDA remediation expenses

 

1.7

 

0.6

 

0.02

 

1.7

 

0.6

 

0.02

Field corrective actions

 

2.3

 

0.7

 

0.03

 

(0.7)

 

(0.8)

 

-

Litigation credit

 

(0.9)

 

(0.3)

 

(0.01)

 

-

 

-

 

-

Special charges

 

7.5

 

0.3

 

0.12

 

29.4

 

10.3

 

0.33

Foreign valuation allowance

 

-

 

1.9

 

(0.03)

 

-

 

(19.6)

 

0.34

Adjusted Earnings

 

$             92.6

 

$            27.0

 

$               1.13

 

$             80.3

 

$            26.0

 

$            0.93

                         

* Does not add due to rounding.

                 

 

 

 

Hill-Rom Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in millions)

(unaudited)

             
       

March 31, 2015

 

September 30, 2014

Assets

         

Current Assets

       
 

Cash and cash equivalents

 

$                       114.5

 

$                         99.3

 

Trade accounts receivable, net of allowances

 

368.0

 

411.0

 

Inventories, net

 

168.7

 

176.2

 

Other current assets

 

93.4

 

92.8

   

Total current assets

 

744.6

 

779.3

             

Property, plant and equipment, net

 

286.0

 

261.5

Goodwill

 

387.3

 

399.8

Other assets

 

288.3

 

311.5

             

Total Assets

 

$                    1,706.2

 

$                    1,752.1

             

Liabilities

       

Current Liabilities

       
 

Trade accounts payable

 

$                         87.7

 

$                       112.7

 

Short-term borrowings

 

128.7

 

126.9

 

Other current liabilities

 

185.3

 

202.7

   

Total current liabilities

 

401.7

 

442.3

             

Long-term debt

 

449.8

 

364.9

Other long-term liabilities

 

132.4

 

138.4

             

Total Liabilities

 

983.9

 

945.6

             

Shareholders' Equity

 

722.3

 

806.5

             

Total Liabilities and Shareholders' Equity

 

$                    1,706.2

 

$                    1,752.1

             

 

 

 

Hill-Rom Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in millions)

(unaudited)

             
       

 Year to Date Ended March 31 

             
       

2015

 

2014

Operating Activities

       
 

Net income 

 

$                         38.2

 

$                          9.9

 

Adjustments to reconcile net income to net cash provided by

       
 

   operating activities:

       
   

Depreciation

 

34.9

 

33.6

   

Amortization

 

5.5

 

7.0

   

Acquisition-related intangible asset amortization

 

15.7

 

13.8

   

Provision for deferred income taxes

 

(6.2)

 

6.5

   

(Gain) loss on disposal of property, equipment leased to others,

       
   

       intangible assets and impairments

 

(0.2)

 

7.8

   

Stock compensation

 

9.9

 

9.0

   

Excess tax benefits from employee stock plans

 

(1.4)

 

0.6

   

Change in working capital excluding cash, current investments,

       
   

current debt and acquisitions and dispositions:

       
   

Trade accounts receivable

 

22.6

 

15.8

   

Inventories

 

(3.9)

 

0.9

   

Other current assets

 

(2.8)

 

(1.3)

   

Trade accounts payable

 

(16.6)

 

(14.5)

   

Accrued expenses and other liabilities

 

(9.4)

 

(14.6)

   

Other, net

 

0.8

 

3.4

Net cash provided by operating activities

 

87.1

 

77.9

             

Investing Activities

       
 

Capital expenditures and purchases of intangibles

 

(80.3)

 

(31.4)

 

Proceeds on sale of property and equipment leased to others

 

0.9

 

1.3

 

Payment for acquisition of businesses, net of cash acquired

 

(2.7)

 

(14.3)

 

Refund on acquisition of businesses

 

-

 

4.6

 

Other

 

(4.8)

 

-

Net cash used in investing activities

 

(86.9)

 

(39.8)

             

Financing Activities

       
 

Net change in short-term debt

 

(0.7)

 

(0.2)

 

Borrowings on revolving credit facility

 

95.0

 

41.0

 

Proceeds from long-term debt

 

-

 

0.6

 

Payment of long-term debt

 

(7.6)

 

(5.0)

 

Purchase of noncontrolling interest

 

(1.3)

 

(1.0)

 

Payment of cash dividends

 

(17.7)

 

(16.7)

 

Proceeds on exercise of stock options

 

9.1

 

7.4

 

Proceeds from stock issuance

 

1.3

 

1.3

 

Excess tax benefits from employee stock plans

 

1.4

 

(0.6)

 

Treasury stock acquired

 

(57.1)

 

(71.6)

Net cash provided by (used in) financing activities

 

22.4

 

(44.8)

             

Effect of exchange rate changes on cash

 

(7.4)

 

(0.4)

             

Net Cash Flows

 

15.2

 

(7.1)

             

Cash and Cash Equivalents:

       
 

At beginning of period

 

99.3

 

127.4

 

At end of period

 

$                       114.5

 

$                       120.3

             

 

 

 

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SOURCE Hill-Rom Holdings, Inc.

 

 

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