BATESVILLE, Ind., May 4
Hill-Rom Holdings, Inc. (NYSE: HRC), announced strong financial results for its fiscal second quarter ended March 31, 2010 and updated its outlook for the full year. Net income of $24.2 million compares to a loss of $465.8 million, which reflected a $470 million non-cash intangible impairment charge recorded in the prior year. Earnings per diluted share of $0.38 compare to a loss of $7.44 per diluted share in the same period of the prior year. On an adjusted basis, earnings per diluted share of $0.33 increased 22.2 percent from $0.27 in the prior year. The improved financial performance was primarily the result of increased revenues and gross margin expansion. The second quarter results do not reflect any benefits associated with the restructuring announced in late March.
Hill-Rom's total revenue of $357.1 million increased 5.9 percent compared to the second quarter of last year. On a constant currency basis, revenue increased 3.5 percent. Domestic sales increased 9.4 percent to $253.2 million, while international sales decreased 1.8 percent to $103.9 million. Excluding the impact of foreign currency, Hill-Rom's international sales decreased 9.5 percent.
"We delivered another strong quarter with positive sales and earnings momentum across our portfolio," stated John J. Greisch, President and CEO of Hill-Rom. "While we continue to see a challenging macro-economic environment, we are pleased with our ability to effectively execute against our plans and deliver solid margin expansion and earnings growth."
Other second quarter revenue highlights regarding Hill-Rom business segments include:
Other Second Quarter Financial and Operational Highlights
-- Hill-Rom recorded initial sales for the Advanta(TM)2 bed, a platform used in medical-surgical areas of hospitals and alternate care facilities. The new bed brings together ease of use with key safety features and the flexibility to use a variety of care surfaces as needed.
-- During the quarter, the company announced a restructuring action that included the elimination of approximately 160 positions throughout the company. This resulted in a special charge of $5 million, or $0.05 per diluted share, primarily related to severance and other benefits provided to affected employees. The restructuring action is anticipated to yield annualized savings of approximately $16 million.
-- During the quarter we finalized a settlement with the Internal Revenue Service on a long standing tax matter. The settlement resulted in a payment of $8.5 million and the recognition of income for previously unrecognized tax benefits of $6.5 million, or $0.10 per diluted share.
Please see the attached schedules for additional information, including reconciliations of earnings in accordance with U.S. generally accepted accounting principles ("GAAP") to as adjusted income and earnings per share, condensed financial information, summary balance sheet information 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, 2010, which will be filed later this week.
Financial Guidance Summary for 2010
The company updated full year 2010 financial guidance as follows. Hill-Rom now expects constant currency revenue growth of between 4 and 7 percent. This excludes an expected currency benefit of approximately 1 percent for the full year. The company is increasing adjusted earnings guidance to $1.33 to $1.43 per diluted share. This compares to the company's previous guidance of $1.24 to $1.36 per share. Adjusted earnings guidance excludes the non-recurring items noted above related to the tax settlement and the special charge associated with the restructuring action. Cash flow from operations for the full year is expected to be approximately $150 million.
Hill-Rom Holdings, Inc. 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, undetermined special charges and the impact of significant litigation. 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 Replay and Webcast
The company will sponsor a conference call and webcast for the investing public at 8 a.m. EDT, 7 a.m. CDT, on Wednesday, May 5, 2010. The webcast is available at http://ir.hill-rom.com/events.cfm or http://ir.hill-rom.com/eventdetail.cfm?eventid=80384 and will be archived on the company's website for those who are unable to listen to the live webcast. A replay of the call is also available through May 12, 2010, at 800-642-1687 (706-645-9291 International). Code 70430730 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-Rom...enhancing outcomes for patients and their caregivers.
Disclosure Regarding Forward-Looking Statements
Certain statements in this press release 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. The Company has tried, wherever possible, to identify these forward-looking statements using words such as "intend," "anticipate," "believe," "plan," "encourage," "expect," "may," "goal," "become," "pursue," "estimate," "strategy," "will," "projection," "forecast," "continue," "accelerate," "promise," "increase," "higher," "lower," "reduce," "improve," "expand," "progress," "potential" or the negative of those terms or other variations of them or by comparable terminology. The absence of such terms, however, does not mean that the statement is not forward-looking. 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. Factors that could cause actual results to differ from forward-looking statements include but are not limited to: the Company's dependence on its relationships with several large group purchasing organizations, whether the Company's new products are successful in the marketplace, impacts of healthcare reform, compliance with federal healthcare programs, collections of accounts receivable, compliance with FDA regulations, antitrust litigation, potential exposure to product liability or other claims, failure of the Company's announced or future strategic initiatives and restructuring and realignment activities to achieve expected growth, efficiencies or cost reductions, adverse consequences resulting from the spin-off of the funeral services business, failure of the Company to execute its acquisition and business alliance strategy through the consummation and successful integration of acquisitions or entry into joint ventures or other business alliances, increased costs or unavailability of raw materials, adverse changes in global economic conditions or disruptions of credit markets, labor disruptions, the ability to retain executive officers and other key personnel, liquidity of auction rate securities, and certain tax-related matters. For a more in depth discussion of these and other 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 Annual Report on Form 10-K for the period ended September 30, 2009, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, which will be filed later this week. The Company assumes no obligation to update or revise any forward-looking statements.
-- Revenue of $357 million grew 6 percent versus prior year -- Adjusted earnings per share were $0.33 compared to $0.27 in the prior year, an increase of 22 percent -- Reported diluted earnings per share were $0.38 compared to a loss per share of $7.44 in the prior year -- Gross margin improved 260 basis points versus the prior year -- Company updates annual guidance for fiscal year 2010: Constant currency revenues are now expected to grow 4 to 7 percent and earnings are now expected to be between $1.33 to $1.43 per diluted share, excluding special items
SOURCE Hill-Rom Holdings, Inc.