News Details

LIMERICK, Pa.--(BUSINESS WIRE)--Jul. 27, 2009-- Teleflex Incorporated (NYSE:TFX) today announced financial results for the second quarter ended June 28, 2009 and raised its full year financial outlook.

Second Quarter Financial Highlights

Revenues from continuing operations were $483.1 million compared to $559.7 million in the second quarter of 2008, down 14%. This decline resulted from a decrease in core revenue of 8%, an unfavorable currency impact of 5%, and a loss of revenues of 1% resulting from the sale of our Marine gauge business. Core revenue was flat in the Medical Segment and down 36% and 18% in the Aerospace and Commercial Segments, respectively.

Income from continuing operations excluding special charges increased 18% to $38.5 million, or $0.96 per diluted share compared to $32.7 million or $0.82 per diluted share in the prior year quarter. Income from continuing operations attributable to common shareholders including special charges declined to $6.3 million or $0.16 per diluted share compared to $28.6 million or $0.72 per diluted share in the prior year quarter. Special charges in the second quarter of 2009 included goodwill and intangible asset impairments of $33.3 million net of tax or $0.83 per diluted share. A complete reconciliation of the results for the comparable periods including the special charges is provided in the table below.

Income from discontinued operations attributable to common shareholders was $0.2 million, or $0.00 per diluted share compared to $6.3 million or $0.16 per diluted share in the prior year quarter. Net income attributable to common shareholders in the second quarter of 2009 was $6.5 million and diluted earnings per share available to common shareholders were $0.16 compared to $34.9 million and $0.88 per diluted share in the prior year quarter.

Cash flow from continuing operations increased 71% in the second quarter of 2009 to $82.7 million excluding a tax payment of approximately $97.5 million related to the gain on sale of the 51% ownership interest in Airfoil Technologies International - Singapore Pte. Ltd. (“ATI”). Excluding tax payments of $42.8 million related to the divestiture of the automotive and industrial businesses, cash flow from continuing operations for the second quarter of 2008 was $48.3 million.

“Teleflex continues to demonstrate the ability to consistently generate double-digit adjusted earnings growth despite operating in very difficult economic times,” said Jeffrey P. Black, chairman and chief executive officer. “We continue to make progress within our Medical Segment, as our adjusted operating margins in that segment approached 22%.” Added Black, “Despite the top-line revenue challenges we experienced in the first six months of 2009, we are raising our 2009 annual guidance for earnings per share excluding special charges to $3.40 to $3.60 per diluted share.”

Second Quarter Business Segment Commentary

Medical Segment

Medical Segment revenues of $363.9 million for the second quarter represented a decrease of 5% versus the prior year quarter due principally to the negative impact from currency. Core revenue increases in cardiac care, urology, anesthesia and surgical products were offset by declines in respiratory and orthopedic devices sold to medical OEM’s. Core revenues increased 5% sequentially from the first quarter of 2009.

Medical Segment sales by product group were comprised of the following:

Adjusted segment operating profit increased to $79.1 million from $74.2 million in the prior year. The improvement resulted from lower operating expenses, reduced FDA remediation spending, and synergies from the Arrow integration activities offset by the effect of the stronger U.S. dollar. Adjusted segment operating margins in the quarter improved 240 basis points to 21.7% versus 19.3% in the prior year quarter. A reconciliation of adjusted segment operating profit and margins are noted in the table below.

Aerospace Segment

Aerospace Segment revenues declined 44% in the second quarter of 2009 to $37.0 million from $65.7 million in the same period last year. Lower sales of wide body cargo handling systems caused by a lower number of cargo system conversions in the aftermarket, lower wide body cargo spares, components and repairs and lower demand for cargo containers and actuators due to the current weakness in the commercial aviation sector were the principal factors driving the 36% decline in core revenue during the quarter. An unfavorable currency impact of 8% also contributed to the decline.

Segment operating profit decreased in the second quarter of 2009 to $1.0 million from $7.7 million in the same period last year. This was principally due to the lower sales volumes across all product lines noted above, including an unfavorable mix of lower margin systems sales compared with spares and repairs, that was partially offset by cost reduction initiatives that resulted in lower operating costs. Segment operating margin for the quarter was 2.8% versus 11.6% in the prior year quarter.

Commercial Segment

Commercial Segment revenues declined 25% in the second quarter of 2009 to $82.2 million from $109.6 million in the same period last year, 18% of which is due to a decline in core revenue. The core revenue decline was principally a result of a decrease in sales of marine products to OEM manufacturers for the recreational boat market and lower volumes of alternate fuel systems and rigging services. An unfavorable currency impact of 3% and the impact of the Marine gauge business divestiture of 4% contributed to the decline.

During the second quarter of 2009 operating profit in the Commercial Segment declined to $3.2 million from $9.5 million in the prior year period, principally due to the lower sales volumes, higher warranty costs in the Power Systems business and the sale of higher cost inventory in the rigging services business, which more than offset the impact from the elimination of approximately $4 million of operating costs compared to the prior year quarter. Segment operating margin for the quarter was 3.9% versus 8.6% in the prior year quarter.

Power Systems Transaction

On July 20, 2009, the Company announced the signing of a definitive agreement to sell its Power Systems business for $14.5 million. The transaction is expected to close in the third quarter, at which time Power Systems will be reflected in the Company’s consolidated financial statements as a discontinued operation. Accordingly, the second quarter and year to date consolidated financial results from continuing operations include the Power Systems business.

Six Month Results

For the first six months of 2009, Teleflex revenues from continuing operations decreased 13% to $952.7 million from $1.1 billion in the first six months of 2008. Income from continuing operations excluding special charges increased 18% to $68.7 million or $1.72 per diluted share, compared to $58.4 million or $1.47 per diluted share in the prior year. Income from continuing operations attributable to common shareholders including special charges decreased to $32.7 million or $0.82 per diluted share compared to $43.6 million or $1.10 per diluted share in the prior year.

Income from discontinued operations attributable to common shareholders was $189.3 million or $4.74 per diluted share compared to $14.3 million or $0.36 per diluted share in the prior year. 2009 results from discontinued operations include a gain, net of tax, of $178.3 million or $4.47 per diluted share from the sale of ATI.

Net income attributable to common shareholders for the first six months of 2009 was $222.0 million and diluted earnings per share available to common shareholders were $5.56 compared to $57.9 million and $1.46 per diluted share in the prior year period, respectively.

Cash flow from continuing operations for the first six months of 2009 totaled $78.2 million, excluding a tax payment of approximately $97.5 million related to the gain on sale of ATI. Excluding tax payments of $90.2 million related to the divestiture of the automotive and industrial businesses, cash flow from continuing operations for the first six months of 2008 was $75.5 million.

Business Outlook for 2009

The Company raised its full year 2009 guidance for income from continuing operations to $3.40 to $3.60 per diluted share, excluding special charges, an increase of 9% to 15% compared to the prior year. Special charges for 2009 are expected to be in the range of $1.00 to $1.05 per diluted share. This compares to the company’s previous guidance of $3.25 to $3.55 per diluted share excluding special charges which were expected to be in the range of $0.30 to $0.40. Core revenue growth in the Medical segment is expected in the low single digits for the full year. The Company expects cash flow from continuing operations for the full year to be approximately $210 to $220 million, exclusive of the tax payment related to the gain on the sale of ATI.

Second Quarter Conference Call Webcast and Additional Information

As previously announced, Teleflex will comment on its second quarter results on a conference call to be held Monday, July 27, 2009, 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 July 31, 2009 by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 29581742.

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 non-controlling interest. Unallocated corporate expenses, gains or losses 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, and fair market value adjustments for inventory as disclosed in the condensed consolidated statements of income.

* Certain reclassifications within product categories have been made to 2008 results to conform with current year presentation.

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 and asset impairments, charges related to the Arrow acquisition, (gain)/loss on sale of assets and other charges, and tax adjustments. 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.

About Teleflex Incorporated

Teleflex is a diversified company with a significant presence in medical technology and niche businesses serving aerospace and commercial markets, providing innovative solutions for customers around the world. Teleflex employs approximately 12,800 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 forecast of diluted earnings per share from continuing operations excluding special charges for 2009; expected range of special charges for 2009; our forecast of diluted earnings per share from continuing operations attributable to common shareholders including special charges for 2009; expected cash flow from continuing operations for 2009 excluding the effects of a tax payment; and our forecast of Medical Segment revenue growth for 2009. Actual results could differ materially from those in these 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