ALPHARETTA, Ga., Nov. 2, 2016 /PRNewswire/ -- Halyard Health,
Inc. (NYSE: HYH) today reported third quarter 2016 results and
raised its full-year 2016 adjusted diluted earnings per share
outlook.
Executive Summary
- Third quarter 2016 net sales totaled $398 million, a 2 percent increase compared to
the same period last year.
- Net income for the third quarter 2016 was $9 million compared to net loss of $(471) million in the third quarter of 2015,
which was impacted by a non-cash impairment charge taken in respect
to the company's Surgical and Infection Prevention (S&IP)
segment. Third quarter adjusted net income was $23 million compared to $24 million in the prior year.
- Third quarter diluted earnings per share were $0.19, compared to $(10.10) in the third quarter 2015. Adjusted
diluted earnings per share in the quarter were $0.48, compared to $0.52 in the same period last year.
- Year-to-date 2016 net sales were $1,182
million, up 1 percent compared to the year-ago period.
- Through nine months, diluted earnings per share were
$0.63, compared to $(9.46), in the same period a year ago. Adjusted
diluted earnings per share for the first nine months of 2016 were
$1.47 compared to $1.55 in the prior year period.
- The company raised its full-year 2016 adjusted diluted earnings
per share outlook from $1.70 to $1.90
to $1.87 to $1.97.
"We delivered another solid quarter fueled by organic growth in
Medical Devices and contributions from our recent CORPAK
acquisition. I am pleased with our integration progress and we have
realized synergies earlier than expected. As a result, we are
raising our full-year adjusted diluted earnings outlook," said
Robert Abernathy, Halyard chairman
and CEO. "We are advancing Halyard's transformation into a leading
medical devices company and our strong financial profile leaves us
well-positioned for future growth."
Third Quarter 2016 Operating Results
Net sales of $398 million
increased 2 percent compared to the prior year, including the
CORPAK acquisition that contributed 3 percent of the growth. On a
constant currency basis, sales increased 1 percent. Excluding
expected lower Corporate and Other Sales and the CORPAK
acquisition, volumes were flat compared to the prior year and net
selling prices were lower by 2 percent.
Operating profit was $21 million
in the third quarter of 2016 versus a net loss of $(461) million in 2015. On an adjusted basis,
operating profit was $43 million
compared to $46 million in the prior
year. Volume growth in Medical Devices, including CORPAK, and
manufacturing cost savings were offset by lower selling prices in
S&IP and higher selling, general and administrative
expenses.
Adjusted operating profit for the third quarter 2016 excludes
$7 million spin-related transition
charges, $4 million for
acquisition-related charges, $5
million for litigation matters and $6
million for intangible amortization expense.
Adjusted EBITDA for the third quarter, excluding spin-related
charges, acquisition-related charges and litigation expenses was
$53 million compared to $56 million in the prior year.
Third Quarter 2016 Business Segment Results
Medical Devices
Net sales of Medical Devices in the third quarter increased 15
percent to $145 million compared to
the third quarter 2015, driven by a 4 percent increase in organic
sales volumes and 11 percent growth attributed to the CORPAK
acquisition. Performance was driven by volume growth across all
product categories and 1 percent favorable currency exchange
rates.
Operating profit for Medical Devices was $32 million compared to $29 million in the third quarter 2015. Results
were driven by higher sales volumes and manufacturing cost savings,
which were partially offset by planned higher selling and research
and development expense to help drive future growth.
Surgical and Infection Prevention
S&IP net sales were $249
million, down 3 percent compared to the third quarter of
2015. On a constant currency basis, net sales decreased 4 percent.
Excluding sales to Kimberly-Clark, volumes were down 2 percent, as
continued robust demand in exam gloves was offset by lower volume
in surgical drapes and gowns and sterilization. Selling prices were
lower by 3 percent, concentrated in exam gloves and
sterilization.
S&IP operating profit for the quarter was $22 million compared to $26 million in the third quarter of 2015.
Performance was impacted by lower net selling prices and volumes
that were partially offset by manufacturing cost savings and
favorable currency exchange rates.
Year-To-Date Results
Medical Devices
In the first nine months of 2016, net sales of Medical Devices
were $413 million, up 10 percent
compared to the comparable period in 2015. Organic sales volumes
increased 4 percent and growth attributable to the CORPAK
acquisition was 6 percent. Performance was driven by growth in each
product category, in line with expectations.
Through nine months, operating profit for Medical Devices was
$91 million, compared to $87 million in the first nine months of 2015.
Results were driven by higher volumes and favorable currency
exchange rates partially offset by higher research and development
spending, and selling and marketing expense to help drive
growth.
Surgical and Infection Prevention
In the first nine months of 2016, S&IP net sales totaled
$760 million, a 1 percent decline
compared to the first nine months of 2015. Sales volumes increased
2 percent, driven by continued strong demand for exam gloves, which
was offset by 3 percent lower selling prices, primarily in exam
gloves and sterilization.
Year-to-date S&IP operating profit was $72 million compared to $71 million in the same period last year.
Performance for the first nine months was driven by higher sales
volumes, favorable currency exchange rates and manufacturing cost
savings partially offset by lower selling prices.
Balance Sheet and Cash Flow
Total debt at the end of the third quarter 2016 was $589 million, consisting of a secured term loan,
unsecured notes and net borrowing on the revolver to fund the
CORPAK acquisition, compared to total debt of $578 million at the end of 2015.
Cash from operations for the third quarter was $50 million compared to $19 million a year ago. Capital spending for the
third quarter totaled $8 million
compared to $19 million in 2015. The
decrease in capital spending for the quarter was attributed to
higher spending for spin-related items in the prior year. The
company's cash balance was $87
million at the end of the third quarter.
2016 Outlook and Key Planning Assumptions
The company is revising its previously announced full-year 2016
outlook.
- Adjusted diluted earnings per share are expected to be in the
range of $1.87 to $1.97.
Based on current trends, the company is updating one of its key
planning assumptions, as described below.
- S&IP sales to Kimberly-Clark are expected to range between
$50 and $55 million.
Non-GAAP Financial Measures
This press release and the accompanying tables include the
following financial measures that have not been calculated in
accordance with accounting principles generally accepted in the
U.S., or GAAP, and are therefore referred to as non-GAAP financial
measures:
- Net sales on a constant currency basis
- Adjusted net income
- Adjusted diluted earnings per share
- Adjusted gross and operating profit
- Adjusted effective tax rate
- Adjusted EBITDA
These non-GAAP financial measures exclude the following items,
as applicable, for the relevant time periods as indicated in the
accompanying non-GAAP reconciliations to the comparable GAAP
financial measures:
- Transition costs relating to the separation from
Kimberly-Clark, which include costs to establish Halyard Health's
capabilities as a stand-alone entity. These costs are related
primarily to the transition services the company receives from
Kimberly-Clark as well as the rebranding and other supply chain
transition costs, and are expected to continue through 2016.
- Manufacturing strategic charges and gains relating to exiting
one of the disposable glove facilities in Thailand and outsourcing the related
production.
- Expenses associated with the amortization of intangible assets
associated with prior business acquisitions.
- The positive or negative effect of changes in currency exchange
rates during the year.
- Expenses associated with certain litigation matters.
- Certain acquisition and integration charges related to the
acquisition of CORPAK MedSystems, Inc.
- The remeasurement of a deferred tax asset due to Thailand's statutory tax rate change.
The company provides these non-GAAP financial measures as
supplemental information to our GAAP financial measures. Management
and the company's Board of Directors use net sales on a constant
currency basis, adjusted net income, adjusted diluted earnings per
share, adjusted operating profit, adjusted EBITDA, and free cash
flow to (a) evaluate the company's historical and prospective
financial performance and its performance relative to its
competitors, (b) allocate resources and (c) measure the operational
performance of the company's business units and their managers.
Management also believes that the use of an adjusted effective tax
rate provides improved insight into the tax effects of our ongoing
business operations.
Additionally, the Compensation Committee of the company's Board
of Directors will use certain of the non-GAAP financial measures
when setting and assessing achievement of incentive compensation
goals. These goals are based, in part, on the company's net sales
on a constant currency basis, adjusted diluted earnings per share
and adjusted EBITDA which will be determined by excluding certain
items that are used in calculating these non-GAAP financial
measures.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in the
attached financial tables.
Conference Call
Halyard Health, Inc. will host a conference call today at
9 a.m. ET. The conference call can be
accessed live over the internet at
https://halyardhealth.investorroom.com or via telephone by
dialing 877.240.5772 in the U.S. A replay of the call will be
available at noon ET today by calling
877.344.7529 in the U.S. and entering passcode 10094658. A
webcast of the call will also be archived in the Investors section
on the Halyard website.
About Halyard Health
Halyard Health (NYSE: HYH) is a medical technology company
focused on preventing infection, eliminating pain and speeding
recovery for healthcare providers and their patients. Headquartered
in Alpharetta, Georgia, Halyard is
committed to addressing some of today's most important healthcare
needs, such as preventing healthcare-associated infections and
reducing the use of narcotics while helping patients move from
surgery to recovery. Halyard's business segments - Surgical and
Infection Prevention (S&IP) and Medical Devices - develop,
manufacture and market clinically superior solutions that improve
medical outcomes and business performance in more than 100
countries. For more information, visit www.halyardhealth.com.
Forward-Looking Statements
This press release contains information that includes or is
based on "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on the current plans and expectations of
management and are subject to various risks and uncertainties that
could cause our actual results to differ materially from those
expressed or implied in such statements. Forward-looking statements
include all statements that do not relate solely to historical or
current facts, and can generally be identified by the use of words
such as "may", "believe", "will", "expect", "project", " estimate",
"anticipate", "plan", or "continue" and similar expressions, among
others. Such factors include, but are not limited to: weakening of
economic conditions that could adversely affect the level of demand
for our products; pricing pressures generally, including
cost-containment measures that could adversely affect the price of
or demand for our products; changes in foreign exchange markets;
legislative and regulatory actions; unanticipated issues arising in
connection with clinical studies and otherwise that affect U.S.
Food and Drug Administration approval of new products; changes in
reimbursement levels from third-party payors; a significant
increase in product liability claims; the impact of investigative
and legal proceedings and compliance risks; the impact of the
federal legislation to reform the United
States healthcare system; changes in financial markets; and
changes in the competitive environment. Additional information
concerning these and other factors that may impact future results
is contained in our filings with the U.S. Securities and Exchange
Commission, including our most recent Form 10-K and Quarterly
Reports on Form 10-Q.
|
HALYARD HEALTH,
INC.
CONDENSED CONSOLIDATED INCOME STATEMENT
(unaudited)
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
|
Net
Sales
|
$
|
397.5
|
|
|
$
|
389.5
|
|
|
2.1
|
%
|
|
$
|
1,182.3
|
|
|
$
|
1,173.0
|
|
|
0.8
|
%
|
|
Cost of products
sold
|
259.5
|
|
|
258.5
|
|
|
0.4
|
|
|
767.1
|
|
|
775.0
|
|
|
(1.0)
|
|
|
Gross
Profit
|
138.0
|
|
|
131.0
|
|
|
5.3
|
|
|
415.2
|
|
|
398.0
|
|
|
4.3
|
|
|
Research and
development expenses
|
10.9
|
|
|
10.2
|
|
|
6.9
|
|
|
29.1
|
|
|
22.5
|
|
|
29.3
|
|
|
Selling and general
expenses
|
100.3
|
|
|
97.2
|
|
|
3.2
|
|
|
301.0
|
|
|
300.2
|
|
|
0.3
|
|
|
Goodwill
impairment
|
—
|
|
|
475.5
|
|
|
N.M.
|
|
|
—
|
|
|
475.5
|
|
|
N.M.
|
|
|
Other expense and
(income), net
|
5.9
|
|
|
9.3
|
|
|
N.M.
|
|
|
13.5
|
|
|
(2.0)
|
|
|
N.M.
|
|
|
Operating Profit
(Loss)
|
20.9
|
|
|
(461.2)
|
|
|
N.M.
|
|
|
71.6
|
|
|
(398.2)
|
|
|
N.M.
|
|
|
Interest
income
|
0.2
|
|
|
—
|
|
|
N.M.
|
|
|
0.5
|
|
|
0.2
|
|
|
N.M.
|
|
|
Interest
expense
|
(8.4)
|
|
|
(7.8)
|
|
|
7.7
|
|
|
(24.7)
|
|
|
(25.0)
|
|
|
(1.2)
|
|
|
Income (Loss)
Before Income Taxes
|
12.7
|
|
|
(469.0)
|
|
|
N.M.
|
|
|
47.4
|
|
|
(423.0)
|
|
|
N.M.
|
|
|
Income tax
provision
|
(3.6)
|
|
|
(1.5)
|
|
|
N.M.
|
|
|
(17.6)
|
|
|
(17.8)
|
|
|
(1.1)
|
|
|
Net Income
(Loss)
|
$
|
9.1
|
|
|
$
|
(470.5)
|
|
|
N.M.
|
|
|
$
|
29.8
|
|
|
$
|
(440.8)
|
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
8.2
|
|
|
7.8
|
|
|
5.1
|
|
|
24.2
|
|
|
24.8
|
|
|
(2.4)
|
|
|
Income tax
provision
|
3.6
|
|
|
1.5
|
|
|
N.M.
|
|
|
17.6
|
|
|
17.8
|
|
|
(1.1)
|
|
|
Depreciation and
amortization
|
16.6
|
|
|
16.3
|
|
|
1.8
|
|
|
48.4
|
|
|
48.6
|
|
|
(0.4)
|
|
|
EBITDA
|
$
|
37.5
|
|
|
$
|
(444.9)
|
|
|
N.M.
|
|
|
$
|
120.0
|
|
|
$
|
(349.6)
|
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss)
Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.19
|
|
|
$
|
(10.10)
|
|
|
N.M.
|
|
|
$
|
0.64
|
|
|
$
|
(9.46)
|
|
|
N.M.
|
|
|
Diluted
|
0.19
|
|
|
(10.10)
|
|
|
N.M.
|
|
|
0.63
|
|
|
(9.46)
|
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
Outstanding (in thousands)
|
|
|
|
|
|
|
|
|
Basic
|
46.7
|
|
|
46.6
|
|
|
|
|
46.6
|
|
|
46.6
|
|
|
|
|
Diluted
|
47.2
|
|
|
46.6
|
|
|
|
|
47.0
|
|
|
46.6
|
|
|
|
|
HALYARD HEALTH,
INC.
NON-GAAP RECONCILIATIONS
(unaudited)
(in millions)
|
|
|
Gross
Profit
|
|
Operating
Profit
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
As
reported
|
$
|
138.0
|
|
|
$
|
131.0
|
|
|
$
|
415.2
|
|
|
$
|
398.0
|
|
|
$
|
20.9
|
|
|
$
|
(461.2)
|
|
|
$
|
71.6
|
|
|
$
|
(398.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spin-related
transition charges
|
4.5
|
|
|
4.1
|
|
|
4.6
|
|
|
8.2
|
|
|
6.7
|
|
|
16.0
|
|
|
10.6
|
|
|
46.4
|
|
|
Manufacturing
strategic changes
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12.0)
|
|
|
Acquisition-related
charges
|
1.5
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|
4.4
|
|
|
—
|
|
|
14.7
|
|
|
—
|
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
475.5
|
|
|
—
|
|
|
475.5
|
|
|
Litigation and
legal
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.1
|
|
|
9.1
|
|
|
15.1
|
|
|
9.1
|
|
|
Intangibles
amortization
|
0.8
|
|
|
0.7
|
|
|
2.3
|
|
|
2.3
|
|
|
5.6
|
|
|
6.5
|
|
|
16.5
|
|
|
19.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
144.8
|
|
|
$
|
135.8
|
|
|
$
|
427.1
|
|
|
$
|
408.8
|
|
|
$
|
42.7
|
|
|
$
|
45.9
|
|
|
$
|
128.5
|
|
|
$
|
140.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Taxes
|
|
Income Tax
Provision
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
As
reported
|
$
|
12.7
|
|
|
$
|
(469.0)
|
|
|
$
|
47.4
|
|
|
$
|
(423.0)
|
|
|
$
|
(3.6)
|
|
|
$
|
(1.5)
|
|
|
$
|
(17.6)
|
|
|
$
|
(17.8)
|
|
|
Effective tax rate,
as
reported
|
|
|
|
|
|
|
|
|
28.3
|
%
|
|
(0.3)%
|
|
|
37.1
|
%
|
|
(4.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spin-related
transition charges
|
6.7
|
|
|
16.0
|
|
|
10.6
|
|
|
46.4
|
|
|
(2.3)
|
|
|
(6.3)
|
|
|
(3.9)
|
|
|
(17.7)
|
|
|
Manufacturing
strategic changes
|
—
|
|
|
—
|
|
|
—
|
|
|
(12.0)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
|
Acquisition-related
charges
|
4.4
|
|
|
—
|
|
|
14.7
|
|
|
—
|
|
|
(1.7)
|
|
|
—
|
|
|
(5.6)
|
|
|
—
|
|
|
Goodwill
impairment
|
—
|
|
|
475.5
|
|
|
—
|
|
|
475.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Litigation and
legal
|
5.1
|
|
|
9.1
|
|
|
15.1
|
|
|
9.1
|
|
|
(1.9)
|
|
|
(3.5)
|
|
|
(5.7)
|
|
|
(3.5)
|
|
|
Intangibles
amortization
|
5.6
|
|
|
6.5
|
|
|
16.5
|
|
|
19.2
|
|
|
(2.3)
|
|
|
(2.4)
|
|
|
(6.2)
|
|
|
(7.4)
|
|
|
Thailand statutory
tax rate change
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
34.5
|
|
|
$
|
38.1
|
|
|
$
|
104.3
|
|
|
$
|
115.2
|
|
|
$
|
(11.8)
|
|
|
$
|
(13.7)
|
|
|
$
|
(35.3)
|
|
|
$
|
(42.8)
|
|
|
Effective tax rate,
as
adjusted
|
|
|
|
|
|
|
|
|
34.2
|
%
|
|
36.0
|
%
|
|
33.8
|
%
|
|
37.2
|
%
|
|
HALYARD HEALTH,
INC.
NON-GAAP RECONCILIATIONS
(unaudited)
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
As
reported
|
$
|
9.1
|
|
|
$
|
(470.5)
|
|
|
$
|
29.8
|
|
|
$
|
(440.8)
|
|
|
Diluted EPS, as
reported
|
$
|
0.19
|
|
|
$
|
(10.10)
|
|
|
$
|
0.63
|
|
|
$
|
(9.46)
|
|
|
|
|
|
|
|
|
|
|
Spin-related
transition charges
|
4.4
|
|
|
9.7
|
|
|
6.7
|
|
|
28.7
|
|
|
Manufacturing
strategic changes
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.4)
|
|
|
Acquisition-related
charges
|
2.7
|
|
|
—
|
|
|
9.1
|
|
|
—
|
|
|
Goodwill
impairment
|
—
|
|
|
475.5
|
|
|
—
|
|
|
475.5
|
|
|
Litigation and
legal
|
3.2
|
|
|
5.6
|
|
|
9.4
|
|
|
5.6
|
|
|
Intangibles
amortization
|
3.3
|
|
|
4.1
|
|
|
10.3
|
|
|
11.8
|
|
|
Thailand statutory
tax rate change
|
—
|
|
|
—
|
|
|
3.7
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
22.7
|
|
|
$
|
24.4
|
|
|
$
|
69.0
|
|
|
$
|
72.4
|
|
|
Diluted EPS, as
adjusted
|
$
|
0.48
|
|
|
$
|
0.52
|
|
|
$
|
1.47
|
|
|
$
|
1.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income
|
$
|
9.1
|
|
|
$
|
(470.5)
|
|
|
$
|
29.8
|
|
|
$
|
(440.8)
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
8.2
|
|
|
7.8
|
|
|
24.2
|
|
|
24.8
|
|
|
Income tax
provision
|
3.6
|
|
|
1.5
|
|
|
17.6
|
|
|
17.8
|
|
|
Depreciation and
amortization
|
16.6
|
|
|
16.3
|
|
|
48.4
|
|
|
48.6
|
|
|
EBITDA, as
reported
|
37.5
|
|
|
(444.9)
|
|
|
120.0
|
|
|
(349.6)
|
|
|
|
|
|
|
|
|
|
|
Spin-related
transition charges
|
6.7
|
|
|
16.0
|
|
|
10.6
|
|
|
45.6
|
|
|
Manufacturing
strategic changes
|
—
|
|
|
—
|
|
|
—
|
|
|
(12.0)
|
|
|
Acquisition-related
charges
|
4.0
|
|
|
—
|
|
|
14.4
|
|
|
—
|
|
|
Goodwill
impairment
|
—
|
|
|
475.5
|
|
|
—
|
|
|
475.5
|
|
|
Litigation and
legal
|
5.1
|
|
|
9.1
|
|
|
15.1
|
|
|
9.1
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
53.3
|
|
|
$
|
55.7
|
|
|
$
|
160.1
|
|
|
$
|
168.6
|
|
|
HALYARD HEALTH,
INC.
NON-GAAP RECONCILIATIONS
(unaudited)
|
|
|
|
2016
Outlook
|
|
Estimated
Range
|
|
Adjusted diluted
earnings per share
|
$
|
1.87
|
|
to
|
$
|
1.97
|
|
|
Amortization
|
(0.30)
|
|
to
|
(0.30)
|
|
|
Spin-related
transition expenses
|
(0.20)
|
|
to
|
(0.16)
|
|
|
Acquisition related
charges
|
(0.23)
|
|
to
|
(0.18)
|
|
|
Other
|
(0.31)
|
|
to
|
(0.28)
|
|
|
Diluted earnings per
share (GAAP)
|
$
|
0.83
|
|
to
|
$
|
1.05
|
|
|
HALYARD HEALTH,
INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
(in millions)
|
|
|
As of
September 30,
2016
|
|
As of
December 31,
2015
|
|
ASSETS
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
86.7
|
|
|
$
|
129.5
|
|
|
Accounts receivable,
net
|
189.1
|
|
|
224.7
|
|
|
Inventories
|
298.7
|
|
|
303.2
|
|
|
Prepaid expenses and
other current assets
|
31.1
|
|
|
18.6
|
|
|
Total Current
Assets
|
605.6
|
|
|
676.0
|
|
|
Property, Plant
and Equipment, net
|
265.0
|
|
|
279.5
|
|
|
Goodwill
|
1,031.9
|
|
|
945.2
|
|
|
Other Intangible
Assets, net
|
176.7
|
|
|
82.6
|
|
|
Deferred Tax
Assets
|
12.2
|
|
|
14.9
|
|
|
Other
Assets
|
3.6
|
|
|
2.0
|
|
|
TOTAL
ASSETS
|
$
|
2,095.0
|
|
|
$
|
2,000.2
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Trade accounts
payable
|
$
|
166.5
|
|
|
$
|
163.2
|
|
|
Accrued
expenses
|
144.2
|
|
|
152.0
|
|
|
Total Current
Liabilities
|
310.7
|
|
|
315.2
|
|
|
Long-Term
Debt
|
589.4
|
|
|
578.1
|
|
|
Deferred Tax
Liabilities
|
63.4
|
|
|
23.8
|
|
|
Other Long-Term
Liabilities
|
30.0
|
|
|
27.8
|
|
|
TOTAL
LIABILITIES
|
993.5
|
|
|
944.9
|
|
|
Stockholders'
Equity
|
1,101.5
|
|
|
1,055.3
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY
|
$
|
2,095.0
|
|
|
$
|
2,000.2
|
|
|
HALYARD HEALTH,
INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
(unaudited)
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
9.1
|
|
|
$
|
(470.5)
|
|
|
$
|
29.8
|
|
|
$
|
(440.8)
|
|
|
Depreciation and
amortization
|
16.6
|
|
|
16.3
|
|
|
48.4
|
|
|
48.6
|
|
|
Goodwill
impairment
|
—
|
|
|
475.5
|
|
|
—
|
|
|
475.5
|
|
|
Net loss (gain) on
asset dispositions
|
3.0
|
|
|
2.2
|
|
|
3.8
|
|
|
(7.6)
|
|
|
Changes in operating
assets and liabilities
|
18.4
|
|
|
(6.0)
|
|
|
43.8
|
|
|
(13.4)
|
|
|
Deferred income taxes
and other
|
2.8
|
|
|
1.4
|
|
|
18.1
|
|
|
12.3
|
|
|
Cash Provided by
Operating Activities
|
49.9
|
|
|
18.9
|
|
|
143.9
|
|
|
74.6
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(7.6)
|
|
|
(19.2)
|
|
|
(21.7)
|
|
|
(64.4)
|
|
|
Acquisition of
business, net of cash acquired
|
0.1
|
|
|
—
|
|
|
(175.0)
|
|
|
—
|
|
|
Proceeds from
dispositions of property
|
—
|
|
|
0.1
|
|
|
—
|
|
|
7.8
|
|
|
Cash Used in
Investing Activities
|
(7.5)
|
|
|
(19.1)
|
|
|
(196.7)
|
|
|
(56.6)
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Line of credit
facility proceeds
|
—
|
|
|
—
|
|
|
72.0
|
|
|
—
|
|
|
Line of credit
facility repayments
|
(35.0)
|
|
|
—
|
|
|
(62.0)
|
|
|
—
|
|
|
Debt
repayments
|
—
|
|
|
—
|
|
|
—
|
|
|
(51.0)
|
|
|
Purchase of treasury
stock
|
—
|
|
|
—
|
|
|
(0.9)
|
|
|
(1.0)
|
|
|
Proceeds from the
exercise of stock options
|
0.2
|
|
|
0.3
|
|
|
0.2
|
|
|
1.2
|
|
|
Cash Used in
Financing Activities
|
(34.8)
|
|
|
0.3
|
|
|
9.3
|
|
|
(50.8)
|
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
(0.1)
|
|
|
(1.9)
|
|
|
0.7
|
|
|
(3.7)
|
|
|
Increase
(Decrease) in Cash and Cash Equivalents
|
7.5
|
|
|
(1.8)
|
|
|
(42.8)
|
|
|
(36.5)
|
|
|
Cash and Cash
Equivalents - Beginning of Period
|
79.2
|
|
|
114.3
|
|
|
129.5
|
|
|
149.0
|
|
|
Cash and Cash
Equivalents - End of Period
|
$
|
86.7
|
|
|
$
|
112.5
|
|
|
$
|
86.7
|
|
|
$
|
112.5
|
|
|
HALYARD HEALTH,
INC.
SELECTED BUSINESS SEGMENT DATA
(unaudited)
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Surgical and
Infection Prevention
|
$
|
248.8
|
|
|
$
|
257.4
|
|
|
(3.3)
|
%
|
|
$
|
760.2
|
|
|
$
|
767.5
|
|
|
(1.0)
|
%
|
|
Medical
Devices
|
145.2
|
|
|
126.1
|
|
|
15.1
|
|
|
413.4
|
|
|
375.3
|
|
|
10.2
|
|
|
Corporate and
Other(a)
|
3.5
|
|
|
6.0
|
|
|
(41.7)
|
|
|
8.7
|
|
|
30.2
|
|
|
(71.2)
|
|
|
Total Net
Sales
|
$
|
397.5
|
|
|
$
|
389.5
|
|
|
2.1
|
%
|
|
$
|
1,182.3
|
|
|
$
|
1,173.0
|
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Surgical and
Infection Prevention(b)
|
$
|
22.2
|
|
|
$
|
26.3
|
|
|
(15.6)
|
%
|
|
$
|
71.9
|
|
|
$
|
71.3
|
|
|
0.8
|
%
|
|
Medical
Devices(c)
|
31.9
|
|
|
28.5
|
|
|
11.9
|
|
|
90.6
|
|
|
86.6
|
|
|
4.6
|
|
|
Corporate and
Other(d)
|
(27.3)
|
|
|
(31.2)
|
|
|
N.M.
|
|
|
(77.4)
|
|
|
(82.6)
|
|
|
N.M.
|
|
|
Goodwill
impairment
|
—
|
|
|
(475.5)
|
|
|
N.M.
|
|
|
—
|
|
|
(475.5)
|
|
|
N.M.
|
|
|
Other (expense)
income, net(e)
|
(5.9)
|
|
|
(9.3)
|
|
|
N.M.
|
|
|
(13.5)
|
|
|
2.0
|
|
|
N.M.
|
|
|
Total Operating
Profit (Loss)
|
$
|
20.9
|
|
|
$
|
(461.2)
|
|
|
N.M.
|
|
|
$
|
71.6
|
|
|
$
|
(398.2)
|
|
|
N.M.
|
|
_______________________________________________
|
|
|
(a)
|
Corporate and Other
net sales include sales of non-healthcare products to
Kimberly-Clark.
|
|
|
|
(b)
|
S&IP operating
profit includes $0.2 million and $0.2 million of amortization
expense for the quarters ended September 30, 2016 and 2015,
respectively and $0.6 million and $0.6 million for the nine months
ended September 30, 2016 and 2015, respectively.
|
|
|
|
(c)
|
Medical Devices
operating profit includes $5 million and $6 million of amortization
expense for the quarters ended September 30, 2016 and 2015,
respectively and $16 million and $19 million for the nine months
ended September 30, 2016 and 2015, respectively.
|
|
|
|
(d)
|
Corporate and Other
for the three and nine months ended September 30, 2016
includes $16 million and $48 million, respectively, of general
expenses, $7 million and $11 million, respectively, of post
spin-related transition expenses, $4 million and $15 million,
respectively, of acquisition, integration and restructuring
expenses related to the CORPAK acquisition and $0 million and $4
million, respectively of costs related to corporate sales.
Corporate and Other for the three and nine months ended
September 30, 2015 includes $13 million and $36 million,
respectively, of general expenses and $16 million and $46 million,
respectively, of post spin-related transition expenses and $2
million and $0 million of costs, respectively, from corporate
sales.
|
|
|
|
(e)
|
Other (expense)
income, net for the three and nine months ended September 30,
2016 includes $5 million and $15 million, respectively, related to
legal expenses and litigation. Other (expense) income, net for the
three ended September 30, 2015 includes $9 million related to
legal expenses and litigation. Other (expense) income, net for the
nine months ended September 30, 2015 includes $9 million
related to legal expenses and litigation and a $12 million gain on
the disposal of one of our disposable glove facilities in
Thailand.
|
|
N.M. - not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
- Net Sales vs. Prior Year
|
|
|
Changes Due
To
|
|
Third
Quarter
|
Total
|
|
Volume(a)
|
|
Pricing/Mix
|
|
Currency
|
|
Other(b)
|
|
Consolidated
|
2
|
%
|
|
—
|
%
|
|
(2)%
|
|
|
1
|
%
|
|
3
|
%
|
|
S&IP
|
(3)
|
|
|
(2)
|
|
|
(3)
|
|
|
1
|
|
|
1
|
|
|
Medical
Devices
|
15
|
|
|
4
|
|
|
—
|
|
|
1
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-date
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
1
|
%
|
|
3
|
%
|
|
(2)%
|
|
|
—
|
%
|
|
—
|
%
|
|
S&IP
|
(1)
|
|
|
2
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
|
Medical
Devices
|
10
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
6
|
|
______________________________
|
(a)
|
Volume excludes
changes in sales volume to Kimberly-Clark.
|
|
(b)
|
Other includes Corpak
net sales, changes in sales volume to Kimberly-Clark and
rounding.
|
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visit:http://www.prnewswire.com/news-releases/halyard-health-inc-announces-third-quarter-2016-results-raises-its-full-year-2016-outlook-300355581.html
SOURCE Halyard Health, Inc.