Teleflex Incorporated (NYSE: TFX) (the “Company”) today announced
financial results for the first quarter ended March 29, 2020.
First quarter 2020 net revenues were $630.6
million, an increase of 2.8% compared to the prior year period.
Excluding the impact of foreign currency exchange rate
fluctuations, first quarter 2020 net revenues increased 4.0% over
the year ago period.
First quarter 2020 GAAP earnings per share from
continuing operations increased 212.4% to $2.78, compared to $0.89
in the prior year period. First quarter 2020 adjusted diluted
earnings per share from continuing operations increased 21.4% to
$2.72, compared to $2.24 in the prior year period.
Liam Kelly, President and Chief Executive
Officer, said, “We were pleased with the first quarter 2020
performance for Teleflex, with results that included 4% constant
currency revenue growth and $2.72 in adjusted EPS, a 21.4%
year-over-year increase. These results occurred despite a worse
than expected global impact from COVID-19, including a slow-down in
the performance of non-emergent procedures during the last two
weeks of March within the United States, and are a testament to the
diverse product portfolio that we have created during the past
decade. By geography, during the first quarter we saw a negative
impact from COVID-19 in the Americas and Asia, while EMEA saw a
benefit due to elevated ordering for certain anesthesia,
respiratory, and vascular access products.”
Mr. Kelly continued, ”As we enter the second
year of our three-year long-range plan, and despite the challenges
caused by the global pandemic, Teleflex remains in a strong
financial position, supported by a healthy balance sheet, which
includes over $400 million of cash on hand, and access to
additional liquidity under our revolving credit facility. We
continue to remain confident in underlying business fundamentals,
including robust demand for our innovative and critical care
products. That said, due to the rapidly evolving environment and
continued uncertainties from the impact of the COVID-19 global
pandemic, we are withdrawing our previously announced 2020
financial guidance, as at this time, Teleflex cannot accurately
predict the specific extent or duration of the impact of the
COVID-19 outbreak on its financial and operating results.”
Mr. Kelly concluded, "While we are disappointed
in the necessity of retracting our prior 2020 financial guidance,
we remain confident in our ability to generate significant constant
currency revenue growth, margin expansion, and adjusted earnings
per share and free-cash flow growth over the long term."
NET REVENUE BY SEGMENT
The following table and commentary provide
information regarding net revenues in each of the Company's
reportable operating segments for the three months ended March 29,
2020 on both a GAAP and constant currency basis. The discussion
below the tables of the principal factors behind changes in net
revenues for the three months ended March 29, 2020 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) |
| |
March 29, 2020 |
|
March 31, 2019 |
|
Total Sales Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
Americas |
$ |
358.0 |
|
$ |
344.0 |
|
4.1 |
|
% |
|
(0.2 |
) |
% |
|
4.3 |
|
% |
| EMEA |
|
156.1 |
|
|
154.6 |
|
1.0 |
|
% |
|
(2.8 |
) |
% |
|
3.8 |
|
% |
| Asia |
|
53.1 |
|
|
60.8 |
|
(12.6 |
) |
% |
|
(3.4 |
) |
% |
|
(9.2 |
) |
% |
| OEM |
|
63.4 |
|
|
54.2 |
|
16.9 |
|
% |
|
(0.6 |
) |
% |
|
17.5 |
|
% |
|
Total |
$ |
630.6 |
|
$ |
613.6 |
|
2.8 |
|
% |
|
(1.2 |
) |
% |
|
4.0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas first quarter 2020 net revenues were
$358.0 million, an increase of 4.1% compared to the prior year
period. Excluding the impact of foreign currency exchange rate
fluctuations, first quarter 2020 net revenues increased 4.3%
compared to the prior year period. The increase in constant
currency revenue was primarily attributable to increases in sales
volumes of existing products, mostly in interventional urology, as
well as an increase in new product sales, which were partially
offset by a decrease in revenues caused by the COVID-19
pandemic.
EMEA first quarter 2020 net revenues were $156.1
million, an increase of 1.0% compared to the prior year period.
Excluding the impact of foreign currency exchange rate
fluctuations, first quarter 2020 net revenues increased 3.8%
compared to the prior year period. The increase in constant
currency revenue was primarily attributable to an increase in sales
volumes of existing products, inclusive of a benefit from the
COVID-19 pandemic.
Asia first quarter 2020 net revenues were $53.1
million, a decrease of 12.6% compared to the prior year period.
Excluding the impact of foreign currency exchange rate
fluctuations, first quarter 2020 net revenues decreased 9.2%
compared to the prior year period. The decrease in constant
currency revenue was primarily attributable to a decrease in sales
volumes of existing products, inclusive of the negative impact from
the COVID-19 pandemic.
OEM first quarter 2020 net revenues were $63.4
million, an increase of 16.9% compared to the prior year period.
Excluding the impact of foreign currency exchange rate
fluctuations, first quarter 2020 net revenues increased 17.5%
compared to the prior year period. The increase in constant
currency revenue was primarily attributable to the acquisition of
IWG High Performance Conductors, Inc., and an increase in sales
volumes of existing products.
NET REVENUE BY GLOBAL PRODUCT
CATEGORY
The following table and commentary provide
information regarding net revenues in each of the Company's global
product categories for the three months ended March 29, 2020 on
both a GAAP and constant currency basis.
|
|
|
|
|
|
|
Three Months
Ended |
|
% Increase /
(Decrease) |
| |
March 29, 2020 |
|
March 31, 2019 |
|
Total Revenue Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
Vascular Access |
$ |
150.3 |
|
$ |
143.9 |
|
4.4 |
|
% |
|
(1.2 |
) |
% |
|
5.6 |
|
% |
| Interventional |
|
99.9 |
|
|
103.2 |
|
(3.2 |
) |
% |
|
(0.9 |
) |
% |
|
(2.3 |
) |
% |
| Anesthesia |
|
75.7 |
|
|
80.3 |
|
(5.7 |
) |
% |
|
(1.8 |
) |
% |
|
(3.9 |
) |
% |
| Surgical |
|
75.4 |
|
|
86.7 |
|
(13.0 |
) |
% |
|
(1.5 |
) |
% |
|
(11.5 |
) |
% |
| Interventional Urology |
|
74.2 |
|
|
59.7 |
|
24.2 |
|
% |
|
(0.1 |
) |
% |
|
24.3 |
|
% |
| OEM |
|
63.4 |
|
|
54.2 |
|
16.9 |
|
% |
|
(0.6 |
) |
% |
|
17.5 |
|
% |
| Other |
|
91.7 |
|
|
85.6 |
|
7.2 |
|
% |
|
(2.0 |
) |
% |
|
9.2 |
|
% |
|
Total |
$ |
630.6 |
|
$ |
613.6 |
|
2.8 |
|
% |
|
(1.2 |
) |
% |
|
4.0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter 2020 net revenues from sales of
Vascular Access products were $150.3 million, an increase of 4.4%
compared to the prior year period. Excluding the impact of foreign
currency exchange rate fluctuations, first quarter 2020 net
revenues increased 5.6% compared to the prior year period.
First quarter 2020 net revenues from sales of
Interventional products were $99.9 million, a decrease of 3.2%
compared to the prior year period. Excluding the impact of foreign
currency exchange rate fluctuations, first quarter 2020 net
revenues decreased 2.3% compared to the prior year period.
First quarter 2020 net revenues from sales of
Anesthesia products were $75.7 million, a decrease of 5.7% compared
to the prior year period. Excluding the impact of foreign currency
exchange rate fluctuations, first quarter 2020 net revenues
decreased 3.9% compared to the prior year period.
First quarter 2020 net revenues from sales of
Surgical products were $75.4 million, a decrease of 13.0% compared
to the prior year period. Excluding the impact of foreign currency
exchange rate fluctuations, first quarter 2020 net revenues
decreased 11.5% compared to the prior year period.
First quarter 2020 net revenues from sales of
Interventional Urology products were $74.2 million, an increase of
24.2% compared to the prior year period. Excluding the impact of
foreign currency exchange rate fluctuations, first quarter 2020 net
revenues increased 24.3% compared to the prior year period.
First quarter 2020 net revenues from sales of
OEM products were $63.4 million, an increase of 16.9% compared to
the prior year period. Excluding the impact of foreign
currency exchange rate fluctuations, first quarter 2020 net
revenues increased 17.5% compared to the prior year period.
First quarter 2020 net revenues from sales of
other products were $91.7 million, an increase of 7.2% compared to
the prior year period. Excluding the impact of foreign currency
exchange rate fluctuations, first quarter 2020 net revenues
increased 9.2% 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 quarter of 2020
totaled $56.7 million compared to $54.6 million for the prior year
period.
Cash and cash equivalents at March 29, 2020 were
$406.5 million compared to $301.1 million at December 31, 2019.
Net accounts receivable at March 29, 2020 were
$441.7 million compared to $418.7 million at December 31, 2019.
Net inventories at March 29, 2020 were $488.9
million compared to $476.6 million at December 31, 2019.
WITHDRAWING 2020 OUTLOOK
As a result of the ongoing uncertainty regarding
both the scope and duration of the COVID-19 global pandemic,
Teleflex is withdrawing its previously issued 2020 financial
guidance (on February 20). Since February 20, the impact of
COVID-19 has rapidly expanded globally across Asia, Europe and the
United States. Due to the anticipation for a surge in demand for
capacity to treat those affected with COVID-19, medical authorities
globally (including the U.S. Surgeon General, the American College
of Surgeons, the American Hospital Association, the Center for
Medicaid and Medicare Services, and the U.K. National Health
Service) have advised the deferral of elective medical procedures.
As a result, the Company anticipates material disruption caused by
the evolving COVID-19 pandemic and macroeconomic environment. In
addition, given the ongoing uncertainty of the scope and duration
of the pandemic, the Company is currently unable to estimate the
magnitude or duration of specific impacts on its business. Given a
high-degree of uncertainty around the potential negative financial
impact from COVID-19, Teleflex will not update 2020 guidance until
the impact of COVID-19 becomes sufficiently clear.
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 May 5, 2020 at 11:00am (ET), by calling
855-859-2056 (U.S./Canada) or 404-537-3406 (International),
Passcode: 7545905.
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" and "Net Revenue by
Global Product Category". 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.
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 such changes
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 marketed in the EU 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 or
certain other discrete changes affecting our deferred tax
liability.
RECONCILIATION OF CONSOLIDATED STATEMENT
OF INCOME ITEMSDollars in millions, except per
share amounts
| |
|
|
|
|
|
|
|
| Quarter
Ended - March 29, 2020 |
|
|
|
|
|
|
|
| |
Cost of goods sold, excluding intangible asset
amortization |
Selling, general and administrative expenses |
Research and development expenses |
Restructuring and impairment charges |
(Gain) Loss on sale of business and assets |
Loss on extinguishment of debt |
Income taxes |
Income (loss) from continuing operations |
Diluted earnings per share from continuing
operations |
| GAAP Basis |
$ |
297.0 |
|
$ |
147.8 |
|
$ |
27.4 |
|
$ |
1.3 |
|
— |
— |
$ |
11.1 |
|
$ |
131.2 |
|
$ |
2.78 |
|
| Adjustments |
|
|
|
|
|
|
|
|
|
|
Restructuring, restructuring related and impairment items (A) |
|
4.9 |
|
|
0.2 |
|
|
— |
|
|
1.3 |
|
— |
— |
|
0.8 |
|
|
5.7 |
|
$ |
0.12 |
|
|
Acquisition, integration and divestiture related items (B) |
|
1.7 |
|
|
(44.3 |
) |
|
— |
|
|
— |
|
— |
— |
|
0.4 |
|
|
(43.0 |
) |
($ |
0.91 |
) |
| Other items (C) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
— |
|
— |
|
|
— |
|
|
— |
|
| MDR (D) |
|
— |
|
|
— |
|
|
1.8 |
|
|
— |
|
— |
— |
|
— |
|
|
1.8 |
|
$ |
0.04 |
|
| Intangible amortization
expense (E) |
|
20.9 |
|
|
17.9 |
|
|
0.1 |
|
|
— |
|
— |
— |
|
6.2 |
|
|
32.7 |
|
$ |
0.69 |
|
| Tax adjustments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
— |
|
(0.1 |
) |
|
0.1 |
|
|
— |
|
| Adjusted basis |
$ |
269.5 |
|
$ |
174.0 |
|
$ |
25.5 |
|
|
— |
|
— |
— |
$ |
18.4 |
|
$ |
128.4 |
|
$ |
2.72 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF CONSOLIDATED STATEMENT
OF INCOME ITEMSDollars in millions, except per
share amounts
| |
|
|
|
|
|
| Quarter
Ended - March 31, 2019 |
|
|
|
|
|
| |
Cost of goods sold, excluding intangible asset
amortization |
Selling, general and administrative expenses |
Research and development expenses |
Restructuring and impairment charges |
(Gain)/Loss on sale of business and assets |
Income taxes |
Income (loss) from continuing operations |
Diluted earnings per share from continuing
operations |
|
GAAP Basis |
$ |
289.6 |
|
$ |
206.9 |
|
$ |
27.2 |
|
$ |
17.4 |
|
$ |
(2.7 |
) |
$ |
11.0 |
|
$ |
41.9 |
|
$ |
0.89 |
| Adjustments |
|
|
|
|
|
|
|
|
| Restructuring, restructuring
related and impairment items (A) |
|
3.0 |
|
|
0.0 |
|
|
0.0 |
|
|
17.4 |
|
|
— |
|
|
1.9 |
|
|
18.5 |
|
$ |
0.39 |
| Acquisition, integration and
divestiture related items (B) |
|
— |
|
|
13.6 |
|
|
— |
|
|
— |
|
|
(2.7 |
) |
|
(1.9 |
) |
|
12.7 |
|
$ |
0.27 |
| Other items (C) |
|
— |
|
|
1.3 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.3 |
|
|
1.0 |
|
$ |
0.02 |
| Intangible amortization
expense (E) |
|
20.8 |
|
|
16.9 |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
7.7 |
|
|
30.0 |
|
$ |
0.64 |
| Tax adjustments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.7 |
) |
|
0.7 |
|
$ |
0.01 |
| Adjusted basis |
$ |
265.8 |
|
$ |
175.2 |
|
$ |
27.0 |
|
|
— |
|
|
— |
|
$ |
18.3 |
|
$ |
105.0 |
|
$ |
2.24 |
- Restructuring,
restructuring related and impairment items - For the three
months ended March 29, 2020, pre-tax restructuring charges were
$1.3 million, pre-tax restructuring related charges were $5.1
million; there were no pre-tax impairment charges. For the three
months ended March 31, 2019, pre-tax restructuring charges $14.4
million, pre-tax restructuring related charges were $3.1 million,
and pre-tax impairment charges were $3.0 million.
- Acquisition, integration
and divestiture related items - For the three months ended
March 29, 2020, these items primarily related to the reversal of
contingent consideration liabilities, partially offset by charges
primarily related to our acquisition of IWG High Performance
Conductors, Inc. For the three months ended March 31, 2019,
these charges primarily related to contingent consideration
liabilities and our acquisition of Essential Medical, Inc.,
partially offset by the gain on sale of an asset. There were no
divestiture related activities for the three months ended March 29,
2020 and March 31, 2019.
- Other items - For
the three months ended March 31, 2019, other items included
expenses associated with a franchise tax audit, product relabeling
costs, and costs associated with our efforts to comply with the
European Medical Device Regulation.
- MDR - For the
three months ended March 29, 2020, these costs were associated with
our efforts to comply with the European Medical Device Regulation.
For the three months ended March 31, 2019, these costs were
included in Other items.
- Intangible amortization
expense - For the three months ended March 29, 2020 and
March 31, 2019, we reclassified intangible asset amortization
expense of $20.9 million and $20.8 million, respectively, from
selling, general and administrative expenses to cost of goods
sold.
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, confidence in our
ability to achieve our previously stated long-term financial
objectives. Actual results could differ materially from those in
the forward-looking statements due to, among other things, the
adverse economic conditions associated with the COVID-19 global
health pandemic and the associated financial crisis, stay-at-home
and other orders, which may significantly reduce customer spending
and which may have a negative impact on the Company’s business,
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,
suppliers and third-party vendors that sterilize our products; 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 departure from the European Union,
commonly known as "Brexit"; public health epidemics; 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
INCORPORATEDCONSOLIDATED STATEMENTS OF
INCOME
| |
|
| |
Three Months Ended |
| |
March 29, 2020 |
|
March 31, 2019 |
| |
(Dollars and shares in thousands, except per
share) |
|
Net revenues |
$ |
630,642 |
|
|
$ |
613,584 |
|
| Cost of goods sold |
297,018 |
|
|
289,614 |
|
|
Gross profit |
333,624 |
|
|
323,970 |
|
| Selling, general and
administrative expenses |
147,796 |
|
|
206,921 |
|
| Research and development
expenses |
27,396 |
|
|
27,150 |
|
| Restructuring and impairment
charges |
1,346 |
|
|
17,395 |
|
| (Gain) on sale of assets |
— |
|
|
(2,739 |
) |
|
Income from continuing operations before interest and taxes |
157,086 |
|
|
75,243 |
|
| Interest expense |
15,439 |
|
|
22,692 |
|
| Interest income |
(579 |
) |
|
(339 |
) |
|
Income from continuing operations before taxes |
142,226 |
|
|
52,890 |
|
| Taxes on income from
continuing operations |
11,074 |
|
|
10,972 |
|
|
Income from continuing operations |
131,152 |
|
|
41,918 |
|
| Operating loss from
discontinued operations |
(4 |
) |
|
(1,343 |
) |
| Tax benefit on operating loss
from discontinued operations |
(2 |
) |
|
(322 |
) |
|
Loss from discontinued operations |
(2 |
) |
|
(1,021 |
) |
|
Net income |
$ |
131,150 |
|
|
$ |
40,897 |
|
| Earnings per share: |
|
|
|
|
Basic: |
|
|
|
|
Income from continuing operations |
$ |
2.83 |
|
|
$ |
0.91 |
|
|
Loss from discontinued operations |
— |
|
|
(0.02 |
) |
| Net income |
$ |
2.83 |
|
|
$ |
0.89 |
|
|
Diluted: |
|
|
|
|
Income from continuing operations |
$ |
2.78 |
|
|
$ |
0.89 |
|
|
Loss from discontinued operations |
— |
|
|
(0.02 |
) |
| Net income |
$ |
2.78 |
|
|
$ |
0.87 |
|
| Weighted average common shares
outstanding |
|
|
|
|
Basic |
46,382 |
|
|
46,050 |
|
|
Diluted |
47,231 |
|
|
46,942 |
|
|
|
|
|
|
|
|
TELEFLEX
INCORPORATEDCONSOLIDATED BALANCE
SHEETS
| |
|
|
|
| |
March 29, 2020 |
|
December 31, 2019 |
| |
(Dollars in thousands) |
| ASSETS |
|
|
|
| Current assets |
|
|
|
|
Cash and cash equivalents |
$ |
406,477 |
|
|
$ |
301,083 |
|
|
Accounts receivable, net |
441,714 |
|
|
418,673 |
|
|
Inventories |
488,856 |
|
|
476,557 |
|
|
Prepaid expenses and other current assets |
101,606 |
|
|
97,943 |
|
|
Prepaid taxes |
8,133 |
|
|
12,076 |
|
|
Total current assets |
1,446,786 |
|
|
1,306,332 |
|
| Property, plant and equipment,
net |
427,452 |
|
|
430,719 |
|
| Operating lease assets |
107,290 |
|
|
113,160 |
|
| Goodwill |
2,332,414 |
|
|
2,245,305 |
|
| Intangible assets, net |
2,297,178 |
|
|
2,156,285 |
|
| Deferred tax assets |
5,519 |
|
|
5,572 |
|
| Other assets |
84,925 |
|
|
52,447 |
|
|
Total assets |
$ |
6,701,564 |
|
|
$ |
6,309,820 |
|
| LIABILITIES AND
EQUITY |
|
|
|
|
Current liabilities |
|
|
|
|
Current borrowings |
$ |
53,625 |
|
|
$ |
50,000 |
|
|
Accounts payable |
104,348 |
|
|
102,916 |
|
|
Accrued expenses |
99,804 |
|
|
100,466 |
|
|
Current portion of contingent consideration |
9,463 |
|
|
148,090 |
|
|
Payroll and benefit-related liabilities |
73,632 |
|
|
115,981 |
|
|
Accrued interest |
16,153 |
|
|
5,514 |
|
|
Income taxes payable |
6,989 |
|
|
6,692 |
|
|
Other current liabilities |
38,286 |
|
|
33,396 |
|
|
Total current liabilities |
402,300 |
|
|
563,055 |
|
| Long-term borrowings |
2,340,892 |
|
|
1,858,943 |
|
| Deferred tax liabilities |
489,677 |
|
|
439,558 |
|
| Pension and postretirement
benefit liabilities |
66,380 |
|
|
82,719 |
|
| Noncurrent liability for
uncertain tax positions |
12,139 |
|
|
10,294 |
|
| Noncurrent contingent
consideration |
23,274 |
|
|
71,818 |
|
| Noncurrent operating lease
liabilities |
96,333 |
|
|
101,372 |
|
| Other liabilities |
197,545 |
|
|
202,741 |
|
|
Total liabilities |
3,628,540 |
|
|
3,330,500 |
|
| Commitments and
contingencies |
|
|
|
| Total shareholders'
equity |
3,073,024 |
|
|
2,979,320 |
|
| Total liabilities and
shareholders' equity |
$ |
6,701,564 |
|
|
$ |
6,309,820 |
|
| |
|
|
|
|
|
|
|
TELEFLEX
INCORPORATEDCONSOLIDATED STATEMENTS OF CASH
FLOWS
| |
|
| |
Three Months Ended |
| |
March 29, 2020 |
|
March 31, 2019 |
| |
(Dollars in thousands) |
| Cash flows from operating
activities of continuing operations: |
|
|
|
|
Net income |
$ |
131,150 |
|
|
$ |
40,897 |
|
|
Adjustments to reconcile net income to net cash (used in) provided
by operating activities: |
|
|
|
|
Loss from discontinued operations |
2 |
|
|
1,021 |
|
|
Depreciation expense |
16,842 |
|
|
15,645 |
|
|
Intangible asset amortization expense |
38,911 |
|
|
37,751 |
|
|
Deferred financing costs and debt discount amortization
expense |
945 |
|
|
1,179 |
|
|
Gain on sale of assets |
— |
|
|
(2,739 |
) |
|
Impairment of long-lived assets |
— |
|
|
3,030 |
|
|
Fair value step up of acquired inventory sold |
1,707 |
|
|
— |
|
|
Changes in contingent consideration |
(46,502 |
) |
|
13,057 |
|
|
Stock-based compensation |
3,522 |
|
|
5,781 |
|
|
Deferred income taxes, net |
679 |
|
|
2,603 |
|
|
Payments for contingent consideration |
(79,771 |
) |
|
(25,935 |
) |
|
Interest benefit on swaps designated as net investment hedges |
(4,874 |
) |
|
(3,882 |
) |
|
Other |
(18,143 |
) |
|
4,536 |
|
|
Changes in assets and liabilities, net of effects of acquisitions
and disposals: |
|
|
|
|
Accounts receivable |
(23,145 |
) |
|
(14,102 |
) |
|
Inventories |
(12,346 |
) |
|
(19,200 |
) |
|
Prepaid expenses and other assets |
6,403 |
|
|
(11,524 |
) |
|
Accounts payable, accrued expenses and other liabilities |
(31,488 |
) |
|
8,856 |
|
|
Income taxes receivable and payable, net |
4,651 |
|
|
3,192 |
|
|
Net cash (used in) provided by operating activities from
continuing operations |
(11,457 |
) |
|
60,166 |
|
| Cash flows from investing
activities of continuing operations: |
|
|
|
|
Expenditures for property, plant and equipment |
(19,684 |
) |
|
(23,494 |
) |
|
Proceeds from sale of assets |
400 |
|
|
991 |
|
|
Payments for businesses and intangibles acquired, net of cash
acquired |
(265,160 |
) |
|
(1,025 |
) |
|
Net cash used in investing activities from continuing
operations |
(284,444 |
) |
|
(23,528 |
) |
| Cash flows from financing
activities of continuing operations: |
|
|
|
|
Proceeds from new borrowings |
485,000 |
|
|
— |
|
|
Net proceeds from share based compensation plans and the related
tax impacts |
(3,022 |
) |
|
2,242 |
|
|
Payments for contingent consideration |
(60,881 |
) |
|
(110,953 |
) |
|
Dividends paid |
(15,767 |
) |
|
(15,650 |
) |
|
Net cash provided by (used in) financing activities from continuing
operations |
405,330 |
|
|
(124,361 |
) |
| Cash flows from discontinued
operations: |
|
|
|
|
Net cash (used in) provided by operating activities |
(193 |
) |
|
3,610 |
|
|
Net cash (used in) provided by discontinued operations |
(193 |
) |
|
3,610 |
|
| Effect of exchange rate
changes on cash and cash equivalents |
(3,842 |
) |
|
(1,836 |
) |
| Net increase (decrease) in
cash and cash equivalents |
105,394 |
|
|
(85,949 |
) |
| Cash and cash equivalents at
the beginning of the period |
301,083 |
|
|
357,161 |
|
| Cash and cash equivalents at
the end of the period |
$ |
406,477 |
|
|
$ |
271,212 |
|
|
Contact: |
Jake Elguicze Treasurer and Vice President of Investor
Relations 610-948-2836 |
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