Teleflex Incorporated (NYSE: TFX) (the “Company”) today announced
financial results for the second quarter ended June 28, 2020.
Second quarter 2020 net revenues were $567.0 million, a decrease
of 13.1% compared to the prior year period. Excluding the
impact of foreign currency exchange rate fluctuations, second
quarter 2020 net revenues decreased 12.0% over the year ago
period. The Company estimates that COVID-19 had a net
negative impact to revenue of approximately $130 million, or
20%.
Second quarter 2020 GAAP earnings per share from continuing
operations decreased 86.4% to $0.24, compared to $1.77 in the prior
year period. Second quarter 2020 adjusted diluted earnings
per share from continuing operations decreased 27.4% to $1.93,
compared to $2.66 in the prior year period.
Liam Kelly, President and Chief Executive Officer, said, “We
were pleased with our second quarter 2020 performance, which
significantly exceeded our internal expectations and reflected
improvements in underlying monthly revenue trends for the product
categories most impacted by the postponement of non-emergent
procedures because of COVID-19, particularly Interventional
Urology, Interventional Access, and Surgical. Like our revenue
performance, our second quarter 2020 adjusted EPS of $1.93 also
significantly exceeded our expectations, reflecting the recovery we
saw in procedures, as well as prudent operating expense
management."
Mr. Kelly continued, "Despite the challenges caused by the
global pandemic, Teleflex remains in a strong financial position,
supported by a healthy balance sheet, which includes more than $550
million of cash on hand, and access to additional liquidity under
our revolving credit facility. We remain confident in our
core business fundamentals, including robust demand for our
innovative and critical care products. That said, due to the
rapidly evolving environment, continued uncertainties from the
impact of the COVID-19 global pandemic, and recent regional
outbreaks that are impacting the recovery, we are not reinstating
2020 financial guidance at this time.”
Mr. Kelly concluded, "We remain confident that we will weather
the storm given our diversified business model and our continued
belief in our ability to generate significant constant currency
revenue growth, margin expansion, adjusted earnings per share and
free cash flow growth over the long term."
NET REVENUE BY SEGMENT
The following tables and commentary provide information
regarding net revenues in each of the Company's reportable
operating segments for the three and six months ended June 30, 2019
and June 28, 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 June 28, 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) |
|
June 28, 2020 |
|
June 30, 2019 |
|
Total Sales Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
Americas |
$ |
312.5 |
|
|
$ |
373.8 |
|
|
(16.4 |
) |
% |
|
(0.4 |
) |
% |
|
(16.0 |
) |
% |
|
EMEA |
|
131.6 |
|
|
|
147.1 |
|
|
(10.5 |
) |
% |
|
(2.5 |
) |
% |
|
(8.0 |
) |
% |
|
Asia |
|
67.1 |
|
|
|
75.2 |
|
|
(10.8 |
) |
% |
|
(3.0 |
) |
% |
|
(7.8 |
) |
% |
|
OEM |
|
55.8 |
|
|
|
56.4 |
|
|
(1.1 |
) |
% |
|
(0.4 |
) |
% |
|
(0.7 |
) |
% |
|
Total |
$ |
567.0 |
|
|
$ |
652.5 |
|
|
(13.1 |
) |
% |
|
(1.1 |
) |
% |
|
(12.0 |
) |
% |
|
|
Six Months
Ended |
|
% Increase /
(Decrease) |
|
June 28, 2020 |
|
June 30, 2019 |
|
Total Sales Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
Americas |
$ |
670.5 |
|
|
$ |
717.8 |
|
|
(6.6 |
) |
% |
|
(0.3 |
) |
% |
|
(6.3 |
) |
% |
|
EMEA |
|
287.8 |
|
|
|
301.6 |
|
|
(4.6 |
) |
% |
|
(2.7 |
) |
% |
|
(1.9 |
) |
% |
|
Asia |
|
120.2 |
|
|
|
136.0 |
|
|
(11.6 |
) |
% |
|
(3.2 |
) |
% |
|
(8.4 |
) |
% |
|
OEM |
|
119.2 |
|
|
|
110.7 |
|
|
7.7 |
|
% |
|
(0.6 |
) |
% |
|
8.3 |
|
% |
|
Total |
$ |
1,197.7 |
|
$ |
1,266.1 |
|
|
(5.4 |
) |
% |
|
(1.2 |
) |
% |
|
(4.2 |
) |
% |
|
Americas second quarter 2020 net revenues were $312.5 million, a
decrease of 16.4% compared to the prior year period.
Excluding the impact of foreign currency exchange rate
fluctuations, second quarter 2020 net revenues decreased 16.0%
compared to the prior year period. The decrease in constant
currency revenue was primarily attributable to a net decrease in
sales volumes of existing products caused by the COVID-19
pandemic. We estimate that COVID-19 had a negative impact to
revenue of approximately $89 million, or 24%.
EMEA second quarter 2020 net revenues were $131.6 million, a
decrease of 10.5% compared to the prior year period. Excluding the
impact of foreign currency exchange rate fluctuations, second
quarter 2020 net revenues decreased 8.0% compared to the prior year
period. The decrease in constant currency revenue was primarily
attributable to a net decrease in sales volumes of existing
products caused by the COVID-19 pandemic. We estimate that
COVID-19 had a negative impact to revenue of approximately $13
million, or 9%.
Asia second quarter 2020 net revenues were $67.1 million, a
decrease of 10.8% compared to the prior year period.
Excluding the impact of foreign currency exchange rate
fluctuations, second quarter 2020 net revenues decreased 7.8%
compared to the prior year period. The decrease in constant
currency revenue was primarily attributable to a net decrease in
sales volumes of existing products caused by the COVID-19
pandemic. We estimate that COVID-19 had a negative impact to
revenue of approximately $13 million, or 18%.
OEM second quarter 2020 net revenues were $55.8 million, a
decrease of 1.1% compared to the prior year period. Excluding
the impact of foreign currency exchange rate fluctuations, second
quarter 2020 net revenues decreased 0.7% compared to the prior year
period. The decrease in constant currency revenue was
primarily attributable to a decrease in sales volumes of existing
products caused by the COVID-19 pandemic, partially offset by net
revenues generated by IWG High Performance Conductors, Inc.
(HPC). We estimate that COVID-19 had a negative impact to
revenue of approximately $15 million, or 26%.
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 June 28, 2020 on both a GAAP and constant
currency basis.
|
Three Months
Ended |
|
% Increase /
(Decrease) |
|
June 28, 2020 |
|
June 30, 2019 |
|
Total Revenue Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
Vascular Access |
$ |
164.9 |
|
|
$ |
153.6 |
|
|
7.4 |
|
% |
|
(1.4 |
) |
% |
|
8.8 |
|
% |
|
Interventional |
|
82.6 |
|
|
|
104.8 |
|
|
(21.2 |
) |
% |
|
(0.9 |
) |
% |
|
(20.3 |
) |
% |
|
Anesthesia |
|
64.9 |
|
|
|
85.7 |
|
|
(24.3 |
) |
% |
|
(1.3 |
) |
% |
|
(23.0 |
) |
% |
|
Surgical |
|
67.3 |
|
|
|
95.6 |
|
|
(29.6 |
) |
% |
|
(1.2 |
) |
% |
|
(28.4 |
) |
% |
|
Interventional Urology |
|
40.1 |
|
|
|
68.0 |
|
|
(40.9 |
) |
% |
|
(0.0 |
) |
% |
|
(40.9 |
) |
% |
|
OEM |
|
55.8 |
|
|
|
56.4 |
|
|
(1.1 |
) |
% |
|
(0.4 |
) |
% |
|
(0.7 |
) |
% |
|
Other |
|
91.4 |
|
|
|
88.4 |
|
|
3.4 |
|
% |
|
(2.0 |
) |
% |
|
5.4 |
|
% |
|
Total |
$ |
567.0 |
|
|
$ |
652.5 |
|
|
(13.1 |
) |
% |
|
(1.1 |
) |
% |
|
(12.0 |
) |
% |
|
|
Six Months
Ended |
|
% Increase /
(Decrease) |
|
June 28, 2020 |
|
June 30, 2019 |
|
Total Revenue Growth |
|
Currency Impact |
|
Constant Currency Revenue Growth |
|
Vascular Access |
$ |
315.2 |
|
|
$ |
297.5 |
|
|
5.9 |
|
% |
|
(1.4 |
) |
% |
|
7.3 |
|
% |
|
Interventional |
|
182.5 |
|
|
|
208.0 |
|
|
(12.2 |
) |
% |
|
(0.9 |
) |
% |
|
(11.3 |
) |
% |
|
Anesthesia |
|
140.6 |
|
|
|
166.0 |
|
|
(15.3 |
) |
% |
|
(1.6 |
) |
% |
|
(13.7 |
) |
% |
|
Surgical |
|
142.7 |
|
|
|
182.3 |
|
|
(21.7 |
) |
% |
|
(1.3 |
) |
% |
|
(20.4 |
) |
% |
|
Interventional Urology |
|
114.3 |
|
|
|
127.7 |
|
|
(10.4 |
) |
% |
|
(0.0 |
) |
% |
|
(10.4 |
) |
% |
|
OEM |
|
119.2 |
|
|
|
110.7 |
|
|
7.7 |
|
% |
|
(0.6 |
) |
% |
|
8.3 |
|
% |
|
Other |
|
183.2 |
|
|
|
174.0 |
|
|
5.3 |
|
% |
|
(2.0 |
) |
% |
|
7.3 |
|
% |
|
Total |
$ |
1,197.7 |
|
|
$ |
1,266.1 |
|
|
(5.4 |
) |
% |
|
(1.2 |
) |
% |
|
(4.2 |
) |
% |
|
Second quarter 2020 net revenues from sales of Vascular Access
products were $164.9 million, an increase of 7.4% compared to the
prior year period. Excluding the impact of foreign currency
exchange rate fluctuations, second quarter 2020 net revenues
increased 8.8% compared to the prior year period. We estimate
that COVID-19 had a net positive impact to revenue of approximately
$8 million, or 5%.
Second quarter 2020 net revenues from sales of Interventional
products were $82.6 million, a decrease of 21.2% compared to the
prior year period. Excluding the impact of foreign currency
exchange rate fluctuations, second quarter 2020 net revenues
decreased 20.3% compared to the prior year period. We estimate that
COVID-19 had a negative impact to revenue of approximately $25
million, or 24%.
Second quarter 2020 net revenues from sales of Anesthesia
products were $64.9 million, a decrease of 24.3% compared to the
prior year period. Excluding the impact of foreign currency
exchange rate fluctuations, second quarter 2020 net revenues
decreased 23.0% compared to the prior year period. We estimate that
COVID-19 had a negative impact to revenue of approximately $18
million, or 22%.
Second quarter 2020 net revenues from sales of Surgical products
were $67.3 million, a decrease of 29.6% compared to the prior year
period. Excluding the impact of foreign currency exchange
rate fluctuations, second quarter 2020 net revenues decreased 28.4%
compared to the prior year period. We estimate that COVID-19 had a
negative impact to revenue of approximately $28 million, or
30%.
Second quarter 2020 net revenues from sales of Interventional
Urology products were $40.1 million, a decrease of 40.9% compared
to the prior year period. Excluding the impact of foreign currency
exchange rate fluctuations, second quarter 2020 net revenues
decreased 40.9% compared to the prior year period. We estimate that
COVID-19 had a negative impact to revenue of approximately $58
million, or 85%.
Second quarter 2020 net revenues from sales of OEM products were
$55.8 million, a decrease of 1.1% compared to the prior year
period. Excluding the impact of foreign currency exchange
rate fluctuations, second quarter 2020 net revenues decreased 0.7%
compared to the prior year period. We estimate that COVID-19
had a negative impact to revenue of approximately $15 million, or
26%.
Second quarter 2020 net revenues from sales of other products
were $91.4 million, an increase of 3.4% compared to the prior year
period. Excluding the impact of foreign currency exchange
rate fluctuations, second quarter 2020 net revenues increased 5.4%
compared to the prior year period. We estimate that COVID-19
had a positive impact to revenue of approximately $6 million, or
6%.
OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE
METRICS
Depreciation expense, amortization of intangible assets and
deferred financing charges for the six months ended June 28, 2020
totaled $115.1 million compared to $109.5 million for the six
months ended June 30, 2019.
Cash and cash equivalents at June 28, 2020 were $553.5 million
compared to $301.1 million at December 31, 2019.
Net accounts receivable at June 28, 2020 were $374.9 million
compared to $418.7 million at December 31, 2019.
Net inventories at June 28, 2020 were $514.8 million compared to
$476.6 million at December 31, 2019.
2020 WORKFORCE REDUCTION PLAN
During the second quarter of 2020, we committed to a workforce
reduction designed to improve profitability and reduce cost
primarily by streamlining certain sales and marketing functions in
our EMEA segment and certain manufacturing operations in our OEM
segment. The workforce reduction was initiated to further align the
business with our high growth strategic objectives. We estimate
that we will incur aggregate pre-tax restructuring charges of $10
million to $13 million, consisting primarily of termination
benefits, and will result in future cash outlays. This plan will be
substantially complete during 2020 and as a result most of these
charges are expected to be incurred prior to the end of 2020. We
expect to begin realizing plan-related savings in 2020 and expect
to achieve annual pre-tax savings of $11 million to $13 million
once the plans are fully implemented.
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 4, 2020 at 11:00am
(ET), by calling 855-859-2056 (U.S./Canada) or 404-537-3406
(International), Passcode: 1778009.
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 - June 28, 2020 |
|
|
|
|
|
Cost of goods sold, excluding intangible asset
amortization |
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 |
$288.7 |
|
$191.2 |
|
$29.4 |
|
$19.0 |
|
$11.8 |
|
$11.4 |
|
$0.24 |
|
Adjustments |
|
|
|
|
|
|
|
Restructuring, restructuring
related and impairment items (A) |
6.3 |
|
0.1 |
|
— |
|
19.0 |
|
0.9 |
|
24.6 |
|
$0.52 |
|
Acquisition, integration and
divestiture related items (B) |
— |
|
16.9 |
|
— |
|
— |
|
0.2 |
|
16.7 |
|
$0.35 |
|
Other items (C) |
— |
|
0.3 |
|
— |
|
— |
|
0.1 |
|
0.2 |
|
— |
|
MDR (D) |
— |
|
— |
|
2.7 |
|
— |
|
0.0 |
|
2.7 |
|
$0.06 |
|
Intangible amortization
expense (E) |
21.1 |
|
18.5 |
|
0.1 |
|
— |
|
6.4 |
|
33.3 |
|
$0.71 |
|
Tax adjustments |
— |
|
— |
|
— |
|
— |
|
(2.3 |
) |
2.3 |
|
$0.05 |
|
Adjusted basis |
$261.2 |
|
$155.4 |
|
$26.6 |
|
— |
|
$17.1 |
|
$91.3 |
|
$1.93 |
|
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME
ITEMSDollars in millions, except per share
amounts
Quarter
Ended - June 30, 2019 |
|
|
|
|
|
Cost of goods sold, excluding intangible asset
amortization |
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 |
$300.3 |
|
$215.5 |
|
$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 (E) |
20.7 |
|
16.7 |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Restructuring, restructuring related and impairment
items - For the three months ended June 28, 2020, pre-tax
restructuring charges were $19.0 million, pre-tax restructuring
related charges were $6.4 million; and there were no pre-tax
impairment charges. For the three months ended June 30, 2019,
pre-tax restructuring income was $2.2 million, pre-tax
restructuring related charges were $3.7 million, and pre-tax
impairment charges were $3.9 million.
- Acquisition, integration and divestiture related
items - For the three months ended June 28, 2020, these
items primarily related to contingent consideration liabilities,
and charges primarily related to our acquisition of IWG High
Performance Conductors, Inc. For the three months ended June
30, 2019, these charges primarily related to contingent
consideration liabilities and our acquisition of Essential Medical,
Inc. There were no divestiture related activities for the
three months ended June 28, 2020 or June 30, 2019.
- Other items - For the three months ended June
28, 2020, other items included expenses associated with prior year
tax matters. For the three months ended June 30, 2019, other
items included debt modification costs and product relabeling
costs.
- MDR - These costs were associated with our
efforts to comply with the European Medical Device Regulation.
- Intangible amortization expense - For the
three months ended June 28, 2020 and June 30, 2019, we reclassified
intangible asset amortization expense of $21.1 million and $20.7
million, respectively, from selling, general and administrative
expenses to cost of goods sold.
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME
ITEMSDollars in millions, except per share
amounts
Year to
Date Ended - June 28, 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 |
Income taxes |
Income (loss) from continuing operations |
Diluted earnings per share from continuing
operations |
GAAP Basis |
$585.7 |
|
$339.0 |
|
$56.8 |
|
$20.4 |
|
— |
$22.9 |
|
$142.6 |
|
$3.02 |
|
Adjustments |
|
|
|
|
|
|
|
|
Restructuring, restructuring
related and impairment items (A) |
|
11.2 |
|
|
0.3 |
|
|
— |
|
|
20.4 |
|
— |
|
1.6 |
|
|
30.2 |
|
$0.64 |
|
Acquisition, integration and
divestiture related items (B) |
|
1.7 |
|
|
(27.4 |
) |
|
— |
|
|
— |
|
— |
|
0.6 |
|
|
(26.3 |
) |
($0.56 |
) |
Other items (C) |
|
— |
|
|
0.3 |
|
|
— |
|
|
— |
|
— |
|
0.1 |
|
|
0.2 |
|
$0.00 |
|
MDR (D) |
|
— |
|
|
— |
|
|
4.5 |
|
|
— |
|
— |
|
0.0 |
|
|
4.5 |
|
$0.09 |
|
Intangible amortization
expense (E) |
|
42.0 |
|
|
36.4 |
|
|
0.2 |
|
|
— |
|
— |
|
12.6 |
|
|
66.0 |
|
$1.40 |
|
Tax adjustments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
(2.4 |
) |
|
2.4 |
|
$0.05 |
|
Adjusted basis |
$530.7 |
|
$329.4 |
|
$52.1 |
|
|
— |
|
— |
$35.5 |
|
$219.6 |
|
$4.65 |
|
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME
ITEMSDollars in millions, except per share
amounts
Year to
Date Ended - June 30, 2019 |
|
|
|
|
|
|
Cost of goods sold, excludingintangible 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 |
$589.9 |
|
$422.4 |
|
$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 (E) |
|
41.5 |
|
|
33.6 |
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Restructuring, restructuring related and impairment
items - For the six months ended June 28, 2020, pre-tax
restructuring charges were $20.4 million, pre-tax restructuring
related charges were $11.5 million; and there were no pre-tax
impairment charges. For the six months ended June 30, 2019, pre-tax
restructuring charges $12.2 million, pre-tax restructuring related
charges were $6.7 million, and pre-tax impairment charges were $6.9
million.
- Acquisition, integration and divestiture related
items - For the six months ended June 28, 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
six months ended June 30, 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
six months ended June 28, 2020 or June 30, 2019.
- Other items - For the six months ended June
28, 2020, other items included expenses associated with prior year
tax matters. For the six months ended June 30, 2019, other
items included debt modification costs, expenses associated with a
franchise tax audit, and product relabeling costs.
- MDR - These costs were associated with our
efforts to comply with the European Medical Device Regulation.
- Intangible amortization expense - For the six
months ended June 28, 2020 and June 30, 2019, we reclassified
intangible asset amortization expense of $42.0 million and $41.5
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 diversified
business model and in our ability to generate significant constant
currency revenue growth, margin expansion, adjusted earnings per
share and free cash flow growth over the long-term; estimated
pre-tax restructuring charges we expect to incur, and estimated
savings we expect to realize, in connection with our 2020 workforce
reduction plan; and our expectations with respect to when we will
incur the pre-tax restructuring charges and begin realizing savings
associated with the 2020 workforce reduction plan and when the plan
will be completed. 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 |
|
Six Months Ended |
|
June 28, 2020 |
|
June 30, 2019 |
|
June 28, 2020 |
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
(Dollars and shares in thousands, except per
share) |
Net revenues |
$ |
567,034 |
|
|
$ |
652,507 |
|
|
$ |
1,197,676 |
|
|
$ |
1,266,091 |
|
Cost of goods sold |
288,662 |
|
|
300,269 |
|
|
585,680 |
|
|
589,883 |
|
Gross profit |
278,372 |
|
|
352,238 |
|
|
611,996 |
|
|
676,208 |
|
Selling, general and
administrative expenses |
191,193 |
|
|
215,500 |
|
|
338,989 |
|
|
422,421 |
|
Research and development
expenses |
29,364 |
|
|
27,595 |
|
|
56,760 |
|
|
54,745 |
|
Restructuring and impairment
charges |
19,005 |
|
|
1,685 |
|
|
20,351 |
|
|
19,080 |
|
Gain on sale of assets |
— |
|
|
— |
|
|
— |
|
|
(2,739 |
) |
Income from continuing operations before interest and taxes |
38,810 |
|
|
107,458 |
|
|
195,896 |
|
|
182,701 |
|
Interest expense |
15,682 |
|
|
20,758 |
|
|
31,121 |
|
|
43,450 |
|
Interest income |
(163 |
) |
|
(472 |
) |
|
(742 |
) |
|
(811 |
) |
Income from continuing operations before taxes |
23,291 |
|
|
87,172 |
|
|
165,517 |
|
|
140,062 |
|
Taxes on income from
continuing operations |
11,848 |
|
|
3,844 |
|
|
22,922 |
|
|
14,816 |
|
Income from continuing operations |
11,443 |
|
|
83,328 |
|
|
142,595 |
|
|
125,246 |
|
Operating income (loss) from
discontinued operations |
22 |
|
|
61 |
|
|
18 |
|
|
(1,282 |
) |
Tax benefit (expense) on
operating loss from discontinued operations |
9 |
|
|
14 |
|
|
7 |
|
|
(308 |
) |
Income (loss) from discontinued operations |
13 |
|
|
47 |
|
|
11 |
|
|
(974 |
) |
Net income |
$ |
11,456 |
|
|
$ |
83,375 |
|
|
$ |
142,606 |
|
|
$ |
124,272 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.25 |
|
|
$ |
1.80 |
|
|
$ |
3.07 |
|
|
$ |
2.72 |
|
Income (loss) from discontinued operations |
— |
|
|
0.01 |
|
|
— |
|
|
(0.02 |
) |
Net income |
$ |
0.25 |
|
|
$ |
1.81 |
|
|
$ |
3.07 |
|
|
$ |
2.70 |
|
Diluted: |
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.24 |
|
|
$ |
1.77 |
|
|
$ |
3.02 |
|
|
$ |
2.67 |
|
Loss from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
(0.03 |
) |
Net income |
$ |
0.24 |
|
|
$ |
1.77 |
|
|
$ |
3.02 |
|
|
$ |
2.64 |
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
Basic |
46,442 |
|
|
46,172 |
|
|
46,412 |
|
|
46,111 |
|
Diluted |
47,242 |
|
|
47,036 |
|
|
47,237 |
|
|
46,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TELEFLEX INCORPORATEDCONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
June 28, 2020 |
|
December 31, 2019 |
|
|
|
|
|
(Dollars in thousands) |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
553,535 |
|
|
$ |
301,083 |
|
Accounts receivable, net |
374,886 |
|
|
418,673 |
|
Inventories |
514,755 |
|
|
476,557 |
|
Prepaid expenses and other current assets |
94,381 |
|
|
97,943 |
|
Prepaid taxes |
7,060 |
|
|
12,076 |
|
Total current assets |
1,544,617 |
|
|
1,306,332 |
|
Property, plant and equipment,
net |
432,401 |
|
|
430,719 |
|
Operating lease assets |
101,982 |
|
|
113,160 |
|
Goodwill |
2,343,561 |
|
|
2,245,305 |
|
Intangible assets, net |
2,260,863 |
|
|
2,156,285 |
|
Deferred tax assets |
5,589 |
|
|
5,572 |
|
Other assets |
76,117 |
|
|
52,447 |
|
Total assets |
$ |
6,765,130 |
|
|
$ |
6,309,820 |
|
LIABILITIES AND
EQUITY |
|
|
|
Current liabilities |
|
|
|
Current borrowings |
$ |
83,000 |
|
|
$ |
50,000 |
|
Accounts payable |
107,140 |
|
|
102,916 |
|
Accrued expenses |
103,557 |
|
|
100,466 |
|
Current portion of contingent consideration |
25,243 |
|
|
148,090 |
|
Payroll and benefit-related liabilities |
80,602 |
|
|
115,981 |
|
Accrued interest |
6,887 |
|
|
5,514 |
|
Income taxes payable |
18,340 |
|
|
6,692 |
|
Other current liabilities |
31,846 |
|
|
33,396 |
|
Total current liabilities |
456,615 |
|
|
563,055 |
|
Long-term borrowings |
2,328,791 |
|
|
1,858,943 |
|
Deferred tax liabilities |
488,968 |
|
|
439,558 |
|
Pension and postretirement
benefit liabilities |
60,866 |
|
|
82,719 |
|
Noncurrent liability for
uncertain tax positions |
12,381 |
|
|
10,294 |
|
Noncurrent contingent
consideration |
24,036 |
|
|
71,818 |
|
Noncurrent operating lease
liabilities |
91,917 |
|
|
101,372 |
|
Other liabilities |
204,154 |
|
|
202,741 |
|
Total liabilities |
3,667,728 |
|
|
3,330,500 |
|
Commitments and
contingencies |
|
|
|
Total shareholders'
equity |
3,097,402 |
|
|
2,979,320 |
|
Total liabilities and
shareholders' equity |
$ |
6,765,130 |
|
|
$ |
6,309,820 |
|
|
|
|
|
|
|
|
|
|
TELEFLEX INCORPORATEDCONSOLIDATED
STATEMENTS OF CASH FLOWS |
|
|
|
Six Months Ended |
|
June 28, 2020 |
|
June 30, 2019 |
|
|
|
|
|
(Dollars in thousands) |
Cash flows from operating
activities of continuing operations: |
|
|
|
Net income |
$ |
142,606 |
|
|
$ |
124,272 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
(Income) loss from discontinued operations |
(11 |
) |
|
974 |
|
Depreciation expense |
34,461 |
|
|
31,966 |
|
Intangible asset amortization expense |
78,638 |
|
|
75,285 |
|
Deferred financing costs and debt discount amortization
expense |
1,984 |
|
|
2,249 |
|
Gain on sale of assets |
— |
|
|
(2,739 |
) |
Fair value step up of acquired inventory sold |
1,707 |
|
|
— |
|
Changes in contingent consideration |
(29,951 |
) |
|
25,456 |
|
Stock-based compensation |
8,482 |
|
|
12,700 |
|
Impairment of long-lived assets |
— |
|
|
6,911 |
|
Deferred income taxes, net |
1,055 |
|
|
(5,495 |
) |
Payments for contingent consideration |
(79,771 |
) |
|
(26,092 |
) |
Interest benefit on swaps designated as net investment hedges |
(9,805 |
) |
|
(8,799 |
) |
Other |
(18,981 |
) |
|
4,272 |
|
Changes in assets and liabilities, net of effects of acquisitions
and disposals: |
|
|
|
Accounts receivable |
45,843 |
|
|
(19,747 |
) |
Inventories |
(34,875 |
) |
|
(33,970 |
) |
Prepaid expenses and other assets |
11,819 |
|
|
(6,381 |
) |
Accounts payable, accrued expenses and other liabilities |
(26,449 |
) |
|
(6,231 |
) |
Income taxes receivable and payable, net |
7,257 |
|
|
(17,347 |
) |
Net cash provided by operating activities from continuing
operations |
134,009 |
|
|
157,284 |
|
Cash flows from investing
activities of continuing operations: |
|
|
|
Expenditures for property, plant and equipment |
(39,052 |
) |
|
(56,107 |
) |
Proceeds from sale of assets |
400 |
|
|
1,178 |
|
Payments for businesses and intangibles acquired, net of cash
acquired |
(265,895 |
) |
|
(1,025 |
) |
Net interest proceeds on swaps designated as net investment
hedges |
9,986 |
|
|
8,330 |
|
Net cash used in investing activities from continuing
operations |
(294,561 |
) |
|
(47,624 |
) |
Cash flows from financing
activities of continuing operations: |
|
|
|
Proceeds from new borrowings |
1,010,000 |
|
|
25,000 |
|
Reduction in borrowings |
(500,000 |
) |
|
(52,500 |
) |
Debt extinguishment, issuance and amendment fees |
(7,727 |
) |
|
(4,703 |
) |
Net proceeds from share based compensation plans and the related
tax impacts |
2,668 |
|
|
7,829 |
|
Payments for contingent consideration |
(60,947 |
) |
|
(111,928 |
) |
Dividends paid |
(31,558 |
) |
|
(31,347 |
) |
Net cash provided by (used in) financing activities from continuing
operations |
412,436 |
|
|
(167,649 |
) |
Cash flows from discontinued
operations: |
|
|
|
Net cash (used in) provided by operating activities |
(317 |
) |
|
2,799 |
|
Net cash (used in) provided by discontinued operations |
(317 |
) |
|
2,799 |
|
Effect of exchange rate
changes on cash and cash equivalents |
885 |
|
|
1,925 |
|
Net increase (decrease) in
cash and cash equivalents |
252,452 |
|
|
(53,265 |
) |
Cash and cash equivalents at
the beginning of the period |
301,083 |
|
|
357,161 |
|
Cash and cash equivalents at
the end of the period |
$ |
553,535 |
|
|
$ |
303,896 |
|
|
|
|
|
|
|
|
|
Contact: |
Jake ElguiczeTreasurer and Vice President of Investor
Relations610-948-2836 |
Teleflex (NYSE:TFX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Teleflex (NYSE:TFX)
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From Apr 2023 to Apr 2024