Full Press Release Details
| Contact: | Jake Elguicze | |||
| Treasurer and Vice President of Investor Relations | ||||
| 610-948-2836 | ||||
| FOR IMMEDIATE RELEASE | February 21, 2014 |
TELEFLEX REPORTS FOURTH QUARTER AND FULL YEAR 2013 RESULTS
Fourth Quarter Revenues Increase 7.5% to $450.5 million; up 6.9% on Constant Currency Basis
Fourth Quarter GAAP Diluted EPS of $0.78; Adjusted Diluted EPS of $1.36 up 18.3%
2014 Guidance Ranges for Constant Currency Revenue Growth of 7% to 9% and Adjusted Diluted EPS of $5.35 to $5.55 Reaffirmed
Limerick, PA Teleflex Incorporated (NYSE: TFX) today announced financial results for the fourth quarter and full year ended December 31,
Fourth quarter 2013 net revenues were $450.5 million, an increase of 7.5% over the prior year period. Excluding the impact of foreign currency
fluctuations, fourth quarter 2013 net revenues increased 6.9% over the prior year period.
Fourth quarter 2013 GAAP diluted earnings per share from
continuing operations were $0.78, as compared to $0.72 in the prior year period. Fourth quarter 2013 adjusted diluted earnings per share from continuing operations were $1.36, as compared to $1.15 in the prior year period, an increase of 18.3%.
Teleflex delivered a strong finish to 2013, both in terms of constant currency revenue growth and adjusted earnings per share achievement, said
Benson Smith, Chairman, President and Chief Executive Officer. Our fourth quarter performance was aided by the contribution from the acquisitions of Vidacare and LMA International, an improvement in the average selling price of products, the
introduction of new products to the marketplace and one additional shipping day in the quarter as compared to the prior year period.
Mr. Smith, As we turn to 2014, Teleflex is well-positioned to continue to exceed industry revenue growth rates and expand adjusted operating margin and earnings per share due to recently concluded dealer negotiations, the acquisition of
Vidacare, the introduction of new products to the market, and the continued integration of the LMA business.
FOURTH QUARTER NET REVENUE BY
PRODUCT GROUP AND SEGMENT
Product Group Revenues
Critical Care fourth quarter 2013 net revenues were $316.7 million, an increase of 10.6% compared to the prior year period. Excluding the impact of foreign
currency fluctuations, fourth quarter 2013 net revenues increased 10.2% compared to the prior year period. The increase in constant currency revenue was due to higher sales of anesthesia, interventional, vascular and urology 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. The growth in sales of
vascular and interventional access products was primarily due to the contribution from the Vidacare Corporation business ( Vidacare ), which was acquired in December of 2013. Constant currency sales growth was partially offset by a decline
in sales of respiratory products.
Surgical Care fourth quarter 2013 net revenues were $80.5 million, an increase of 5.2% compared to the prior year
period. Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues increased 4.0% compared to the prior year period. The increase in constant currency revenue was due to higher sales of ligation, access and suture
products, partially offset by a decline in sales of general surgical instrument and chest drainage products.
Cardiac Care fourth quarter 2013 net
revenues were $19.2 million, a decrease of 6.0% compared to the prior year period on both an as-reported and constant currency basis. The decrease in revenue was due to a decline in sales of intra-aortic balloon pumps.
OEM and Development Services ( OEM ) fourth quarter 2013 net revenues were $34.1 million, a decrease of 4.8% compared to the prior year period.
Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues decreased 5.7% compared to the prior year period. The decrease in constant currency revenue was primarily due to a decline in sales of catheter and performance
| Three Months Ended | % Increase/ (Decrease) | |||||||||||||||||||
| December 31, 2013 | December 31, 2012 | Constant Currency | Foreign Currency | Total Change | ||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||
| Critical Care | $ | 316.7 | $ | 286.5 | 10.2 | % | 0.4 | % | 10.6 | % | ||||||||||
| Surgical Care | 80.5 | 76.5 | 4.0 | % | 1.2 | % | 5.2 | % | ||||||||||||
| Cardiac Care | 19.2 | 20.4 | (6.0 | %) | (6.0 | %) | ||||||||||||||
| OEM | 34.1 | 35.7 | (5.7 | %) | 0.9 | % | (4.8 | %) | ||||||||||||
| Total | $ | 450.5 | $ | 419.1 | 6.9 | % | 0.6 | % | 7.5 | % |
Americas fourth quarter 2013 net revenues were $212.4 million, an increase of 6.2% compared to the prior year period. Excluding the impact of foreign currency
fluctuations, fourth quarter 2013 net revenues increased 6.6% compared to the prior year period. The increase in constant currency revenue was largely due to LMA and Vidacare product sales, new product sales and price increases, partially offset by
lower sales volume of existing products as compared to the fourth quarter of 2012.
EMEA fourth quarter 2013 net revenues were $144.9 million, an increase
of 9.2% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues increased 5.2% compared to the prior year period. The increase in constant currency revenue was due to LMA and
Vidacare product sales, price increases including the benefit of selling direct to customers in some markets versus selling to a third party distributor and higher sales volume of existing products as compared to the fourth quarter of 2012.
Asia fourth quarter 2013 net revenues were $59.1 million, an increase of 17.1% compared to the prior year period. Excluding the impact of foreign currency
fluctuations, fourth quarter 2013 net revenues increased 21.6% 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) | |||||||||||||||||||
| December 31, 2013 | December 31, 2012 | Constant Currency | Foreign Currency | Total Change | ||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||
| Americas | $ | 212.4 | $ | 200.1 | 6.6 | % | (0.4 | %) | 6.2 | % | ||||||||||
| EMEA | 144.9 | 132.8 | 5.2 | % | 4.0 | % | 9.2 | % | ||||||||||||
| Asia | 59.1 | 50.5 | 21.6 | % | (4.5 | %) | 17.1 | % | ||||||||||||
| OEM | 34.1 | 35.7 | (5.7 | %) | 0.9 | % | (4.8 | %) | ||||||||||||
| Total | $ | 450.5 | $ | 419.1 | 6.9 | % | 0.6 | % | 7.5 | % |
revenues for the full year 2013 were $1.696 billion, an increase of 9.4% compared to the prior year period. Excluding the impact of foreign currency fluctuations which had a positive impact of 0.4%, net revenues for 2013 increased 9.0% compared to
GAAP diluted earnings per share from continuing operations were $3.46 for the full year 2013, as compared to a loss per share of ($4.47) 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 full year of 2013 were $5.03, an increase of 13.5% over the prior year.
OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS
Depreciation expense and amortization of intangible assets and deferred financing costs for full year 2013 were $107.9 million compared to $94.9 million for
the prior year period.
Cash and cash equivalents at December 31, 2013 were $432.0 million compared to $337.0 million at December 31, 2012.
Net accounts receivable at December 31, 2013 were $295.3 million compared to $298.0 million at December 31, 2012.
Net inventories at December 31, 2013 were $333.6 million compared to $323.3 million at December 31, 2012.
Net debt obligations at December 31, 2013 were $902.7 million compared to $692.7 million at December 31, 2012. During the fourth quarter of 2013, as
a result of the Company meeting a contingent conversion threshold related to the Company s stock price, the Company s convertible notes have been classified as a current liability as of December 31, 2013. The determination of whether
or not the convertible notes are convertible must continue to be performed on a quarterly basis until maturity or conversion. Consequently, the convertible notes may not be convertible in future quarters, and therefore may again be classified as
long-term debt, if the contingent conversion threshold is not met in such quarters.
The Company reaffirmed full year 2014 financial estimates as follows:
Constant currency revenue growth between 7% and 9% for the full year 2014.
Adjusted diluted earnings per share in the range of $5.35 to $5.55.
FORECASTED 2014 CONSTANT CURRENCY REVENUE GROWTH RECONCILIATION
| Low | High | |||||||
| Forecasted 2014 GAAP revenue growth | 6.0 | % | 8.0 | % | ||||
| Foreign exchange | 1.0 | % | 1.0 | % | ||||
| Forecasted 2014 constant currency revenue growth | 7.0 | % | 9.0 | % |
FORECASTED 2014 ADJUSTED EARNINGS PER SHARE RECONCILIATION
| Low | High | |||||||
| Forecasted 2014 diluted earnings per share attributable to common shareholders | $ | 3.60 | $ | 3.75 | ||||
| Restructuring, impairment charges and special items, net of tax | $ | 0.65 | $ | 0.70 | ||||
| Intangible amortization expense, net of tax | $ | 0.93 | $ | 0.93 | ||||
| Amortization of debt discount on convertible notes, net of tax | $ | 0.17 | $ | 0.17 | ||||
| Forecasted 2014 adjusted diluted earnings per share | $ | 5.35 | $ | 5.55 |
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 28, 2014 at 11:59pm (ET), by calling
888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 68453301.
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:
Adjusted diluted earnings per share. This measure excludes, depending on the period
presented (i) the effect of charges associated with our restructuring programs, as well as goodwill and other asset impairment charges; (ii) loss on extinguishment of debt; (iii) the gain or loss on sales of businesses and assets;
(iv) losses and other charges related to acquisition costs, the reversal of liabilities related
to certain contingent consideration arrangements and a previously announced stock keeping unit rationalization program, the establishment of a litigation reserve and a litigation verdict against
the Company with respect to a non-operating joint venture; (v) amortization of the debt discount on the Company s convertible notes; (vi) charges associated with the amortization of additional interest expense related to an interest
rate swap terminated in 2011; (vii) intangible amortization expense; and (viii) tax benefits resulting from the resolution of prior years tax matters and the filing of prior years amended tax returns. In addition, the
calculation of diluted shares within adjusted earnings per share gives effect to the anti-dilutive impact of the Company s convertible note hedge agreements, which reduce the potential economic dilution that otherwise would occur upon
conversion of the Company s senior subordinated convertible notes (under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares).
Constant currency revenue. This measure excludes the impact of translating the results of international subsidiaries at different currency exchange rates from
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.
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
Quarter Ended December 31, 2013
| Cost of goods sold | Selling, general and administrative expenses | Research and development expenses | Restructuring and other impairment charges | 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 | $ | 225.6 | $ | 143.8 | $ | 17.9 | $ | 9.2 | $ | 14.2 | $ | 4.6 | $ | 35.1 | $ | 0.78 | 45,033 | |||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 9.2 | 1.7 | 7.6 | $ | 0.17 | |||||||||||||||||||||||||||||||
| Losses and other charges (A) | 0.3 | 8.2 | 0.5 | 2.5 | 6.5 | $ | 0.14 | |||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 2.9 | 1.1 | 1.8 | $ | 0.04 | |||||||||||||||||||||||||||||||
| Intangible amortization expense | 13.5 | 4.5 | 9.0 | $ | 0.20 | |||||||||||||||||||||||||||||||
| Tax Adjustment (B) | 1.5 | (1.5 | ) | ($ | 0.03 | ) | ||||||||||||||||||||||||||||||
| Shares due to Teleflex under note hedge (C) | $ | 0.06 | (2,165 | ) | ||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 225.3 | $ | 122.0 | $ | 17.3 | $ | 11.3 | $ | 15.8 | $ | 58.5 | $ | 1.36 | 42,868 |
Quarter Ended December 31, 2012
| Cost of goods sold | Selling, general and administrative expenses | Research and development expenses | Restructuring and other impairment charges | 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 | $ | 219.9 | $ | 121.5 | $ | 16.3 | $ | 3.0 | $ | 14.4 | $ | 13.5 | $ | 30.4 | $ | 0.72 | 42,007 | |||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 3.0 | 0.6 | 2.3 | $ | 0.06 | |||||||||||||||||||||||||||||||
| Losses and other charges (A) | 0.5 | 3.0 | (1.9 | ) | 5.4 | $ | 0.13 | |||||||||||||||||||||||||||||
| 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 (B) | ||||||||||||||||||||||||||||||||||||
| Shares due to Teleflex under note hedge (C) | $ | 0.02 | (733 | ) | ||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 219.4 | $ | 106.5 | $ | 16.3 | $ | 11.7 | $ | 17.3 | $ | 47.6 | $ | 1.15 | 41,274 |
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
Twelve Months Ended December 31, 2013
| Cost of goods sold | Selling, general and administrative expenses | Research and development 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 | $ | 857.3 | $ | 502.2 | $ | 65.0 | $ | 38.5 | $ | 1.3 | $ | 56.3 | $ | 23.5 | $ | 151.3 | $ | 3.46 | 43,693 | |||||||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 38.5 | 7.8 | 30.7 | $ | 0.71 | |||||||||||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | 1.3 | 0.5 | 0.8 | $ | 0.02 | |||||||||||||||||||||||||||||||||||||||||||
| Losses and other charges (A) | 2.3 | 1.5 | 0.5 | 4.9 | (0.6 | ) | ($ | 0.02 | ) | |||||||||||||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes | 11.3 | 4.1 | 7.2 | $ | 0.16 | |||||||||||||||||||||||||||||||||||||||||||
| Intangible amortization expense | 50.6 | 17.3 | 33.4 | $ | 0.76 | |||||||||||||||||||||||||||||||||||||||||||
| Tax Adjustment (D) | 11.1 | (11.1 | ) | ($ | 0.25 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Shares due to Teleflex under note hedge (E) | $ | 0.19 | (1,620 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 855.1 | $ | 450.1 | $ | 64.5 | $ | 45.0 | $ | 69.2 | $ | 211.6 | $ | 5.03 | 42,073 |
Twelve Months Ended December 31, 2012
| Cost of goods sold | Selling, general and administrative expenses | Research and development 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 | $ | 802.8 | $ | 454.5 | $ | 56.3 | $ | 332.1 | $ | 3.0 | $ | 0.3 | $ | 68.0 | $ | 16.4 | ($ | 182.7 | ) | ($ | 4.47 | ) | 40,859 | |||||||||||||||||||||||||
| Adjustments | ||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | 332.1 | 17.0 | 315.1 | $ | 7.71 | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other impairment charges | 3.0 | 0.6 | 2.5 | $ | 0.06 | |||||||||||||||||||||||||||||||||||||||||||
| Gain/(loss) on sales of businesses and assets | (0.3 | ) | (0.3 | ) | ($ | 0.01 | ) | |||||||||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | ||||||||||||||||||||||||||||||||||||||||||||||||
| Losses and other charges (A) | 0.5 | 14.2 | 14.6 | $ | 0.36 | |||||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||||
| Anti-dilutive effect on EPS (C) | ($ | 0.06 | ) | 542 | ||||||||||||||||||||||||||||||||||||||||||||
| Tax adjustment (D) | 9.0 | (9.0 | ) | ($ | 0.22 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Shares due to Teleflex under note hedge (E) | $ | 0.03 | (275 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted basis | $ | 802.3 | $ | 396.0 | $ | 56.3 | $ | 46.5 | $ | 66.7 | $ | 182.2 | $ | 4.43 | 41,126 |
RECONCILIATION OF NET DEBT OBLIGATIONS
| December 31, 2013 | December 31, 2012 | |||||||
| (Dollars in thousands) | ||||||||
| Note payable and current portion of long-term borrowings | $ | 356,287 | $ | 4,700 | ||||
| Long term borrowings | 930,000 | 965,280 | ||||||
| Unamortized debt discount | 48,413 | 59,720 | ||||||
| Total debt obligations | 1,334,700 | 1,029,700 | ||||||
| Less: cash and cash equivalents | 431,984 | 337,039 | ||||||
| Net debt obligations | $ | 902,716 | $ | 692,661 |
ABOUT TELEFLEX INCORPORATED