Teleflex Incorporated (NYSE: TFX) (the “Company”) today announced
financial results for the second quarter ended June 30, 2019.
Second quarter 2019 net revenues were $652.5
million, an increase of 7% compared to the prior year period.
Excluding the impact of foreign currency exchange rate
fluctuations, second quarter 2019 net revenues increased 9.6% over
the year ago period.
Second quarter 2019 GAAP earnings per share from
continuing operations were $1.77, compared to GAAP earnings per
share of ($0.06) in the prior year period. Second quarter
2019 adjusted diluted earnings per share from continuing operations
increased 7.7% to $2.66, compared to $2.47 in the prior year
period.
Liam Kelly, President and Chief Executive
Officer, said, “In the second quarter of 2019 we accelerated our
growth rate from the first quarter, delivering 9.6% constant
currency revenue growth. We continue to see strength across nearly
every global product category, with Interventional Urology,
Vascular Access, Surgical, and Interventional each producing strong
results. Based on the momentum we've generated during the first six
months of the year, as well as our outlook for the remainder of the
year, we are increasing our full year constant currency revenue
growth guidance from a range of between 6% and 7%, to a range of
between 7.5% and 8%."
Mr. Kelly continued, "The increase in our
constant currency revenue growth expectations are due to a
multitude of Teleflex products, including increased expectations
for our Interventional Urology products, as UroLift continues to
generate robust physician adoption, generating $67.9 million in
second quarter revenues, up 42.7% on a constant currency basis
compared to the prior year period. Based on its strong performance
in the first half of the year, we are increasing our UroLift full
year 2019 revenue growth guidance from approximately 30% to
approximately 35%."
Mr. Kelly concluded, "In addition to strong
second quarter top-line performance, second quarter adjusted
diluted earnings per share increased 7.7%. Finally, despite
worsening headwinds from foreign currency exchange rate volatility
as compared to our initial expectations, we are reaffirming our
full year adjusted diluted earnings per share guidance range of
between $10.90 and $11.10."
NET REVENUE BY SEGMENT
The following table provides information
regarding net revenues in each of the Company's reportable
operating segments for the three and six months ended June 30, 2019
and July 1, 2018 on both a GAAP and constant currency basis. The
discussion below the table of the principal factors behind changes
in net revenues for the three months ended June 30, 2019 as
compared to the prior year period applies to both GAAP revenue and
constant currency revenue, although GAAP revenue also was affected
by foreign currency exchange rate fluctuations, as indicated in the
"Currency Impact" column of the table.
|
|
Three Months
Ended |
|
% Increase /
(Decrease) |
| |
June 30, 2019 |
|
July 1, 2018 |
|
Total Sales Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
|
Americas |
$ |
373.8 |
|
|
$ |
331.5 |
|
|
12.8 |
|
% |
|
(0.3 |
) |
% |
|
13.1 |
|
% |
|
| EMEA |
|
147.1 |
|
|
|
153.4 |
|
|
(4.2 |
) |
% |
|
(6.1 |
) |
% |
|
1.9 |
|
% |
|
| Asia |
|
75.2 |
|
|
|
72.4 |
|
|
3.9 |
|
% |
|
(6.1 |
) |
% |
|
10.0 |
|
% |
|
| OEM |
|
56.4 |
|
|
|
52.6 |
|
|
7.3 |
|
% |
|
(1.2 |
) |
% |
|
8.5 |
|
% |
|
|
Total |
$ |
652.5 |
|
|
$ |
609.9 |
|
|
7.0 |
|
% |
|
(2.6 |
) |
% |
|
9.6 |
|
% |
|
|
|
Six Months
Ended |
|
% Increase /
(Decrease) |
| |
June 30, 2019 |
|
July 1, 2018 |
|
Total Sales Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
|
Americas |
$ |
717.8 |
|
|
$ |
654.8 |
|
|
9.6 |
|
% |
|
(0.3 |
) |
% |
|
9.9 |
|
% |
|
| EMEA |
|
301.6 |
|
|
|
313.3 |
|
|
(3.7 |
) |
% |
|
(6.9 |
) |
% |
|
3.2 |
|
% |
|
| Asia |
|
136.0 |
|
|
|
130.6 |
|
|
4.1 |
|
% |
|
(6.3 |
) |
% |
|
10.4 |
|
% |
|
| OEM |
|
110.7 |
|
|
|
98.4 |
|
|
12.4 |
|
% |
|
(1.5 |
) |
% |
|
13.9 |
|
% |
|
|
Total |
$ |
1,266.1 |
|
|
$ |
1,197.1 |
|
|
5.8 |
|
% |
|
(2.8 |
) |
% |
|
8.6 |
|
% |
|
Americas second quarter 2019 net revenues were
$373.8 million, an increase of 12.8% compared to the prior year
period. Excluding the impact of foreign currency exchange
rate fluctuations, second quarter 2019 net revenues increased 13.1%
compared to the prior year period. The increase in constant
currency revenue is primarily attributable to an increase in sales
volumes of existing products.
EMEA second quarter 2019 net revenues were
$147.1 million, a decrease of 4.2% compared to the prior year
period. Excluding the impact of foreign currency exchange rate
fluctuations, second quarter 2019 net revenues increased 1.9%
compared to the prior year period. The increase in constant
currency revenue is primarily attributable to an increase in new
product sales and revenues generated by acquired businesses.
Asia second quarter 2019 net revenues were $75.2
million, an increase of 3.9% compared to the prior year
period. Excluding the impact of foreign currency exchange
rate fluctuations, second quarter 2019 net revenues increased 10.0%
compared to the prior year period. The increase in constant
currency revenue is primarily attributable to an increase in sales
volumes of existing products, an increase in new product sales, and
revenue generated by an acquired business.
OEM second quarter 2019 net revenues were $56.4
million, an increase of 7.3% compared to the prior year
period. Excluding the impact of foreign currency exchange
rate fluctuations, second quarter 2019 net revenues increased 8.5%
compared to the prior year period. The increase in constant
currency revenue is primarily attributable to an increase in sales
volumes of existing products.
NET REVENUE BY GLOBAL PRODUCT
CATEGORY
The following table and commentary provides
information regarding net revenues in each of the Company's global
product categories for the three and six months ended June 30, 2019
and July 1, 2018 on both a GAAP and constant currency basis.
|
|
Three Months
Ended |
|
|
% Increase /
(Decrease) |
| |
June 30, 2019 |
|
July 1, 2018 |
|
|
Total Sales Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
|
Vascular Access |
$ |
153.6 |
|
|
$ |
140.2 |
|
|
9.6 |
|
% |
|
(2.4 |
) |
% |
|
12.0 |
|
% |
|
| Interventional |
|
104.8 |
|
|
|
98.2 |
|
|
6.7 |
|
% |
|
(2.1 |
) |
% |
|
8.8 |
|
% |
|
| Anesthesia |
|
85.7 |
|
|
|
89.3 |
|
|
(4.0 |
) |
% |
|
(3.1 |
) |
% |
|
(0.9 |
) |
% |
|
| Surgical |
|
95.6 |
|
|
|
90.5 |
|
|
5.6 |
|
% |
|
(3.4 |
) |
% |
|
9.0 |
|
% |
|
| Interventional Urology |
|
67.9 |
|
|
|
47.7 |
|
|
42.5 |
|
% |
|
(0.2 |
) |
% |
|
42.7 |
|
% |
|
| OEM |
|
56.4 |
|
|
|
52.6 |
|
|
7.3 |
|
% |
|
(1.2 |
) |
% |
|
8.5 |
|
% |
|
| Other |
|
88.4 |
|
|
|
91.4 |
|
|
(3.3 |
) |
% |
|
(3.6 |
) |
% |
|
0.3 |
|
% |
|
|
Total |
$ |
652.5 |
|
|
$ |
609.9 |
|
|
7.0 |
|
% |
|
(2.6 |
) |
% |
|
9.6 |
|
% |
|
|
|
Six Months
Ended |
|
|
% Increase /
(Decrease) |
| |
June 30, 2019 |
|
July 1, 2018 |
|
|
Total Sales Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
|
Vascular Access |
$ |
297.5 |
|
|
$ |
284.2 |
|
|
4.7 |
|
% |
|
(2.5 |
) |
% |
|
7.2 |
|
% |
|
| Interventional |
|
208.0 |
|
|
|
188.3 |
|
|
10.4 |
|
% |
|
(2.4 |
) |
% |
|
12.8 |
|
% |
|
| Anesthesia |
|
166.0 |
|
|
|
174.2 |
|
|
(4.7 |
) |
% |
|
(3.5 |
) |
% |
|
(1.2 |
) |
% |
|
| Surgical |
|
182.3 |
|
|
|
176.1 |
|
|
3.5 |
|
% |
|
(3.5 |
) |
% |
|
7.0 |
|
% |
|
| Interventional Urology |
|
127.7 |
|
|
|
90.0 |
|
|
41.9 |
|
% |
|
(0.2 |
) |
% |
|
42.1 |
|
% |
|
| OEM |
|
110.7 |
|
|
|
98.4 |
|
|
12.4 |
|
% |
|
(1.5 |
) |
% |
|
13.9 |
|
% |
|
| Other |
|
174.0 |
|
|
|
185.8 |
|
|
(6.4 |
) |
% |
|
(4.0 |
) |
% |
|
(2.4 |
) |
% |
|
|
Total |
$ |
1,266.1 |
|
|
$ |
1,197.1 |
|
|
5.8 |
|
% |
|
(2.8 |
) |
% |
|
8.6 |
|
% |
|
Second quarter 2019 net revenues from sales of
Vascular Access products were $153.6 million, an increase of 9.6%
compared to the prior year period. Excluding the impact of
foreign currency exchange rate fluctuations, second quarter 2019
net revenues increased 12% compared to the prior year period.
Second quarter 2019 net revenues from sales of
Interventional products were $104.8 million, an increase of 6.7%
compared to the prior year period. Excluding the impact of
foreign currency exchange rate fluctuations, second quarter 2019
net revenues increased 8.8% compared to the prior year period.
Second quarter 2019 net revenues from sales of
Anesthesia products were $85.7 million, a decrease of 4.0% compared
to the prior year period. Excluding the impact of foreign
currency exchange rate fluctuations, second quarter 2019 net
revenues decreased 0.9% compared to the prior year period.
Second quarter 2019 net revenues from sales of
Surgical products were $95.6 million, an increase of 5.6% compared
to the prior year period. Excluding the impact of foreign
currency exchange rate fluctuations, second quarter 2019 net
revenues increased 9% compared to the prior year period.
Second quarter 2019 net revenues from sales of
Interventional Urology products were $67.9 million, an increase of
42.5% compared to the prior year period. Excluding the impact of
foreign currency exchange rate fluctuations, second quarter 2019
net revenues increased 42.7% compared to the prior year period.
Second quarter 2019 net revenues from sales of
OEM products were $56.4 million, an increase of 7.3% compared to
the prior year period. Excluding the impact of foreign
currency exchange rate fluctuations, second quarter 2019 net
revenues increased 8.5% compared to the prior year period.
Second quarter 2019 net revenues from sales of
other products were $88.4 million, a decrease of 3.3% compared to
the prior year period. Excluding the impact of foreign
currency exchange rate fluctuations, second quarter 2019 net
revenues increased 0.3% compared to the prior year period.
OTHER FINANCIAL HIGHLIGHTS AND KEY
PERFORMANCE METRICS
Depreciation expense, amortization of intangible
assets and deferred financing charges for the first six months of
2019 totaled $109.5 million compared to $106.9 million for the
prior year period.
Cash and cash equivalents at June 30, 2019 were
$303.9 million compared to $357.2 million at December 31, 2018.
Net accounts receivable at June 30, 2019 were
$382.1 million compared to $366.3 million at December 31, 2018.
Net inventories at June 30, 2019 were $461.3
million compared to $427.8 million at December 31, 2018.
2019 OUTLOOK
The Company raised its full year 2019 revenue
guidance range from an increase of between 5% and 6% over the prior
year on a GAAP basis, to a range of between 6% and 6.5% over the
prior year on a GAAP basis. The Company increased its estimate of
the unfavorable impact of foreign currency exchange rate
fluctuations on full year 2019 revenues from approximately 1% to
approximately 1.5%. The Company raised its full year 2019 revenue
guidance on a constant currency basis from a range of between 6%
and 7%, to a range of between 7.5% and 8%.
The Company raised its full year 2019 GAAP
diluted earnings per share from continuing operations guidance from
a range of between $6.72 and $6.84 to a range of between $6.82 and
$6.94. The Company reaffirmed adjusted diluted earnings per share
from continuing operations to be between $10.90 and $11.10 for full
year 2019, representing an increase of between 10.1% and 12.1% over
2018, and reflecting our estimate of an approximately 3.5% negative
impact from foreign currency exchange rate fluctuations.
Forecasted 2019 Constant Currency Revenue Growth
Reconciliation
| |
Low |
High |
| |
|
|
|
Forecasted 2019 GAAP revenue growth |
6.0 |
|
% |
6.5 |
|
% |
| |
|
|
|
Estimated impact of foreign currency exchange rate
fluctuations |
(1.5 |
) |
% |
(1.5 |
) |
% |
| |
|
|
|
Forecasted 2019 constant currency revenue growth |
7.5 |
|
% |
8.0 |
|
% |
Forecasted 2019 Adjusted Diluted Earnings Per
Share From Continuing Operations Reconciliation
| |
Low |
High |
| |
|
|
|
Forecasted GAAP diluted earnings per share from continuing
operations |
$6.82 |
|
|
$6.94 |
|
|
| |
|
|
|
Restructuring, restructuring related and impairment items, net of
tax |
$0.83 |
|
|
$0.86 |
|
|
| |
|
|
|
Acquisition, integration and divestiture related items, net of
tax |
$0.80 |
|
|
$0.82 |
|
|
| |
|
|
|
|
|
|
Other items, net of tax |
$0.11 |
|
|
$0.12 |
|
|
| |
|
|
|
|
|
|
Intangible amortization expense, net of tax |
$2.58 |
|
|
$2.60 |
|
|
| |
|
|
|
|
|
|
Tax adjustments |
($0.24 |
) |
|
($0.24) |
|
|
| |
|
|
|
|
|
|
Forecasted adjusted diluted earnings per share from continuing
operations |
$10.90 |
|
|
$11.10 |
|
|
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 August 6, 2019 at 11:00pm (ET), by
calling 855-859-2056 (U.S./Canada) or 404-537-3406 (International),
Passcode: 8346258.
ADDITIONAL NOTES
References in this release to the impact of
foreign currency exchange rate fluctuations on adjusted diluted
earnings per share include both the impact of translating foreign
currencies into U.S. dollars and the impact of foreign currency
exchange rate fluctuations on foreign currency denominated
transactions.
In the discussion of segment results, "new
products" refers to products for which we initiated commercial
sales within the past 36 months and "existing products" refers to
products we have sold commercially for more than 36 months.
Certain financial information is presented on a
rounded basis, which may cause minor differences.
Segment results and commentary exclude the
impact of discontinued operations.
NOTES ON NON-GAAP FINANCIAL
MEASURES
We report our financial results in accordance
with accounting principles generally accepted in the United States,
commonly referred to as “GAAP.” In this press release, we
provide supplemental information, consisting of the following
non-GAAP financial measures: constant currency revenue growth and
adjusted diluted earnings per share. These non-GAAP measures are
described in more detail below. Management uses these
financial measures to assess Teleflex’s financial performance, make
operating decisions, allocate financial resources, provide guidance
on possible future results, and assist in its evaluation of
period-to-period and peer comparisons. The non-GAAP measures may be
useful to investors because they provide insight into management’s
assessment of our business, and provide supplemental information
pertinent to a comparison of period-to-period results of our
ongoing operations. The non-GAAP financial measures are
presented in addition to results presented in accordance with GAAP
and should not be relied upon as a substitute for GAAP financial
measures. Moreover, our non-GAAP financial measures may not be
comparable to similarly titled measures used by other
companies.
Tables reconciling changes in historical
constant currency net revenues to historical GAAP net revenues are
set forth above under “Net Revenue by Segment." Tables
reconciling historical adjusted diluted earnings per share from
continuing operations to historical GAAP diluted earnings per share
from continuing operations are set forth below. Tables
reconciling forecasted 2019 constant currency revenue growth and
forecasted 2019 adjusted earnings per share from continuing
operations to their respective most directly comparable forecasted
GAAP measures, which are forecasted 2019 GAAP revenue growth and
forecasted 2019 GAAP diluted earnings per share from continuing
operations, respectively, are set forth above under “2019
Outlook.”
Constant currency revenue
growth: This non-GAAP measure is based upon net revenues,
adjusted to eliminate the impact of translating the results of
international subsidiaries at different currency exchange rates
from period to period. The impact of changes in foreign currency
may vary significantly from period to period, and generally are
outside of the control of our management. We believe that this
measure facilitates a comparison of our operating performance
exclusive of currency exchange rate fluctuations that do not
reflect our underlying performance or business trends.
Adjusted diluted earnings per
share: This non-GAAP measure is based upon diluted
earnings per share from continuing operations, the most directly
comparable GAAP measure, adjusted to exclude, depending on the
period presented, the items described below. Management does not
believe that any of the excluded items are indicative of our
underlying core performance or business trends.
Restructuring, restructuring related and
impairment items - Restructuring programs involve discrete
initiatives designed to, among other things, consolidate or
relocate manufacturing, administrative and other facilities,
outsource distribution operations, improve operating efficiencies
and integrate acquired businesses. Depending on the specific
restructuring program involved, our restructuring charges may
include employee termination, contract termination, facility
closure, employee relocation, equipment relocation, outplacement
and other exit costs associated with the restructuring
program. Restructuring related charges are directly related
to our restructuring programs and consist of facility consolidation
costs, including accelerated depreciation expense related to
facility closures, costs to transfer manufacturing operations
between locations, and retention bonuses offered to certain
employees as an incentive for them to remain with our company after
completion of the restructuring program. Impairment charges occur
if, due to events or changes in circumstances, we determine that
the carrying value of an asset exceeds its fair value. Impairment
charges do not directly affect our liquidity, but could have a
material adverse effect on our reported financial results.
Acquisition, integration and divestiture related
items - Acquisition and integration expenses are incremental
charges, other than restructuring or restructuring related
expenses, that are directly related to specific business or asset
acquisition transactions. These charges may include, among
other things, professional, consulting and other fees; systems
integration costs; legal entity restructuring expense; inventory
step-up amortization (amortization, through cost of goods sold, of
the increase in fair value of inventory resulting from a fair value
calculation as of the acquisition date); fair value adjustments to
contingent consideration liabilities; and bridge loan facility and
backstop financing fees in connection with loan facilities that
ultimately were not utilized. Divestiture related activities
involve specific business or asset sales. Depending primarily
on the terms of a divestiture transaction, the carrying value of
the divested business or assets on our financial statements and
other costs we incur as a direct result of the divestiture
transaction, we may recognize a gain or loss in connection with the
divestiture related activities.
Other items - These are discrete items that
occur sporadically and can affect period-to-period comparisons. See
footnote C to the reconciliation tables set forth below.
European medical device regulation - The
European Union (“EU”) has adopted the EU Medical Device Regulation
(“MDR”), which replaces the existing Medical Devices Directive
(“MDD”) and imposes more stringent requirements for the marketing
and sale of medical devices in the EU, including requirements
affecting clinical evaluations, quality systems and post-market
surveillance. Manufacturers of currently marketed medical
devices will have until May 2020 to meet the MDR requirements,
although certain devices that previously satisfied MDD requirements
can continue to be placed on the EU market until May 2024, subject
to certain limitations. Significantly, the MDR will require
the re-registration of previously approved medical devices.
As a result, Teleflex will incur expenditures in connection with
the new registration of medical devices that previously had been
registered under the MDD. Therefore, these expenditures are not
considered to be ordinary course expenditures in connection with
regulatory matters (in contrast, no adjustment has been made to
exclude expenditures related to the registration of medical devices
that were not registered previously under the MDD).
Intangible amortization expense - Certain
intangible assets, including customer relationships, intellectual
property, distribution rights, trade names and non-competition
agreements, initially are recorded at historical cost and then
amortized over their respective estimated useful lives. The amount
of such amortization can vary from period to period as a result of,
among other things, business or asset acquisitions or
dispositions.
Tax adjustments - These adjustments represent
the impact of the expiration of applicable statutes of limitations
for prior year returns, the resolution of audits, the filing of
amended returns with respect to prior tax years and/or tax law
changes affecting our deferred tax liability.
RECONCILIATION OF CONSOLIDATED STATEMENT
OF INCOME ITEMSDollars in millions, except per
share amounts
| Quarter
Ended - June 30, 2019 |
| |
| |
Cost of goods sold |
Selling, generaland administrative expenses |
Research and development expenses |
Restructuringandimpairment charges |
Income taxes |
Income (loss) from continuing operations |
Diluted earningsper share from continuing
operations |
| GAAP
Basis |
$ |
279.6 |
|
$236.2 |
|
$27.6 |
|
$1.7 |
|
$3.8 |
|
$83.3 |
|
$1.77 |
|
| Adjustments |
|
|
|
|
|
|
|
|
Restructuring, restructuring related and impairment items (A) |
|
3.6 |
|
|
0.0 |
|
|
0.0 |
|
|
1.7 |
|
|
1.5 |
|
|
3.9 |
|
$0.08 |
|
| Acquisition,
integration and divestiture related items (B) |
|
— |
|
|
12.6 |
|
|
— |
|
|
— |
|
|
0.0 |
|
|
12.6 |
|
$0.27 |
|
| Other items
(C) |
|
— |
|
|
1.4 |
|
|
— |
|
|
— |
|
|
0.3 |
|
|
1.0 |
|
$0.02 |
|
| MDR (D) |
|
— |
|
|
— |
|
|
0.3 |
|
|
— |
|
|
— |
|
|
0.3 |
|
$0.01 |
|
| Intangible
amortization expense |
|
— |
|
|
37.4 |
|
|
0.1 |
|
|
— |
|
|
7.7 |
|
|
29.8 |
|
$0.63 |
|
| Tax
adjustments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.0 |
|
|
(6.0 |
) |
($0.13 |
) |
| Adjusted
basis |
$ |
275.9 |
|
$184.8 |
|
$27.1 |
|
|
— |
|
$19.3 |
|
$125.0 |
|
$2.66 |
|
RECONCILIATION OF CONSOLIDATED STATEMENT
OF INCOME ITEMSDollars in millions, except per
share amounts
| Quarter
Ended - July 1, 2018 |
| |
| |
Cost of goods sold |
Selling, general and administrative expenses |
Research and development expenses |
Restructuring and impairment charges |
Income taxes |
Income (loss) from continuing operations |
Diluted earnings per share from continuing
operations |
Shares used in calculation of GAAP and adjusted earnings
per share |
| GAAP Basis |
$265.1 |
|
$229.9 |
|
$26.0 |
|
$55.4 |
|
$9.6 |
|
($2.6 |
) |
($0.06 |
) |
45,581 |
|
| Adjustments |
|
|
|
|
|
|
|
|
|
Restructuring, restructuring related and impairment items (A) |
|
3.6 |
|
|
— |
|
|
0.1 |
|
|
55.4 |
|
|
1.1 |
|
|
57.8 |
|
$1.24 |
|
— |
|
| Acquisition,
integration and divestiture related items (B) |
|
0.4 |
|
|
26.9 |
|
|
0.2 |
|
|
— |
|
|
(0.2 |
) |
|
27.6 |
|
$0.59 |
|
— |
|
| Other items
(C) |
|
(0.4 |
) |
|
2.1 |
|
|
— |
|
|
— |
|
|
(0.0 |
) |
|
1.7 |
|
$0.04 |
|
— |
|
| Anti-dilutive
effect on EPS (E) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$0.00 |
|
1,219 |
|
| Intangible
amortization expense |
|
— |
|
|
37.1 |
|
|
0.1 |
|
|
— |
|
|
6.7 |
|
|
30.5 |
|
$0.65 |
|
— |
|
| Tax
adjustments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
|
0.4 |
|
$0.01 |
|
— |
|
| Adjusted
basis |
$261.5 |
|
$163.9 |
|
$25.7 |
|
|
— |
|
$16.8 |
|
$115.5 |
|
$2.47 |
|
46,800 |
|
- Restructuring, restructuring related and impairment
items - For the three months ended June 30, 2019
pre-tax restructuring charges reflected a net restructuring credit
of $2.2 million, primarily related to changes in estimates with
respect to termination benefits. Pre-tax restructuring related
charges were $3.7 million, and pre-tax impairment charges were $3.9
million. For the three months ended July 1, 2018, pre-tax
restructuring charges were $53.5 million, pre-tax restructuring
related charges were $3.6 million, and pre-tax impairment charges
were $1.9 million.
- Acquisition, integration and divestiture related
items - For the three months ended June 30, 2019 and July
1, 2018, these charges primarily related to contingent
consideration liabilities and our acquisition of NeoTract.
- Other items - For the three months ended June
30, 2019, other items included debt modification expenses, and
relabeling costs. For the three months ended July 1, 2018,
these items included the reversal of previously recognized income
due to distributor acquisitions related to Vascular Solutions and
relabeling costs. In addition, the items related to the three
months ended July 1, 2018 included a charge we incurred as a result
of our continuing evaluation of the impact of the Tax Cuts and Jobs
Act ("TCJA") on our consolidated operations. During the
second quarter of 2018, we identified provisions of the TCJA that
could have adverse consequences due to our organization
structure. We implemented certain changes in our organization
structure (with, pursuant to tax law, retroactive impact back to
2017), and as a result of which we incurred a $1.9 million net
worth tax in a foreign jurisdiction with respect to the 2017 tax
year. Because the decision to make the change resulting
in the net worth tax occurred in the second quarter of 2018, and as
permitted under GAAP, we recorded the net worth tax charge in 2018,
and the adjustment eliminating the charge is included in the table
above among "Other Items" for the 2018 period.
- MDR - For the three months ended June 30,
2019, these costs are associated with our initiatives to comply
with the European Medical Device Regulation initiatives.
- Anti-dilutive effect on EPS - We recorded a
GAAP net loss in the second quarter 2018. Because any
increase in the weighted average number of shares would decrease
the loss per share and would therefore be antidilutive, the same
weighted average number of shares was utilized to calculate both
GAAP loss per share and GAAP diluted loss per share. However,
on an adjusted basis, we realized net income. Therefore, in
calculating adjusted earnings per share, we increased the weighted
average number of shares outstanding to include dilutive
securities.
RECONCILIATION OF CONSOLIDATED STATEMENT
OF INCOME ITEMSDollars in millions, except per
share amounts
| Six
Months Ended - June 30, 2019 |
| |
| |
Cost of goods sold |
Selling, general and administrative expenses |
Research and development expenses |
Restructuring and impairment charges |
(Gain)/Loss on sale of businesses &
assets |
Income taxes |
Income (loss) from continuing operations |
Diluted earnings per share from continuing
operations |
| GAAP
Basis |
$548.4 |
|
$463.9 |
|
$54.7 |
|
$19.1 |
|
($2.7 |
) |
$14.8 |
|
$125.2 |
|
$2.67 |
|
| Adjustments |
|
|
|
|
|
|
|
|
|
Restructuring, restructuring related and impairment items (A) |
|
6.7 |
|
|
0.0 |
|
|
0.0 |
|
|
19.1 |
|
|
— |
|
|
3.4 |
|
|
22.4 |
|
$0.48 |
|
| Acquisition,
integration and divestiture related items (B) |
|
— |
|
|
26.2 |
|
|
— |
|
|
— |
|
|
(2.7 |
) |
|
(1.9 |
) |
|
25.3 |
|
$0.54 |
|
| Other items
(C) |
|
— |
|
|
2.4 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.6 |
|
|
1.8 |
|
$0.04 |
|
| MDR (D) |
|
— |
|
|
— |
|
|
0.6 |
|
|
— |
|
— |
|
|
— |
|
|
0.6 |
|
$0.01 |
|
| Intangible
amortization expense |
|
— |
|
|
75.1 |
|
|
0.2 |
|
|
— |
|
|
— |
|
|
15.4 |
|
|
59.9 |
|
$1.27 |
|
| Tax
adjustments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5.3 |
|
|
(5.3 |
) |
($0.11 |
) |
| Adjusted
basis |
$541.8 |
|
$360.2 |
|
$53.9 |
|
|
— |
|
|
— |
|
$37.6 |
|
$230.0 |
|
$4.90 |
|
RECONCILIATION OF CONSOLIDATED STATEMENT
OF INCOME ITEMSDollars in millions, except per
share amounts
| Six
Months Ended - July 1, 2018 |
| |
| |
Cost of goods sold |
Selling, general and administrative expenses |
Research and development expenses |
Restructuring and impairment charges |
Income taxes |
Income (loss) from continuing operations |
Diluted earnings per share from continuing
operations |
| GAAP Basis |
$521.0 |
|
$445.3 |
|
$52.0 |
|
$58.4 |
$15.8 |
|
$52.4 |
|
$1.12 |
|
| Adjustments |
|
|
|
|
|
|
|
|
Restructuring, restructuring related and impairment items (A) |
|
5.5 |
|
|
0.1 |
|
|
0.1 |
|
|
58.4 |
|
|
1.8 |
|
|
62.3 |
|
$1.33 |
|
| Acquisition,
integration and divestiture related items (B) |
|
0.7 |
|
|
38.4 |
|
|
0.4 |
|
|
— |
|
|
0.4 |
|
|
39.1 |
|
$0.84 |
|
| Other items
(C) |
|
(1.3 |
) |
|
2.2 |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
1.0 |
|
$0.02 |
|
| Intangible
amortization expense |
|
— |
|
|
74.8 |
|
|
0.2 |
|
|
— |
|
|
14.2 |
|
|
60.8 |
|
$1.30 |
|
| Tax
adjustments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
0.6 |
|
$0.01 |
|
| Adjusted
basis |
$516.2 |
|
$329.8 |
|
$51.3 |
|
|
— |
|
$31.5 |
|
$216.1 |
|
$4.62 |
|
- Restructuring, restructuring related and impairment
items - For the six months ended June 30, 2019
pre-tax restructuring charges were $12.2 million, pre-tax
restructuring related charges were $6.7 million, and pre-tax
impairment charges were $6.9 million. For the six months
ended July 1, 2018, pre-tax restructuring charges were $56.6
million, pre-tax restructuring related charges were $5.7 million,
and pre-tax impairment charges were $1.9 million.
- Acquisition, integration and divestiture related
items - For the six months ended June 30, 2019,
these charges primarily related to contingent consideration
liabilities and our acquisition of Essential Medical, somewhat
offset by the gain on sale of a divested business. For the six
months ended July 1, 2018, these charges primarily related to
contingent consideration liabilities and our acquisition of
NeoTract. There were no divestiture related activities for
the six months ended July 1, 2018.
- Other items - For the six months ended June
30, 2019, other items included debt modification expenses, expenses
associated with a franchise tax audit, and relabeling costs. Other
items for the six months ended July 1, 2018 included the reversal
of previously recognized income due to distributor acquisitions
related to Vascular Solutions and relabeling costs. In addition,
these items included a charge we incurred as a result of our
continuing evaluation of the impact of the Tax Cuts and Jobs Act
("TCJA") on our consolidated operations. During the second
quarter of 2018, we identified provisions of the TCJA that could
have adverse consequences due to our organization structure.
We implemented certain changes in our organization structure (with,
pursuant to tax law, retroactive impact back to 2017), and as a
result of which we incurred a $1.9 million net worth tax in a
foreign jurisdiction with respect to the 2017 tax year.
Because the decision to make the change resulting in
the net worth tax occurred in the second quarter of 2018, and as
permitted under GAAP, we recorded the net worth tax charge in 2018,
and the adjustment eliminating the charge is included in the table
above among "Other Items" for the 2018 period.
- MDR - For the six months ended June 30, 2019,
these costs are associated with our initiatives to comply with the
European Medical Device Regulation initiatives. The costs
associated with the European Medical Device Regulation initiative
include $0.3 million that were a component of the "Other items"
line item in the reconciliation table for the three months ended
March 31, 2019 included in our first quarter 2019 earnings
release.
ABOUT TELEFLEX INCORPORATED
Teleflex is a global provider of medical
technologies designed to improve the health and quality of people’s
lives. We apply purpose driven innovation - a relentless pursuit of
identifying unmet clinical needs - to benefit patients and
healthcare providers. Our portfolio is diverse, with solutions in
the fields of vascular access, interventional cardiology and
radiology, anesthesia, emergency medicine, surgical, urology and
respiratory care. Teleflex employees worldwide are united in the
understanding that what we do every day makes a difference. For
more information, please visit teleflex.com.
Teleflex is the home of Arrow®, Deknatel®,
Hudson RCI®, LMA®, Pilling®, Rusch®, UroLift®, and Weck® - trusted
brands united by a common sense of purpose.
CAUTION CONCERNING FORWARD-LOOKING
INFORMATION
This press release contains forward-looking
statements, including, but not limited to, forecasted 2019 UroLift
revenue growth; forecasted 2019 GAAP and constant currency revenue
growth and GAAP and adjusted diluted earnings per share; and our
estimates regarding the projected impact of foreign currency
exchange rate fluctuations on our 2019 financial results.
Actual results could differ materially from those in the
forward-looking statements due to, among other things, changes in
business relationships with and purchases by or from major
customers or suppliers; delays or cancellations in shipments;
demand for and market acceptance of new and existing products; our
inability to provide products to our customers, which may be due
to, among other things, events that impact key distributors; our
inability to integrate acquired businesses into our operations,
realize planned synergies and operate such businesses profitably in
accordance with our expectations; the inability of acquired
businesses to generate revenues in accordance with our
expectations; our inability to effectively execute our
restructuring plans and programs; our inability to realize
anticipated savings from restructuring plans and programs; the
impact of healthcare reform legislation and proposals to amend,
replace or repeal the legislation; changes in Medicare, Medicaid
and third party coverage and reimbursements; the impact of enacted
tax legislation and related regulations; competitive market
conditions and resulting effects on revenues and pricing; increases
in raw material costs that cannot be recovered in product pricing;
global economic factors, including currency exchange rates,
interest rates, trade disputes, sovereign debt issues and the
impact of the United Kingdom's pending departure from the European
Union, commonly known as "Brexit"; difficulties in entering new
markets; general economic conditions; and other factors described
or incorporated in our filings with the Securities and Exchange
Commission, including our most recently filed Annual Report on Form
10-K. We expressly disclaim any obligation to update
forward-looking statements, except as otherwise specifically stated
by us or as required by law or regulation.
|
|
|
TELEFLEX INCORPORATED |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
(Unaudited) |
| |
| |
Three Months Ended |
|
Six Months Ended |
| |
June 30, 2019 |
|
July 1, 2018 |
|
June 30, 2019 |
|
July 1, 2018 |
| |
|
|
|
|
|
|
|
| |
(Dollars and shares in thousands, except per
share) |
|
Net revenues |
$ |
652,507 |
|
|
$ |
609,866 |
|
|
$ |
1,266,091 |
|
|
$ |
1,197,096 |
|
| Cost of goods sold |
279,583 |
|
|
265,088 |
|
|
548,425 |
|
|
521,048 |
|
|
Gross profit |
372,924 |
|
|
344,778 |
|
|
717,666 |
|
|
676,048 |
|
| Selling, general and
administrative expenses |
236,186 |
|
|
229,917 |
|
|
463,879 |
|
|
445,254 |
|
| Research and development
expenses |
27,595 |
|
|
26,018 |
|
|
54,745 |
|
|
52,045 |
|
| Restructuring and impairment
charges |
1,685 |
|
|
55,353 |
|
|
19,080 |
|
|
58,416 |
|
| Gain on sale of assets |
— |
|
|
— |
|
|
(2,739 |
) |
|
— |
|
|
Income from continuing operations before interest and taxes |
107,458 |
|
|
33,490 |
|
|
182,701 |
|
|
120,333 |
|
| Interest expense |
20,758 |
|
|
26,649 |
|
|
43,450 |
|
|
52,592 |
|
| Interest income |
(472 |
) |
|
(183 |
) |
|
(811 |
) |
|
(456 |
) |
|
Income from continuing operations before taxes |
87,172 |
|
|
7,024 |
|
|
140,062 |
|
|
68,197 |
|
| Taxes on income from
continuing operations |
3,844 |
|
|
9,576 |
|
|
14,816 |
|
|
15,818 |
|
|
Income (loss) from continuing operations |
83,328 |
|
|
(2,552 |
) |
|
125,246 |
|
|
52,379 |
|
| Operating income (loss) from
discontinued operations |
61 |
|
|
94 |
|
|
(1,282 |
) |
|
1,329 |
|
| Tax (benefit) on income (loss)
from discontinued operations |
14 |
|
|
38 |
|
|
(308 |
) |
|
20 |
|
|
Income (loss) from discontinued operations |
47 |
|
|
56 |
|
|
(974 |
) |
|
1,309 |
|
|
Net income (loss) |
$ |
83,375 |
|
|
$ |
(2,496 |
) |
|
$ |
124,272 |
|
|
$ |
53,688 |
|
| Earnings per share: |
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
$ |
1.80 |
|
|
$ |
(0.06 |
) |
|
$ |
2.72 |
|
|
$ |
1.15 |
|
|
Income (loss) from discontinued operations |
0.01 |
|
|
0.01 |
|
|
(0.02 |
) |
|
0.03 |
|
| Net income (loss) |
$ |
1.81 |
|
|
$ |
(0.05 |
) |
|
$ |
2.70 |
|
|
$ |
1.18 |
|
|
Diluted: |
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
$ |
1.77 |
|
|
$ |
(0.06 |
) |
|
$ |
2.67 |
|
|
$ |
1.12 |
|
|
Income (loss) from discontinued operations |
— |
|
|
0.01 |
|
|
(0.03 |
) |
|
0.03 |
|
| Net income (loss) |
$ |
1.77 |
|
|
$ |
(0.05 |
) |
|
$ |
2.64 |
|
|
$ |
1.15 |
|
| Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
46,172 |
|
|
45,581 |
|
|
46,111 |
|
|
45,455 |
|
|
Diluted |
47,036 |
|
|
45,581 |
|
|
46,989 |
|
|
46,771 |
|
|
|
|
TELEFLEX INCORPORATED |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(Unaudited) |
| |
| |
June 30, 2019 |
|
December 31, 2018 |
| |
(Dollars in thousands) |
| ASSETS |
|
|
|
| Current assets |
|
|
|
|
Cash and cash equivalents |
$ |
303,896 |
|
|
$ |
357,161 |
|
|
Accounts receivable, net |
382,142 |
|
|
366,286 |
|
|
Inventories, net |
461,320 |
|
|
427,778 |
|
|
Prepaid expenses and other current assets |
78,477 |
|
|
72,481 |
|
|
Prepaid taxes |
19,306 |
|
|
12,463 |
|
|
Total current assets |
1,245,141 |
|
|
1,236,169 |
|
| Property, plant and equipment,
net |
425,475 |
|
|
432,766 |
|
| Operating lease assets |
107,543 |
|
|
— |
|
| Goodwill |
2,250,219 |
|
|
2,246,579 |
|
| Intangible assets, net |
2,242,267 |
|
|
2,325,052 |
|
| Deferred tax assets |
3,056 |
|
|
2,446 |
|
| Other assets |
40,709 |
|
|
34,979 |
|
|
Total assets |
$ |
6,314,410 |
|
|
$ |
6,277,991 |
|
| LIABILITIES AND
EQUITY |
|
|
|
| Current liabilities |
|
|
|
|
Current borrowings |
$ |
50,000 |
|
|
$ |
86,625 |
|
|
Accounts payable |
108,059 |
|
|
106,709 |
|
|
Accrued expenses |
87,698 |
|
|
97,551 |
|
|
Current portion of contingent consideration |
119,706 |
|
|
136,877 |
|
|
Payroll and benefit-related liabilities |
88,888 |
|
|
104,670 |
|
|
Accrued interest |
6,009 |
|
|
6,031 |
|
|
Income taxes payable |
4,448 |
|
|
5,943 |
|
|
Other current liabilities |
29,084 |
|
|
38,050 |
|
|
Total current liabilities |
493,892 |
|
|
582,456 |
|
| Long-term borrowings |
2,081,372 |
|
|
2,072,200 |
|
| Deferred tax liabilities |
604,856 |
|
|
608,221 |
|
| Pension and postretirement
benefit liabilities |
86,149 |
|
|
92,914 |
|
| Noncurrent liability for
uncertain tax positions |
11,029 |
|
|
10,718 |
|
| Noncurrent contingent
consideration |
71,965 |
|
|
167,370 |
|
| Noncurrent operating lease
liabilities |
96,502 |
|
|
— |
|
| Other liabilities |
203,801 |
|
|
204,134 |
|
|
Total liabilities |
3,649,566 |
|
|
3,738,013 |
|
| Commitments and
contingencies |
|
|
|
| Total shareholders'
equity |
2,664,844 |
|
|
2,539,978 |
|
|
Total liabilities and shareholders' equity |
$ |
6,314,410 |
|
|
$ |
6,277,991 |
|
|
|
|
TELEFLEX INCORPORATED |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(Unaudited) |
| |
| |
Six Months Ended |
| |
June 30, 2019 |
|
July 1, 2018 |
| |
(Dollars in thousands) |
| Cash flows from operating
activities of continuing operations: |
|
|
|
|
Net income |
$ |
124,272 |
|
|
$ |
53,688 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Loss (income) from discontinued operations |
974 |
|
|
(1,309 |
) |
|
Depreciation expense |
31,966 |
|
|
29,527 |
|
|
Amortization expense of intangible assets |
75,285 |
|
|
75,008 |
|
|
Amortization expense of deferred financing costs and debt
discount |
2,249 |
|
|
2,368 |
|
|
Gain on sale of assets |
(2,739 |
) |
|
— |
|
|
Changes in contingent consideration |
25,456 |
|
|
34,618 |
|
|
Impairment of long-lived assets |
6,911 |
|
|
1,865 |
|
|
Stock-based compensation |
12,700 |
|
|
10,737 |
|
|
Deferred income taxes, net |
(5,495 |
) |
|
4,821 |
|
|
Payments for contingent consideration |
(26,092 |
) |
|
— |
|
|
Other |
(4,527 |
) |
|
(3,669 |
) |
|
Changes in assets and liabilities, net of effects of acquisitions
and disposals: |
|
|
|
|
Accounts receivable |
(19,747 |
) |
|
(15,886 |
) |
|
Inventories |
(33,970 |
) |
|
(15,017 |
) |
|
Prepaid expenses and other assets |
(6,381 |
) |
|
(3,611 |
) |
|
Accounts payable, accrued expenses and other liabilities |
(6,231 |
) |
|
38,112 |
|
|
Income taxes receivable and payable, net |
(17,347 |
) |
|
(29,668 |
) |
|
Net cash provided by operating activities from continuing
operations |
157,284 |
|
|
181,584 |
|
| Cash flows from investing
activities of continuing operations: |
|
|
|
|
Expenditures for property, plant and equipment |
(56,107 |
) |
|
(38,004 |
) |
|
Proceeds from sale of assets |
1,178 |
|
|
— |
|
|
Payments for businesses and intangibles acquired, net of cash
acquired |
(1,025 |
) |
|
(22,450 |
) |
|
Net interest proceeds on swaps designated as net investment
hedges |
8,330 |
|
|
— |
|
|
Net cash used in investing activities from continuing
operations |
(47,624 |
) |
|
(60,454 |
) |
| Cash flows from financing
activities of continuing operations: |
|
|
|
|
Proceeds from new borrowings |
25,000 |
|
|
— |
|
|
Reduction in borrowings |
(52,500 |
) |
|
(18,500 |
) |
|
Debt extinguishment, issuance and amendment fees |
(4,703 |
) |
|
(188 |
) |
|
Net proceeds from share based compensation plans and the related
tax impacts |
7,829 |
|
|
9,800 |
|
|
Payments for contingent consideration |
(111,928 |
) |
|
(62,574 |
) |
|
Dividends paid |
(31,347 |
) |
|
(30,938 |
) |
|
Net cash used in financing activities from continuing
operations |
(167,649 |
) |
|
(102,400 |
) |
| Cash flows from discontinued
operations: |
|
|
|
|
Net cash provided by (used in) operating activities |
2,799 |
|
|
(464 |
) |
|
Net cash provided by (used in) discontinued operations |
2,799 |
|
|
(464 |
) |
| Effect of exchange rate
changes on cash and cash equivalents |
1,925 |
|
|
(5,520 |
) |
| Net (decrease) increase in
cash and cash equivalents |
(53,265 |
) |
|
12,746 |
|
| Cash and cash equivalents at
the beginning of the period |
357,161 |
|
|
333,558 |
|
| Cash and cash equivalents at
the end of the period |
$ |
303,896 |
|
|
$ |
346,304 |
|
| |
|
|
|
| Non cash investing activities
of continuing operations: |
|
|
|
| Property, plant and equipment
additions due to build-to-suit lease transaction |
$ |
— |
|
|
$ |
28,147 |
|
| |
|
|
|
| Non cash financing activities
of continuing operations: |
|
|
|
| Acquisition of treasury stock
associated with settlement and exchange of convertible note hedge
and warrant agreements |
$ |
— |
|
|
$ |
36,877 |
|
|
Contact: |
|
Jake
Elguicze |
| |
|
Treasurer and Vice President of Investor Relations |
| |
|
610-948-2836 |
Teleflex (NYSE:TFX)
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