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STERIS Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: February 8, 2013 11:36PM

STERIS Corp. (STE) filed Quarterly Report for the period ended 2012-12-31. Steris Corporation has a market cap of $2.3 billion; its shares were traded at around $39.4 with a P/E ratio of 15.5039 and P/S ratio of 1.5972. The dividend yield of Steris Corporation stocks is 1.83%. Steris Corporation had an annual average earning growth of 5.4% over the past 10 years. GuruFocus rated Steris Corporation the business predictability rank of 3.5-star.



Highlight of Business Operations:

Fiscal 2013 third quarter operating income was $67.1 million, an increase of 25.0% over the fiscal 2012 third quarter operating income of $53.7 million. Fiscal 2013 first nine months operating income was $177.7 million representing an increase of 19.9% compared to the fiscal 2012 first nine months operating income of $148.3 million. The primary drivers of the increase in operating income were the positive impact of the $21.5 million SYSTEM 1 Rebate Program adjustment recorded in the fiscal 2013 second quarter and the $15.8 million SYSTEM 1 class action settlement adjustment recorded during the fiscal 2013 third quarter. Excluding the SYSTEM 1 class action settlement adjustment made in the fiscal 2013 third quarter, adjusted operating income was $51.3 million in the fiscal 2013 third quarter, a decrease of 4.4% over the fiscal 2012 third quarter operating income of $53.7 million, driven primarily by the declines in SYSTEM 1 consumable volumes and SYSTEM 1E unit sales and expenses related to the recent acquisitions (see subsection of MD&A titled, "Non-GAAP Financial Measures" for additional information and related reconciliation of non-GAAP financial measures to the most comparable GAAP measures). Adjusted operating income during the first nine months of fiscal 2013 was $140.4 million, a decrease of 5.3% compared to the first nine months of fiscal 2012, driven primarily by the declines in SYSTEM 1 consumable volumes and SYSTEM 1E unit sales and expenses related to the recent acquisitions (see subsection of MD&A titled, "Non-GAAP Financial Measures" for additional information and related reconciliation of non-GAAP financial measures to the most comparable GAAP measures).

Revenues increased $57.1 million or 5.6% to $1,073.7 million for the first nine months of fiscal 2013, as compared to $1,016.6 million for the same prior year period. The increase is partially attributable to the fiscal 2013 second quarter SYSTEM 1 Rebate Program adjustment of $20.4 million. Adjusted revenues for the first nine months, excluding the impact of the adjustment related to the SYSTEM 1 Rebate Program, were $1,053.3 million, a 3.6% increase over the same prior year period (see subsection of MD&A titled, "Non-GAAP Financial Measures" for additional information and related reconciliation of non-GAAP financial measures to the most comparable GAAP measures). Capital equipment revenues for the first nine months of fiscal 2013 decreased $4.0 million or 0.9% compared to the prior year period. Capital equipment revenues for the first nine months of fiscal 2013 were favorably impacted by the $20.4 million adjustment related to the SYSTEM 1 Rebate Program. Adjusted capital equipment revenues for the first nine months of fiscal 2013 were $414.8 million, a 5.6% decrease over the first nine months of fiscal 2012 driven by the expected post-transition decline in SYSTEM 1E unit sales compared to the prior year (see subsection of MD&A titled, "Non-GAAP Financial Measures" for additional information and related reconciliation of non-GAAP financial measures to the most comparable GAAP measures). Consumable revenues for the first nine months of fiscal 2013 increased 12.5% over the first nine months of fiscal 2012 as declines in SYSTEM 1 consumable volumes were more than offset by increases within the Healthcare segment, driven largely by recent acquisitions, and within the Life Sciences business segment. Service revenues during the first nine months of fiscal 2013 increased 9.4% over the first nine months of fiscal 2012 primarily driven by the recent acquisition of the instrument repair businesses, Spectrum and TRE and other service offerings.

Healthcare revenues increased $12.0 million, or 4.6%, to $271.1 million for the quarter ended December 31, 2012, as compared to $259.1 million for the same prior year quarter. This increase is attributable to recent acquisitions, which were partially offset by the expected post-transition decline in SYSTEM 1E unit sales and the decline in SYSTEM 1 consumable volumes. Healthcare revenues for the first nine months of fiscal 2013 increased $32.0 million, or 4.4% to $757.4 million, as compared to $725.5 million for the first nine months of fiscal 2012. The increase is partially attributable to the fiscal 2013 second quarter SYSTEM 1 Rebate Program adjustment of $20.4 million. Adjusted Healthcare revenues for the first nine months of fiscal 2013, excluding the impact of the adjustment made in the same period related to the SYSTEM 1 Rebate Program, were $737.0 million, representing an increase of 1.6% compared to the first nine months of fiscal 2012 (see subsection of MD&A titled, "Non-GAAP Financial Measures" for additional information and related reconciliation of non-GAAP financial measures to the most comparable GAAP measures). The increase in adjusted revenue is attributable to the addition of consumable revenues and service revenues from our recent acquisitions. These increases were partially offset by the expected post-transition decline in SYSTEM 1E unit sales and the decline in SYSTEM 1 consumable volumes. At December 31, 2012, the Healthcare segment s backlog amounted to $141.3 million, increasing $5.5 million, or 4.1%, compared to the backlog of $135.8 million at December 31, 2011. Healthcare backlog increased $38.8 million, or 37.9%, compared to the backlog of $102.5 million at March 31, 2012.

The Life Sciences segment s operating income increased $2.5 million, or 24.3%, to $12.8 million for the third quarter of fiscal 2013 as compared to $10.3 million for the same prior year period. The Life Sciences segment's operating income for the first nine months of fiscal 2013 increased by $4.4 million or 14.2% to $35.2 million as compared to $30.8 million in the first nine months of fiscal 2012. The segment s operating margin was 19.7% for the third quarter of fiscal 2013 compared to 18.4% for the third quarter of fiscal 2012. The segment's operating margin was 19.5% for the first nine months of fiscal 2013 compared to 18.4% for the first nine months of fiscal 2012. The increased operating margins in both the third quarter and the first nine months of fiscal 2013 is primarily attributable to higher revenues.

The Isomedix segment s operating income decreased $0.6 million or 5.5% to $11.1 million for the third quarter of fiscal 2013 as compared to $11.8 million for the same prior year period. The decrease was primarily attributable to new capacity brought online during the quarter. The Isomedix segment's operating income for the first nine months of fiscal 2013 increased $3.4 million or 9.5% to $39.3 million as compared to $35.9 million in the first first nine months of fiscal 2012, reflecting the benefits of increased revenues and improved operating efficiencies. The Isomedix operating margin was 25.6% for the third quarter of fiscal 2013 compared to 29.7% in the same prior year period; while the operating margin was 29.4% in the first nine months of fiscal 2013 compared to 29.5% in the first nine months of fiscal 2012.

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