Looking forward for the full year 2010, the company expects earnings to be in the range of $1.80 per share to $2.00 per share. Revenues are anticipated to be flat to down mid-single digits from fiscal 2009 levels.
“We are very pleased with the year we were able to deliver, particularly in what turned out to be a more difficult environment for our Customers in the second half of our fiscal year,” said Walt Rosebrough, president and chief executive officer of STERIS. “We improved profitability and cash flow, even beyond our expectations, because our people continued to improve efficiencies. Looking ahead, we anticipate that fiscal 2010 will continue to be a challenging environment, but we remain encouraged by Customer response to our new products. In addition, the cost reduction actions already taken will continue to benefit our profitability. We believe that our new products, past cost control efforts, and continued efficiency gains will allow us to offset marketplace challenges.”
Fourth Quarter Results
As forecasted, fourth quarter revenues were lower than the previous year, primarily reflecting lower overall market demand, as well as the company’s efforts to reduce seasonality. Fiscal 2009 fourth quarter revenues were $344.4 million compared to $375.2 million in the fourth quarter of fiscal 2008, a decrease of 8%. On a constant currency basis, fourth quarter revenues declined 5%.
Fiscal 2009 fourth quarter net income was $27.8 million, or $0.47 per diluted share, against net income of $26.1 million, or $0.42 per diluted share, in the fourth quarter of fiscal 2008. Included in net income for the fourth quarter of fiscal 2009 are pre-tax restructuring charges totaling $1.8 million related to the third quarter 2009 cost reduction program. On the consolidated statements of income, $0.8 million of these charges were recorded as restructuring expenses and $1.0 million were recorded in cost of goods sold. Included in net income for the fourth quarter of fiscal 2008 are pre-tax restructuring charges totaling $16.5 million associated with the 2008 cost reduction program. On the consolidated statements of income, $12.4 million of these charges were recorded as restructuring expenses and $4.1 million were recorded in cost of goods sold.
Excluding these restructuring charges net of tax, fiscal 2009 fourth quarter net income was $28.9 million, or $0.49 per diluted share, against net income of $36.4 million, or $0.59 per diluted share in the fourth quarter of fiscal 2008.
Segment Results
Healthcare revenues in the quarter were $249.2 million compared with $264.2 million in the fourth quarter of fiscal 2008, a decrease of 6%. Strength in new products was more than offset by a slowdown in US hospital spending, as well as the company’s efforts to reduce seasonality. Backlog levels at quarter end were $119.8 million, an increase of 22% compared with the same time last year. Operating income was $38.3 million, compared with $34.6 million in the fourth quarter of fiscal 2008. Excluding restructuring charges, segment operating income was $39.9 million compared with $48.4 million in the prior year quarter driven by lower revenues.
Life Sciences fourth quarter revenues were $58.7 million against $73.0 million in the fourth quarter of fiscal 2008, a decline of 20%. Capital equipment sales declined 34% compared with a very strong fourth quarter of last year. Backlog levels at quarter end were $45.2 million, up of 2% compared with the prior year period. Life Sciences operating income was $4.0 million in the quarter compared with $5.6 million in the fourth quarter of fiscal 2008. Excluding restructuring charges, segment operating income was $4.2 million compared with $7.1 million in the prior year quarter driven by lower revenues.
Fiscal 2009 fourth quarter revenues for Isomedix Services were $34.2 million against $35.7 million in the same period last year, a decline of 4%. Revenues were affected by the previously disclosed sale of a Chicago-area facility in the second quarter of fiscal 2009 as well as some slowdown in spending by medical device Customers. Operating income was $7.9 million in the quarter compared with $7.1 million in the fourth quarter of last year. Included in operating income for the fourth quarter was a gain of $1.7 million related to the sale of the segment’s Rhode Island facility to a Customer. Excluding restructuring charges, segment operating income was $7.9 million in the fourth quarter of fiscal 2009 compared with $7.5 million in the prior year quarter.
