Company expects FY 2009 fully diluted earnings per share to increase over 10 percent at midpoint over FY 2008 adjusted earnings per share BATESVILLE, Ind., Oct. 6
BATESVILLE, Ind., Oct. 6 /PRNewswire-FirstCall/ -- Hill-Rom Holdings, Inc.
(NYSE: HRC) will update investors regarding progress on significant strategic
and financial initiatives at its Investor Conference in New York City. Hosted
by Peter H. Soderberg, president and CEO of Hill-Rom, company presentations
will include the following topics:
-- Status of multi-year strategic initiatives
-- Portfolio changes, including Liko acquisition and rental business
remodeling
-- Financial guidance for FY2009
STRATEGIC INITIATIVES
Continuing pursuit of its aggressive program of improved execution,
targeted investment, revenue acceleration and margin expansion, Hill-Rom will
update operational strategies and associated initiatives first introduced in
October 2006. At its first Investor Conference since becoming an independent
"pure-play" medical technology company, Soderberg along with Gregory N.
Miller, senior vice president and CFO, and other Hill-Rom business unit
leaders will provide financial and business presentations focusing on market
opportunities, key strategic initiatives and resulting growth and
profitability expectations for fiscal years 2009 - 2011.
"We look forward to the opportunity to discuss the progress we have made
to date as well as to highlight our expectations for future performance. With
our primary focus to create shareholder value through continued execution of
previously identified strategies and initiatives, we believe Hill-Rom has an
exciting future ahead," said Soderberg. "However, we also recognize that the
current challenges in the financial markets have the potential to impact our
customers. Accordingly, our revenue projections for 2009 have been framed
conservatively."
Soderberg added that, "Going forward, we continue to believe our strategic
directions and operational initiatives will yield organic revenue and
operating income (EBIT) growth over the 2009 - 2011 time frames that are
consistent with the multi-year goals set out previously during our March and
April investor meetings. Our three-year goal remains to grow organic revenue
by an average of 6 - 8 percent, while growing operating income by an average
of 12 - 15 percent."
"We will continue to prioritize research and development, sales channel
enhancements, and margin expansion initiatives. Further, we continuously
evaluate our business and product portfolio in order to fill gaps, or shed or
restructure underperforming operations. These actions will allow us to better
serve our customers, associates, and shareholders," he said.
LIKO ACQUISITION
The Company will review the just completed acquisition of Liko Vardlyft AB
and Liko North America Corporation. Liko is a leading supplier and developer
of patient lifts and related technologies that facilitate the safe movement,
transfer and mobilization of patients. The previously announced and completed
acquisition will broaden Hill-Rom's portfolio by adding safe mobility
solutions. The transaction is expected to be slightly accretive to Hill-Rom's
GAAP earnings per share in 2009 and increasingly accretive thereafter, as
outlined below.
FISCAL YEAR 2009 FINANCIAL GUIDANCE
The Company will introduce fiscal year 2009 financial guidance during the
conference. Going forward, guidance will include the operations of the Liko
transaction which closed on October 1, 2008. In commenting on guidance
Soderberg stated, "Our outlook assumes a mid-single digit revenue growth rate
in our 'same store' categories without Liko, which is slightly more
conservative than we have seen over the last two years in order to take
customers' economic concerns into account if they arise. Including Liko, Hill-
Rom's revenue is expected to grow at a high-single to low-double digit rate.
Further, our EPS guidance anticipates expanding operating margins in spite of
higher input costs. These anticipated results reflect the impact of the Liko
acquisition, improved productivity, and increasing profitability due to our
continuing efforts in lowering costs-both in manufacturing and throughout the
organization."
Hill-Rom consolidated revenue guidance for fiscal year 2009, including
Liko, is expected to range from $1.633 - 1.683 billion with earnings per share
from continuing operations on a fully diluted basis of $1.40 - $1.64. The
estimated full year impact of recently acquired Liko, is expected to add $80 -
$85 million in revenue and up to $0.03 in diluted earnings per share in fiscal
2009 and increasing amounts thereafter. Further details are provided in the
schedules attached to this release.
MEDICAL EQUIPMENT MANAGEMENT SERVICES (MEMS) BUSINESS REMODELING
The Company will also discuss current and future actions related to its
moveable medical equipment rental business. These actions are the result of a
comprehensive and rigorous portfolio review process and are targeted to
improve the profitability and growth of this business. Implementation will
include strategic partnering with customers, rationalization of the related
service infrastructure, and rationalization and disposal of select assets to
align and consolidate resources to better serve our customers. As a result of
this analysis, the Company will incur a one-time fourth quarter FY 2008 charge
of $13 to 15 million-primarily non-cash-in order to realize savings of
approximately $4 - 5 million per year following implementation. It is
expected that optimal levels of customer support will be maintained
throughout.
The earnings guidance for fiscal 2008 presented herein does not give
consideration to the fourth quarter charge to be taken in conjunction with
these actions.
WEBCAST INFORMATION
The Company will webcast the entire conference beginning at 9 a.m. EDT, 8
a.m. CDT, on Tuesday, October 7, 2008. The webcast will be available at
http://ir.hill-rom.com/eventdetail.cfm?eventid=59633 or
http://www.hill-rom.com and will be archived on the company's website for
those who are unable to listen to the live webcast. Interested parties may
access audio of the conference call live in listen only mode by dialing
877-545-1415 (719-325-4874 international). Both use confirmation code 3484229.
A replay of the call is also available through October 14, 2008 at
888-203-1112 (719-457-0820 international). Code 3484229 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.
www.hill-rom.com
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, changes in customers' Medicare reimbursements, collections of
accounts receivable, compliance with FDA regulations, antitrust litigation,
potential exposure to product liability or other claims, failure of the
Company's announced strategic initiatives and restructuring and realignment
activities to achieve expected growth, future restructuring or realignment
activities, efficiencies or cost reductions, disruptions in the Company's
business or other adverse consequences resulting from the recent spin-off of
the funeral service business, failure to realize the anticipated benefits of
the spin-off, 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, labor disruptions, the
ability to retain executive officers and other key personnel, 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 Annual Report on Form 10-K for the period ended September 30,
2007, its Current Report on Form 8-K filed with the SEC on March 17, 2008, and
the Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, which
were previously filed with the Securities and Exchange Commission. The
Company assumes no obligation to update or revise any forward-looking
statements.
NON-GAAP FINANCIAL DISCLOSURES
Hill-Rom provides earnings per share on an adjusted basis from continuing
operations because the company's management believes that the presentation
provides useful information to investors. Among other things, it may assist
investors in evaluating the company's operations period over period, which is
also the basis on which it generally is most reasonable to forecast results.
This measure may exclude such items as strategic developments (including
restructurings and product line changes) and significant litigation. Special
items may be highly variable, difficult to predict, and of a size that
sometimes has substantial impact on the company's reported operations for a
period. Often, prospective quantification of them is not reasonable.
Management uses these measures internally for planning, forecasting and
evaluating the performance of the business, including allocating resources and
evaluating results relative to employee performance compensation targets.
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.
Financial Guidance for Fiscal Year 2009
HRC
2008 2009 Guidance
($ in millions, except EPS) MidLow High
Net Revenues
Capital sales $1,046 $1,159 $1,194
Rental revenues 460474489
Total revenues 1,505 1,633 1,683
vs prior year+10.9% +8.5% +11.8%
Capital sales gross margin %41.0% 42.1% 43.5%
Rental revenues gross margin % 52.5% 51.9% 53.0%
Total gross margin %44.5% 45.0% 46.3%
Operating Expenses - Adj (1) 538591610
Operating Income - Adj (1) 132143169
Tax Rate (2) 29.9% 34.0% 34.0%
Income from Continuing Ops - Adj (1) $86$88 $104
Earnings per share $1.25 $1.40 $1.64
Separation Costs 0.02 - -
Special Charges 0.02 - -
One-time Stock Modification Charge0.06 - -
Loss on Extinguishment of Debt0.03 - -
Earnings per share - Adjusted (1) (2) (3)$1.38 $1.40 $1.64
(1) 2008 guidance excludes from the applicable line items special charges
recognized in Q1 2008, one time charges incurred in Q2 2008 for equity
award modification, debt extinguishment, and other costs related to
the spin-off of the funeral services business. The impacts of such
items on a diluted earnings per share basis are presented above. 2008
guidance also excludes Q4 special charges associated with the
Company's streamlining efforts and its restructuring of the Medical
Equipment Management Services Rental Business.
(2) Tax rate includes discrete period tax benefits recognized for nine-
month period ended June 30, 2008. 2008 tax rate does not reflect any
future discrete period tax items which may be recognized in the fourth
quarter.
(3) Earnings per share - Adjusted in the above presentation for fiscal
2008 has not been adjusted to remove the effects of discrete period
tax adjustments recognized in any of the periods presented. Discrete
period tax adjustments are routinely recognized throughout any given
year under a variety of circumstances and are highly subjective in
nature. For the three- and nine-month periods ended June 30, 2008, we
recognized discrete tax benefits of $7.8 million ($0.12 per share) and
$6.7 million ($0.11 per share), respectively, principally associated
with the release of valuation allowances on foreign tax credit
carryforwards and the recognition of certain previously unrecognized
tax benefits associated with recently completed tax audits.
SOURCE Hill-Rom Holdings, Inc.
