ALPHARETTA, Ga., Nov. 1, 2017 /PRNewswire/ -- Halyard Health, Inc.
(NYSE: HYH) today reported third quarter 2017 results and raised
its full-year 2017 adjusted diluted earnings per share outlook.
Executive Summary
- Third quarter 2017 net sales totaled $401 million, compared to $398 million in the same period last year.
- Net income for the third quarter 2017 was $17 million compared to net income of
$9 million in the third quarter a
year ago. Third quarter adjusted net income was $28 million compared to adjusted net income of
$23 million in the prior year.
- Third quarter diluted earnings per share were $0.35 compared to $0.19 diluted earnings per share in the third
quarter 2016. Adjusted diluted earnings per share in the quarter
were $0.60, compared to $0.48 in the prior year.
- Year-to-date net sales totaled $1,196
million, up 1 percent, compared to the year-ago period.
- Through nine months, diluted earnings per share were
$0.98 compared to $0.63 a year ago. Adjusted diluted earnings per
share for the first nine months were $1.58, compared to $1.47 in the prior year.
- Halyard separately announced an agreement to sell the S&IP
business to Owens & Minor for $710
million. The divestiture accelerates the company's
transformation into a pure-play medical devices business operating
in attractive end-markets, enables increased management focus, and
provides the company with additional financial capacity to pursue
future growth opportunities.
- The company raised its full-year 2017 adjusted diluted earnings
per share outlook to $2.03 to $2.13
from $1.85 to $2.05.
"Halyard delivered another strong quarter, driven by momentum in
our Medical Devices segment. We continued to deliver against our
transformation strategy, with Medical Devices delivering net sales
and operating profit growth of four and 18 percent, respectively.
We also reached another milestone in our evolution with the
agreement to sell the S&IP business to Owens & Minor. This
transaction accelerates our transformation as a pure-play medical
devices business and positions the S&IP franchise and its
employees for success through more focused ownership," said
Joe Woody, Halyard chief executive
officer. "As a result of our year-to-date performance, we're
raising our full-year adjusted diluted earnings per share outlook
to $2.03 - $2.13. We're looking
forward to our future as a pure-play medical devices company, and
expect to be well-positioned to succeed operating in higher growth
and higher margin end-markets."
Third Quarter 2017 Operating Results
Net sales totaled $401 million,
compared to $398 million a year ago.
Performance was driven by 2 percent higher volumes compared to the
prior year, which was partially offset by 1 percent lower selling
prices.
Operating profit was $29 million
in the third quarter compared to $21
million in 2016. On an adjusted basis, operating profit was
$48 million compared to $43 million in the prior year. Volume growth in
Medical Devices and lower selling, general and administrative
expense were partially offset by lower selling prices in Surgical
and Infection Prevention (S&IP).
Adjusted operating profit for the third quarter excludes
$8 million for divestiture-related
charges, $2 million for
acquisition-related charges, $4
million for litigation matters and $5
million for intangible amortization expense.
Adjusted EBITDA for the third quarter, excluding
divestiture-related charges, acquisition-related charges and
litigation expenses, was $59 million,
compared to $53 million a year
ago.
Third Quarter 2017 Business Segment Results
Medical Devices
Net sales of Medical Devices in the third quarter 2017 totaled
$151 million, a 4 percent increase
compared to the third quarter 2016. Volumes increased 4 percent.
Performance was driven by continued volume growth in interventional
pain and surgical pain, as well as respiratory health resulting
from the conversion of a new GPO contract for oral care.
Operating profit for Medical Devices was $38 million, an 18 percent increase compared to
the prior year. Performance was driven by higher sales volumes and
the timing of spending related to research and development, and
selling, general and administrative expense.
Surgical and Infection Prevention
S&IP net sales were $246
million, a 1 percent decrease compared to the third quarter
of 2016. Volumes for the quarter were flat. Continued volume growth
in exam gloves was offset by lower volume in other product
categories. Lower selling prices of 2 percent were concentrated in
exam gloves.
S&IP operating profit for the quarter was $18 million compared to $22 million in the third quarter of 2016.
Performance was impacted by lower selling prices, which was
partially offset by favorable currency exchange rates.
Year-To-Date Results
Medical Devices
In the first nine months of 2017, net sales of Medical Devices
totaled $446 million, up 8 percent
compared to the comparable period in 2016. Sales volumes increased
8 percent bolstered by Corpak. Organic sales volumes grew 3
percent, driven by higher volume across all product categories.
Year-to-date, operating profit for Medical Devices was
$116 million, a 28 percent increase
compared to the first nine months of 2016. Results were driven by
higher sales volumes and manufacturing cost savings.
Surgical and Infection Prevention
In the first nine months of 2017, S&IP net sales totaled
$740 million, a 3 percent decrease
compared to the prior year. Sales volumes increased 1 percent
driven by continued strong demand for exam gloves. Sales volume
growth was offset by 3 percent lower selling prices primarily in
exam gloves.
Year-to-date, S&IP operating profit was $51 million compared to $72 million in the first nine months of 2016.
Performance was driven by higher sales volumes, favorable currency
exchange rates, and manufacturing cost savings offset by lower
selling prices and higher commodity costs.
Balance Sheet and Cash Flow
Total debt at the end of the third quarter 2017 was $580 million, consisting of a secured term loan
and unsecured notes, compared to total debt of $579 million at the end of 2016.
Cash from operations for the third quarter was $23 million compared to $50 million a year ago. Capital spending for the
third quarter was $14 million, up
from $8 million compared to 2016. The
company's cash balance was $166
million at the end of the third quarter 2017, compared to
$114 million at the end of 2016.
2017 Outlook and Key Planning Assumptions
The company is revising its previously announced adjusted
full-year 2017 outlook.
- Adjusted diluted earnings per share are now expected to range
between $2.03 and $2.13.
Based on current trends, the company is updating several of its
key planning assumptions, as described below:
- S&IP sales, excluding sales to Kimberly-Clark, are now
expected to range from down 1 percent to down 3 percent.
- S&IP net sales to Kimberly-Clark are now expected to range
between $50 and $55 million.
- Inflation in key inputs of $10 to $15
million.
- The adjusted effective tax rate is anticipated to be between 31
and 33 percent.
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:
- Adjusted net income
- Adjusted diluted earnings per share
- Adjusted gross and operating profit
- Adjusted effective tax rate
- Adjusted EBITDA
- Free cash flow
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:
- Divestiture costs relating to the sale of the S&IP
business.
- 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 rebranding and other supply chain transition costs.
Going forward, these costs are not expected to be material;
therefore, they will no longer be excluded from adjusted
earnings.
- 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.
- Prior periods impact of tax regulatory changes.
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 Webcast
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 United
States. A replay of the call will be available at
noon ET today by calling 877-344-7529
in the United States and entering
passcode 10113544. 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 eliminating pain, speeding recovery and preventing
infection 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 reducing the use of
opioids while helping patients move from surgery to recovery and
preventing healthcare-associated infections. Halyard's business
segments - Medical Devices and Surgical and Infection Prevention
(S&IP) - 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 STATEMENTS
|
(unaudited)
|
(in millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Net
Sales
|
$
|
401.4
|
|
|
$
|
397.5
|
|
|
1.0
|
%
|
|
$
|
1,196.2
|
|
|
$
|
1,182.3
|
|
|
1.2
|
%
|
Cost of products
sold
|
258.1
|
|
|
259.5
|
|
|
(0.5)
|
|
|
765.4
|
|
|
767.1
|
|
|
(0.2)
|
|
Gross
Profit
|
143.3
|
|
|
138.0
|
|
|
3.8
|
|
|
430.8
|
|
|
415.2
|
|
|
3.8
|
|
Research and
development expenses
|
10.3
|
|
|
10.9
|
|
|
(5.5)
|
|
|
28.1
|
|
|
29.1
|
|
|
(3.4)
|
|
Selling and general
expenses
|
101.2
|
|
|
100.3
|
|
|
0.9
|
|
|
302.5
|
|
|
301.0
|
|
|
0.5
|
|
Other expense,
net
|
3.0
|
|
|
5.9
|
|
|
N.M.
|
|
|
15.9
|
|
|
13.5
|
|
|
N.M.
|
|
Operating
Profit
|
28.8
|
|
|
20.9
|
|
|
37.8
|
|
|
84.3
|
|
|
71.6
|
|
|
17.7
|
|
Interest
income
|
0.7
|
|
|
0.2
|
|
|
N.M.
|
|
|
1.6
|
|
|
0.5
|
|
|
N.M.
|
|
Interest
expense
|
(8.1)
|
|
|
(8.4)
|
|
|
(3.6)
|
|
|
(23.5)
|
|
|
(24.7)
|
|
|
(4.9)
|
|
Income Before
Income Taxes
|
21.4
|
|
|
12.7
|
|
|
68.5
|
|
|
62.4
|
|
|
47.4
|
|
|
31.6
|
|
Income tax
provision
|
(4.8)
|
|
|
(3.6)
|
|
|
33.3
|
|
|
(15.9)
|
|
|
(17.6)
|
|
|
(9.7)
|
|
Net
Income
|
$
|
16.6
|
|
|
$
|
9.1
|
|
|
82.4
|
|
|
$
|
46.5
|
|
|
$
|
29.8
|
|
|
56.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
7.4
|
|
|
8.2
|
|
|
(9.8)
|
|
|
21.9
|
|
|
24.2
|
|
|
(9.5)
|
|
Income tax
provision
|
4.8
|
|
|
3.6
|
|
|
33.3
|
|
|
15.9
|
|
|
17.6
|
|
|
(9.7)
|
|
Depreciation and
amortization
|
16.1
|
|
|
16.6
|
|
|
(3.0)
|
|
|
48.5
|
|
|
48.4
|
|
|
0.2
|
|
EBITDA
|
$
|
44.9
|
|
|
$
|
37.5
|
|
|
19.7
|
|
|
$
|
132.8
|
|
|
$
|
120.0
|
|
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.35
|
|
|
$
|
0.19
|
|
|
84.2
|
%
|
|
$
|
1.00
|
|
|
$
|
0.64
|
|
|
56.3
|
%
|
Diluted
|
0.35
|
|
|
0.19
|
|
|
84.2
|
|
|
0.98
|
|
|
0.63
|
|
|
55.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
46.8
|
|
|
46.7
|
|
|
|
|
46.7
|
|
|
46.6
|
|
|
|
Diluted
|
47.6
|
|
|
47.2
|
|
|
|
|
47.4
|
|
|
47.0
|
|
|
|
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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
As
reported
|
$
|
143.3
|
|
|
$
|
138.0
|
|
|
$
|
430.8
|
|
|
$
|
415.2
|
|
|
$
|
28.8
|
|
|
$
|
20.9
|
|
|
$
|
84.3
|
|
|
$
|
71.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestiture-related
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.1
|
|
|
—
|
|
|
8.1
|
|
|
—
|
|
Spin-related
transition charges
|
—
|
|
|
4.5
|
|
|
(1.6)
|
|
|
4.6
|
|
|
—
|
|
|
6.7
|
|
|
(0.8)
|
|
|
10.6
|
|
Acquisition-related
charges
|
1.2
|
|
|
1.5
|
|
|
2.4
|
|
|
5.0
|
|
|
2.0
|
|
|
4.4
|
|
|
5.3
|
|
|
14.7
|
|
Litigation and
legal
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
|
5.1
|
|
|
17.3
|
|
|
15.1
|
|
Intangibles
amortization
|
1.0
|
|
|
0.8
|
|
|
2.9
|
|
|
2.3
|
|
|
5.3
|
|
|
5.6
|
|
|
16.1
|
|
|
16.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
145.5
|
|
|
$
|
144.8
|
|
|
$
|
434.5
|
|
|
$
|
427.1
|
|
|
$
|
47.8
|
|
|
$
|
42.7
|
|
|
$
|
130.3
|
|
|
$
|
128.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
As
reported
|
$
|
21.4
|
|
|
$
|
12.7
|
|
|
$
|
62.4
|
|
|
$
|
47.4
|
|
|
$
|
(4.8)
|
|
|
$
|
(3.6)
|
|
|
$
|
(15.9)
|
|
|
$
|
(17.6)
|
|
Effective tax
rate, as
reported
|
|
|
|
|
|
|
|
|
22.4
|
%
|
|
28.3
|
%
|
|
25.5
|
%
|
|
37.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestiture-related
charges
|
8.1
|
|
|
—
|
|
|
8.1
|
|
|
—
|
|
|
(3.1)
|
|
|
—
|
|
|
(3.1)
|
|
|
—
|
|
Spin-related
transition charges
|
—
|
|
|
6.7
|
|
|
(0.8)
|
|
|
10.6
|
|
|
—
|
|
|
(2.3)
|
|
|
0.2
|
|
|
(3.9)
|
|
Acquisition-related
charges
|
2.0
|
|
|
4.4
|
|
|
5.3
|
|
|
14.7
|
|
|
(0.8)
|
|
|
(1.7)
|
|
|
(2.0)
|
|
|
(5.6)
|
|
Litigation and
legal
|
3.6
|
|
|
5.1
|
|
|
17.3
|
|
|
15.1
|
|
|
(1.3)
|
|
|
(1.9)
|
|
|
(6.5)
|
|
|
(5.7)
|
|
Intangibles
amortization
|
5.3
|
|
|
5.6
|
|
|
16.1
|
|
|
16.5
|
|
|
(2.0)
|
|
|
(2.3)
|
|
|
(6.0)
|
|
|
(6.2)
|
|
Regulatory tax
changes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
40.4
|
|
|
$
|
34.5
|
|
|
$
|
108.4
|
|
|
$
|
104.3
|
|
|
$
|
(12.0)
|
|
|
$
|
(11.8)
|
|
|
$
|
(33.3)
|
|
|
$
|
(35.3)
|
|
Effective tax
rate, as
adjusted
|
|
|
|
|
|
|
|
|
29.7
|
%
|
|
34.2
|
%
|
|
30.7
|
%
|
|
33.8
|
%
|
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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
As
reported
|
$
|
16.6
|
|
|
$
|
9.1
|
|
|
$
|
46.5
|
|
|
$
|
29.8
|
|
Diluted EPS, as
reported
|
$
|
0.35
|
|
|
$
|
0.19
|
|
|
$
|
0.98
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
|
|
Divestiture-related
charges
|
5.0
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
Spin-related
transition charges
|
—
|
|
|
4.4
|
|
|
(0.6)
|
|
|
6.7
|
|
Acquisition-related
charges
|
1.2
|
|
|
2.7
|
|
|
3.3
|
|
|
9.1
|
|
Litigation and
legal
|
2.3
|
|
|
3.2
|
|
|
10.8
|
|
|
9.4
|
|
Intangibles
amortization
|
3.3
|
|
|
3.3
|
|
|
10.1
|
|
|
10.3
|
|
Thailand statutory
tax rate change
|
—
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
As adjusted
non-GAAP
|
$
|
28.4
|
|
|
$
|
22.7
|
|
|
$
|
75.1
|
|
|
$
|
69.0
|
|
Diluted EPS, as
adjusted
|
$
|
0.60
|
|
|
$
|
0.48
|
|
|
$
|
1.58
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
EBITDA, as
reported
|
$
|
44.9
|
|
|
$
|
37.5
|
|
|
$
|
132.8
|
|
|
$
|
120.0
|
|
|
|
|
|
|
|
|
|
Divestiture-related
charges
|
8.1
|
|
|
—
|
|
|
8.1
|
|
|
—
|
|
Spin-related
transition charges
|
—
|
|
|
6.7
|
|
|
(0.8)
|
|
|
10.6
|
|
Acquisition-related
charges
|
1.9
|
|
|
4.0
|
|
|
5.0
|
|
|
14.4
|
|
Litigation and
legal
|
3.6
|
|
|
5.1
|
|
|
17.3
|
|
|
15.1
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
58.5
|
|
|
$
|
53.3
|
|
|
$
|
162.4
|
|
|
$
|
160.1
|
|
HALYARD HEALTH,
INC.
|
NON-GAAP
RECONCILIATIONS
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cash provided by
operating activities
|
$
|
23.4
|
|
|
$
|
49.9
|
|
|
$
|
80.1
|
|
|
$
|
143.9
|
|
Capital
expenditures
|
(14.0)
|
|
|
(7.6)
|
|
|
(30.6)
|
|
|
(21.7)
|
|
Free Cash
Flow
|
$
|
9.4
|
|
|
$
|
42.3
|
|
|
$
|
49.5
|
|
|
$
|
122.2
|
|
2017
OUTLOOK
|
|
|
|
|
|
|
|
|
|
|
Estimated
Range
|
Adjusted diluted
earnings per share
|
$
|
2.03
|
|
to
|
$
|
2.13
|
|
Amortization
|
(0.28)
|
|
to
|
(0.28)
|
|
Divestiture-related charges
|
(0.33)
|
|
to
|
(0.26)
|
|
Spin-related
transition expenses
|
0.01
|
|
to
|
0.01
|
|
Acquisition
related charges
|
(0.09)
|
|
to
|
(0.07)
|
|
Other
|
(0.38)
|
|
to
|
(0.28)
|
|
Diluted earnings per
share (GAAP)
|
$
|
0.96
|
|
to
|
$
|
1.25
|
|
HALYARD HEALTH,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(unaudited)
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
166.1
|
|
|
$
|
113.7
|
|
Accounts receivable,
net of allowances
|
194.4
|
|
|
190.1
|
|
Inventories
|
300.5
|
|
|
272.5
|
|
Prepaid expenses and
other current assets
|
20.0
|
|
|
17.2
|
|
Total Current
Assets
|
681.0
|
|
|
593.5
|
|
Property, Plant
and Equipment, net
|
261.1
|
|
|
260.8
|
|
Goodwill
|
1,032.0
|
|
|
1,029.0
|
|
Other Intangible
Assets, net
|
154.8
|
|
|
169.8
|
|
Deferred Tax
Assets
|
16.3
|
|
|
15.1
|
|
Other
Assets
|
3.7
|
|
|
3.6
|
|
TOTAL
ASSETS
|
$
|
2,148.9
|
|
|
$
|
2,071.8
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Trade accounts
payable
|
$
|
172.5
|
|
|
$
|
173.1
|
|
Accrued
expenses
|
146.9
|
|
|
151.3
|
|
Total Current
Liabilities
|
319.4
|
|
|
324.4
|
|
Long-Term
Debt
|
580.4
|
|
|
579.0
|
|
Deferred Tax
Liabilities
|
36.5
|
|
|
35.8
|
|
Other Long-Term
Liabilities
|
31.9
|
|
|
30.1
|
|
TOTAL
LIABILITIES
|
968.2
|
|
|
969.3
|
|
Stockholders'
Equity
|
1,180.7
|
|
|
1,102.5
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
2,148.9
|
|
|
$
|
2,071.8
|
|
HALYARD HEALTH,
INC.
|
CONDENSED
CONSOLIDATED CASH FLOW STATEMENTS
|
(unaudited)
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Operating
Activities
|
|
|
|
|
|
|
|
Net income
|
$
|
16.6
|
|
|
$
|
9.1
|
|
|
$
|
46.5
|
|
|
$
|
29.8
|
|
Depreciation and
amortization
|
16.1
|
|
|
16.6
|
|
|
48.5
|
|
|
48.4
|
|
Net loss on asset
dispositions
|
0.1
|
|
|
3.0
|
|
|
0.1
|
|
|
3.8
|
|
Changes in operating
assets and liabilities
|
(14.7)
|
|
|
18.4
|
|
|
(36.5)
|
|
|
43.8
|
|
Deferred income taxes
and other
|
5.3
|
|
|
2.8
|
|
|
21.5
|
|
|
18.1
|
|
Cash Provided by
Operating Activities
|
23.4
|
|
|
49.9
|
|
|
80.1
|
|
|
143.9
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
(14.0)
|
|
|
(7.6)
|
|
|
(30.6)
|
|
|
(21.7)
|
|
Acquisition of
business, net of cash acquired
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(175.0)
|
|
Proceeds from
dispositions of property
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
Cash Used in
Investing Activities
|
(14.0)
|
|
|
(7.5)
|
|
|
(30.5)
|
|
|
(196.7)
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Line of credit
facility proceeds
|
—
|
|
|
—
|
|
|
—
|
|
|
72.0
|
|
Line of credit
facility repayments
|
—
|
|
|
(35.0)
|
|
|
—
|
|
|
(62.0)
|
|
Purchase of treasury
stock
|
—
|
|
|
—
|
|
|
(2.0)
|
|
|
(0.9)
|
|
Proceeds from the
exercise of stock options
|
1.5
|
|
|
0.2
|
|
|
2.3
|
|
|
0.2
|
|
Cash Provided by
(Used in) Financing Activities
|
1.5
|
|
|
(34.8)
|
|
|
0.3
|
|
|
9.3
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
0.4
|
|
|
(0.1)
|
|
|
2.5
|
|
|
0.7
|
|
Increase
(Decrease) in Cash and Cash Equivalents
|
11.3
|
|
|
7.5
|
|
|
52.4
|
|
|
(42.8)
|
|
Cash and Cash
Equivalents - Beginning of Period
|
154.8
|
|
|
79.2
|
|
|
113.7
|
|
|
129.5
|
|
Cash and Cash
Equivalents - End of Period
|
$
|
166.1
|
|
|
$
|
86.7
|
|
|
$
|
166.1
|
|
|
$
|
86.7
|
|
HALYARD HEALTH,
INC.
|
SELECTED BUSINESS
SEGMENT DATA
|
(unaudited)
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
Medical
Devices
|
$
|
150.7
|
|
|
$
|
145.2
|
|
|
3.8
|
%
|
|
$
|
445.7
|
|
|
$
|
413.4
|
|
|
7.8
|
%
|
Surgical and
Infection Prevention
|
246.1
|
|
|
248.8
|
|
|
(1.1)
|
|
|
740.0
|
|
|
760.2
|
|
|
(2.7)
|
|
Corporate and
Other(a)
|
4.6
|
|
|
3.5
|
|
|
31.4
|
|
|
10.5
|
|
|
8.7
|
|
|
20.7
|
|
Total Net
Sales
|
$
|
401.4
|
|
|
$
|
397.5
|
|
|
1.0
|
|
|
$
|
1,196.2
|
|
|
$
|
1,182.3
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
|
|
|
|
|
|
|
|
|
|
Medical
Devices(b)
|
$
|
37.6
|
|
|
$
|
31.9
|
|
|
17.9
|
%
|
|
$
|
116.3
|
|
|
$
|
90.6
|
|
|
28.4
|
%
|
Surgical and
Infection Prevention(c)
|
17.6
|
|
|
22.2
|
|
|
(20.7)
|
|
|
50.9
|
|
|
71.9
|
|
|
(29.2)
|
|
Corporate and
Other(d)
|
(23.4)
|
|
|
(27.3)
|
|
|
N.M.
|
|
|
(67.0)
|
|
|
(77.4)
|
|
|
N.M.
|
|
Other (expense)
income, net(e)
|
(3.0)
|
|
|
(5.9)
|
|
|
N.M.
|
|
|
(15.9)
|
|
|
(13.5)
|
|
|
N.M.
|
|
Total Operating
Profit
|
$
|
28.8
|
|
|
$
|
20.9
|
|
|
37.8
|
|
|
$
|
84.3
|
|
|
$
|
71.6
|
|
|
17.7
|
|
|
|
(a)
|
Corporate and Other
net sales include sales of non-healthcare products to
Kimberly-Clark.
|
(b)
|
Medical Devices
operating profit includes $5 million of amortization expense for
each of the three months ended September 30, 2017 and 2016,
and $16 million and $16 million, respectively, in the nine months
ended September 30, 2017 and 2016.
|
(c)
|
S&IP operating
profit includes $0.2 million of amortization expense for each of
the three months ended September 30, 2017 and 2016, and $0.6
million in each of the nine months ended September 30, 2017
and 2016.
|
(d)
|
Corporate and Other
for the three and nine months ended September 30, 2017
includes $14 million and $54 million, respectively, of general
expenses, $8 million and $8 million, respectively of
Divestiture-related costs which were specifically identified
beginning in the third quarter of this year, $2 million and $5
million, respectively, of acquisition-related expenses and $0.5
million of income and $0.3 million of costs, respectively, related
to Corporate Sales. Corporate and other for the three and nine
months ended September 30, 2016 includes $16 million and $48
million, respectively, of general expenses, $4 million and $15
million, respectively, of acquisition-related expenses, $7 million
and $11 million, respectively, of post spin-related transition
expenses, and $0.4 million and $4 million, respectively, of costs
related to Corporate Sales.
|
(e)
|
Other (expense)
income, net includes $4 million and $17 million, respectively,
related to legal expenses and litigation for the three and nine
months ended September 30, 2017 compared to $5 million and $15
million, respectively, in the three and nine months ended
September 30, 2016.
|
N.M. - not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
- Net Sales vs. Prior Year
|
|
|
Changes Due
To
|
Quarter-to-date
|
Total
|
|
Volume(a)
|
|
Pricing/Mix
|
|
Currency
|
|
Other(b)
|
Consolidated
|
1
|
%
|
|
2
|
%
|
|
(1)
|
%
|
|
—
|
%
|
|
—
|
%
|
Medical
Devices
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Surgical and
Infection Prevention
|
(1)
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-date
|
|
|
|
|
|
|
|
|
|
Consolidated
|
1
|
%
|
|
2
|
%
|
|
(2)
|
%
|
|
—
|
%
|
|
1
|
%
|
Medical
Devices
|
8
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
5
|
|
Surgical and
Infection Prevention
|
(3)
|
|
|
1
|
|
|
(3)
|
|
|
—
|
|
|
(1)
|
|
|
|
(a)
|
Quarter-to-date
volume changes in sales volume to Kimberly-Clark. Year-to-date
volume also excludes prorated sales of Corpak products for
comparability.
|
(b)
|
Other includes
changes in sales volume to Kimberly-Clark, prorated Corpak products
(year-to-date only) and rounding.
|
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SOURCE Halyard Health, Inc.