Steris (STE) Misses Q2 EPS by 1c; Reaffirms

November 2, 2016 8:50 AM EDT

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Steris (NYSE: STE) reported Q2 EPS of $0.89, $0.01 worse than the analyst estimate of $0.90. Revenue for the quarter came in at $646.42 million versus the consensus estimate of $670.24 million.

GUIDANCE:

Steris sees FY2017 EPS of $3.85-$4.00, versus the consensus of $3.90.

“Sustained organic growth in aggregates and cement pricing, coupled with improved cost discipline and margin capture, contributed to significant year-over-year increases in operating cash flow and net income in the third quarter,” stated Tom Hill, CEO of Summit Materials. “Materials gross profit increased nearly 30% on a year over year basis, representing more than half of total gross profit in the period. Overall, total gross profit margin increased 290 basis points on a year-over-year basis to 40.3% in the third quarter 2016.”

“Total sales volumes increased across all lines of business in the third quarter, due mainly to the benefit of acquisitions completed during the past twelve months,” continued Hill. “On an organic basis, total sales volumes of aggregates and products declined due to a combination of severe summer weather in most of our core regional markets and tough prior-year comparisons in Vancouver. Looking ahead, we believe that our regional markets remain in the early stages of a multi-year recovery in public infrastructure, residential and non-residential construction spending, as supported by favorable long-term demographic trends,” continued Hill.

“For the nine months ended 2016, approximately 40% of our aggregates revenues were related to public infrastructure projects,” continued Hill. “Entering 2017, we anticipate an acceleration in public infrastructure spending from current levels, supported in part by the passage of the FAST Act and state-level funding.”

“We remain a disciplined acquirer of strategic assets that serve to further entrench Summit as a leader in markets where our scale and integrated model are proven competitive advantages,” stated Hill. “During the third quarter, we completed four small bolt-on acquisitions, including one transaction that serves to expand our materials distribution capabilities through two acquired terminals in the Louisiana market. We anticipate financial contributions from these transactions will begin to contribute meaningfully in 2017,” continued Hill.

“Net leverage declined to 4.3x at third quarter-end, as Adjusted EBITDA increased more than 20% on a year-over-year basis to $146.2 million,” stated Brian Harris, CFO of Summit Materials. “At quarter-end, we had more than $240 million of cash and availability under our revolving credit facility, providing us with sufficient flexibility with which to support the growth of our existing business. We continue to maintain a high degree of capital discipline, even as we regularly review potential acquisition opportunities that align with our materials-based growth strategy. As before, we remain committed to reducing outstanding net leverage, with the objective of achieving a net debt to Adjusted EBITDA metric of 4.0x by year-end 2016.”

“We are pleased to host our first-ever Investor Day in Houston on November 15, 2016, which will be streamed live via webcast in the investor relations section of our corporate website,” noted Hill. “We believe Summit is uniquely positioned for profitable expansion in the years ahead and intend to provide important details around our roadmap for strategic growth at this important event.”

For earnings history and earnings-related data on Steris (STE) click here.



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