HRC
#Yes.
<UNK>, this is <UNK>.
Obviously we need to align our operating structure and the rest of our infrastructure along the lines of what we laid out at the investor conference.
We will start reporting that way as that structure gets put in place, and we start operating the business specifically that way.
We have a lot of work to do yet to get our organization infrastructure in place for the international part of the business.
Once that is put in place, then we will start reporting that way.
<UNK>, this is <UNK>.
I think at the investor conference we commented that we'll be doing that some time during 2016.
As <UNK> gets his team fully in place so we got Management accountability, matching the segments, as <UNK> said, that we laid out at the investor conference, we'll do that.
It'll probably be in the first half of 2016.
Yes, let me take a couple cuts at that, <UNK>.
One specific to your question on what do we see externally, and two, how does that translate into our 2016 guidance.
As I said in my comments, HCA obviously is a bit of an impactor for us, just because it's our biggest customer, but that's just timing.
We've won that business the last two years.
We got it in Q4 of last year, we're getting it in Q1 of ---+ last year being 2014, we're getting it in Q1 of 2016.
Ex-HCA, as I mentioned in my comments, orders for the quarter and certainly for the year were up year-over-year, and backlog at the end of the year is up year-over-year ---+ and reasonably healthfully up, also.
I think capital orders for the full year were up 9%, even though we had HCA slip out of 2015 and into 2016, while it was in 2014 last year.
We're not seeing any real changes in the stability and the strength of hospital CapEx.
We've got a pretty active order book right now, and I think we feel reasonably good that 2016 is going to look a lot like what we laid out at the investor conference, low- to mid-single digits, which I think is what our guidance is for 2016.
That said, as you flip from 2015 to 2016, our North America capital business was up 17% in revenue in 2015, and before we layer Welch Allyn into the portfolio, that's half our business.
That was a big driver to the 7% constant-currency growth we saw in 2015.
You do the math on that business growing in the low- to mid-single digits.
You got surgical and respiratory and Trumpf growing in mid-single digits, and you've got international improving from minus 5% to flat.
Then you later on a point or two of FX.
That's where you get to the ---+ call it 3%-ish growth for 2016.
The impact on the strength in North America capital, big impact obviously on our 2016 guidance; but the stability that we want to see in this business, we're certainly seeing.
We don't expect it to grow double digits in 2016, clearly.
I think you guys would question our judgment if we came out with another double-digit capital growth in 2016.
But we certainly expect it to be steady, solid, low- to mid-single-digit growth, and we see nothing at this point to deviate from that plan.
<UNK>, we're obviously pushing it hard, and we'll get the savings in the bank as quickly as possible.
The other piece as part of the $40 million is some footprint consolidation, and that's going to take a couple years, two to three years to get done.
But <UNK> and his team are obviously working hard to get as much of that $40 million in as soon as possible.
We're sticking with the commitment that we made a couple months ago at this point in time.
Thanks a lot.
Hi, <UNK>.
Yes.
We're increasing pretty dramatically our operational cadence.
By that, I mean getting deeper on every aspect of the business, making changes.
Literally in the past few months I think you saw ---+ met Carlos Alonso, or at least heard him speak when we were at the investor conference.
We swapped out our leader in Europe.
We brought in a very seasoned veteran that I know from my past that I think is going to make a huge impact.
We've changed, and are in the process of changing our German leader, our leader in France.
We're also ---+ on the personal side, we're very focused on that.
We're also looking at how do we integrate these businesses to take cost out of our structure internationally.
We are integrating Welch Allyn into the international structure, as we mentioned.
We're integrating Trumpf into our structure.
What that's going to allow us to do is shape some expense out of what it takes to deliver the products internationally, and give us more strength.
Places like China and other places, size and your gravitas, it really matters.
Pulling this all together into a single customer experience center will make a big difference, as well.
That covers the expense side.
We've covered leadership, we've covered expense.
Now to get strategically, one of the areas of opportunity that we have is ---+ and I'll mention, too ---+ are some of the products that we have that drive higher margin in the US, we don't offer in all of the international communities.
We're starting to correct that.
These are product lines like our Clinical Workflow Solutions.
It's offered on a very limited basis overseas, and it has a nicer margin, and it's a product that others would like to have.
We're starting to develop that for the international market.
There are other products that I spoke about at our investor conference that we're going to do ---+ we're going to offer overseas, as well.
The higher margin, higher med-tech component of a products that I think will really help lift us.
Then finally there's just allocation of resources.
We ---+ today we're going to have the opportunity to take some of our resources that today are selling lower margin, long-term care (inaudible - background noise) solutions, and move them into the higher margin, higher growth potential products like a Welch Allyn overseas.
That gives you a broad brush of what we're doing with people, with expenses, and strategically.
I think as we said in the investor conference, we are very excited about the stability of the cash flow that the combined operation has.
Obviously we had a great cash flow with that base Hill-Rom business, combined nice cash flow with Welch Allyn.
Our immediate focus is on de-leveraging.
But as we said in the conference, we're always going to be looking for ways to profitably grow the business.
As opportunities present themselves, we'll obviously take a look at them.
We'll look at whether or not there's other creative ways for us to make sure that we can mind our balance sheet, but also grow the top line and grow it profitably.
Immediate term is de-leveraging, but we are keeping our eyes open and our options open going forward.
<UNK>, this is <UNK>.
Just to add briefly to that.
You should absolutely expect us to continue to be focused on M&A.
It was a big part of the strategy that we laid out in September.
We've got room.
We are confident we can find opportunities that match our strategy, and we're not going to take a year off.
We're going to maintain the discipline we followed.
We're committed to doing that, and we're also committed to investing to grow the Company, while at the same time as <UNK> said, deploy our capital to de-leverage in the absence of any M&A.
Thank you.
You bet.
Good morning, <UNK>.
Well, North America is the majority of our rental business.
It's more than two-thirds of it.
I think this time last year, on the margin side, I think we said margins for rental this year were going to approximate what the fourth quarter margins were last year, which were just around 50%.
That's pretty much where we'd landed the full year.
Obviously we had some margin compression here in North America that we've talked about throughout the year.
The rest of our rental business, it includes the respiratory care business, and which has been a flat ---+ more flat business, certainly than North America rental this year.
Those are the two biggest components of our rental business globally.
<UNK>.
Yes, we've talked about it in the past.
Size-wise, it's just north of $100 million.
I'd rather not get any more specific than that.
It's growing strongly.
It's a big part of our value proposition, and we've continued to add new products into that offering.
We've got high expectations for it going forward to really stabilize and accelerate the underlying capital growth of our patient support systems business.
Well, they made an acquisition early in 2015, but year-over-year, the growth rate that <UNK> laid out, 3% to 5% for Welch Allyn, that's more or less an apples-to-apples comparison.
There weren't any acquisitions later in the year that are going to have any significant accretive impact on 2016.
Yes.
<UNK>, this is <UNK>.
There wasn't any pull-forward.
The growth is probably about $20 million, I think, above what we had said ---+ $20 million, $25 million.
A big chunk of that is Trumpf, North America, as I mentioned in my comments ---+ they were up 25%.
Like any capital business, their fourth quarter tends to be the heroic quarter of the year, and we saw that here in FY15.
Welch Allyn over-performed, probably represented 20% of that overall.
The rest of it largely came out of our North American business.
As you well know, capital business is the toughest one to predict.
The vast majority of the $25-million improvement in Q4 came out of various parts of our capital segment.
Again, you look at next year as a full year, I think we're pretty much in line, and we are in line with what we laid out at the investor conference.
We've got some FX drag of 1 to 2 points on the full year.
We've got a bigger FX drag in Q1, 3 to 4.
I think we're right in line with the commitments and the expectations we set in September.
Yes, I think that's true, <UNK>.
I'll go back to my comments earlier.
I think it was in response to your question, the macro-environment, and how does that translate into our guidance next year.
Again, think about our North American business, 3% to 5% growth.
SRC and Trumpf same thing, 3% to 5% growth.
International flat.
You knock a point to two off of FX, we're right in the zone of where we think this business is long term, in terms of low to mid-single-digit growth.
2015 was clearly an anomaly on our North America capital business.
But yes, I don't think there's anything heroic in 2016.
If we continue to execute along the things that <UNK> said earlier, we might surprise ourselves.
But we feel good about the guidance that we put out here.
There's significant bottom-line earnings growth.
There's significant accretion just in line with what we committed to from Welch Allyn.
There's 100 basis point of margin expansion on our core business.
I think we've got everything moving in the right direction, and we're pushing to move it as fast as we can on the top line and on the bottom line.
My pleasure.
Thank you, Amanda, and thanks to everybody for listening in on the call.
We look forward to speaking with you.
So long.
