STERIS Corporation Announces Better Than Anticipated Fiscal 2013 Fourth Quarter and Full Year Results

• Double digit revenue growth in the fourth quarter and mid-single digit growth for the year 

• Reported and adjusted earnings per diluted share of $0.70 in the fourth quarter 

• Full year reported earnings per diluted share of $2.72 

• Full year adjusted earnings per diluted share of $2.34 

Mentor, Ohio (May 7, 2013) - STERIS Corporation (NYSE: STE) today announced financial results for its fiscal 2013 fourth quarter ended March 31, 2013.  As reported, fiscal 2013 fourth quarter revenue was $428.2 million compared with $390.2 million in the fourth quarter of fiscal 2012, with growth in all three segments.  Operating income for the fourth quarter was $65.1 million compared with $74.0 million in the fourth quarter of fiscal 2012.  Net income was $41.4 million, or $0.70 per diluted share, compared with net income of $44.2 million, or $0.76 per diluted share in the fourth quarter of fiscal 2012.  The reported financial results for both periods are adjusted below for several items, including the SYSTEM 1 Rebate Program.  Please refer to the attached schedules for additional information, including reconciliations of adjusted "non-GAAP financial measures" to reported results.

Adjusted Results
Adjusted revenue for the fourth quarter of fiscal 2013 was $426.2 million, an increase of 14% compared with adjusted revenue for the fourth quarter of fiscal 2012.  Adjusted operating income for the fourth quarter of fiscal 2013 increased to $65.4 million, compared with adjusted operating income for the fourth quarter of fiscal 2012 of $59.9 million.  Adjusted net income for the fourth quarter of fiscal 2013 increased 18% to $41.5 million, or $0.70 per diluted share, compared with adjusted net income for the fourth quarter of fiscal 2012 of $35.1 million, or $0.60 per diluted share, primarily due to the increased volume and a lower effective tax rate.

"We began this year with the expectation that fiscal 2013 would be a platform for growth," said Walt Rosebrough, President and Chief Executive Officer of STERIS.  "The people of STERIS executed our strategy and delivered performance that exceeded our expectations on both the top and bottom-line despite challenging year-over-year comparisons, market weakness in Europe and the first quarter of the Medical Device Excise Tax.  We plan to carry this momentum into fiscal 2014 to grow revenue and profits in-line with our long-term goals."  

Segment Results
  As reported, Healthcare revenue in the quarter was $317.4 million compared with $287.6 million in the fourth quarter of fiscal 2012.  Adjusted revenue increased 16% to $315.4 million in the fourth quarter of fiscal 2013 compared with $272.3 million in the fourth quarter of fiscal 2012. Contributing to the quarter, consumable revenue grew 42%, service revenue increased 29% and capital equipment was flat compared with the prior year.  Capital equipment, excluding SYSTEM 1E unit sales, grew 8%, with growth in both infection prevention and surgical products.  

As reported, Healthcare operating income was $43.0 million compared with $53.5 million in last year's fourth quarter.  Adjusted segment operating income increased 10% to $42.9 million in the fourth quarter of fiscal 2013 compared with $39.1 million in the fourth quarter of fiscal 2012.  The increase in adjusted operating income year-over-year was primarily due to the positive impact of acquisitions and increased margins of existing products, offset by the Medical Device Excise Tax expense.

As reported, Life Sciences fourth quarter revenue increased 9% to $64.3 million compared with $59.0 million in the fourth quarter of fiscal 2012.  Capital equipment increased 13%, service grew 8% and consumable revenue improved 6%.  Life Sciences operating income was $12.3 million compared with $10.8 million in the prior year fourth quarter, driven primarily by the increase in volume.

As reported, fiscal 2013 fourth quarter revenue for Isomedix Services was $45.8 million compared with $42.6 million in the same period last year, an increase of 7%.  Revenue benefitted from increased volumes from core medical device Customers as well as the acquisition of Biotest in March 2012.  Operating income was $12.1 million in the quarter compared with $11.7 million in the fourth quarter of last year.  The increase in operating income is largely attributable to the improved volume.

Full Year Results
As reported, fiscal 2013 revenue was $1.50 billion compared with $1.41 billion in fiscal 2012.  Adjusted revenue for fiscal 2013 increased 6% to $1.48 billion compared with $1.39 billion in fiscal 2012, with growth in all three business segments.

As reported, fiscal 2013 operating income was $242.8 million compared with $222.3 million in fiscal 2012.  Adjusted operating income was $219.7 million in fiscal 2013 compared with $214.5 million in fiscal 2012.

As reported, fiscal 2013 net income was $160.0 million, or $2.72 per diluted share, compared with net income of $136.1 million, or $2.31 per diluted share in fiscal 2012.  Adjusted net income for fiscal 2013 increased 5% to $137.8 million or $2.34 per diluted share compared with $131.1 million or $2.22 per diluted share in fiscal 2012.  

Please refer to the attached schedules for additional information, including reconciliations from these "non-GAAP financial measures" to reported results.

Cash Flow
Net cash provided by operations for fiscal 2013 was $227.8 million, compared with $149.4 million in fiscal 2012.  Free cash flow (see note 1) for fiscal 2013 was $140.4 million, compared with $82.7 million in the prior year.  The increase in free cash flow was driven by improvements in working capital management and a tax benefit related to European restructuring.

Dividend Announcement
The Company announced today that STERIS's Board of Directors has authorized a quarterly dividend of $0.19 per common share.  The dividend is payable June 25, 2013 to shareholders of record at the close of business on June 4, 2013.

Outlook
Based upon current trends, the Company expects revenue growth in the range of 8-10% in fiscal 2014 when compared with adjusted revenue in fiscal 2013.  Adjusted earnings per diluted share are anticipated to be in the range of $2.47 to $2.60 for the full fiscal year, including approximately ten cents for the Medical Device Excise Tax.  This outlook reflects certain key assumptions, some of which are listed below:

• Healthcare segment revenue is expected to grow low-double digits. 

• Life Sciences segment revenue is expected to grow mid-single digits. 

• Isomedix segment revenue growth is expected to be in the mid-single digits. 

• The Company has assumed the average forward exchange rates for the U.S. dollar and key international currencies as of March 29, 2013. 

• Adjusted EBIT as a percent of revenue is anticipated to be approximately 15.5%. 

• The adjusted effective tax rate is anticipated to be in the range of 34-35%. 

For the full fiscal year 2014, free cash flow (see note 1) is anticipated to be approximately $145 million. Capital expenditures are anticipated to be approximately $90 million, as the Company is continuing to invest in projects within its facilities that are designed to improve quality, reduce cost and add value to the current product offering.

Conference Call
In conjunction with this release, STERIS Corporation management will host a conference call today at 10:00 a.m. Eastern time.  The conference call can be heard live over the Internet at www.steris-ir.com or via phone by dialing 1-800-369-8428 in the United States and Canada, and 1-773-799-3378 internationally, then referencing the password "STERIS".

For those unable to listen to the conference call live, a replay will be available beginning at 12:00 p.m. Eastern time on May 7, 2013, either over the Internet at www.steris-ir.com or via phone by calling 1-800-839-2348 in the United States and Canada, and 1-203-369-3033 internationally.

Annual Meeting of Shareholders
The Company will hold its annual meeting of shareholders on July 25, 2013. Further information regarding the time and location will be provided in the Company's annual report and proxy materials.

About STERIS
The mission of STERIS Corporation is to provide a healthier today and safer tomorrow through knowledgeable people and innovative infection prevention, decontamination and health science technologies, products and services. The Company has approximately 6,000 dedicated employees around the world working together to supply a broad array of solutions by offering a combination of equipment, consumables and services to healthcare, pharmaceutical, industrial and government Customers. The Company is listed on the New York Stock Exchange under the symbol STE. For more information, visit www.steris.com.

 (1) Free cash flow is a non-GAAP number used by the Company as a measure to gauge its ability to fund future debt principal repayments, growth outside of core operations, repurchase common shares, and pay cash dividends.  Free cash flow is defined as cash flows from operating activities less purchases of property, plant, equipment and intangibles, net, plus proceeds from the sale of property, plant, equipment and intangibles. STERIS's calculation of free cash flow may vary from other companies. 

This press release and the referenced conference call may contain statements concerning certain trends, expectations, forecasts, estimates, or other forward-looking information affecting or relating to the Company or its industry, products or activities that are intended to qualify for the protections afforded "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 and other laws and regulations. Forward-looking statements speak only as to the date made, and may be identified by the use of forward-looking terms such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "targets," "forecasts," "outlook," "impact," "potential," "confidence," "improve," "optimistic," "deliver," "comfortable," "trend", and "seeks," or the negative of such terms or other variations on such terms or comparable terminology. Many important factors could cause actual results to differ materially from those in the forward-looking statements including, without limitation, disruption of production or supplies, changes in market conditions, political events, pending or future claims or litigation, competitive factors, technology advances, actions of regulatory agencies, and changes in laws, government regulations, labeling or product approvals or the application or interpretation thereof. Other risk factors are described herein and in the Company's Form 10-K and other securities filings. Many of these important factors are outside STERIS's control. No assurances can be provided as to any result or the timing of any outcome regarding matters described in  this press release or the conference call or otherwise with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, transition, cost reductions, business strategies, earnings or revenue trends or future financial results (including without limitation the regulatory matters related to SYSTEM 1E or its accessories). References to products, the consent decree, the transition or rebate program, or the class action settlement, are summaries only and should not be considered the specific terms of the decree, settlement, program or product clearance or literature. Unless legally required, the Company does not undertake to update or revise any forward-looking statements even if events make clear that any projected results, express or implied, will not be realized. Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (b) the possibility that market demand will not develop for new technologies, products or applications or the Company's  business initiatives will take longer, cost more or produce lower benefits than anticipated, (c) the possibility that application of or compliance with laws, court rulings, certifications, regulations, regulatory actions, including without limitation those relating to FDA warning notices or letters, government investigations, the April 20, 2010 consent decree, the SYSTEM 1E device, the outcome of any pending FDA requests, inspections or submissions, or other requirements or standards may delay, limit or prevent new product introductions, affect the production and marketing of existing products or services or otherwise affect Company performance, results, prospects or value, (d) the potential of international unrest, economic downturn or effects of currencies, tax assessments, adjustments, or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (e) the possibility of reduced demand, or reductions in the rate of growth in demand, for the Company's products and services, (f) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, including without limitation SYSTEM 1E and accessories thereto, or other results may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, or other issues or risks associated with our business, industry or initiatives including, without limitation, the consent decree,  and the transition from the SYSTEM 1 processing system and adjustments to related reserves, or those matters described in our Form 10-K for the year ended March 31, 2012 and other securities filings, may adversely impact company performance, results, prospects or value, (g) the possibility that anticipated financial results or benefits of recent acquisitions will not be realized or will be other than anticipated, (h) the effect of the contraction in credit availability, as well as the ability of our Customers and suppliers to adequately access the credit markets when needed, and (i) those risks described in our securities filings including our Annual Report on Form 10-K for the year ended March 31, 2012, and other securities filings.

Contact: Julie Winter, Director, Investor Relations at 440-392-7245.