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Despite 'Uncertain' Year, STERIS Profits up in 4Q

by Brendon Nafziger, DOTmed News Associate Editor | May 07, 2010
Quarterly report
Closing a turbulent 2010 fiscal year, sterilizer maker STERIS, Inc. saw profits jump about 7 percent in its fourth quarter, netting $29.8 million or 50 cents per diluted share, against $27.8 million and 47 cents per diluted share from last year at this time, the Mentor, Ohio-based company announced Thursday morning before trading.

But sales slumped 4 percent to $332.1 million, compared with around $344.4 million in fourth quarter 2009. On a constant currency basis, the revenues fell 5 percent, the company said.

Excluding the restructuring charges net of tax, 4Q earnings were $33.2 million, or 55 cents per diluted share - two cents higher than projections from analysts, of about 53 cents per share, according to reports.
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All told, for fiscal 2010 the company reaped $128.5 million in profits, or $2.16 per diluted share, up 16 percent from the $110.7 million, or $1.86 per share, earned during fiscal 2009.

"Our people have performed admirably in a year filled with uncertainty," STERIS president and CEO Walt Rosebrough said in a statement. "We substantially improved profitability and cash flow during fiscal 2010 and delivered record earnings per share even in the face of revenue declines."

The company also announced a dividend payment of 11 cents per common share to be paid out to shareholders in the coming weeks.

The quarterly report comes at a time of change for the historic sterilizer company. Last week, the company announced it would shutter its old Erie, Pa. plant and shift the majority of employees to its Mentor, Ohio campus in order to better serve customers, the company said.

Although many of the 240 employees at Erie would be given a chance to move, some might lose their jobs, according to reports. The company expects to spend $11 million in Mentor, according to information released on Monday.

Last month, STERIS received permission from the U.S. Food and Drug Administration to market the System 1E, a reprocessor for heat-sensitive medical instruments, and the successor to the System 1, a widely used sterilizer the FDA urged customers to transition away from after the company made what the agency considered unapproved changes to the device.

SALES FORECAST

STERIS predicts 5 percent sales growth in fiscal 2010, with earnings per diluted share between $2 and $2.30 for the year, assuming flat or modest growth in its main businesses and excluding restructuring expenses and a one-time reduction in revenue due to its System 1 rebate program.

"We are entering the year with strong backlog and more normalized order patterns in our core markets compared to last year, in particular in the Healthcare segment. However, our ability to grow earnings will be somewhat hampered during fiscal 2011 as Customers transition away from SYSTEM 1," Rosebrough said.