Hill-Rom, Inc. Reports Fiscal Second Quarter Results; Provides Third Quarter and Full Year Financial Outlook
BATESVILLE, Ind., April 25, 2012 /PRNewswire/ -- Hill-Rom Holdings, Inc. (NYSE: HRC) announced financial results for its fiscal second quarter ended March 31, 2012 and updated its outlook for 2012. Adjusted earnings per diluted share increased 9 percent to $0.59 from $0.54. Reported earnings per diluted share decreased 23 percent to $0.40 from $0.52 in the prior year. Adjustments in the current period include previously announced items related to business restructuring, asset impairment charges, a gain associated with a continuing vendor product recall and closing and integration costs associated with recent acquisitions. Adjustments in the prior year included a gain associated with a vendor product recall and restructuring charges. Amounts in the current quarter include the results of the Volker acquisition, which closed February 13, 2012.
Hill-Rom's quarterly revenue of $415 million increased 3 percent compared to last year or 4 percent on a constant currency basis. Domestic revenue decreased 2 percent to $262 million, while revenue outside the United States increased 13 percent to $153 million in the same period. Excluding the impact of foreign currency, Hill-Rom's international revenue increased 16 percent. Approximately $15 million of international revenue in the second quarter was attributable to Volker.
Management Comments
"Despite a challenging environment, we delivered revenue in line with expectations and achieved nine percent growth in adjusted earnings per share," stated John J. Greisch, President & CEO. "Our continued focus on operational improvements enabled us to leverage our cost structure, increase earnings and deliver strong operating cash flow. In addition, by closing our acquisition of Volker we significantly expanded our geographic footprint and strengthened our product portfolio, helping to position us for the future."
Financial and Operational Highlights
-- Second quarter revenue highlights include:
-- North America Acute Care. North America Acute Care revenue declined 4 percent to approximately $240 million. Capital sales declined 3 percent due primarily to lower revenue in Canada, while rental revenue declined 7 percent. Patient support systems sales declined 8 percent in North America overall, but were flat in the U.S.
-- International. International segment revenue, which excludes Canada, increased 28 percent to approximately $126 million, due primarily to growth in the Middle East and Eastern Europe and the impact of the Volker acquisition. Excluding Volker, International revenue increased 16 percent on a constant currency basis.
-- North America Post-Acute Care. North America Post-Acute Care revenue declined 6 percent to approximately $49 million. Capital sales decreased 2 percent and rental revenue decreased 8 percent versus the prior year. Extended Care and Home Care revenue declined, while Respiratory Care revenue increased slightly.
-- Year to date operating cash flow was $124 million, compared to $108 million in the prior year.
-- During the quarter, the Company completed its acquisition of Volker group for approximately $77 million, net of cash acquired.
-- The Company launched the Hill-Rom® 900 Split Side Rail (SSR) med-surg bed frame for regions outside North America. The HR 900 SSR features a split side-rail configuration that provides improved ergonomic controls, reduced space consumption and enhanced patient egress, while maintaining compliance with the latest safety standards.
-- During the quarter, the Company announced a restructuring action in order to eliminate costs and streamline operations. The action included the elimination of approximately 200 positions. The Company anticipates incurring pre-tax charges in connection with the restructuring and other asset impairments totaling approximately $19 to $22 million during 2012, of which $16 million, or $0.17 per diluted share were recorded in the second quarter. Of the total expected 2012 charge, we expect approximately one-half to be non-cash. The restructuring action is anticipated to yield annualized savings of approximately $18 million after full implementation.
-- The Board of Directors approved an 11 percent increase to the quarterly dividend, increasing it to $0.125 per share in the second quarter.
Please see the attached schedules for additional information, including condensed financial information, summary balance sheet, cash flow statement and segment sales summaries.
For a more complete review of Hill-Rom's results, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, which will be filed later this week.
Financial Guidance Summary
For the third quarter of fiscal 2012, Hill-Rom expects constant currency revenue growth of between 11 and 13 percent, or 4 to 5 percent excluding Volker. Adjusted earnings per diluted share are expected to be $0.56 to $0.58 for the quarter.
For the full year, Hill-Rom expects constant currency revenue growth of between 5 and 6 percent, or approximately 1 percent excluding Volker. Adjusted earnings per diluted share are expected to be $2.45 to $2.50. If foreign exchange rates remain near current levels, the Company expects reported revenue growth to be approximately 2 percentage points lower for the third quarter and approximately 1 percentage point lower for the full year. Cash flow from operations for the full year is expected to be approximately $290 to $300 million.
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. These measures exclude strategic developments, special charges and the impact of significant litigation 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. 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.
Additional assumptions and discussion will be provided during the Company's conference call to be held tomorrow morning. Information to access the webcast is provided below.
Conference Call Webcast and Replay
The Company will sponsor a conference call and webcast for the investing public at 8:00 a.m. ET, on Thursday, April 26, 2012. The webcast is available at http://ir.hill-rom.com/events.cfm or http://ir.hill-rom.com/eventdetail.cfm?eventid=111191 and will be archived on the Company's website for those who are unable to listen live. A replay of the call is also available through May 3, 2012 at 855-859-2056 (404-537-3406 International). Code 64245938 is needed to access the replay.
ABOUT HILL-ROM HOLDINGS, INC.
Hill-Rom is a leading worldwide manufacturer and provider of medical technologies and related services for the health care industry, including patient support systems, safe mobility and handling solutions, non-invasive therapeutic products for a variety of acute and chronic medical conditions, medical equipment rentals and information technology solutions. Hill-Rom's comprehensive product and service offerings are used by health care providers across the health care continuum and around the world in hospitals, extended care facilities and home care settings to enhance the safety and quality of patient care.
Hill-Romenhancing outcomes for patients and their caregivers.