News Details

LIMERICK, Pa.--(BUSINESS WIRE)--Feb. 25, 2009-- Teleflex Incorporated (NYSE: TFX) today announced financial results for the fourth quarter and year ended December 31, 2008.

Fourth Quarter 2008 Financial Highlights

Fourth quarter revenues from continuing operations increased 2% to $596.5 million from $583.1 million in the fourth quarter of 2007 as a result of 4% core growth, offset by an unfavorable currency impact.

Income from continuing operations excluding special charges increased 47% to $41.4 million or $1.04 per diluted share compared to $28.1 million or $0.71 per diluted share in the prior year quarter. Operating profit improvements were achieved in our Medical, Aerospace and Commercial segments, and we experienced a reduction in corporate costs versus the prior year quarter. Income from continuing operations including special charges increased to $30.9 million or $0.78 per diluted share compared to a loss of $46.2 million or $1.17 per share in the prior year quarter. Results for the period included certain charges described in the reconciliation table below.

The loss from discontinued operations for the fourth quarter was $11.4 million or $0.29 per diluted share compared to income of $111.6 million or $2.83 per diluted share in 2007. 2007 results from discontinued operations include a gain, net of tax, of $107.5 million from the sale of the automotive and industrial businesses.

Net income was $19.6 million or $0.49 per diluted share compared to $65.4 million or $1.66 per diluted share in the prior year quarter.

“The solid performance of our core operations reflects the strength of our businesses and our management teams’ ability to execute,” said Jeffrey P. Black, chairman and chief executive officer of Teleflex.

Fourth Quarter Business Segment Commentary

Medical Segment

Medical Segment revenues in the quarter increased 4% to $373.4 million from $360.2 million in the prior year. The increase resulted from core growth of 7%, offset by an unfavorable currency impact of 3%.

Adjusted segment operating profit rose to $74.5 million from $69.3 million in the prior year. Adjusted segment operating margins in the quarter were 19.9% versus 19.2% in the prior year quarter. A reconciliation of adjusted segment operating profit and margin are noted in the table below.

“We achieved core revenue growth in the fourth quarter from every region and major product category, led by an increase in sales to medical device manufacturers and disposable products sold for critical care applications,” commented Black. “In addition, we are continuing to support our customers by developing new products, supporting best practices and enhancing clinical education and training.”

Added Black, “We are pleased to see the fourth quarter core revenue growth and operating profit achieved by our Medical business, further confirming our investment strategy in adding the Arrow product offerings to our Medical business.”

Aerospace Segment

Aerospace Segment revenues increased 4% to $125.5 million from $120.4 million in the prior year. The improvement resulted from a 5% increase from an acquisition and core revenue growth of 2%, offset by a 3% negative impact of currency translation. Increases in engine repair services revenues more than offset a decline in cargo handling revenues. Segment operating profit increased 7% to $15.9 million from $14.8 million in the prior year. Segment operating margins improved 30 basis points to 12.6% in the quarter.

Black stated, “Overall, it was a good quarter for the Segment. The favorable mix that we have seen in the prior quarters continued in the fourth quarter of 2008 in our repairs business. The investments that we made over the past few years in new technologies continue to pay dividends for our Aerospace business, as well as for our customers.”

Commercial Segment

Commercial Segment revenues were $97.6 million, a 5% decline compared to the prior year. The decrease resulted from declines of 2% in core revenues, 2% from currency translation, and 1% from dispositions. The decline in core revenues resulted from a significant decrease in sales of products in the marine business which was nearly offset by an increase in auxiliary power units sold in the power systems business and 13% core growth in sales of rigging services products. Segment operating profit improved to $8.1 million, compared to $5.0 million in the prior year quarter. Segment operating margins increased to 8.3% from 4.9% in the prior year, benefiting from positive effects of foreign currency translation.

Commented Black, “Our power systems and rigging services businesses executed well in the quarter, with increased sales and strong operating profit improvement. We also took action to further restructure our marine business as it continued its decline in both sales and profitability as a result of the extremely challenging recreational marine market.”

Full Year 2008 Financial Highlights

For the full year 2008, revenues from continuing operations increased 25% to $2.4 billion compared to revenues of $1.9 billion for the same period in 2007. Core revenues increased in both Medical and Aerospace while Commercial revenues declined. Revenues also benefited from acquisitions and currency translation.

Full year 2008 income from continuing operations excluding special charges increased 25% to $161.2 million or $4.05 per diluted share compared to $128.5 million or $3.24 per diluted share in the prior year. Income from continuing operations for 2008 including special charges increased to $134.0 million or $3.36 per diluted share compared to a loss of $42.4 million or $1.08 per share in the prior year.

Special charges for full year 2008 included restructuring and transaction-related charges, net of tax, of $22.8 million or $0.57 per diluted share, primarily related to the acquisition of Arrow International (“Arrow”) and the Commercial segment restructuring announced in December 2008. Results for 2008 also included a fair market value adjustment to inventory, net of tax, of $4.4 million or $0.11 per diluted share associated with the acquisition of Arrow.

Results from continuing operations for 2007 included certain charges for purchased in-process research and development, fair market value adjustments to inventory and deferred financing costs in connection with the Arrow acquisition, as well as special charges related to restructuring programs. Charges in 2007 also included intangible asset impairment charges primarily related to the company’s power systems business, a tax charge related to completed and future cash repatriation, and losses on sales of assets. These items reduced earnings by $170.8 million, net of tax, or $4.32 per diluted share for the full year.

Full year 2008 loss from discontinued operations was $14.2 million or $0.36 per diluted share compared to income from discontinued operations of $188.9 million or $4.81 per diluted share in 2007. Income from discontinued operations in 2007 included gains on dispositions.

Net income for the full year was $119.8 million or $3.01 per diluted share compared to $146.5 million or $3.73 per diluted share in the prior year.

Cash flow from continuing operations for 2008 was $176.8 million. Excluding tax payments of $90.2 million related to the divestiture of the automotive and industrial businesses completed in 2007, cash flow from continuing operations was $267.0 million versus $283.1 million in the prior year.

Commented Black, “It was a strong year for Teleflex as we achieved good results on our stated goals. We delivered double-digit growth in earnings before special charges, another year of strong cash flow generation, Medical adjusted segment operating margins of 20% for the full year, and operating margin improvement in both our Aerospace and Commercial segments.”

Added Black, “We consistently performed throughout the year and achieved over $40 million of pre-tax synergies associated with the Arrow acquisition. Teleflex enters 2009 with an improved balance sheet, the ability to generate significant cash flow and a portfolio of businesses better positioned to manage through this difficult and challenging economic environment. We are reaffirming our previous 2009 guidance for diluted earnings per share from continuing operations excluding special items of $4.10 to $4.40.”

The company expects special items for 2009 to be in the range of $0.30 to $0.40 per diluted share.

Fourth Quarter Conference Call Webcast and Additional Information

As previously announced, Teleflex will comment on its fourth quarter results on a conference call to be held today at 9:00 a.m. (ET). The call will be available live and archived on the company’s website at www.teleflex.com and accompanying presentations will be posted prior to the call. An audio replay will be available until March 2, 2009, 12:00pm (ET), by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 14873492.

Additional Notes

Core growth includes activity of a purchased company beyond the initial twelve months after the date of acquisition. Core growth excludes the impact of translating the results of international subsidiaries at different currency exchange rates from year to year, and the activity of companies that have been divested within the most recent twelve month period.

Certain financial information is presented on a rounded basis, which may cause minor differences.

Segment operating profit includes a segment’s net revenues reduced by its materials, labor and other product costs along with the segment’s selling, engineering and administrative expenses and minority interest. Unallocated corporate expenses, gain on sales of assets, restructuring and impairment charges, interest income and expense and taxes on income are excluded from the measure.

Segment commentary excludes the impact of discontinued operations, items included in restructuring and impairment charges, losses and other charges, the impact of transaction related charges for in process research and development costs, and fair market adjustments for inventory as disclosed in the condensed consolidated statements of income.

*Arrow International was acquired on October 1, 2007.

Notes on Non-GAAP Financial Measures

This press release addresses certain non-GAAP income measures. We use these financial measures for internal managerial purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. These 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.

This press release includes financial measures which exclude the effect of charges associated with our restructuring programs, charges related to the Arrow acquisition, and (gain)/loss on sale of assets and other charges. Management believes these measures are useful to investors because they eliminate items that do not reflect Teleflex’s day-to-day operations. Tables reconciling these non-GAAP measures to the most directly comparable GAAP measures are set forth below.

Teleflex At a Glance

Teleflex is a diversified company that designs, manufactures and distributes quality engineered products and services for the medical, aerospace and commercial markets worldwide. Teleflex employs approximately 14,200 people worldwide who focus on providing innovative solutions for customers. Additional information about Teleflex can be obtained from the company's website at www.teleflex.com.

Caution Concerning Forward-looking Information

This press release contains forward-looking statements, including, but not limited to, statements relating to our ability to generate cash flow and manage through the challenging economic environment; our 2009 forecast of diluted earnings per share from continuing operations excluding special charges; and the expected range of special charges for 2009. 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; our ability to realize efficiencies; changes in material costs and surcharges; unanticipated difficulties in connection with consolidation of manufacturing and administrative functions; unanticipated difficulties, expenditures and delays in connection with the integration of Arrow International, including delays in the implementation of integration programs and adverse customer and shareholder reaction; unanticipated difficulties, expenditures and delays in complying with government regulations applicable to our businesses, including unanticipated costs and difficulties in connection with the resolution of issues related to the FDA corporate warning letter issued to Arrow; our ability to meet our debt obligations; changes in general and international economic conditions; and other factors described in Teleflex's filings with the Securities and Exchange Commission, including our Annual Report on Form 10K.

Source: Teleflex Incorporated

Teleflex Incorporated
Jake Elguicze
Senior Director
Investor Relations
610-948-2836