First Quarter Revenues of $487.9 million, up
14.8% Versus Prior Year Period; up 16.0% on Constant Currency
Basis
First Quarter GAAP Diluted EPS of $0.87,
down 17.1% Over Prior Year Period
First Quarter Adjusted Diluted EPS of $1.80,
up 18.4% Versus Prior Year Period
Reaffirmed 2017 Guidance Range for GAAP
Revenue Growth of 10.0% to 11.5% and Constant Currency Revenue
Growth of 12.5% to 14.0%
Raised 2017 Guidance for GAAP Diluted EPS
from a range of $5.04 to $5.08 to a range of $5.59 to $5.66
Raised 2017 Guidance for Adjusted Diluted
EPS from a range of $8.00 to $8.15 to a range of $8.05 to
$8.23
Teleflex Incorporated (NYSE: TFX) (the “Company”) today
announced financial results for the first quarter ended April 2,
2017.
First quarter 2017 net revenues were $487.9 million, an increase
of 14.8% compared to the prior year period. Excluding the impact of
foreign currency exchange rate fluctuations, first quarter 2017 net
revenues increased 16.0% over the year ago period.
First quarter 2017 GAAP diluted earnings per share from
continuing operations decreased 17.1% to $0.87, as compared to
$1.05 in the prior year period. The decrease in GAAP diluted
earnings per share from continuing operations is due to costs
incurred associated with the acquisition of Vascular Solutions.
First quarter 2017 adjusted diluted earnings per share from
continuing operations increased 18.4% to $1.80, compared to $1.52
in the prior year period.
“Following a solid fourth quarter performance to end 2016, I am
pleased to report that the Company is off to a strong start in
2017, aided in part by the additional shipping days in the quarter
as compared to the first quarter of 2016,” said Benson Smith,
Chairman and Chief Executive Officer. “During the first quarter,
the strength in our business was broad-based, covering several of
our operating segments. This includes our recent acquisition of
Vascular Solutions which contributed meaningfully to our revenue
growth during its partial quarter of ownership, accounting for
approximately 5% of our total company revenue growth."
Added Mr. Smith, "We are pleased with our performance in the
first quarter and remain confident in our outlook for 2017 and are
reaffirming our full year constant currency revenue growth guidance
range, while increasing our full year adjusted earnings per share
guidance range."
FIRST QUARTER NET REVENUE BY SEGMENT
The following table provides information regarding net revenues
in each of the Company's reportable operating segments and all of
its other operating segments for the three months ended April 2,
2017 and March 27, 2016 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 April 2, 2017 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
"Foreign Currency" column of the table.
Three Months Ended %
Increase/ (Decrease) April 2, 2017
March 27, 2016
Constant
Currency
Foreign
Currency
Total
Change
(Dollars in millions) Vascular North America $ 93.8 $
81.5 14.8 % 0.2 % 15.0 % Surgical North America 46.0 38.9 17.7 %
0.3 % 18.0 % Anesthesia North America 48.2 46.0 4.7 % 0.2 % 4.9 %
EMEA 130.7 122.1 10.9 % (3.8 )% 7.1 % Asia 49.0 49.2 (0.4 )% — (0.4
)% OEM 43.3 34.0 28.4 % (0.8 )% 27.6 % All Other 76.9
53.2 45.0 % (0.5 )% 44.5 % Total $ 487.9 $
424.9 16.0 % (1.2 )% 14.8 %
Vascular North America first quarter 2017 net revenues were
$93.8 million, an increase of 15.0% compared to the prior year
period. Excluding the impact of foreign currency exchange rate
fluctuations, first quarter 2017 net revenues increased 14.8%
compared to the prior year period. The increase in constant
currency revenue is primarily attributable to an increase in sales
volumes, including the impact of an increase in the number of
shipping days in the first quarter 2017.
Surgical North America first quarter 2017 net revenues were
$46.0 million, an increase of 18.0% compared to the prior year
period. Excluding the impact of foreign currency exchange rate
fluctuations, first quarter 2017 net revenues increased 17.7%
compared to the prior year period. The increase in constant
currency revenue is primarily attributable to an increase in sales
volumes, including the impact of an increase in the number of
shipping days in the first quarter 2017, and an increase in new
product sales.
Anesthesia North America first quarter 2017 net revenues were
$48.2 million, an increase of 4.9% compared to the prior year
period. Excluding the impact of foreign currency exchange rate
fluctuations, first quarter 2017 net revenues increased 4.7%
compared to the prior year period. The increase in constant
currency revenue is primarily attributable to an increase in sales
volumes resulting from the impact of an increase in the number of
shipping days in the first quarter 2017, as well as new product
sales and price increases. The increase in net revenues was
partially offset by a decrease in sales volumes of existing
products excluding the impact of an increase in the number of
shipping days in the first quarter 2017.
EMEA first quarter 2017 net revenues were $130.7 million, an
increase of 7.1% compared to the prior year period. Excluding the
impact of foreign currency exchange rate fluctuations, first
quarter 2017 net revenues increased 10.9% compared to the prior
year period. The increase in constant currency revenue is primarily
attributable to an increase in sales volumes, including the impact
of an increase in the number of shipping days in the first quarter
2017.
Asia first quarter 2017 net revenues were $49.0 million, a
decrease of 0.4% compared to the prior year period on both a GAAP
and constant currency basis. The decrease in revenue is primarily
attributable to a decrease in sales volumes including the impact of
the distributor to direct sales conversion in China, partially
offset by an increase in new product sales and price increases.
OEM and Development Services (“OEM”) first quarter 2017 net
revenues were $43.3 million, an increase of 27.6% compared to the
prior year period. Excluding the impact of foreign currency
exchange rate fluctuations, first quarter 2017 net revenues
increased 28.4% compared to the prior year period. The increase in
constant currency revenue is primarily attributable to an increase
in sales volumes and net revenues generated by an acquired
business.
All Other first quarter 2017 net revenues were $76.9 million, an
increase of 44.5% compared to the prior year period. Excluding the
impact of foreign currency exchange rate fluctuations, first
quarter 2017 net revenues increased 45.0% compared to the prior
year period. The increase in constant currency revenue is primarily
attributable to net revenues generated by sales of Vascular
Solutions' products.
OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE
METRICS
Depreciation expense, amortization of intangible assets and
deferred financing charges for the first three months of 2017
totaled $34.4 million compared to $32.3 million for the prior year
period.
Cash and cash equivalents at April 2, 2017 were $689.1 million
compared to $543.8 million at December 31, 2016.
Net accounts receivable at April 2, 2017 were $282.9 million
compared to $272.0 million at December 31, 2016.
Net inventories at April 2, 2017 were $355.3 million compared to
$316.2 million at December 31, 2016.
2017 OUTLOOK
On a GAAP basis, revenues in 2017 are expected to increase 10.0%
to 11.5% over the prior year, reflecting the anticipated 2.5%
unfavorable impact of foreign currency exchange rate fluctuations.
On a constant currency basis, the Company estimates that revenues
for full year 2017 will increase 12.5% to 14.0%. The forecasted
revenue growth includes the impact of Vascular Solutions' product
sales, which are expected to contribute approximately 8.5% to 9.0%
to our revenue growth on a GAAP and constant currency basis.
The Company raised its full year 2017 GAAP diluted earnings per
share from continuing operations guidance from a range of $5.04 to
$5.08 to a range of $5.59 to $5.66. The increase in the full year
2017 GAAP diluted earnings per share from continuing operations
guidance range is primarily due to changes in projected intangible
amortization expense associated with the acquisition of Vascular
Solutions. The Company raised its full year 2017 adjusted diluted
earnings per share from continuing operations guidance from a range
of $8.00 to $8.15 to a guidance range of $8.05 to $8.23.
FORECASTED 2017 CONSTANT CURRENCY
REVENUE GROWTH RECONCILIATION
Low High
Forecasted 2017 GAAP revenue growth 10.0 % 11.5 %
Estimated impact of foreign currency exchange rate
fluctuations 2.5 % 2.5 % Forecasted 2017
constant currency revenue growth 12.5 % 14.0 %
FORECASTED 2017 ADJUSTED EARNINGS PER
SHARE RECONCILIATION
Low High Diluted
earnings per share attributable to common shareholders $5.59 $5.66
Restructuring, impairment charges and special items, net of
tax $1.15 $1.20 Intangible amortization expense, net of tax
$1.30 $1.35 Amortization of debt discount on convertible
notes, net of tax $0.01 $0.02
Adjusted diluted earnings per share $8.05
$8.23
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 9, 2017 at 11:59pm (ET),
by calling 855-859-2056 (U.S./Canada) or 404-537-3406
(International), Passcode: 12639722.
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 we have sold for 36 months or less, and "existing
products" refers to products we have sold 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
This press release includes certain non-GAAP financial measures,
which include:
Adjusted diluted earnings per share. This measure excludes,
depending on the period presented (i) restructuring and other
impairment charges; (ii) certain losses and other charges,
including, for 2017, costs related to the Company's acquisition of
Vascular Solutions and facility consolidation costs and, for 2016,
charges primarily related to facility consolidation and acquisition
costs, net of reversals related to contingent consideration
liabilities and the gain on sale of the sale of an asset; (iii)
amortization of the debt discount on the Company’s convertible
notes; (iv) intangible amortization expense; (v) loss on
extinguishment of debt; and (vi) tax benefits resulting primarily
from 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 the Company's deferred tax liability. In addition, the
calculation of diluted shares within adjusted earnings per share
gives effect to the anti-dilutive impact of the Company’s
convertible note hedge agreements, which reduce the potential
economic dilution that otherwise would occur upon conversion of the
Company’s senior subordinated convertible notes (under GAAP, the
anti-dilutive impact of the convertible note hedge agreements is
not reflected in diluted shares).
Constant currency revenue growth. This measure excludes the
impact of translating the results of international subsidiaries at
different currency exchange rates from period to period.
Management believes these measures are useful to investors
because they eliminate items that do not reflect Teleflex’s
day-to-day operations and, as a result, they facilitate comparisons
of financial results exclusive of items that can fluctuate in a
manner that may not reflect the performance of our business. In
addition, management believes that the calculation of non-GAAP
diluted shares is useful to investors because it provides insight
into the offsetting economic effect of the convertible note hedge
against conversions of the convertible notes. Management uses these
financial measures for internal managerial purposes, when publicly
providing guidance on possible future results, and to assist in our
evaluation of period-to-period comparisons. These financial
measures are presented in addition to results presented in
accordance with generally accepted accounting principles (“GAAP”)
and should not be relied upon as a substitute for GAAP financial
measures. Tables reconciling historical adjusted diluted earnings
per share to historical GAAP earnings per share are set forth
below. Tables reconciling constant currency net revenues to GAAP
net revenues and reconciling forecasted non-GAAP measures to the
most directly comparable forecasted GAAP measures are set forth
above.
RECONCILIATION OF CONSOLIDATED
STATEMENT OF INCOME ITEMS
Dollars in millions, except per share
amounts
Quarter Ended - April 2, 2017
Cost of
goods sold
Selling, general
and
administrative
expenses
Research and
development
expenses
Restructuring
and other
impairment
charges
(Gain) loss on
sale of
business and
assets
Interest
expense,
net
Loss on
extinguishment
of debt, net
Income taxes
Net income
(loss)
attributable to
common
shareholders
from continuing
operations
Diluted
earnings per
share
available to
common
shareholders
Shares used
in calculation
of GAAP and
adjusted
earnings
per share
GAAP Basis $232.3 $164.0 $17.8 $12.9 — $17.6 $5.6 ($2.7 ) $40.3
$0.87 46,615 Adjustments Restructuring and other impairment charges
— — — 12.9 — — — 3.0 10.0 $0.21 — Losses and other charges, net (A)
11.5 9.6 0.2 — — 2.1 — 7.8 15.7 $0.33 — Amortization of debt
discount on convertible notes — — — — — 0.4 — 0.1 0.2 $0.01 —
Intangible amortization expense — 18.7 0.1 — — — — 5.1 13.7 $0.29 —
Tax adjustment (B) — — — — — — — 0.5 (0.5 ) ($0.01 ) — Loss on
extinguishment of debt, net — — — — — — 5.6 2.0 3.5 $0.08 — Shares
due to Teleflex under note hedge (C) — — — — — — — — — $0.02 (477 )
Adjusted basis $220.8 $135.7 $17.5 — — $15.1 — $15.9 $82.9 $1.80
46,138
Quarter Ended - March 27, 2016
Cost of
goods sold
Selling, general
and
administrative
expenses
Research and
development
expenses
Restructuring
and other
impairment
charges
(Gain) loss on
sale of
business and
assets
Interest
expense,
net
Loss on
extinguishment
of debt, net
Income taxes
Net income
(loss)
attributable to
common
shareholders
from continuing
operations
Diluted
earnings per
share
available to
common
shareholders
Shares used
in calculation
of GAAP and
adjusted
earnings
per share
GAAP Basis $199.7 $136.3 $12.4 $10.0 ($1.0 ) $13.7 — $2.6 $51.0
$1.05 48,782 Adjustments Restructuring and other impairment charges
— — — 10.0 — — — 2.3 7.6 $0.16 — Losses and other charges, net (A)
2.7 0.6 0.0 — (1.0 ) — — 0.9 1.4 $0.03 — Amortization of debt
discount on convertible notes — — — — — 3.5 — 1.3 2.2 $0.05 —
Intangible amortization expense — 15.4 — — — — — 4.1 11.2 $0.23 —
Tax adjustment (B) — — — — — — — 5.0 (5.0 ) ($0.10 ) — Loss on
extinguishment of debt, net — — — — — — — — — — — Shares due to
Teleflex under note hedge (C) — — — — — — — — — $0.12 (3,621 )
Adjusted basis $197.1 $120.4 $12.4 — — $10.2 — $16.2 $68.5 $1.52
45,161
(A) In 2017, losses and other charges, net related primarily to
costs associated with the acquisition of Vascular Solutions and
facility consolidation costs. In 2016, losses and other charges,
net related primarily to facility consolidations and the gain on
sale of an asset.
(B) The tax adjustment represents a net benefit resulting
primarily from 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.
(C) Adjusted diluted shares are calculated by giving effect to
the anti-dilutive impact of the Company’s convertible note hedge
agreements, which reduce the potential economic dilution that
otherwise would occur upon conversion of the Company's convertible
notes. Under GAAP, the anti-dilutive impact of the convertible note
hedge agreements is not reflected in diluted shares.
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 and interventional access, surgical, anesthesia,
cardiac care, urology, emergency medicine 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® 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 2017 GAAP and constant
currency revenue growth and GAAP and adjusted diluted earnings per
share. 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
ability to integrate acquired businesses into our operations,
realize planned synergies and operate such businesses profitably in
accordance with expectations; our ability to effectively execute
our restructuring programs; our inability to realize anticipated
savings from restructuring plans and programs; the impact of
healthcare reform legislation and proposals to amend the
legislation; changes in Medicare, Medicaid and third party coverage
and reimbursements; 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,
sovereign debt issues and the impact of the United Kingdom's vote
to leave the European Union; 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.
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
Three Months Ended April 2, 2017
March 27, 2016
(Dollars and shares in
thousands, except per share)
Net revenues $ 487,881 $ 424,893 Cost of goods sold 232,321
199,746 Gross profit 255,560 225,147 Selling,
general and administrative expenses 163,969 136,348 Research and
development expenses 17,827 12,353 Restructuring charges 12,945
9,968 Gain on sale of assets — (1,019 ) Income
from continuing operations before interest, loss on extinguishment
of debt and taxes 60,819 67,497 Interest expense 17,726 13,784
Interest income (169 ) (80 ) Loss on extinguishment of debt
5,582 — Income from continuing operations
before taxes 37,680 53,793 (Benefit) taxes on income from
continuing operations (2,669 ) 2,613 Income
from continuing operations 40,349 51,180
Operating loss from discontinued operations (282 ) (382 )
Benefit on loss from discontinued operations (103 )
(70 ) Loss from discontinued operations (179 ) (312 )
Net income 40,170 50,868 Less: Income from continuing operations
attributable to noncontrolling interest — 179
Net income attributable to common shareholders $ 40,170
$ 50,689 Earnings per share available to common
shareholders: Basic: Income from continuing operations $ 0.90 $
1.22 Income (loss) from discontinued operations (0.01 )
— Net income $ 0.89 $ 1.22 Diluted:
Income from continuing operations $ 0.87 $ 1.05 Loss from
discontinued operations (0.01 ) (0.01 ) Net income $
0.86 $ 1.04 Dividends per share $ 0.34 $ 0.34
Weighted average common shares outstanding Basic 44,893 41,647
Diluted 46,615 48,782 Amounts attributable to common shareholders:
Income from continuing operations, net of tax $ 40,349 $ 51,001
Income (loss) from discontinued operations, net of tax (179
) (312 ) Net income $ 40,170 $ 50,689
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
April 2, 2017
December 31, 2016 (Dollars in thousands)
ASSETS Current assets Cash and cash equivalents $ 689,129 $
543,789 Accounts receivable, net 282,872 271,993 Inventories, net
355,289 316,171 Prepaid expenses and other current assets 47,238
40,382 Prepaid taxes 20,599 8,179 Assets held for sale —
2,879 Total current assets 1,395,127 1,183,393 Property,
plant and equipment, net 355,234 302,899 Goodwill
1,815,498
1,276,720 Intangible assets, net
1,620,454
1,091,663 Deferred tax assets
1,963
1,712 Other assets 44,160 34,826 Total assets $
5,232,436
$ 3,891,213
LIABILITIES AND EQUITY Current liabilities
Current borrowings $ 131,095 $ 183,071 Accounts payable 82,018
69,400 Accrued expenses 82,390 65,149 Current portion of contingent
consideration 669 587 Payroll and benefit-related liabilities
65,927 82,679 Accrued interest 12,686 10,450 Income taxes payable
8,043 7,908 Other current liabilities 9,530 8,402
Total current liabilities 392,358 427,646 Long-term borrowings
1,957,797 850,252 Deferred tax liabilities
460,654
271,377 Pension and postretirement benefit liabilities 130,226
133,062 Noncurrent liability for uncertain tax positions 17,939
17,520 Other liabilities 54,558 52,015 Total
liabilities
3,013,532
1,751,872 Commitments and contingencies Convertible notes -
redeemable equity component — 1,824 Mezzanine equity
— 1,824 Total shareholders' equity 2,218,904
2,137,517 Total liabilities and shareholders' equity $
5,232,436
$ 3,891,213
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three Months Ended April 2,
2017 March 27, 2016 (Dollars in
thousands) Cash flows from operating activities of continuing
operations: Net income $ 40,170 $ 50,868 Adjustments to reconcile
net income to net cash provided by operating activities: Loss
(income) from discontinued operations 179 312 Depreciation expense
14,180 12,602 Amortization expense of intangible assets 18,785
15,357 Amortization expense of deferred financing costs and debt
discount 1,406 4,377 Loss on extinguishment of debt 5,582 — Gain on
sale of assets — (1,019 ) Fair value step up of acquired inventory
sold 7,832 — Changes in contingent consideration 179 377
Stock-based compensation 4,240 3,437 Deferred income taxes, net
(3,081 ) 756 Other (2,703 ) (3,114 ) Changes in operating assets
and liabilities, net of effects of acquisitions and disposals:
Accounts receivable 18,691 (10,568 ) Inventories (5,322 ) (5,104 )
Prepaid expenses and other current assets (1,224 ) (3,749 )
Accounts payable and accrued expenses 2,696 4,502 Income taxes
receivable and payable, net (10,670 ) (2,202 ) Net
cash provided by operating activities from continuing operations
90,940 66,832 Cash flows from investing
activities of continuing operations: Expenditures for property,
plant and equipment (12,894 ) (7,822 ) Proceeds from sale of assets
6,332 1,251 Payments for businesses and intangibles acquired, net
of cash acquired (975,524 ) — Net cash used in
investing activities from continuing operations (982,086 )
(6,571 ) Cash flows from financing activities of continuing
operations: Proceeds from new borrowings 1,194,500 — Reduction in
borrowings (138,251 ) (9 ) Debt extinguishment, issuance and
amendment fees (19,114 ) — Net proceeds from share based
compensation plans and the related tax impacts (505 ) 3,180
Payments for contingent consideration (79 ) (61 ) Dividends paid
(15,287 ) (14,179 ) Net cash provided by (used in)
financing activities from continuing operations 1,021,264
(11,069 ) Cash flows from discontinued operations:
Net cash used in operating activities (266 ) (126 )
Net cash used in discontinued operations (266 ) (126
) Effect of exchange rate changes on cash and cash equivalents
15,488 5,126 Net increase in cash and
cash equivalents 145,340 54,192 Cash and cash equivalents at the
beginning of the period 543,789 338,366
Cash and cash equivalents at the end of the period $ 689,129
$ 392,558 Non cash financing activities of continuing
operations: Settlement and exchange of convertible notes with
common or treasury stock $ 958 $ 5 Acquisition of treasury stock
associated with settlement and exchange of convertible note hedge
and warrant agreements $ 19,311 $ 11
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170504005062/en/
Teleflex IncorporatedJake ElguiczeTreasurer and Vice President
of Investor Relations610-948-2836
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