01—Abstract
Summary
Summary of the 10-K filed May 30, 2019. Cited figures are marked; the original filing is the authoritative source.
STERIS plc (filed as STERIS plc, NYSE: STE) reported fiscal 2019 (year ended March 31, 2019) revenues of $2,782.2 milliona, up 6.2% from $2,620.0 million in fiscal 2018, driven by organic growth in all four segments, partially offset by the fiscal 2018 divestiture of Healthcare Consumable Solutions and unfavorable currency movements.
Operating income rose 2.9% to $411.5 millionb after $40.7 million of pre-tax restructuring costs under the Fiscal 2019 Restructuring Plan, and net income attributable to shareholders was $304.1 million, or $3.56 per diluted share, compared with $290.9 million and $3.39 a year earlier. Net cash from operations increased to $539.5 million and free cash flow to $355.4 million, from $457.6 million and $294.3 million in fiscal 2018. The company completed its redomiciliation from the United Kingdom to Ireland on March 28, 2019, with STERIS Ireland becoming the public parent.
Balance sheet items included total assets of $5,073.1 millionc, long-term indebtedness of $1,183.2 million, and a debt-to-total capital ratio of 27.1%. The Board increased the quarterly dividend for the thirteenth consecutive year to $0.34 per share, and fiscal 2019 dividends were $1.33 per share. As of May 7, 2019, approximately $80.0 million remained under the share repurchase authorization, which the filing says was continued by STERIS Ireland.
Management expects fiscal 2020 capital expenditures to rise to approximately $280.0 milliond, mainly for facility expansions in the Applied Sterilization Technologies segment. The filing notes an IRS notice of proposed tax adjustment of approximately $25,000 thousand relating to intercompany interest deductions for fiscal 2016 and 2017, which the company intends to contest.
02—Key points
Key Highlights
- Revenues rose 6.2% to $2,782.2 million, with growth in all four segments: Healthcare Products (4.9%), Healthcare Specialty Services (8.7%), Life Sciences (4.7%), and Applied Sterilization Technologies (8.2%).
- Gross profit increased $82.7 million to $1,175.4 million, and gross profit percentage rose to 42.2% from 41.7%.
- Operating income increased 2.9% to $411.5 million after $40.7 million of pre-tax Fiscal 2019 Restructuring Plan costs, which include closing two manufacturing facilities in Brazil and England.
- Net income attributable to shareholders was $304.1 million, or $3.56 per diluted share, versus $3.39 in fiscal 2018.
- Free cash flow was $355.4 million, up from $294.3 million, on net operating cash flow of $539.5 million.
- Redomiciliation from the United Kingdom to Ireland completed March 28, 2019; the quarterly dividend was increased to $0.34 per share.
- Backlog of capital equipment orders was $215.2 million at March 31, 2019, versus $193.9 million a year earlier.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Steris kept $0.11.
- Revenue$2.78B100.0%
- Cost of revenue−$1.61B57.8%
- Gross profit$1.17B42.2%
- Operating costs−$764.0M27.5%
- Operating income$411.0M14.8%
- Interest, other & tax−$107.3M3.9%
- Net income$303.7M10.9%
Where FY2019 revenue went
$2.78B- Cost of revenue: $1.61B, 58% of revenue
- SG&A: $669.9M, 24% of revenue
- Net income: $303.7M, 11% of revenue
- R&D: $63.0M, 2.3% of revenue
- Other operating costs: $31.4M, 1.1% of revenue
- Interest, other & tax: $107.3M, 3.9% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed May 30, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.78B$2.62B | +6.2% |
| Cost of Revenue | $1.61B$1.53B | +5.2% |
| Gross Profit | $1.17B$1.09B | +7.5% |
| R&D Expenses | $63.04M$60.78M | +3.7% |
| SG&A Expenses | $669.94M$631.98M | +6.0% |
| Operating Expenses | $763.96M$692.86M | +10.3% |
| Operating Income | $411.02M$399.88M | +2.8% |
| Interest Expense | $45.02M$50.63M | −11.1% |
| Net Income | $303.72M$290.92M | +4.4% |
| EPS (Basic) | $3.59$3.42 | +5.0% |
| EPS (Diluted) | $3.55$3.39 | +4.7% |
| Shares Outstanding (Basic) | 84.58M85.03M | −0.5% |
| Shares Outstanding (Diluted) | 85.47M85.71M | −0.3% |
05—Questions
Frequently Asked Questions
How did STERIS perform financially in fiscal 2019?
Revenues increased 6.2% to $2,782.2 million, operating income rose 2.9% to $411.5 million, and diluted EPS was $3.56 versus $3.39 in fiscal 2018. Results were affected by $40.7 million of restructuring expenses under the Fiscal 2019 Restructuring Plan.
What drove the growth in revenues?
The filing attributes the increase to organic growth across all business segments. Service revenues grew $86.8 million (6.2%), capital equipment revenues grew $51.3 million (8.0%), and consumable revenues grew $24.1 million (4.1%). The fiscal 2018 divestiture of the HCS business and unfavorable currency fluctuations partly offset the gains.
What is the Fiscal 2019 Restructuring Plan?
Adopted in the third quarter of fiscal 2019, the plan closes two manufacturing facilities, one in Brazil and one in England, and rationalizes certain products. Fewer than 200 positions are being eliminated. The company expects about $3.0 million of additional restructuring expenses in fiscal 2020 and beyond.
What did STERIS do with its capital and shareholder returns?
Capital expenditures were $189.7 million in fiscal 2019, and fiscal 2020 is expected to rise to about $280.0 million. The company paid $112.5 million in dividends ($1.33 per share) and repurchased 651,093 shares for $72.1 million. About $80.0 million remained under the repurchase authorization as of May 7, 2019.
What is the status of the company's debt and tax matters?
Long-term indebtedness was $1,183.2 million at March 31, 2019, with a debt-to-total capital ratio of 27.1%, and the company was in compliance with its financial covenants. The filing also discloses two IRS notices of proposed tax adjustment, relating to interest deductions on intercompany debt, with a potential liability of approximately $25 million, which the company intends to contest.
06—Continue