News Details

Revenues Rise 0.6% to $383.3 million; up 4.7% on Constant Currency Basis

GAAP EPS of $1.14, up 52%

Adjusted EPS of $1.23, up 34%

Reaffirms 2012 Guidance for Constant Currency Revenue Growth and Adjusted EPS Ranges

LIMERICK, Pa.--(BUSINESS WIRE)--Jul. 31, 2012-- Teleflex Incorporated (NYSE: TFX) today announced financial results for the second quarter ended July 1, 2012.

Second quarter 2012 net revenues were $383.3 million, an increase of 0.6% over the prior year period. Excluding the impact of foreign currency fluctuations, second quarter 2012 net revenues increased 4.7% over the prior year period.

Second quarter 2012 GAAP diluted earnings per share from continuing operations was $1.14, as compared to $0.75 in the prior year period. Second quarter 2012 adjusted diluted earnings per share from continuing operations was $1.23, an increase of 33.7% over the prior year period.

"Teleflex's second quarter performance demonstrates continued steady progress in revenue growth, gross and operating margin improvement, and pipeline investment," said Benson Smith, Chairman, President and CEO. "Revenue grew across all geographic regions on a constant currency basis, driven by additional sales volume and our pricing strategy. At the same time, we continued to invest in research and development, completing four late-stage technology acquisitions that will help position the Company for future growth. Furthermore, we are taking steps to expand margins through the divestiture of our OEM orthopedics business, as well as through the reduction of three U.S. based distribution centers into one centralized location. Looking forward, despite the impact of foreign currency headwinds, we remain comfortable with our previously provided constant currency revenue growth and adjusted earnings per share guidance ranges for 2012."

SECOND QUARTER NET REVENUE BY PRODUCT GROUP AND SEGMENT

Critical Care second quarter 2012 net revenues were $254.1 million, an increase of 0.2% compared to the prior year period. Excluding the impact of foreign currency fluctuations, second quarter 2012 net revenues increased 4.4% compared to the prior year period. The increase in revenue was due to higher sales of anesthesia, urology and vascular access products, partially offset by a decline in sales of respiratory products.

Surgical Care second quarter 2012 net revenues were $72.5 million, a decrease of 0.5% compared to the prior year period. Excluding the impact of foreign currency fluctuations, second quarter 2012 net revenues increased 3.8% compared to the prior year period. The increase in revenue was due to higher sales of ligation and closure products, partially offset by a decline in sales of general surgical instruments and chest drainage products.

Cardiac Care second quarter 2012 net revenues were $20.5 million, a decrease of 7.6% compared to the prior year period. Excluding the impact of foreign currency fluctuations, second quarter 2012 net revenues decreased 2.3% compared to the prior year period. The decrease in revenue was due to a decline in sales of intra-aortic balloon pumps and catheters.

OEM and Development Services ("OEM") second quarter 2012 net revenues were $36.0 million, an increase of 11.7% compared to the prior year period. Excluding the impact of foreign currency fluctuations, second quarter 2012 net revenues increased 13.6% compared to the prior year period. The increase in revenue was due to higher sales of specialty suture and catheter fabrication products. The OEM results, for all periods mentioned, reflect the OEM orthopedics business as a discontinued operation.

North America second quarter 2012 net revenues were $160.3 million, an increase of 2.5% compared to the prior year period. Excluding the impact of foreign currency fluctuations, second quarter 2012 net revenues increased 2.7% compared to the prior year period. The increase in revenue was due to higher volume, new product sales, and price increases.

EMEA second quarter 2012 net revenues were $126.9 million, a decrease of 7.9% compared to the prior year period. Excluding the impact of foreign currency fluctuations, second quarter 2012 net revenues increased 2.3% compared to the prior year period. The increase in revenue was due to higher volume, new product sales, and price increases.

Asia & Latin America second quarter 2012 net revenues were $60.1 million, an increase of 9.9% compared to the prior year period. Excluding the impact of foreign currency fluctuations, second quarter 2012 net revenues increased 11.1% compared to the prior year period. The increase in revenue was due to higher volume and price increases.

OEM second quarter 2012 net revenues were $36.0 million, an increase of 11.7% compared to the prior year period. Excluding the impact of foreign currency fluctuations, second quarter 2012 net revenues increased 13.6% compared to the prior year period. The increase in revenue was due to higher sales of specialty suture and catheter fabrication products.

SIX MONTH RESULTS

Net revenues for the first six months of 2012 were $763.9 million, an increase of 5.1% compared to the prior year period. Excluding the impact of foreign currency fluctuations, net revenues for the first six months of 2012 increased 7.9% compared to the prior year period.

GAAP loss per share from continuing operations was ($5.82) for the first six months of 2012, as compared to diluted earnings per share of $1.09 in the prior year period. The financial results for the first six months of 2012 reflect a goodwill impairment charge of $315.1 million, net of tax, or $7.72 per share, incurred in the first quarter of 2012.

Adjusted diluted earnings per share from continuing operations for the first six months of 2012 was $2.22, an increase of 24.7% over the prior year period. This increase reflects additional sales volume, improved pricing, gross profit expansion, and reduced tax expense. The improvement in profitability was partially offset by continuing investment in sales, marketing and research and development, and increased interest expense.

OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS

Depreciation and amortization of intangible assets, deferred financing costs and debt discount for the first six months of 2012 were $45.4 million compared to $48.3 million for the prior year period.

Cash and cash equivalents at July 1, 2012 were $545.0 million compared to $584.1 million at December 31, 2011.

Net accounts receivable at July 1, 2012 were $275.2 million compared to $286.2 million at December 31, 2011.

Net inventories at July 1, 2012 were $284.6 million compared to $298.8 million at December 31, 2011.

Net debt obligations at July 1, 2012 were $484.7 million compared to $445.9 million at December 31, 2011.

2012 OUTLOOK

The Company's financial estimates for 2012 are as follows:

Constant currency revenue growth between 4% and 6% for full year 2012.

Adjusted earnings per share in the range of $4.25 to $4.45.

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 August 7, 2012, 11:59pm (ET), by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 46362185.

ADDITIONAL NOTES

Constant currency revenue and growth exclude the impact of translating the results of international subsidiaries at different currency exchange rates from period to period. Constant currency revenue and growth include activity of a purchased company beyond the initial twelve months after the date of acquisition.

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.

NOTES ON NON-GAAP FINANCIAL MEASURES

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, gain on sale of businesses and assets, refinancing transactions and costs associated with severance payments and benefits to be provided to our former chief executive officer, 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 certain tax adjustments; 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 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 2012, losses and other charges include approximately $0.4 million, net of tax, or $0.01 per share, related to acquisition costs; and ($0.3) million, net of tax, or ($0.01) per share related to a gain on sale of businesses and assets. In 2011, losses and other charges include approximately $0.5 million, net of tax, or $0.01 per share, related to loss on extinguishment of debt.

(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 is amortizing this amount as additional interest expense over the remainder of the original term of the interest rate swap, which was scheduled to expire in September 2012. In the second quarter of 2012, the non-cash, net of tax impact was approximately $2.3 million, or $0.06 per share.

(C) The tax adjustment represents a net benefit resulting from the resolution (including the expiration of statutes of limitations) of various prior years' U.S. federal, state and foreign tax matters.

(A) In 2012, losses and other charges include approximately $0.4 million, net of tax, or $0.01 per share, related to acquisition costs; and ($0.3) million, net of tax, or ($0.01) per share related to a gain on sale of businesses and assets. In 2011, losses and other charges include approximately $9.8 million, net of tax, or $0.24 per share, related to loss on extinguishment of debt; and $3.5 million, net of tax, or $0.09 per share, in charges related to severance payments and benefits provided to our former chief executive officer.

(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 is amortizing this amount as additional interest expense over the remainder of the original term of the interest rate swap, which was scheduled to expire in September 2012. In the first six months of 2012, the non-cash, net of tax impact was approximately $4.7 million, or $0.12 per share.

(C) The tax adjustment represents a net benefit resulting from the resolution (including the expiration of statutes of limitations) of various prior years' U.S. federal, state and foreign tax matters.

(D) The Company has presented results using basic weighted average shares with the impact of dilution on adjusted income, separately. In accordance with ASC 260, if income from continuing operations is a loss no potential common shares are included in the computation of diluted per-share amounts because inclusion would result in an anti-dilutive per share amount.

ABOUT TELEFLEX INCORPORATED

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 11,200 people worldwide and serves healthcare providers in more than 130 countries. For additional information about Teleflex please refer to http://www.teleflex.com.

CAUTION CONCERNING FORWARD-LOOKING INFORMATION

This press release contains forward-looking statements, including, but not limited to, statements relating to our expectation that the consolidation of three of our U.S. based distribution centers will generate improved operating efficiencies; and forecasted 2012 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, 2011.

Source: Teleflex Incorporated

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