Steris Plc (ireland) · NYSE:STE
Steris Plc (ireland) — STERIS — Investor Day (November 2005)
94 slides from Steris Plc (ireland)'s investor day presentation, Nov 15, 2005
Slide 1: STERIS Corporation's 2005 Analyst Day
STERIS Corporation’s 2005 Analyst Day Exhibit 99.1
Slide 2: Forward Looking Statements
Forward Looking Statements Except for historical information discussed, today’s presentation includes forward- looking statements that involve risks and uncertainties. Investors are cautioned that such statements are only predictions and that actual events or results may differ materially. Some of t
Slide 3: Today's Agenda
Today’s Agenda > STERIS Overview – Les Vinney > Financial Overview – Laurie Brlas > Healthcare – Chuck Immel > Luncheon – Dr. Steve Gordon, Chairman, Infectious Diseases, Cleveland Clinic Foundation > Life Sciences – Gerry Reis > Isomedix – Robert Moss > Wrap-up and Questions – Les Vinney
Slide 4: Today's Objectives
Today’s Objectives Our purpose in hosting this event is to provide you with: > An increased understanding and knowledge of STERIS > The opportunity to hear directly from the leadership of the Company > An enhanced perspective on our industry and opportunities > The ability to interact with our senio
Slide 5: Company Overview
Company Overview Presented by Les C. Vinney President and CEO
Slide 6: Reasons to Consider STERIS
Reasons to Consider STERIS > We are a market leader > Strong underlying industry demand > Stable company with strong financial position – Solid cash generation – Low debt levels > Substantial opportunities for growth in new markets and geographies > Consistent revenue stream, with 58% recurring reve
Slide 7: Over Arching Vision
Over Arching Vision To See The World Free From Infection And Contamination
Slide 8: Unique Product Offering
Unique Product Offering This balanced revenue stream allows us: – A stronger competitive position – Protection from capital spending cycles – Higher margins from consumables and service – The ability to offer customers a total solution Balanced Revenue Stream YTD Fiscal 2006 Capital Equipment 42% Se
Slide 9: Where you will find STERIS
Where you will find STERIS Healthcare (Hospitals and Surgical Centers) > OR and Critical Care Equipment > Sterile Processing Capital Equipment > Consumables > Equipment Maintenance and Process Consulting Life Sciences (Pharma Production & Research, Defense) > Pharmaceutical Production > Research and
Slide 10: Growth Drivers
Growth Drivers
Slide 11: Key Growth Drivers
Key Growth Drivers Market Growth Improve Execution Diversify Revenue Sustainable Profitable Growth
Slide 12: Industry Growth Drivers
Industry Growth Drivers > Healthcare: – Organic growth of 3-5% – Drivers = aging population, surgical procedure growth, hospital spending on construction, concerns over hospital acquired infections > Life Sciences: – Organic growth of 8-10% – Drivers = aging population, drug consumption, ongoing inv
Slide 13: Growth Strategy
Growth Strategy > Increase recurring revenues > Leverage our channel > Introduce new technologies > Adapt our technologies > Expand internationally Diversify revenue stream by product, service, market and geography
Slide 14: Recent Progress
Recent Progress > Integration of recent acquisitions going well – Browne product conversions in US – C-Max table launched in US – Cosmed contributing strongly > New Product Pipeline Strengthening > New Market Opportunities – Ambulance decontamination first orders in – Prototype testing with governme
Slide 15: New Innovations
New Innovations Reliance® Endoscope Reprocessor HAMO LS2000 Endoclean
Slide 16: Tackling Emerging Threats - MRSA
Tackling Emerging Threats - MRSA > MRSA: an antibiotic-resistant bacteria plaguing the UK. > Reviews of death certificates which mention MRSA show a 15 fold increase since 1992. > 300,000 cases of hospital acquired infection , causing around 5,000 deaths and costing the NHS as much as £1 billion. >
Slide 17: Actions to Improve Execution
Actions to Improve Execution Performance Transformation Initiative Targeting Improvements In: > Business Processes - Becoming a market-led organization - Focusing on lean operations > Management Processes - Improving planning, talent and performance management > Mindsets & Behaviors - Embracing a si
Slide 18: Why own STERIS?
Why own STERIS? > Market leader > Growing markets > Strong financial position > Substantial opportunities > Consistent revenue stream
Slide 19: STERIS Corporation's 2005 Analyst Day
STERIS Corporation’s 2005 Analyst Day
Slide 20: Laurie Brlas, Senior Vice President and CFO
STERIS Corporation’s 2005 Analyst Day Laurie Brlas, Senior Vice President and CFO
Slide 21: Fiscal 2006 Second Quarter Recap
Fiscal 2006 Second Quarter Recap 11.7% 9.5% Operating Margin…….. (11%) $0.27 $0.24 Diluted EPS…………… (13%) $18.9 $16.4 Net Income……………. Change (13%) $30.9 $27.0 Operating Profit……….. 42.1% 40.9% Gross Margin………….. 4% 111.5 116.2 Gross Profit……………. 7% $264.8 $284.4 Total Net Revenues….. Fiscal 2006 Qu
Slide 22: Second Quarter Revenue Mix
Second Quarter Revenue Mix Capital 43% Life Sciences 21% Isomedix 11% Healthcare 68% Service 35% Consumables 22% Fiscal 2006 Quarter Ended September 30, 2005
Slide 23: Second Quarter Segment Data
Second Quarter Segment Data 13% 4.4 5.0 Operating Profit……….. 18.1% 15.5% Operating Margin (1.3%) (1.2%) Operating Margin 15.2% 11.7% Operating Margin Isomedix Life Sciences Change Healthcare 32% $24.2 $32.0 Revenues……………… N/A (0.8) (0.7) Operating Profit……….. (5%) $61.4 $58.4 Revenues……………… (16%) 2
Slide 24: Cash Flow
Cash Flow * Fiscal 2006 Period Ended September 30, 2005 (in millions) 2Q06 $4.1 $28.6 Free Cash Flow………….. 15.0 14.6 Capital Spending……………. $19.1 $43.2 Cash from Operations….. 2Q05 1H06 1H05 $84.3 $61.4 22.7 25.5 $61.6 $35.8 * Free cash flow is defined as operating cash flow less purchases of proper
Slide 25: Financial Overview
Financial Overview
Slide 26: Total Company Revenue Growth
Total Company Revenue Growth 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr (in millions)
Slide 27: Healthcare Revenue Growth
Healthcare Revenue Growth (in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Slide 28: Life Sciences Revenue Growth
Life Sciences Revenue Growth (in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Slide 29: Isomedix Revenue Growth
Isomedix Revenue Growth (in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Slide 30: Gross and Operating Margins
Gross and Operating Margins 0.0 10.0 20.0 30.0 40.0 50.0 Operating Margin Gross Margin (percentage) Estimate
Slide 31: Quarterly Diluted Earnings Per Share
Quarterly Diluted Earnings Per Share $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Slide 32: Current Financial Position
Current Financial Position
Slide 33: Strong Financial Picture
Strong Financial Picture > Low level of debt > Strong free cash flow > Capacity to fund growth
Slide 34: Strong Cash from Operations
Strong Cash from Operations Cash From Operations and Capital Spending (in millions) $102 $142 $133 $123 $151 $51 $66 $59 $68 $56 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 Cash from Operations Capital Spending
Slide 35: Capital Spending
Capital Spending Healthcare 26% Life Sciences 8% Isomedix 35% R&D 5% IT 12% Other 14% Estimated Fiscal 2006 $60-65 million
Slide 36: Priorities for Cash
Priorities for Cash > Fund growth through acquisitions > Share buybacks – 1.6 million shares repurchased in first half fiscal 2006 > Fund dividend payments
Slide 37: Acquisition Criteria
Acquisition Criteria > Strong financial discipline and detailed integration > Strategic fit – Expand internationally – Leverage healthcare channel – Drive recurring revenues – Improve technology offering > Targeted accretion in year one > Exceed ROI hurdle rate of 15%
Slide 38: Quarterly Long-Term Debt-to-Capital
Quarterly Long-Term Debt-to-Capital Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY 2002 FY 2003 FY 2004 FY 2005 percentage FY 2006
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Slide 40: Fiscal 2006 Outlook
Fiscal 2006 Outlook Our Current Financial Outlook Including acquisitions and divestitures: > Revenue growth of 6-8% > Earnings per share of $1.30 to $1.34 (6-9% growth) > Free cash flow of $85-90 million (before acquisitions) > Capital spending approximately $60-$65 million > Depreciation and amorti
Slide 41: Charles L. Immel, Healthcare
STERIS Corporation’s 2005 Analyst Day Charles L. Immel, Healthcare
Slide 42: Business Definition
Business Definition BUSINESS UNITS PRODUCT MIX A leading provider of an integrated offering of equipment, consumables, and services to healthcare providers, enabling them to reduce cost and improve outcomes in the surgical and acute care environments. Sterile Processing Surgical & Critical Care Serv
Slide 43: Surgical Environment
Surgical Environment
Slide 44: Sterile Processing Environment
Sterile Processing Environment
Slide 45: Core Strengths
Core Strengths > Integrated offering of capital equipment, chemistries, and services > Service force of more than 1,000 professionals > Strong brand and channel in North America > Significant active installed base of equipment > Base of platform sterilization and disinfection technologies
Slide 46: Industry Overview
Industry Overview
Slide 47: Healthcare by Product Type Served Markets
Healthcare by Product Type STERIS STERIS STERIS STERIS Served Markets $1.8B $1.4B $1.6B $0.5B $15 – 17B Adjacent Markets • Total served market size greater than $5 billion with low to mid single digit growth rates • Global markets with regional differences in medical practice and a diverse set of co
Slide 48: Base Market Growth 5% CAGR
Base Market Growth 5% CAGR • “Boomers” continue to increase demand for acute care procedures • U.S. Hospital capacity gaps drive robust construction spend, particularly in surgical and critical care $0 $5 $10 $15 $20 $25 $30 Sources: F.W. Dodge, The Outlook for Healthcare Facilities (Q3 2005); Medte
Slide 49: STERIS"
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Slide 50: Strategy
Strategy > Create capital equipment and recurring revenue synergies > Expand product portfolio and leverage the North American sales and service channel > Introduce new technologies > Build international presence through selected partnerships, acquisitions, and new technology introductions
Slide 51: Sterile Processing Needs Assessment
Sterile Processing Needs Assessment > Instrument throughput, loss, handling > Chemistry management and effectiveness > Appropriate and consistent use of sterility assurance products > Appropriate asset and labor utilization Surgical Case Scheduled Organization and Preparation of Case Carts Transport
Slide 52: Recurring Revenue Growth
Recurring Revenue Growth Opportunity for Improved Recurring Revenue Growth Is Substantial on Current Installed Base of Sterile Processing Equipment * Cost/Cycle includes: Detergents, Indicators, Wraps/Trays & Service $330 million $125 million Annual Consumable Revenue Opportunity $10.00 $9.00 Averag
Slide 53: Recurring Revenue Growth
Recurring Revenue Growth > Launch of Synergy washer with validated chemistries, reducing cycle time from 45 minutes to 25 minutes > Acquisition and North America launch of Browne chemical indicators > Launch of concentrated form of liquid cleaning chemistry > Introduction of Steriltek consulting ser
Slide 54: Revenue From New Products
Revenue From New Products Key Product Introductions > Synergy ® Washer > Amsco ® Century ® Steam Sterilizers > Harmony TM LA Surgical Lights and Equipment Management Systems > Surgigraphic TM Surgical Table > Amsco ® Containers > Verify ® Chemical Indicators > Hamo ® Endoclean > Reliance ® EPS > CMA
Slide 55: International Expansion Update
International Expansion Update > Acquisition of Hamo Holding AG > Acquisition of Albert Browne, Ltd. chemical indicators > Acquisition of FH Surgical SAS > Joint venture with Shandong SHINVA Medical Instrument Company Ltd., Chinese sterilizer manufacturer > Added organizational infrastructure in Eur
Slide 56: Low Temperature Processing
Low Temperature Processing > Enter higher growth GI applications with differentiated HLD product offering Hamo® Endoclean Reliance® EPS > Improve market segmentation > Maintain global focus on surgical applications > Explore alternative technologies Sterilization High level disinfection Processing M
Slide 57: Expanded Offering in Surgical and Critical Care
Expanded Offering in Surgical and Critical Care > Revenue per room ranges from $35 thousand to $120 thousand > Develop appropriate price point for each segment > Capture larger portion of operating room spend > New Offerings CMAX ™ high-end surgical tables Lower tier surgical tables Harmony ™ “Lux C
Slide 58: Margin Improvement Actions
Margin Improvement Actions Unfavorable Factors • Steel, chemicals, fuel, wage, and benefit increases • Geographic mix • Initial impact and integration of acquisitions Improvement Initiatives • Global strategic sourcing investment • Lean initiatives • Manufacturing network optimization • Pricing acti
Slide 59: Summary
Summary > Underlying market demand driven by surgical procedure growth, new construction to address provider capacity gaps, and ongoing need to address nosocomial infections > STERIS has core strengths in channel and technology platforms > STERIS growth will be driven by expanding the offering (prod
Slide 60: Gerry Reis, Life Sciences
STERIS Corporation’s 2005 Analyst Day Gerry Reis, Life Sciences
Slide 61: Business Definition
Business Definition A global provider of decontamination and sterilization technologies, products and services used by research facilities, pharmaceutical companies, defense and industrial customers. Our offerings prevent contamination and the spread of infection and enhance the productivity of our
Slide 62: Revenue Mix
Revenue Mix BUSINESS UNITS PRODUCT MIX FY05 $251 Million Capital Equipment Consumables Services Pharma Production Research Defense and Industrial
Slide 63: Pharmaceutical and Research Business
Pharmaceutical and Research Business A Fundamentally Attractive Market Size and Growth in Current Applications Served Market Size (current segments) $ Millions Growth Rate Percent 6-8% 10-12% Research Pharma
Slide 64: Industry Drivers
Industry Drivers Observations: • Pharmaceutical industry consolidation continues • Generics and bio-pharmaceutical outpacing pharmaceutical • Increased regulatory scrutiny • Usage of validated cleaning chemistries increasing • Regulatory changes forcing innovation • Increased demand for vaccines ass
Slide 65: Pharmaceutical Capital
STERIS STERIS STERIS Pharmaceutical Capital Getinge Scientek Girton Fedegari MECO Mueller Other 6-8% North America $106M (35%) Europe $111M (38%) ROW $79M (27%) Getinge Fedegari Christ SBM/Bosch Stilmas Other Getinge Relimed Sakura SBM/Bosch Xinhua Zibo Other 5% 15-20% (‘05 – ‘10 CAGR) Total $300M
Slide 66: Research Capital
STERIS STERIS STERIS Research Capital 5-7% North America $200M (39%) Europe $162M (31%) ROW $154M (30%) 5% 5-12% Getinge Primus Miele Labconco Other Getinge Tuttnauer Tecniplast Miele Other Getinge Tecniplast Miele Xinhua Other (‘05 – ‘10 CAGR) Total $520M
Slide 67: Consumables
Consumables STERIS STERIS STERIS STERIS STERIS STERIS 14 % 12 % (‘05-'10 CAGR) 12 % Pharmaceutical Consumables Total $450M North America $200M (44%) Europe $180M (40%) ROW $70M (16%) 7 % 5 % ('05-'10 CAGR) 7 % North America $55M (49%) Europe $38M (34%) ROW $19M (17%) Research Consumables Total $112M
Slide 68: Service – A Competitive Advantage
Service – A Competitive Advantage Observations: • Our global network of service professionals represents a competitive advantage • Higher margin services and spare parts business is enabled by our capital equipment business • We are integrating our service and capital offering
Slide 69: Growth and Profitability Strategy
Growth and Profitability Strategy • New direction • Improve economics of capital business • Grow recurring revenues Turn Around of P&R New Market Opportunities Decontamination technologies and services for: • Ambulances • Patient care rooms and other facilities • Military/defense applications (aircr
Slide 70: A New Direction
A New Direction New Direction • Under Penetrated Segments: Research, generics, bio-tech, cosmetics, high-level containment laboratories • Under Penetrated Regions: Eastern Europe, Middle-East, China, Japan, Singapore Former Strategy Depth in the pharmaceutical aseptic core One-stop shop for capital
Slide 71: Improve Economics of Capital Business
Improve Economics of Capital Business 1. Redesign for lower cost manufacturing 2. Outsource non-critical components 3. Implement lean manufacturing practices 4. Balance loading of factories 5. Develop manufacturing capability in China Finn Aqua ® Pure Steam Generator Finn Aqua ® GMP Sterilizer
Slide 72: Grow Recurring Revenues
Grow Recurring Revenues > Launch Albert Browne sterility assurance products (Steraffirm™) > Prioritize sales and marketing around high-margin spare parts > Enhance offering around chemical storage and delivery > Integrate service offering with capital Cage-Klenz ® Cage Washing Detergents CIP 100 ®
Slide 73: New Market Opportunities
New Market Opportunities Life Sciences is working with defense agencies, first responders, and other industrial customers to explore the development and adaptation of its technologies for use in decontaminating: – Airplanes – Ambulances – Buildings – Food and Beverage Filling Lines
Slide 74: New Market Opportunities - Progress
New Market Opportunities - Progress • Partnerships with U.S Army’s Edgewood Chem-Bio Center and other organizations within the U.S. Department of Defense • Development of the only known gaseous technology capable of decontaminating both chemical and biological warfare agents • Multiple successful am
Slide 75: Summary
Summary > Strong underlying growth driven by generics and bio- pharmaceuticals, increased regulatory scrutiny, and aging of baby boomers > New leadership team in place along with a stabilized and competent sales and market team > Well positioned to leverage our success in under penetrated segments a
Slide 76: Robert Moss, STERIS Isomedix Services
STERIS Corporation’s 2005 Analyst Day Robert Moss, STERIS Isomedix Services
Slide 77: STERIS Isomedix Services Definition
STERIS Isomedix Services Definition STERIS Isomedix Services is a leading provider of sterilization, microbial reduction , and materials modification services to medical supply, pharmaceutical, consumer , and industrial customers. STERIS Isomedix Services provides its customers safe, effective proce
Slide 78: Revenue Mix
Revenue Mix MARKETS SERVED SERVICE MIX Gamma Ethylene Oxide FY06 EST Approx. $130 Million Healthcare Medical Consumer Healthcare Other
Slide 79: Key Strengths
Key Strengths > Responsive to customer needs > Capacity – monitor customer needs to meet demand > Proximity – we serve all key geographies in North America with 21 facilities > Flexibility – we offer all three key technologies, Gamma, EO and E-beam > Experience – we have been in the business for 32
Slide 80: Our Business – Geographic View
San Diego, CA Waukegan, IL Grand Prairie, TX South Plainfield, NJ Coventry, RI Our Business – Geographic View
Slide 81: Our Business – Gamma Irradiation
Our Business – Gamma Irradiation > Advantages > Proven reliability > Broad application > Limitations > Pharmaceuticals > Plastics > Industries / Products > Medical Devices & Supplies > Food Packaging & Spices > Labware
Slide 82: Slide 82
Slide 83: Our Business – Ethylene Oxide Sterilization
Our Business – Ethylene Oxide Sterilization > Advantages > Gentle process > High volume > Limitations > Liquids > Industries / Products > Medical Supplies and Kits > Food spices
Slide 84: Sales Process
Sales Process > Sales representatives calling on key customers > Process validation > Service agreements > Processing agreement – customer’s products come at will > Commitments – a specific quantity is determined at a specific price and schedule > Slot of time – customer reserved specific time for a
Slide 85: What is the Isomedix Process?
What is the Isomedix Process? > Provide specific treatment customer requires > Technical Consultation > Educational Seminars > Customers send their finished and fully packaged products to Isomedix for sterilization treatment > Receive and stage in an Isomedix warehouse > Transfer for the sterilizati
Slide 86: Industry Drivers
Industry Drivers > Demographics increasing medical device consumption worldwide > Medical commodity manufacturing moving to lower cost labor > In-house processing going contract / outsourcing > No rapid technology change foreseen > New applications developing
Slide 87: Industry Size
Industry Size > $443+ Million In NA > Includes in-house operations and industrial applications > Medical manufacturer consolidation in Europe and US > Migration to Asian contract manufacturing North America Europe Other STERIS 0% STERIS STERIS 0% $742+M Worldwide $120M $179M $443+M In-House Sterigen
Slide 88: Industry Competition
Industry Competition > Sterigenics – offers gamma, EO, E-beam and x-ray in 40 locations worldwide > Isotron – gamma, EO, and E-beam in 16 locations in eight countries (none in North America) > In-house Captive – trend towards outsourcing as technology/facilities age. Few investments being made > Oth
Slide 89: Growth Strategy – Key Strategic Imperatives
Growth Strategy – Key Strategic Imperatives > Business Growth > Grow revenue 8-10% AAGR > Improve “same store” operating income year over year > Customer Focus > Improve customer satisfaction > Operational Excellence > Enhance performance > Improve business process > Control costs > Leadership Excel
Slide 90: Business Model – Typical Product Life Cycle
Business Model – Typical Product Life Cycle Number of Years
Slide 91: Business Model – Isomedix Services Facility Life Cycle
Business Model – Isomedix Services Facility Life Cycle Number of Years
Slide 92: Business Model – Isomedix Services Advantage
Business Model – Isomedix Services Advantage Number of Years
Slide 93: Summary
Summary > STERIS Isomedix Services is well positioned to: > Take advantage of ongoing favorable market trends > Capitalize on new applications for irradiation and Ethylene Oxide > Expand into new geographies > Address strategic environment > Competition > Political and regulatory
Slide 94: STERIS Corporation's 2005 Analyst Day
STERIS Corporation’s 2005 Analyst Day