Full Press Release Details
| Contact: | Jake Elguicze | |
| Treasurer and Vice President of Investor Relations | ||
| 610-948-2836 |
TELEFLEX REPORTS THIRD QUARTER 2013 RESULTS
Revenues Rise 12.4% to $413.8 million; up 11.6% on Constant Currency Basis
GAAP Diluted EPS of $1.05; Adjusted Diluted EPS of $1.33 up 26.7%
2013 Constant Currency Revenue Growth Expectations adjusted from 10% to 12% to 8.5% to 10%
2013 Adjusted Diluted Earnings per Share Range adjusted from $4.70 to $4.90 to $4.85 to $5.00
Definitive Agreement signed to Acquire Vidacare Corporation
Limerick, PA Teleflex Incorporated (NYSE: TFX) today announced financial results for the third quarter ended September 29, 2013.
Third quarter 2013 net revenues were $413.8 million, an increase of 12.4% over the prior year period. Excluding the impact of foreign currency fluctuations,
third quarter 2013 net revenues increased 11.6% over the prior year period.
Third quarter 2013 GAAP diluted earnings per share from continuing operations
were $1.05, as compared to $0.58 in the prior year period. Third quarter 2013 adjusted diluted earnings per share from continuing operations were $1.33, as compared to $1.05 in the prior year period, an increase of 26.7%.
Teleflex delivered solid third quarter constant currency revenue growth and continued to successfully execute on our initiatives to expand both gross
and operating margins, said Benson Smith, Chairman, President and Chief Executive Officer. Our quarterly revenue performance was paced by continued strength in Critical Care, which was aided by the contribution from our acquisition of
LMA International in 2012, an improvement in the average selling price of products and the continued introduction of new products to the marketplace. In addition, the third quarter results demonstrate the early benefit of our actions focused on cost
control to improve operating leverage in the business.
Added Mr. Smith, Despite the improved revenue performance as compared to the
first half of 2013, third quarter sales were below our expectations, driven in part by weakness with respect to sales of our OEM and respiratory therapy products. We now expect continued weakness in the performance of those product lines in the
fourth quarter as well. In addition, during the fourth quarter, we expect lower revenue in Asia than previously anticipated due to the timing of certain distributor negotiations which are progressing, but slower than originally planned. As a result,
we are revising our outlook for full year 2013 constant currency revenue growth to be between 8.5% to 10%.
In contrast, our adjusted earnings
performance in the third quarter was above our expectations. Based on that, and continued cost reduction efforts, we are raising our adjusted earnings per share estimate to between $4.85 and $5.00 per share.
Finally, yesterday we announced our entry into a definitive agreement to acquire Vidacare Corporation for
$262.5 million, net of cash acquired. This acquisition will expand our vascular access product portfolio by adding a defining technology focused on intraosseous, or inside the bone, access devices. While we expect to complete the transaction by the
end of the year, it is not expected to significantly impact our financial results for full year 2013. However, we expect the transaction to contribute approximately $68 million to $72 million of revenue and approximately $0.10 to $0.15 in adjusted
earnings per share in fiscal year 2014, excluding non-recurring purchase accounting items and other acquisition and integration related costs, said Smith.
THIRD QUARTER NET REVENUE BY PRODUCT GROUP AND SEGMENT
Product Group Revenues
Critical Care third quarter
2013 net revenues were $289.3 million, an increase of 18.7% compared to the prior year period. Excluding the impact of foreign currency fluctuations, third quarter 2013 net revenues increased 17.9% compared to the prior year period. The increase in
constant currency revenue was due to higher sales of anesthesia, vascular, urology and interventional access products. The growth in sales of anesthesia products was primarily due to the contribution from the LMA International business
( LMA ), which was acquired in October of 2012. Constant currency sales growth was partially offset by a decline in sales of respiratory products as compared to the third quarter of 2012.
Surgical Care third quarter 2013 net revenues were $73.2 million, an increase of 5.2% compared to the prior year period. Excluding the impact of foreign
currency fluctuations, third quarter 2013 net revenues increased 3.9% compared to the prior year period. The increase in constant currency revenue was due to higher sales of ligation, suture and access products, partially offset by a decline in
sales of general surgical instrument products as compared to the third quarter of 2012.
Cardiac Care third quarter 2013 net revenues were $17.6 million,
a decrease of 1.6% compared to the prior year period. Excluding the impact of foreign currency fluctuations, third quarter 2013 net revenues also decreased 1.6% compared to the prior year period. The decrease in constant currency revenue was due to
a decline in sales of intra-aortic balloon pumps as compared to the third quarter of 2012.
OEM and Development Services ( OEM ) third quarter
2013 net revenues were $33.7 million, a decrease of 8.5% compared to the prior year period. Excluding the impact of foreign currency fluctuations, third quarter 2013 net revenues decreased 9.4% compared to the prior year period. The decrease in
constant currency revenue was primarily due to a decline in sales of catheter, extrusion and performance fiber products as compared to the third quarter of 2012.
| Three Months Ended | % Increase/ (Decrease) | |||||||||||||||||||
| September 29, 2013 | September 30, 2012 | Constant Currency | Foreign Currency | Total Change | ||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||
| Critical Care | $ | 289.3 | $ | 243.7 | 17.9 | % | 0.8 | % | 18.7 | % | ||||||||||
| Surgical Care | 73.2 | 69.6 | 3.9 | % | 1.3 | % | 5.2 | % | ||||||||||||
| Cardiac Care | 17.6 | 17.9 | (1.6 | %) | (1.6 | %) | ||||||||||||||
| OEM | 33.7 | 36.9 | (9.4 | %) | 0.9 | % | (8.5 | %) | ||||||||||||
| Total | $ | 413.8 | $ | 368.1 | 11.6 | % | 0.8 | % | 12.4 | % |
Americas third quarter 2013 net revenues were $192.5 million, an increase of 13.5% compared to the prior year period. Excluding the impact of foreign currency
fluctuations, third quarter 2013 net
revenues increased 13.8% compared to the prior year period. The increase in constant currency revenue was largely due to LMA product sales, price increases and new product introductions,
partially offset by lower sales volume of existing products as compared to the third quarter of 2012.
EMEA third quarter 2013 net revenues were $132.3
million, an increase of 14.0% compared to the prior year period. Excluding the impact of foreign currency fluctuations, third quarter 2013 net revenues increased 9.6% compared to the prior year period. The increase in constant currency revenue was
due to LMA product sales, price increases, higher sales volume of existing products and new product introductions as compared to the third quarter of 2012.
Asia third quarter 2013 net revenues were $55.3 million, an increase of 21.2% compared to the prior year period. Excluding the impact of foreign currency
fluctuations, third quarter 2013 net revenues increased 25.2% compared to the prior year period. The increase in constant currency revenue was due to LMA product sales, higher sales volume of existing products and price increases.
| Three Months Ended | % Increase/ (Decrease) | |||||||||||||||||||
| September 29, 2013 | September 30, 2012 | Constant Currency | Foreign Currency | Total Change | ||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||
| Americas | $ | 192.5 | $ | 169.6 | 13.8 | % | (0.3 | %) | 13.5 | % | ||||||||||
| EMEA | 132.3 | 116.0 | 9.6 | % | 4.4 | % | 14.0 | % | ||||||||||||
| Asia | 55.3 | 45.6 | 25.2 | % | (4.0 | %) | 21.2 | % | ||||||||||||
| OEM | 33.7 | 36.9 | (9.4 | %) | 0.9 | % | (8.5 | %) | ||||||||||||
| Total | $ | 413.8 | $ | 368.1 | 11.6 | % | 0.8 | % | 12.4 | % |
OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS
Depreciation expense and amortization of intangible assets and deferred financing costs for the first nine months of 2013 were $79.0 million compared to $69.2
million for the prior year period.
Cash and cash equivalents at September 29, 2013 were $326.4 million compared to $337.0 million at
Net accounts receivable at September 29, 2013 were $313.7 million compared to $298.0 million at December 31, 2012.
Net inventories at September 29, 2013 were $346.1 million compared to $323.3 million at December 31, 2012.
Net debt obligations at September 29, 2013 were $710.3 million compared to $692.7 million at December 31, 2012.
ACQUISITION OF VIDACARE CORPORATION
announced, the Company has entered into a definitive agreement to acquire privately-held Vidacare Corporation, the leading provider of intraosseous, or inside the bone, access devices.
The transaction, which Teleflex intends to initially fund with borrowings under its revolving credit facility, is valued at $262.5 million, net of cash
acquired. The acquisition is subject to customary closing conditions, including receipt of certain regulatory approvals and is expected to be completed in the fourth quarter of 2013.
Based on the anticipated date of closing, the acquisition is not expected to significantly impact Teleflex s 2013 revenue and adjusted earnings per
share. The transaction is expected to contribute
approximately $68 million to $72 million of revenue and approximately $0.10 to $0.15 in adjusted earnings per share in fiscal year 2014, excluding non-recurring purchase accounting items and
other acquisition and integration related costs.
The Company s updated financial estimates for full year 2013 are as follows:
Constant currency revenue growth between 8.5% and 10%. This compares to the previously provided constant currency revenue growth range of between 10% and 12%.
Adjusted diluted earnings per share in the range of $4.85 to $5.00. This compares to the previously provided adjusted diluted earnings per share range of
2013 OUTLOOK EARNINGS PER SHARE RECONCILIATION
| Low | High | |||||||
| Diluted earnings per share | $ | 3.45 | $ | 3.60 | ||||
| Restructuring and impairment charges, net of tax | $ | 0.50 | $ | 0.50 | ||||
| Intangible amortization expense, net of tax | $ | 0.75 | $ | 0.75 | ||||
| Amortization of debt discount on convertible notes, net of tax | $ | 0.15 | $ | 0.15 | ||||
| Adjusted diluted earnings per share | $ | 4.85 | $ | 5.00 |
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 November 6, 2013, 11:59pm (ET), by calling
888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 49689482.
Constant currency revenue and growth exclude the impact of translating the results of international subsidiaries at different currency exchange rates from
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 and in the Reconciliation of Consolidated Statement of Income Items set forth below.
NOTES ON NON-GAAP FINANCIAL MEASURES
includes certain non-GAAP financial measures, which include:
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 believes that the calculation of non-GAAP diluted shares is useful to investors because it provides insight into the offsetting economic effect of the convertible note hedge against conversions of the convertible notes.
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
| Quarter Ended September 29, 2013 | ||||||||||||||||||||||||||||||||||||
| Cost of goods sold | Selling, general and administrative expenses | Restructuring and other impairment charges | Loss on extinguishment of debt | Interest expense, net | Income taxes | Net income (loss) attributable to common shareholders from continuing operations | Diluted earnings per share available to common shareholders | Shares used in calculation of GAAP and adjusted earnings per share | ||||||||||||||||||||||||||||
| GAAP Basis | $ | 209.8 | $ | 115.2 | $ | 7.1 | $ | 1.3 | $ | 13.8 | $ | 5.2 | $ | 45.5 | $ | 1.05 | 43,264 | |||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 7.1 | 1.5 | 5.6 | $ | 0.13 | |||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | 1.3 | 0.5 | 0.8 | $ | 0.02 | |||||||||||||||||||||||||||||||
| Losses and other charges (A) | 1.8 | (3.3 | ) | 0.9 | (2.3 | ) | ($ | 0.05 | ) | |||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 2.9 | 1.0 | 1.8 | $ | 0.04 | |||||||||||||||||||||||||||||||
| Intangible amortization expense | 12.5 | 4.2 | 8.3 | $ | 0.19 | |||||||||||||||||||||||||||||||
| Tax Adjustment (C) | 4.1 | (4.1 | ) | ($ | 0.09 | ) | ||||||||||||||||||||||||||||||
| Shares due to Teleflex under note hedge (D) | $ | 0.04 | (1,428 | ) | ||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 208.0 | $ | 106.0 | $ | 10.9 | $ | 17.4 | $ | 55.6 | $ | 1.33 | 41,836 | |||||||||||||||||||||||
| Quarter Ended - September 30, 2012 | ||||||||||||||||||||||||||||||||||||
| Cost of goods sold | Selling, general and administrative expenses | Restructuring and other impairment charges | Loss on extinguishment of debt | Interest expense, net | Income taxes | Net income (loss) attributable to common shareholders from continuing operations | Diluted earnings per share available to common shareholders | Shares used in calculation of GAAP and adjusted earnings per share | ||||||||||||||||||||||||||||
| GAAP Basis | $ | 187.5 | $ | 114.9 | $ | 1.1 | $ | 18.2 | $ | 7.2 | $ | 24.3 | $ | 0.58 | 41,511 | |||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 1.1 | 0.4 | 0.7 | $ | 0.02 | |||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | ||||||||||||||||||||||||||||||||||||
| Losses and other charges (A) | 9.9 | 1.5 | 8.4 | $ | 0.20 | |||||||||||||||||||||||||||||||
| Early termination of interest rate swap (B) | 3.7 | 1.3 | 2.3 | $ | 0.06 | |||||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 2.7 | 1.0 | 1.7 | $ | 0.04 | |||||||||||||||||||||||||||||||
| Intangible amortization expense | 11.1 | 4.0 | 7.0 | $ | 0.17 | |||||||||||||||||||||||||||||||
| Tax adjustment (C) | 1.3 | (1.3 | ) | ($ | 0.03 | ) | ||||||||||||||||||||||||||||||
| Shares due to Teleflex under note hedge (D) | $ | 0.01 | (347 | ) | ||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 187.5 | $ | 94.0 | $ | 11.8 | $ | 16.8 | $ | 43.0 | $ | 1.05 | 41,164 |
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
| Nine Months Ended September 29, 2013 | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | Selling, general and administrative expenses | Goodwill impairment | Restructuring and other impairment charges | Gain/(loss) on sales of businesses and assets | Loss on extinguishment of debt | Interest expense, net | Income taxes | Net income (loss) attributable to common shareholders from continuing operations | Diluted earnings per share available to common shareholders | Shares used in calculation of GAAP and adjusted earnings per share | ||||||||||||||||||||||||||||||||||
| GAAP Basis | $ | 631.7 | $ | 358.4 | $ | 29.2 | $ | 1.3 | $ | 42.1 | $ | 19.0 | $ | 116.3 | $ | 2.69 | 43,246 | |||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 29.2 | 6.1 | 23.1 | $ | 0.53 | |||||||||||||||||||||||||||||||||||||||
| Gain/(loss) on sales of businesses and assets | ||||||||||||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | 1.3 | 0.5 | 0.8 | $ | 0.02 | |||||||||||||||||||||||||||||||||||||||
| Losses and other charges (A) | 2.0 | (6.7 | ) | 2.4 | (7.0 | ) | ($ | 0.16 | ) | |||||||||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 8.4 | 3.1 | 5.3 | $ | 0.12 | |||||||||||||||||||||||||||||||||||||||
| Intangible amortization expense | 37.1 | 12.7 | 24.3 | $ | 0.56 | |||||||||||||||||||||||||||||||||||||||
| Tax Adjustment (D) | 9.6 | (9.6 | ) | ($ | 0.22 | ) | ||||||||||||||||||||||||||||||||||||||
| Shares due to Teleflex under note hedge (E) | $ | 0.12 | (1,438 | ) | ||||||||||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 629.7 | $ | 328.0 | $ | 33.7 | $ | 53.4 | $ | 153.1 | $ | 3.66 | 41,808 | |||||||||||||||||||||||||||||||
| Nine Months Ended - September 30, 2012 | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | Selling, general and administrative expenses | Goodwill impairment | Restructuring and other impairment charges | Gain/(loss) on sales of businesses and assets | Loss on extinguishment of debt | Interest expense, net | Income taxes | Net income (loss) attributable to common shareholders from continuing operations | Diluted earnings per share available to common shareholders | Shares used in calculation of GAAP and adjusted earnings per share | ||||||||||||||||||||||||||||||||||
| GAAP Basis | $ | 582.9 | $ | 333.0 | $ | 332.1 | $ | 0.1 | $ | 0.3 | $ | 53.6 | $ | 3.0 | ($ | 213.1 | ) | ($ | 5.22 | ) | 40,831 | |||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | 332.1 | 17.0 | 315.1 | $ | 7.72 | |||||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 0.1 | (0.1 | ) | 0.1 | ||||||||||||||||||||||||||||||||||||||||
| Gain/(loss) on sales of businesses and assets | (0.3 | ) | (0.3 | ) | ($ | 0.01 | ) | |||||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | ||||||||||||||||||||||||||||||||||||||||||||
| Losses and other charges (A) | 11.1 | 1.9 | 9.2 | $ | 0.23 | |||||||||||||||||||||||||||||||||||||||
| Early termination of interest rate swap (B) | 11.1 | 4.0 | 7.0 | $ | 0.17 | |||||||||||||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 7.8 | 2.8 | 5.0 | $ | 0.12 | |||||||||||||||||||||||||||||||||||||||
| Intangible amortization expense | 32.3 | 11.8 | 20.5 | $ | 0.50 | |||||||||||||||||||||||||||||||||||||||
| Anti-dilutive effect on EPS (C) | ($ | 0.03 | ) | 368 | ||||||||||||||||||||||||||||||||||||||||
| Tax adjustment (D) | 9.0 | (9.0 | ) | ($ | 0.22 | ) | ||||||||||||||||||||||||||||||||||||||
| Shares due to Teleflex under note hedge (E) | $ | 0.01 | (123 | ) | ||||||||||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 582.9 | $ | 289.6 | $ | 34.8 | $ | 49.4 | $ | 134.6 | $ | 3.28 | 41,076 |
RECONCILIATION OF NET DEBT OBLIGATIONS
| September 29, 2013 | December 31, 2012 | |||||||
| (Dollars in thousands) | ||||||||
| Note payable and current portion of long-term borrowings | $ | 4,700 | $ | 4,700 | ||||
| Long term borrowings | 980,688 | 965,280 | ||||||
| Unamortized debt discount | 51,312 | 59,720 | ||||||
| Total debt obligations | 1,036,700 | 1,029,700 | ||||||
| Less: cash and cash equivalents | 326,437 | 337,039 | ||||||
| Net debt obligations | $ | 710,263 | $ | 692,661 |
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 outcomes and enhance patient and provider safety. Headquartered in Limerick, PA, Teleflex employs approximately 11,200 people worldwide and serves healthcare providers in more than 140 countries. For
additional information about Teleflex please refer to www.teleflex.com.