Welcome!

News Feed Item

Hill-Rom Reports Fiscal First Quarter Results And Revised 2014 Outlook; Announces Restructuring Program

-- First quarter revenue of $393 million declined 8 percent versus prior year

BATESVILLE, Ind., Jan. 23, 2014 /PRNewswire/ -- Hill-Rom Holdings, Inc. (NYSE: HRC) announced financial results for its fiscal first quarter ended December 31, 2013 and updated its 2014 financial outlook. Adjusted earnings per diluted share decreased to $0.36 from $0.54 in the prior year.  Reported earnings per diluted share decreased to $0.22 from $0.39 in the prior year. Adjustments to reported earnings and EBITDA are detailed in the reconciliation schedules provided.

(Logo: http://photos.prnewswire.com/prnh/20130123/DE47178LOGO)

Hill-Rom's quarterly revenue was $393 million, an 8 percent decrease compared to last year on a reported basis and a 9 percent decrease on a constant currency basis.  Domestic revenue was $249 million, down 9 percent, while revenue outside the United States decreased 7 percent to $144 million.   

Management Comments

"This quarter demonstrates the inherent volatility and current challenges in our capital equipment markets.  We are clearly disappointed by our weaker than expected results.  However, we remain committed to driving long-term margin improvement through aggressive management of our operating cost structure, as demonstrated by the restructuring actions we announced today," said John Greisch, Hill-Rom President and Chief Executive Officer.  "At the same time, we will pursue improvements to our portfolio, in a manner consistent with our disciplined capital allocation framework, in order to continue to deliver value to our customers and shareholders."

First Quarter Financial and Operational Results

-- Revenue:

-- North America.  North America revenue declined 12 percent to $206 million.  Capital revenue decreased 14 percent.  Rental revenue declined 8 percent. 

-- International.  International segment revenue decreased 8 percent to $125 million (10 percent on a constant currency basis) on lower revenue in the Middle East and Latin America.  Capital revenue decreased 9 percent while rental revenue increased 7 percent.

-- Surgical/Respiratory Care.  Surgical/Respiratory Care revenue increased 7 percent to $63 million, due to strong results in our surgical businesses.

-- Operating cash flow for the quarter was $42 million, compared to $65 million in the prior year.

-- Adjusted EBITDA for the quarter was $54 million, compared to $75 million in the prior year.

-- Share repurchases for the quarter amounted to approximately $42 million.

-- During the quarter, the Company launched the Centuris™ bed system targeted at emerging and developing markets around the world.  The Centuris bed system incorporates essential features for both patient care and caregiver support while maintaining compliance to the latest international safety standards.

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

For a more complete review of Hill-Rom's results, please refer to our Quarterly Report on Form 10-Q for the quarter ended December 31, 2013.

Restructuring Program

In line with its efforts to improve long-term operating margins and further rationalize its cost structure,
Hill-Rom is implementing a comprehensive restructuring program that will include:

  • Reduction of European manufacturing capacity, with the planned closure of one facility and downsizing of capacity throughout its  remaining European manufacturing network;
  • Streamlining operations in the United States and Europe, including establishing a shared services center in Europe;

These actions will result in the elimination of approximately 350 net positions in the United States and Europe, representing approximately 5 percent of Hill-Rom's global work force.

The Company anticipates substantially completing the domestic portion of the restructuring during the second quarter of 2014. The European restructuring is expected to be completed over the next two years.

When all actions are complete, savings are expected to be approximately $30 million on an annual basis.  Savings in 2014 are expected to exceed $8 million, excluding restructuring charges. Restructuring charges associated with completing all actions are expected to be approximately $50 million, with $15 to $20 million to be incurred in the second quarter of 2014.  Remaining charges will be incurred throughout the restructuring period.

Financial Guidance Summary

The Company is updating financial guidance as follows:

Revenue:  Hill-Rom now expects a full year 2014 revenue decline of approximately 2 to 4 percent and second quarter revenue also to decline 2 to 4 percent compared to the prior year (constant currency). 

Adjusted Earnings per Diluted Share:  Full year adjusted earnings per diluted share are now expected to be $2.18 to $2.28, which exclude approximately $0.31 of acquisition-related intangible amortization expense.   For comparison, full year 2013 adjusted earnings per diluted share, excluding $0.29 of acquisition-related intangible amortization expense, would have been $2.38. 2014 earnings guidance excludes an approximate $0.03 per share benefit associated with the R&D Tax Credit, which was not reinstated for 2014. This benefit was included in the company's previous 2014 guidance. 

Second quarter adjusted earnings per diluted share are expected to be $0.50 to $0.53, which exclude approximately $0.08 of acquisition-related intangible amortization expense.  For comparison, second quarter 2013 adjusted earnings per diluted share, excluding $0.07 of acquisition-related intangible amortization expense would have been $0.56.

Cash Flow:  Cash flow from operations for the full year is expected to be approximately $250 to $260 million, excluding any cash outflow related to the restructuring program announced today.

Adjusted EBITDA:  Adjusted EBITDA for the full year is now expected to be approximately $280 to $290 million.

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.  In addition, we are providing adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) for the same reason.  These measures exclude 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 that have historically included this expense.    

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://www.media-server.com/m/p/2u7uz4wi. 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: 26989113. 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 January 29, 2014, domestically at 855-859-2056 and internationally at 404-537-3406. For the replay, callers will need to use confirmation code 26989113. 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 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, surgical products 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-Rom...enhancing 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 

 (Dollars in millions except per share data) 








 Quarter Ended December 31 














2013


2012


Net revenue







Capital sales


$                295.5


$                324.4



Rental revenue


97.9


104.0




Total revenue


393.4


428.4


Cost of revenue







Cost of goods sold


171.2


188.9



Rental expenses


45.4


48.1




Total cost of revenue


216.6


237.0


Gross profit







Capital


124.3


135.5



Rental


52.5


55.9




Total gross profit


176.8


191.4


As a percentage of sales


44.9%


44.7%










Research and development expenses


16.4


17.2


Selling and administrative expenses


138.0


136.1


Litigation charge


-


1.0


Special charges


1.0


-










Operating profit


21.4


37.1










Other income/(expense), net


(2.0)


(1.8)










Income tax expense


6.2


11.3


















Net income 


$                  13.2


$                  24.0










Diluted earnings per share:







Earnings per share 


$                  0.22


$                  0.39










Average common shares outstanding - diluted (thousands)

59,142


61,106










Dividends per common share


$              0.1375


$              0.1250










 

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 the 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 December 31



2013


Foreign Exchange 


2013


2012


Constant Currency



As Reported


Impact


Adjusted


As Reported


Change












Capital sales


$                295.5


$                   2.3


$                293.2


$                324.4


-9.6%

Rental revenue


97.9


0.4


97.5


104.0


-6.3%

Total


$                393.4


$                   2.7


$                390.7


$                428.4


-8.8%























North America 


$                205.5


$                  (0.6)


$                206.1


$                234.7


-12.2%

Surgical and Respiratory Care


63.3


-


63.3


59.0


7.3%

International 


124.6


3.3


121.3


134.7


-9.9%

Total 


$                393.4


$                   2.7


$                390.7


$                428.4


-8.8%












 

Hill-Rom Holdings, Inc. and Subsidiaries

Reconciliation: Earnings Per Share

(Dollars in millions except per share data)
















Quarterly Period Ended December 31, 2013


Quarterly Period Ended December 31, 2012



Income Before
Income Taxes


Income Tax
Expense


Diluted EPS*


Income Before
Income Taxes


Income Tax
Expense


Diluted EPS*














GAAP Earnings


$             19.4


$              6.2


$               0.22


$             35.3


$            11.3


$            0.39

Adjustments:













Acquisition and integration costs


1.9


0.6


0.02


3.5


1.2


0.04

Acquisition-related intangible asset amortization


6.9


2.2


0.08


7.2


2.5


0.08

Field corrective actions


1.2


0.4


0.01


2.5


0.9


0.03

FDA remediation expenses


0.9


0.4


0.01


-


-


-

Litigation charge


-


-


-


1.0


0.4


0.01

Special charges


1.0


0.4


0.01


-


-


-














Adjusted Earnings


$             31.3


$            10.2


$               0.36


$             49.5


$            16.3


$            0.54














* Does not add due to rounding.







































 



Reconciliation: Adjusted EBITDA




(Dollars in millions)










 Quarter Ended December 31 




2013


2012








Adjusted income before income taxes 


$             31.3


$            49.5


Add back:






Other expense


2.0


1.8


Depreciation and amortization


20.9


23.9


Adjusted EBITDA


$             54.2


$            75.2








 

Hill-Rom Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in millions)



















December 31, 2013


September 30, 2013

Assets






Current Assets






Cash and cash equivalents


$                       117.6


$                       127.4


Trade accounts receivable, net of allowances


326.1


361.8


Inventories, net


120.6


118.3


Other current assets


79.1


80.5



Total current assets


643.4


688.0








Property, plant and equipment, net


233.2


234.3

Goodwill


341.5


342.8

Other assets


309.3


321.7








Total Assets


$                    1,527.4


$                    1,586.8








Liabilities





Current Liabilities






Trade accounts payable


$                         71.2


$                         80.8


Short-term borrowings


89.6


81.2


Other current liabilities


155.2


183.4



Total current liabilities


316.0


345.4








Long-term debt


222.4


225.8

Other long-term liabilities


150.6


156.9








Total Liabilities


689.0


728.1








Shareholders' Equity


838.4


858.7








Total Liabilities and Shareholders' Equity


$                    1,527.4


$                    1,586.8








 

Hill-Rom Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in millions)












 Quarterly Period Ended December 31 












2013


2012

Operating Activities






Net income 


$                         13.2


$                         24.0


Adjustments to reconcile net income to net cash provided by






   operating activities:







Depreciation


16.9


19.1



Amortization


4.0


4.8



Acquisition-related intangible asset amortization


6.9


7.2



Provision for deferred income taxes


(6.6)


(4.4)



Loss (gain) on disposal of property, equipment leased to others,







       intangible assets and impairments


(0.2)


0.3



Stock compensation


3.6


3.3



Excess tax benefits from employee stock plans


0.8


(0.1)



Change in working capital excluding cash, current investments,







current debt and acquisitions and dispositions:







Trade accounts receivable


35.5


19.5



Inventories


(2.3)


4.2



Other current assets


3.0


(4.7)



Trade accounts payable


(9.6)


(2.5)



Accrued expenses and other liabilities


(26.6)


(7.9)



Other, net


3.7


2.0

Net cash provided by operating activities


42.3


64.8








Investing Activities






Capital expenditures and purchases of intangibles


(16.8)


(16.5)


Proceeds on sale of property and equipment leased to others


0.5


2.9


Refund (payment) on acquisition of businesses, net of cash acquired


3.3


(0.2)

Net cash used in investing activities


(13.0)


(13.8)








Financing Activities






Net change in short-term debt


(0.1)


-


Borrowings on revolving credit facility


7.0


-


Proceeds from long-term debt


0.6


-


Payment of long-term debt


(2.5)


(2.8)


Purchase of noncontrolling interest


(0.7)


(0.7)


Payment of cash dividends


(7.9)


(7.5)


Proceeds on exercise of stock options


6.5


2.5


Proceeds from stock issuance


0.7


0.7


Excess tax benefits from employee stock plans


(0.8)


0.1


Treasury stock acquired


(42.1)


(20.4)

Net cash used in financing activities


(39.3)


(28.1)








Effect of exchange rate changes on cash


0.2


0.4








Net Cash Flows


(9.8)


23.3








Cash and Cash Equivalents:






At beginning of period


127.4


84.3


At end of period


$                       117.6


$                       107.6








 


SOURCE Hill-Rom Holdings, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
Hardware virtualization and cloud computing allowed us to increase resource utilization and increase our flexibility to respond to business demand. Docker Containers are the next quantum leap - Are they?! Databases always represented an additional set of challenges unique to running workloads requiring a maximum of I/O, network, CPU resources combined with data locality.
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
"A lot of times people will come to us and have a very diverse set of requirements or very customized need and we'll help them to implement it in a fashion that you can't just buy off of the shelf," explained Nick Rose, CTO of Enzu, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
As software becomes more and more complex, we, as software developers, have been splitting up our code into smaller and smaller components. This is also true for the environment in which we run our code: going from bare metal, to VMs to the modern-day Cloud Native world of containers, schedulers and micro services. While we have figured out how to run containerized applications in the cloud using schedulers, we've yet to come up with a good solution to bridge the gap between getting your contain...
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
"We host and fully manage cloud data services, whether we store, the data, move the data, or run analytics on the data," stated Kamal Shannak, Senior Development Manager, Cloud Data Services, IBM, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Who are you? How do you introduce yourself? Do you use a name, or do you greet a friend by the last four digits of his social security number? Assuming you don’t, why are we content to associate our identity with 10 random digits assigned by our phone company? Identity is an issue that affects everyone, but as individuals we don’t spend a lot of time thinking about it. In his session at @ThingsExpo, Ben Klang, Founder & President of Mojo Lingo, discussed the impact of technology on identity. Sho...
Information technology (IT) advances are transforming the way we innovate in business, thereby disrupting the old guard and their predictable status-quo. It’s creating global market turbulence. Industries are converging, and new opportunities and threats are emerging, like never before. So, how are savvy chief information officers (CIOs) leading this transition? Back in 2015, the IBM Institute for Business Value conducted a market study that included the findings from over 1,800 CIO interviews ...
"Operations is sort of the maturation of cloud utilization and the move to the cloud," explained Steve Anderson, Product Manager for BMC’s Cloud Lifecycle Management, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Due of the rise of Hadoop, many enterprises are now deploying their first small clusters of 10 to 20 servers. At this small scale, the complexity of operating the cluster looks and feels like general data center servers. It is not until the clusters scale, as they inevitably do, when the pain caused by the exponential complexity becomes apparent. We've seen this problem occur time and time again. In his session at Big Data Expo, Greg Bruno, Vice President of Engineering and co-founder of StackIQ...
"I think that everyone recognizes that for IoT to really realize its full potential and value that it is about creating ecosystems and marketplaces and that no single vendor is able to support what is required," explained Esmeralda Swartz, VP, Marketing Enterprise and Cloud at Ericsson, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
The buzz continues for cloud, data analytics and the Internet of Things (IoT) and their collective impact across all industries. But a new conversation is emerging - how do companies use industry disruption and technology enablers to lead in markets undergoing change, uncertainty and ambiguity? Organizations of all sizes need to evolve and transform, often under massive pressure, as industry lines blur and merge and traditional business models are assaulted and turned upside down. In this new da...
Bert Loomis was a visionary. This general session will highlight how Bert Loomis and people like him inspire us to build great things with small inventions. In their general session at 19th Cloud Expo, Harold Hannon, Architect at IBM Bluemix, and Michael O'Neill, Strategic Business Development at Nvidia, discussed the accelerating pace of AI development and how IBM Cloud and NVIDIA are partnering to bring AI capabilities to "every day," on-demand. They also reviewed two "free infrastructure" pr...
"We got started as search consultants. On the services side of the business we have help organizations save time and save money when they hit issues that everyone more or less hits when their data grows," noted Otis Gospodnetić, Founder of Sematext, in this SYS-CON.tv interview at @DevOpsSummit, held June 9-11, 2015, at the Javits Center in New York City.