Teleflex Reports First Quarter 2013 Results
Jake Elguicze, Treasurer and Vice President of Investor Relations610-948-2836
Teleflex Incorporated (NYSE: TFX) today announced financial results for the first quarter ended March 31, 2013.
First quarter 2013 net revenues were $411.9 million, an increase of 8.2% over the prior year period. Excluding the impact of foreign currency fluctuations, first quarter 2013 net revenues also increased 8.2% over the prior year period.
First quarter 2013 GAAP diluted earnings per share from continuing operations were $0.64, as compared to a loss of ($6.97) in the prior year period. The prior year period loss reflects a goodwill impairment charge of $332.1 million resulting from a reorganization of the Company’s business unit reporting structure. First quarter 2013 adjusted diluted earnings per share from continuing operations were $1.03, as compared to $0.99 in the prior year period, an increase of 4.0%.
“Overall, in the first quarter, I am pleased with the progress Teleflex has made on its operating initiatives,” said Benson Smith, Chairman, President and CEO. “The Company delivered high single-digit revenue growth and year-over-year earnings per share expansion, despite being impacted by headwinds such as two fewer shipping days compared to last year’s first quarter, the medical device tax and the impact of our convertible notes on our weighted average shares calculation due to the appreciation in our stock price. We remain focused on executing our strategic plan and capturing additional share in the markets we serve, while remaining committed to rationalizing our cost base to generate increased profitability for our shareholders.”
Critical Care first quarter 2013 net revenues were $287.0 million, an increase of 12.0% compared to the prior year period. Excluding the impact of foreign currency fluctuations, first quarter 2013 net revenues also increased 12.0% compared to the prior year period. The increase in constant currency revenue growth was due to higher sales of anesthesia and urology products. The growth in sales of anesthesia products was primarily due to the contribution from the LMA International N.V. (“LMA”) acquisition, which occurred in October of 2012. Constant currency sales growth was partially offset by a decline in sales of vascular access and respiratory products, as well as the impact of fewer shipping days in the quarter as compared to the first quarter of 2012.
Surgical Care first quarter 2013 net revenues were $74.7 million, an increase of 3.6% compared to the prior year period. Excluding the impact of foreign currency fluctuations, first quarter 2013 net revenues increased 3.3% compared to the prior year period. The increase in constant currency revenue growth was due to higher sales of ligation and access products, partially offset by a decline in sales of chest drainage and general surgical instrument products, as well as the impact of fewer shipping days in the quarter as compared to the first quarter of 2012.
Cardiac Care first quarter 2013 net revenues were $18.9 million, a decrease of 8.1% compared to the prior year period. Excluding the impact of foreign currency fluctuations, first quarter 2013 net revenues decreased 7.3% compared to the prior year period. The decrease in constant currency revenue growth was due to a decline in sales of intra-aortic balloon pumps and the impact of fewer shipping days in the quarter as compared to the first quarter of 2012.
OEM and Development Services (“OEM”) first quarter 2013 net revenues were $31.3 million, a decrease of 1.1% compared to the prior year period. Excluding the impact of foreign currency fluctuations, first quarter 2013 net revenues also decreased 1.1% compared to the prior year period. The decrease in revenue was primarily due to a decline in sales of catheter products and the impact of fewer shipping days in the quarter as compared to the first quarter of 2012.
Americas first quarter 2013 net revenues were $195.8 million, an increase of 8.5% compared to the prior year period. Excluding the impact of foreign currency fluctuations, first quarter 2013 net revenues also increased 8.5% compared to the prior year period. The increase in constant currency revenue growth was due to LMA product sales, new product introductions and price increases, partially offset by the impact of fewer shipping days in the quarter as compared to the first quarter of 2012.
EMEA first quarter 2013 net revenues were $142.4 million, an increase of 5.8% compared to the prior year period. Excluding the impact of foreign currency fluctuations, first quarter 2013 net revenues increased 5.4% compared to the prior year period. The increase in constant currency revenue growth was due to LMA product sales and new product introductions, partially offset by the impact of fewer shipping days in the quarter as compared to the first quarter of 2012 and price decreases.
Asia first quarter 2013 net revenues were $42.4 million, an increase of 24.8% compared to the prior year period. Excluding the impact of foreign currency fluctuations, first quarter 2013 net revenues increased 26.8% compared to the prior year period. The increase in constant currency revenue growth was due to LMA product sales and price increases.
Depreciation expense and amortization of intangible assets and deferred financing costs for the three months of 2013 were $26.3 million compared to $22.7 million for the prior year period.
Cash and cash equivalents at March 31, 2013 were $306.6 million compared to $337.0 million at December 31, 2012.
Net accounts receivable at March 31, 2013 were $307.0 million compared to $298.0 million at December 31, 2012.
Net inventories at March 31, 2013 were $332.8 million compared to $323.3 million at December 31, 2012.
Net debt obligations at March 31, 2013 were $723.1 million compared to $692.7 million at December 31, 2012.
The Company’s financial estimates for full year 2013 are as follows:
Constant currency revenue growth between 11% and 13%.
Adjusted diluted earnings per share in the range of $4.70 to $4.90.
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 and the accompanying presentation will be posted prior to the call. An audio replay will be available until May 7, 2013, 11:59pm (ET), by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 82225144.
Constant currency revenue and growth exclude the impact of translating the results of international subsidiaries at different currency exchange rates from period to period.
Certain financial information is presented on a rounded basis, which may cause minor differences.
Product group results and commentary exclude the impact of discontinued operations, items included in restructuring and impairment charges, and losses and other charges set forth in the condensed consolidated statements of income and in the Reconciliation of Consolidated Statement of Income Items set forth below.
This press release includes certain non-GAAP financial measures. These measures include (i) adjusted diluted earnings per share, which excludes, depending on the period presented, the effect of charges associated with a goodwill impairment, our restructuring programs and asset impairments, losses and other charges related to acquisition costs, charges associated with the amortization of additional interest expense related to an interest rate swap terminated in 2011, intangible amortization expense, the amortization of debt discount on convertible notes and a litigation verdict against the Company with respect to a non-operating joint venture; and (ii) constant currency revenue and growth, which exclude the impact of translating the results of international subsidiaries at different currency exchange rates from period to period. Consistent with past practice, adjusted diluted earnings per share has not been adjusted to exclude the benefit resulting from the forfeiture of equity awards. Management believes these measures are useful to investors because they eliminate items that do not reflect Teleflex’s day-to-day operations. In addition, management uses these financial measures for internal managerial purposes, when publicly providing guidance on possible future results, and to assist in our evaluation of period-to-period comparisons. These financial measures are presented in addition to results presented in accordance with generally accepted accounting principles (“GAAP”) and should not be relied upon as a substitute for GAAP financial measures. Tables reconciling these non-GAAP measures to the most directly comparable GAAP measures are set forth below. This press release also includes forecasted constant currency revenue growth, which is also a non-GAAP measure. A reconciliation of forecasted constant currency revenue growth to GAAP forecasted growth has not been provided as management is unable to forecast trends in foreign currency exchange rates.
(A) In 2013, losses and other charges include approximately $0.4 million, net of tax, or $0.00 per share, related to acquisition costs; and $0.8 million, net of tax or $0.02 per share, related to a litigation verdict against the Company with respect to a non-operating joint venture.
(B) In 2011, the Company terminated an interest rate swap that, at the date of termination, had a notional amount of $350 million. The interest rate swap was designated as a cash flow hedge against the term loan under our senior credit facility. At the date of termination, the interest rate swap was in a liability position resulting in a cash payment by the Company of approximately $14.8 million, which included $3.1 million of accrued interest. In accordance with GAAP, the Company amortized this amount as additional interest expense over the remainder of the original term of the interest rate swap, which expired in September 2012. In the first quarter of 2012, the impact of the amortization, net of tax, was approximately $2.4 million, or $0.06 per share.
(C) The Company has presented results using basic weighted average shares with the impact of dilution on adjusted income, separately. Under applicable accounting guidance, if a company has a net loss from continuing operations, as was the case for the Company in 2012, no common shares that potentially may be issued are included in the computation of diluted per-share amounts because such inclusion would result in an anti-dilutive per share amount. However, the Company had net income on an adjusted basis in 2012. Therefore, common shares that would have a dilutive effect on adjusted net income are deemed to be outstanding for purposes of the calculation of 2012 adjusted diluted earnings per share.
(D) The tax adjustment represents a net benefit resulting from (i) the resolution (including the expiration of statues of limitations) of various prior years’ U.S. federal, state and foreign tax matters, and (ii) the filing of amended prior years’ tax returns.
Teleflex is a leading global provider of specialty medical devices for a range of procedures in critical care and surgery. Our mission is to provide solutions that enable healthcare providers to improve outcomes and enhance patient and provider safety. Headquartered in Limerick, PA, Teleflex employs approximately 11,700 people worldwide and serves healthcare providers in more than 140 countries. For additional information about Teleflex please refer to .
This press release contains forward-looking statements, including, but not limited to, forecasted 2013 constant currency revenue growth and adjusted earnings per share. Actual results could differ materially from those in the forward-looking statements due to, among other things, conditions in the end markets we serve, customer reaction to new products and programs, our ability to achieve sales growth, price increases or cost reductions; changes in the reimbursement practices of third party payors; our ability to realize efficiencies and to execute on our strategic initiatives; changes in material costs and surcharges; market acceptance and unanticipated difficulties in connection with the introduction of new products and product line extensions; product recalls; unanticipated difficulties in connection with the consolidation of manufacturing and administrative functions; unanticipated difficulties, expenditures and delays in complying with government regulations applicable to our businesses; the impact of government healthcare reform legislation; our ability to meet our debt obligations; changes in general and international economic conditions; and other factors described or incorporated in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2012.