News Details

LIMERICK, Pa., Apr 27, 2010 (BUSINESS WIRE) --Teleflex Incorporated (NYSE: TFX) today announced financial results for the first quarter ended March 28, 2010.

Financial Highlights

For the first quarter 2010, revenues from continuing operations were $436.5 million compared to $440.1 million in the prior year quarter, down 1%. Core revenue in the Medical segment was flat, while the Aerospace and Commercial segments had core revenue declines of 20% and 6%, respectively. The decline in overall core revenue was offset by a favorable currency impact of 3%.

For the first quarter 2010, GAAP income from continuing operations attributable to common shareholders increased 46% to $35.6 million, or $0.89 per diluted share compared to $24.4 million, or $0.61 per diluted share in the prior year quarter. On an adjusted basis, and as detailed in the tables below, first quarter 2010 income from continuing operations increased 28% to $36.0 million, or $0.90 per diluted share, compared to $28.1 million, or $0.71 per diluted share, in the prior year quarter.

For the first quarter 2010, GAAP net income attributable to common shareholders was $37.7 million compared to $215.5 million in the prior year quarter. These results included income from discontinued operations of $2.0 million in the first quarter of 2010, and income from discontinued operations of $191.2 million in the prior year quarter.

For the first quarter 2010, GAAP cash flow from continuing operations was $32.2 million as compared to a use of cash of $7.6 million in the prior year quarter. On a adjusted basis, and as detailed in the tables below, first quarter 2010 cash flow from continuing operations was $22.5 million.

"Building on the strong operational performance of 2009, we delivered another solid quarter to start 2010," said Jeffrey P. Black, Chairman and Chief Executive Officer. "Beginning in 2010, we as a company are focusing on achieving sustainable, profitable growth. During the first quarter we delivered sales growth in many of our medical product areas, expanded consolidated gross margins by over 200 basis points, and continued to invest in research and development to drive future growth."

"In addition, we launched a number of innovative new products to the market, saw continued progress with the FDA, and further strengthened and reshaped our portfolio with the divestiture of our SSI Surgical Services business," Mr. Black said.

First Quarter Business Segment Commentary

Medical Segment

Medical Segment revenues in the first quarter of 2010 increased 3% to $343.5 million from $334.8 million in the prior year period. The increase resulted from a favorable currency impact of 3%. Revenue increases in respiratory, urology, anesthesia, cardiac care and specialty products sold to medical OEM's were offset by a decline in surgical and vascular access sales. The decline in vascular access sales was due to the voluntary recall of custom IV tubing product that was announced in February of 2010.

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

* "Other" represents the impact of the deconsolidation of a variable interest entity as a result of the adoption of Accounting Standards Codification topic 810 "Consolidations."

Segment operating profit and margins in the first quarter of 2010 increased to $73.5 million, or 21.4%, compared to $69.4 million, or 20.7%, in the prior year quarter. Excluding the $0.6 million impact of integration costs not qualified for restructuring, segment operating profit and margins in the first quarter of 2009 were $70.0 million, or 20.9%, as noted in the tables below.

Aerospace Segment

Aerospace Segment revenues in the first quarter of 2010 declined 16% to $36.9 million from $43.7 million in the prior year period. Higher sales of wide-body cargo handling systems to OEM's, and increases in actuation sales, were offset by lower cargo systems sales for aftermarket conversions, lower sales of narrow-body cargo handling systems, lower demand for cargo containers, and reduced cargo spares and repair sales, resulting in a 20% decline in core revenue during the quarter. This was somewhat compensated for by a favorable currency impact of 4%.

Segment operating profit decreased to $1.7 million from $3.0 million in the same period last year. This was principally due to the unfavorable mix of reduced spares and repairs sales. Segment operating margin for the quarter was 4.7% versus 6.9% in the prior year quarter.

Commercial Segment

Commercial Segment revenues in the first quarter of 2010 declined 9% to $56.1 million from $61.6 million in the same period last year. Reductions in core revenue, which accounted for 6% of the decline, were principally a result of a decrease in sales of rigging products, partially offset by increased sales of Marine OEM and aftermarket sales. The impact of the Marine gauge business divestiture contributed 4% to the decline. This was somewhat balanced by a favorable currency impact of 1%.

During the first quarter of 2010, operating profit in the Commercial segment increased to $3.1 million from $2.0 million in the prior year period, principally due to increased marine sales volumes, and the impact of cost reduction initiatives put in place during 2009. Segment operating margin for the quarter was 5.5% versus 3.3% in the prior year quarter.

Balance Sheet Highlights

Cash and cash equivalents on hand at March 28, 2010 was $210.7 million compared to $188.3 million at December 31, 2009, up 12%.

Net accounts receivable at March 28, 2010 were $297.4 million compared to $265.3 million at December 31, 2009, up 12%. As we previously indicated, excluding the $39.7 million impact of the adoption of the amendment to Accounting Standards Codification topic 860 "Transfers and Servicing" ("ASC 860"), net accounts receivable declined 3%.

Net inventory at March 28, 2010 was $353.8 million compared to $360.8 million at December 31, 2009, a decline of 2%.

Net debt at March 28, 2010 was $972.0 million compared to $1,008.2 million at December 31, 2009, a decline of 4%. Excluding the $39.7 million impact of ASC 860, net debt declined 8%.

Business Outlook for 2010

The Company's financial estimates for 2010 include total revenues of approximately $1.9 billion and diluted earnings per share from continuing operations excluding special items in the range of $4.10 to $4.25. Cash flow from continuing operations, exclusive of the impact of the adoption of ASC 860, is expected to be in the range of $275 to $280 million. Restructuring and other special charges related to the Arrow integration program are anticipated to be $0.05 per diluted share for the year.

Conference Call Webcast and Additional Information

As previously announced, Teleflex will comment on its first 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.comand the accompanying presentation will be posted prior to the call. An audio replay will be available until May 3, 2010, 12:00pm (ET), by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 40498357.

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, and losses and other charges as disclosed in the condensed consolidated statements of income.

Notes on Non-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, the impact of changes in accounting rules, an income tax refund related to gains on a business divestiture, and intangible amortization expense. Adjusted cash earnings per share from continuing operations is defined as adjusted earnings per share from continuing operations plus intangible amortization expense. 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 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.

About Teleflex Incorporated

Teleflex is a global provider of medical technology products that enable healthcare providers to improve patient outcomes, reduce infections and support patient and provider safety. Teleflex, which employs approximately 12,600 people worldwide, also has niche businesses that serve segments of the aerospace and commercial markets with specialty engineered products. 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 2010 forecast of diluted earnings per share from continuing operations excluding special items; forecasted cash flow from continuing operations, excluding the impact of Accounting Standards Codification Topic 860 "Transfers and Servicing;" expected restructuring and other special charges related to the Arrow restructuring for 2010. 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; unanticipated difficulties in connection with the consolidation of manufacturing and administrative functions; unanticipated difficulties, expenditures and delays in connection with the integration of Arrow International; 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; 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 in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.

SOURCE: Teleflex Incorporated

Teleflex Incorporated
Jake Elguicze
Vice President Investor Relations
610-948-2836