STERIS Corp. issues $2 special dividend to shareholders as it raises earnings expecations for fiscal 2010

STERIS Corp. will pay shareholders a $2-per-share special dividend in December and likely will be more profitable than expected in fiscal 2010, largely as a result of past cost cutting, and fortuitous trends in foreign currency rates and raw materials costs. Because of its strong cash position, STERIS director approved a special $2-a-share dividend, which will return $120 million to shareholders.

Updated 1:41 p.m.

MENTOR, Ohio — STERIS Corp. will pay shareholders a $2-per-share special dividend in December and likely will be more profitable than expected in fiscal 2010, largely as a result of past cost cutting and fortuitous trends in foreign currency rates and raw materials costs.

The maker of infection prevention, decontamination and life sciences technologies and products on Tuesday reported higher profits but lower revenue in its second fiscal 2010 quarter than a year ago. Diluted earnings per share rose 13 percent to 54 cents from 48 cents in that time, while net income rose to $32.1 million from $28. 8 million, a rise of 11 percent.

Quarterly profit rose from a year ago at the same time revenue fell – 3 percent to $314.2 million from $323.2 million. That despite a $2 million bump up in hand sanitizer sales as a result of the H1N1 flu pandemic.

Profit and revenue exceeded the expectations of most securities analysts, who thought the company would earn 44 cents a share on revenue of $296.6 million, according to a Thomson Reuters IBES survey.

Based on its performance in the first half of fiscal 2010, STERIS updated its full-year earnings guidance Tuesday. “Our strong start to the year on the earnings front has caused us to increase our [earnings per share] expectations for the full year to a range of $1.90 to $2.05,” Walt Rosebrough, the company’s president and chief executive, told analysts and investors during a conference call. The company’s prior per-share earnings guidance was for between $1.80 to $2.00.

STERIS did not change its revenue expectations for the year ending March 31 — “from flat to down in single digits” from the prior fiscal year, Rosebrough said.

However, the company did put a number on the drop in revenue expected in the fiscal year for its System 1 tabletop medical equipment sterilizer — $20 million. That figure includes loss of capital equipment, service and supplies sales. “That’s not materially different [from] our past thinking, we just hadn’t described that before,” he said.

In January, STERIS agreed with the U.S. Food and Drug Administration (FDA) to stop selling System 1 to new customers and to phase out sales and service of the sterilizer to existing customers over two years. The FDA warned STERIS in 2008 that it probably should have notified the regulator about significant changes it had made to the sterilizer over its two-decade life. The company has applied to the FDA to sell a newly designed replacement system.

Because of its strong cash position, STERIS directors decided to return $120 million to shareholders with a special dividend of $2.00 per share to be paid with the regular quarterly dividend of 11 cents. The combined dividend is payable Dec. 22 to shareholders as of Nov. 24.

Shares of STERIS were up $1.18, or almost 4 percent, to $30.95 in mid-day trading on the New York Stock Exchange, according to Yahoo! Finance.

Rosebrough announced a leadership change for the STERIS life science business.” Bob Moss, who’s been with STERIS almost 20 years, has expanded his role to group president of our life science and Isomedix businesses,” Rosebrough said. “Bob has proven to be a tremendous leader and diligent operator in the Isomedix business and we are excited for him to take on a broader role.”

Greg Blackmore, formerly executive vice president and group president of life sciences, left STERIS last week to take the new position of chief operating officer, North America for Midmark Corp., the medical, dental and veterinary equipment maker in Versailles, Ohio.