Full Press Release Details
TELEFLEX REPORTS FOURTH QUARTER AND FULL YEAR 2012 RESULTS
Fourth Quarter Revenues Rise 4.0% to $419.0 million; up 5.1% on Constant Currency Basis
Fourth Quarter GAAP Diluted EPS of $0.72; Adjusted Diluted EPS of $1.14
Reaffirms 2013 Guidance Ranges for Constant Currency Revenue Growth of 11% to 13% and Adjusted
Diluted EPS of $4.70 to $4.90
Limerick, PA Teleflex Incorporated (NYSE: TFX) today announced financial results for the fourth quarter and full year ended December 31, 2012.
Fourth quarter 2012 net revenues were $419.0 million, an increase of 4.0% over the prior year period. Excluding the impact of foreign currency
fluctuations, fourth quarter 2012 net revenues increased 5.1% over the prior year period.
Fourth quarter 2012 GAAP diluted earnings per share
from continuing operations were $0.72, as compared to $1.01 in the prior year period. Fourth quarter 2012 adjusted diluted earnings per share from continuing operations were $1.14, as compared to $1.05 in the prior year period, an increase of 8.6%.
Teleflex s fourth quarter operating and financial performance capped off an extremely successful year on many fronts, said
Benson Smith, Chairman, President and CEO. Our higher than anticipated adjusted earnings growth reflects a better than expected contribution from LMA, as well as the operating leverage in the business as we grow revenue and expand our margins
through higher sales volume, new product introductions and the continued implementation of our pricing strategy.
Our goals in 2013 are to build upon our solid operating platform, capture additional share in the markets we serve, and generate revenue growth above the industry average. We believe the actions we have taken over the past two years to invest
in innovative technologies, rationalize our cost base, and prudently invest our capital, position us to generate significantly higher revenue growth and increased profitability for our shareholders.
FOURTH QUARTER NET REVENUE BY PRODUCT GROUP AND SEGMENT
Product Group Revenues
Critical Care fourth quarter 2012 net revenues were $286.1
million, an increase of 6.8% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 8.1% compared to the prior year period. The increase in constant currency revenue
growth was due to higher sales of anesthesia, vascular access and urology products. The growth in sales of anesthesia products was primarily due to the contribution from the LMA International N.V. ( LMA ) acquisition. Constant currency
sales growth was partially offset by a decline in sales of respiratory products and the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.
Surgical Care fourth quarter 2012 net revenues were $76.3 million, an increase of 4.0% compared to the
prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 4.8% compared to the prior year period. The increase in constant currency revenue growth was due to higher sales of ligation,
endo-fascial, closure and general surgical instrument products, partially offset by a decline in sales of chest drainage products and the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.
Cardiac Care fourth quarter 2012 net revenues were $20.9 million, a decrease of 5.3% compared to the prior year period. Excluding the impact of foreign
currency fluctuations, fourth quarter 2012 net revenues decreased 3.3% compared to the prior year period. The decrease in constant currency revenue growth was due to a decline in sales of intra-aortic balloon pumps, partially offset by higher sales
of intra-aortic balloon catheters.
OEM and Development Services ( OEM ) fourth quarter 2012 net revenues were $35.7 million, a
decrease of 8.1% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues decreased 7.4% compared to the prior year period. The decrease in revenue was primarily due to the impact of
fewer shipping days in the quarter as compared to the fourth quarter of 2011.
| Three Months Ended | % Increase/ (Decrease) | |||||||||||||||||||
| December 31, 2012 | December 31, 2011 | Constant Currency | Foreign Currency | Total Change | ||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||
| Critical Care | $ | 286.1 | $ | 267.9 | 8.1 | % | (1.3 | %) | 6.8 | % | ||||||||||
| Surgical Care | 76.3 | 73.5 | 4.8 | % | (0.8 | %) | 4.0 | % | ||||||||||||
| Cardiac Care | 20.9 | 22.0 | (3.3 | %) | (2.0 | %) | (5.3 | %) | ||||||||||||
| OEM | 35.7 | 38.8 | (7.4 | %) | (0.7 | %) | (8.1 | %) | ||||||||||||
| Other | 0.8 | (99.7 | %) | (0.3 | %) | (100.0 | %) | |||||||||||||
| Total | $ | 419.0 | $ | 403.0 | 5.1 | % | (1.1 | %) | 4.0 | % |
Americas fourth quarter 2012 net revenues were $200.1 million, an increase of 8.4% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net
revenues increased 8.1% compared to the prior year period. The increase in constant currency revenue growth was due to incremental sales from our acquisition of LMA, new product introductions and price increases, partially offset by the impact of
fewer shipping days in the quarter as compared to the fourth quarter of 2011.
EMEA fourth quarter 2012 net revenues were $132.7 million, a
decrease of 1.6% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 2.3% compared to the prior year period. The increase in constant currency revenue growth was due to
LMA product sales, new product introductions and price increases, partially offset by the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.
Asia fourth quarter 2012 net revenues were $50.5 million, an increase of 13.2% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues
increased 12.4% compared to the prior year period. The increase in constant currency revenue growth was due to LMA product sales and price increases.
| Three Months Ended | % Increase/ (Decrease) | |||||||||||||||||||
| December 31, 2012 | December 31, 2011 | Constant Currency | Foreign Currency | Total Change | ||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||
| Americas | $ | 200.1 | $ | 184.6 | 8.1 | % | 0.3 | % | 8.4 | % | ||||||||||
| EMEA | 132.7 | 135.0 | 2.3 | % | (3.9 | %) | (1.6 | %) | ||||||||||||
| Asia | 50.5 | 44.6 | 12.4 | % | 0.8 | % | 13.2 | % | ||||||||||||
| OEM | 35.7 | 38.8 | (7.4 | %) | (0.7 | %) | (8.1 | %) | ||||||||||||
| Total | $ | 419.0 | $ | 403.0 | 5.1 | % | (1.1 | %) | 4.0 | % |
Net revenues for the full year 2012 were $1.551 billion, an increase of 3.9% compared to the prior year period. Excluding the impact of foreign currency fluctuations, net revenues for 2012 increased 6.8%
GAAP loss per share from continuing operations was ($4.47) for the full year 2012, as compared to diluted earnings per
share of $2.90 in the prior year period. The financial results for 2012 reflect a goodwill impairment charge of $315.1 million, net of tax, or $7.71 per share, incurred in the first quarter of 2012.
Adjusted diluted earnings per share from continuing operations for the twelve months of 2012 was $4.40, an increase of 14.9% over the prior year period.
This increase reflects additional sales volume and the introduction of new products to the marketplace, improved pricing, gross profit expansion, and reduced tax expense. The improvement in profitability was partially offset by investment in sales,
marketing and research and development.
OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS
Depreciation expense and amortization of intangible assets and deferred financing costs for the twelve months of 2012 were $94.9 million compared to $96.5
million for the prior year period.
Cash and cash equivalents at December 31, 2012 were $337.0 million compared to $584.1 million at
December 31, 2011. The decrease in cash and cash equivalents is largely attributable to the acquisition of LMA which was completed on October 23, 2012.
Net accounts receivable at December 31, 2012 were $298.0 million compared to $286.2 million at December 31, 2011.
Net inventories at December 31, 2012 were $323.3 million compared to $298.8 million at December 31, 2011.
Net debt obligations at December 31, 2012 were $692.7 million compared to $445.9 million at December 31, 2011.
The Company s financial estimates for 2013 are as follows:
Constant currency revenue growth
between 11% and 13% for full year 2013.
Adjusted diluted earnings per share in the range of $4.70 to $4.90.
2013 OUTLOOK EARNINGS PER SHARE RECONCILIATION
| Low | High | |||||||
| Diluted earnings per share | $ | 3.20 | $ | 3.40 | ||||
| Restructuring and impairment charges, net of tax | $ | 0.51 | $ | 0.51 | ||||
| Intangible amortization expense, net of tax | $ | 0.82 | $ | 0.82 | ||||
| Amortization of debt discount on convertible notes, net of tax | $ | 0.17 | $ | 0.17 | ||||
| Adjusted diluted earnings per share | $ | 4.70 | $ | 4.90 |
CONFERENCE CALL WEBCAST AND ADDITIONAL INFORMATION
As previously announced, Teleflex will comment on its financial results on a conference call to be held today at 8:00 a.m. (ET). The call will be available live and archived on the company s website
at www.teleflex.com and the accompanying presentation will be posted prior to the call. An audio replay will be available until February 26, 2013, 11:59pm (ET), by calling 888-286-8010 (U.S./Canada) or 617-801-6888
(International), Passcode: 10277897.
Constant currency revenue and growth exclude the impact of translating the results of international subsidiaries at different currency exchange rates from period to period.
Certain financial information is presented on a rounded basis, which may cause minor differences.
Product group results and commentary exclude the impact of discontinued operations, items included in restructuring and impairment charges, and losses
and other charges set forth in the condensed consolidated statements of income.
NOTES ON NON-GAAP FINANCIAL MEASURES
This press release includes certain non-GAAP financial measures. These measures include (i) adjusted diluted earnings per share, which excludes, depending on the period presented, the effect of
charges associated with a goodwill impairment, our restructuring programs and asset impairments, losses and other charges related to acquisition costs, gain/loss on sale of businesses and assets, loss on extinguishment of debt in connection with
refinancing transactions, costs associated with severance payments and benefits to be provided to our former chief executive officer, charges relating to a stock keeping unit reduction program, charges associated with the amortization of additional
interest expense related to an interest rate swap terminated in 2011, intangible amortization expense, the amortization of debt discount on convertible notes and certain tax adjustments relating to the resolution of various tax matters relating to
prior years; and (ii) constant currency revenue and growth, which exclude the impact of translating the results of international subsidiaries at different currency exchange rates from period to period. Consistent with past practice, adjusted
diluted earnings per share has not been adjusted to exclude the benefit resulting from the forfeiture of equity awards. Management believes these measures are useful to investors because they eliminate items that do not reflect Teleflex s
day-to-day operations. In addition, management uses these financial measures for internal managerial purposes, when publicly providing guidance on possible future results, and to assist in our evaluation of period-to-period comparisons. These
financial measures are presented in addition to results presented in accordance with generally accepted accounting principles ( GAAP ) and should not be relied upon as a substitute for GAAP financial measures. Tables reconciling these
non-GAAP measures to the most directly comparable GAAP measures are set forth below. This press release also includes forecasted constant currency revenue growth, which is also a non-GAAP measure. A reconciliation of forecasted constant currency
revenue growth to GAAP forecasted growth has not been provided as management is unable to forecast trends in foreign currency exchange rates.
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
| Materials, labor and other product costs | Selling, general and administrative expenses | Goodwill impairment | Restructuring and other impairment charges | Gain/(loss) on sales of businesses and assets | Interest expense | Loss on extinguishment of debt | Income taxes | Net Income (loss) attributable to common shareholders from continuing operations | Diluted Earnings per share available to common shareholders | |||||||||||||||||||||||||||||||
| GAAP Basis | $ | 219.9 | $ | 121.5 | $ | 3.0 | $ | 14.6 | $ | 13.5 | $ | 30.4 | $ | 0.72 | ||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | ||||||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 3.0 | 0.6 | 2.3 | $ | 0.06 | |||||||||||||||||||||||||||||||||||
| Losses and other charges (A) | 0.5 | 3.4 | (1.9 | ) | 5.7 | $ | 0.13 | |||||||||||||||||||||||||||||||||
| Early termination of interest rate swap (B) | ||||||||||||||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 2.7 | 1.0 | 1.7 | $ | 0.04 | |||||||||||||||||||||||||||||||||||
| Intangible amortization expense | 12.0 | 4.2 | 7.8 | $ | 0.19 | |||||||||||||||||||||||||||||||||||
| Tax adjustment (C) | ||||||||||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 219.4 | $ | 106.1 | $ | 11.9 | $ | 17.4 | $ | 47.9 | $ | 1.14 |
| Materials, labor and other product costs | Selling, general and administrative expenses | Goodwill impairment | Restructuring and other impairment charges | Gain/(loss) on sales of businesses and assets | Interest expense | Loss on extinguishment of debt | Income taxes | Net Income (loss) attributable to common shareholders from continuing operations | Diluted Earnings per share available to common shareholders | |||||||||||||||||||||||||||||||
| GAAP Basis | $ | 213.3 | $ | 110.8 | $ | 2.4 | ($ | 0.6 | ) | $ | 19.2 | $ | 2.6 | $ | 41.6 | $ | 1.01 | |||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | ||||||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 3.0 | 1.1 | 1.8 | $ | 0.05 | |||||||||||||||||||||||||||||||||||
| Losses and other charges (A) | 2.0 | 0.6 | 0.8 | 1.8 | $ | 0.04 | ||||||||||||||||||||||||||||||||||
| Early termination of interest rate swap (B) | (11.1 | ) | (4.0 | ) | (7.0 | ) | ($ | 0.17 | ) | |||||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 2.5 | 0.9 | 1.6 | $ | 0.04 | |||||||||||||||||||||||||||||||||||
| Intangible amortization expense | 10.5 | 3.9 | 6.6 | $ | 0.16 | |||||||||||||||||||||||||||||||||||
| Tax adjustment (C) | 3.3 | (3.3 | ) | ($ | 0.08 | ) | ||||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 211.3 | $ | 100.2 | ($ | 0.6 | ) | $ | 27.8 | $ | 8.7 | $ | 43.0 | $ | 1.05 |
(A) In 2012, losses and other charges include approximately $5.7 million, net of tax, or $0.13 per share,
related to acquisition costs. In 2011, losses and other charges include approximately $0.4 million, net of tax, or $0.01 per share, related to loss on sale of business and assets; and $1.3 million, net of tax, or $0.03 per share, related to a stock
keeping unit ( SKU ) rationalization to eliminate SKU s based on low sales volume or insufficient margins to help improve future profitability.
(B) In 2011, the Company terminated an interest rate swap that, at the date of termination, had a notional amount of $350 million. The interest rate swap was designated as a cash flow hedge against the
term loan under our senior credit facility. At the date of termination, the interest rate swap was in a liability position resulting in a cash payment by the Company of approximately $14.8 million, which included $3.1 million of accrued interest. In
GAAP, the Company amortized this amount as additional interest expense over the remainder of the original term of the interest
rate swap, which expired in September 2012. In the fourth quarter of 2011, the net of tax impact was approximately $7.0 million, or $0.17 per share.
(C) The tax adjustment represents a net benefit resulting from (i) the resolution (including the expiration of statutes of limitations) of various prior years U.S. federal, state and foreign
tax matters, and (ii) the filing of amended prior years tax returns.
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
| Materials, labor and other product costs | Selling, general and administrative expenses | Goodwill impairment | Restructuring and other impairment charges | Gain/(loss) on sales of businesses and assets | Interest expense | Loss on extinguishment of debt | Income taxes | Net Income (loss) attributable to common shareholders from continuing operations | Diluted Earnings per share available to common shareholders | |||||||||||||||||||||||||||||||
| GAAP Basis | $ | 802.8 | $ | 454.5 | $ | 332.1 | $ | 3.0 | $ | 0.3 | $ | 69.6 | $ | 16.4 | ($ | 182.7 | ) | ($ | 4.47 | ) | ||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | 332.1 | 17.0 | 315.1 | $ | 7.71 | |||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 3.0 | 0.6 | 2.5 | $ | 0.06 | |||||||||||||||||||||||||||||||||||
| Losses and other charges (A) | 0.5 | 13.8 | (0.3 | ) | (0.1 | ) | 14.1 | $ | 0.34 | |||||||||||||||||||||||||||||||
| Early termination of interest rate swap (B) | 11.1 | 4.0 | 7.0 | $ | 0.17 | |||||||||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 10.5 | 3.8 | 6.7 | $ | 0.16 | |||||||||||||||||||||||||||||||||||
| Intangible amortization expense | 44.3 | 16.0 | 28.3 | $ | 0.69 | |||||||||||||||||||||||||||||||||||
| Tax adjustment (C) | 9.0 | (9.0 | ) | ($ | 0.22 | ) | ||||||||||||||||||||||||||||||||||
| Anti-dilutive effect of EPS (D) | ($ | 0.06 | ) | |||||||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 802.3 | $ | 396.4 | $ | 48.0 | $ | 66.6 | $ | 182.0 | $ | 4.40 |
| Materials, labor and other product costs | Selling, general and administrative expenses | Goodwill impairment | Restructuring and other impairment charges | Gain/(loss) on sales of businesses and assets | Interest expense | Loss on extinguishment of debt | Income taxes | Net Income (loss) attributable to common shareholders from continuing operations | Diluted Earnings per share available to common shareholders | |||||||||||||||||||||||||||||||
| GAAP Basis | $ | 783.8 | $ | 423.9 | $ | 6.0 | ($ | 0.6 | ) | $ | 70.3 | $ | 15.4 | $ | 25.8 | $ | 118.3 | $ | 2.90 | |||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | ||||||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 3.7 | 1.4 | 2.3 | $ | 0.06 | |||||||||||||||||||||||||||||||||||
| Losses and other charges (A) | 2.0 | 5.5 | 0.6 | 15.4 | 8.4 | 15.1 | $ | 0.37 | ||||||||||||||||||||||||||||||||
| Early termination of interest rate swap (B) | (11.1 | ) | (4.0 | ) | (7.0 | ) | ($ | 0.17 | ) | |||||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 9.7 | 3.5 | 6.2 | $ | 0.15 | |||||||||||||||||||||||||||||||||||
| Intangible amortization expense | 42.6 | 15.6 | 27.0 | $ | 0.66 | |||||||||||||||||||||||||||||||||||
| Tax adjustment (C) | 5.5 | (5.5 | ) | ($ | 0.13 | ) | ||||||||||||||||||||||||||||||||||
| Anti-dilutive effect of EPS (D) | ||||||||||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 781.8 | $ | 375.8 | $ | 2.3 | $ | 71.7 | $ | 56.2 | $ | 156.3 | $ | 3.83 |
RECONCILIATION OF NET DEBT OBLIGATIONS
| December 31, 2012 | December 31, 2011 | |||||||
| (Dollars in thousands) | ||||||||
| Note payable and current portion of long-term borrowings | $ | 4,700 | $ | 4,986 | ||||
| Long term borrowings | 965,280 | 954,809 | ||||||
| Unamortized debt discount | 59,720 | 70,191 | ||||||
| Total debt obligations | 1,029,700 | 1,029,986 | ||||||
| Less: cash and cash equivalents | 337,039 | 584,088 | ||||||
| Net debt obligations | $ | 692,661 | $ | 445,898 |
ABOUT TELEFLEX INCORPORATED
Teleflex is a leading global provider of specialty medical devices for a range of procedures in critical care and surgery. Our mission is to provide solutions that enable healthcare providers to improve