WAYNE, Pa., July 29, 2021 (GLOBE NEWSWIRE) — Teleflex Incorporated (NYSE: TFX) (the “Company”) today announced financial results for the second quarter ended June 27, 2021.
Second quarter financial summary
- Reported revenues of $713.5 million, up 25.8% year-over-year; up 21.0% on a constant currency basis
- GAAP diluted EPS from continuing operations of $1.76 as compared to $0.24 in the prior year period
- Adjusted diluted EPS from continuing operations of $3.35, up 73.6% year-over-year
2021 guidance summary
- GAAP revenue growth unchanged at 10.50% to 11.75%, inclusive of a $28 to $32 million headwind in the second half of 2021 from the June 28, 2021 respiratory divestiture that was not contemplated in the prior guidance range
- Constant currency revenue growth unchanged at 8.50% to 9.75%
- GAAP diluted EPS increased to $9.50 to $9.60 from $8.00 to $8.10 prior, and adjusted diluted EPS increased to $12.90 to $13.10 from $12.65 to $12.85 prior, inclusive of $0.10-$0.15 dilution in the second half of 2021 from the respiratory divestiture that was not contemplated in the prior guidance range
Liam Kelly, Chairman, President and Chief Executive Officer, said, “Although we continue to see varying levels of recovery across our product lines and geographic segments from challenges due to COVID-19, our second quarter results showed continued positive business momentum. In the quarter, we generated solid revenue growth and sequential improvement in adjusted gross and operating margins, which led to $3.35 in adjusted EPS, a significant improvement of more than 70% on a year-over-year basis. On June 28, 2021, we divested the majority of our respiratory assets reflecting our disciplined portfolio review process. Based on the strength of our first half results and our outlook for the remainder of the year, we are maintaining our 2021 constant currency revenue guidance range and raising the full year adjusted earnings per share guidance range, despite dilution in the second half from the respiratory asset sale, which we did not factor into the previously issued range.”
NET REVENUE BY SEGMENT
The following tables and commentary provide information regarding net revenues in each of the Company’s reportable operating segments for the three and six months ended June 27, 2021 and June 28, 2020 on both a GAAP and constant currency basis. The discussion below the tables of the principal factors behind changes in net revenues for the three months ended June 27, 2021 as compared to the prior year period applies to both GAAP revenue and constant currency revenue, although GAAP revenue also was affected by foreign currency exchange rate fluctuations, as indicated in the “Currency Impact” column of the table.
| Three Months Ended | % Increase / (Decrease) | |||||||||||||
| June 27, 2021 | June 28, 2020 | Total Sales Growth |
Currency Impact |
Constant Currency Revenue Growth |
||||||||||
| Americas | $414.8 | $312.5 | 32.7% | 0.9% | 31.8% | |||||||||
| EMEA | 157.1 | 131.6 | 19.4% | 11.0% | 8.4% | |||||||||
| Asia | 80.6 | 67.1 | 20.2% | 9.9% | 10.3% | |||||||||
| OEM | 61.0 | 55.8 | 9.2% | 2.3% | 6.9% | |||||||||
| Total | $713.5 | $567.0 | 25.8% | 4.8% | 21.0% | |||||||||
| Six Months Ended | % Increase / (Decrease) | |||||||||||||
| June 27, 2021 | June 28, 2020 | Total Sales Growth |
Currency Impact |
Constant Currency Revenue Growth |
||||||||||
| Americas | $790.3 | $670.5 | 17.9% | 0.6% | 17.3% | |||||||||
| EMEA | 298.3 | 287.8 | 3.7% | 8.9% | (5.2)% | |||||||||
| Asia | 144.3 | 120.2 | 20.0% | 9.8% | 10.2% | |||||||||
| OEM | 114.5 | 119.2 | (4.0)% | 1.8% | (5.8)% | |||||||||
| Total | $1,347.4 | $1,197.7 | 12.5% | 3.9% | 8.6% | |||||||||
- Americas second quarter 2021 net revenues were $414.8 million, an increase of 32.7% year-over-year; 31.8% increase on a constant currency basis.
- EMEA second quarter 2021 net revenues of $157.1 million, rose 19.4% year-over-year; 8.4% increase on a constant currency basis.
- Asia second quarter 2021 net revenues were $80.6 million, an increase of 20.2% year-over-year; 10.3% increase on a constant currency basis.
- OEM second quarter 2021 net revenues were $61.0 million, an increase of 9.2% year-over-year; 6.9% increase on a constant currency basis.
NET REVENUE BY GLOBAL PRODUCT CATEGORY
The following tables and commentary provide information regarding net revenues in each of the Company’s global product categories for the three months ended June 27, 2021 on both a GAAP and constant currency basis.
| Three Months Ended | % Increase / (Decrease) | |||||||||||||
| June 27, 2021 | June 28, 2020 | Total Revenue Growth |
Currency Impact |
Constant Currency Revenue Growth |
||||||||||
| Vascular Access | $167.7 | $164.9 | 1.7% | 3.8% | (2.1)% | |||||||||
| Interventional | 112.1 | 82.6 | 35.7% | 4.8% | 30.9% | |||||||||
| Anesthesia | 95.4 | 64.9 | 47.1% | 8.3% | 38.8% | |||||||||
| Surgical | 98.2 | 67.3 | 46.0% | 7.0% | 39.0% | |||||||||
| Interventional Urology | 92.2 | 40.1 | 129.8% | 0.4% | 129.4% | |||||||||
| OEM | 61.0 | 55.8 | 9.2% | 2.3% | 6.9% | |||||||||
| Other | 86.9 | 91.4 | (5.0)% | 4.9% | (9.9)% | |||||||||
| Total | $713.5 | $567.0 | 25.8% | 4.8% | 21.0% | |||||||||
| Six Months Ended | % Increase / (Decrease) | |||||||||||||
| June 27, 2021 | June 28, 2020 | Total Revenue Growth |
Currency Impact |
Constant Currency Revenue Growth |
||||||||||
| Vascular Access | $331.7 | $315.2 | 5.2% | 3.5% | 1.7% | |||||||||
| Interventional | 208.3 | 182.5 | 14.1% | 3.6% | 10.5% | |||||||||
| Anesthesia | 180.3 | 140.6 | 28.3% | 6.6% | 21.7% | |||||||||
| Surgical | 178.6 | 142.7 | 25.1% | 5.4% | 19.7% | |||||||||
| Interventional Urology | 165.6 | 114.3 | 44.8% | 0.2% | 44.6% | |||||||||
| OEM | 114.5 | 119.2 | (4.0)% | 1.8% | (5.8)% | |||||||||
| Other | 168.5 | 183.1 | (8.0)% | 4.6% | (12.6)% | |||||||||
| Total | $1,347.4 | $1,197.7 | 12.5% | 3.9% | 8.6% | |||||||||
- Second quarter 2021 Vascular Access net revenues were $167.7 million, an increase of 1.7% year-over-year; 2.1% decline on a constant currency basis.
- Second quarter 2021 net revenues from Interventional products were $112.1 million, an increase of 35.7% year-over-year; 30.9% increase on a constant currency basis.
- Second quarter 2021 net revenues from Anesthesia products were $95.4 million, an increase of 47.1% year-over-year; 38.8% increase on a constant currency basis.
- Second quarter 2021 net revenues from Surgical products were $98.2 million, an increase of 46.0% year-over-year; 39.0% increase on a constant currency basis.
- Second quarter 2021 net revenues from Interventional Urology products were $92.2 million, an increase of 129.8% year-over-year; 129.4% increase on a constant currency basis.
- Second quarter 2021 net revenues from OEM products were $61.0 million, an increase of 9.2% year-over-year; 6.9% increase on a constant currency basis.
- Second quarter 2021 net revenues from Other products were $86.9 million, a decrease of 5.0% year-over-year; 9.9% decrease on a constant currency basis.
OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS
- Depreciation expense, amortization of intangible assets and deferred financing charges for the six months ended June 27, 2021 totaled $122.2 million compared to $115.1 million for the prior year period.
- Cash and cash equivalents at June 27, 2021 were $361.8 million compared to $375.9 million at December 31, 2020.
- Net accounts receivable at June 27, 2021 were $414.2 million compared to $395.1 million at December 31, 2020.
- Net inventories at June 27, 2021 were $517.3 million (including $26.9 million in inventory held for sale associated with the respiratory divestiture) compared to $513.2 million at December 31, 2020.
INITIAL CLOSE OF RESPIRATORY DIVESTITURE COMPLETED
On June 28, 2021, Teleflex completed the previously announced divestiture of a significant portion of its Respiratory business to Medline Industries, Inc. for $286 million in cash, reduced by $12 million in working capital not transferring to Medline. The Company estimates a revenue headwind of $28 to $32 million and adjusted earnings per share dilution of $0.10 to $0.15 in 2021 or approximately 1% of 2021 adjusted earnings per share, net of a manufacturing services agreement that Teleflex has entered into with Medline as of the initial closing of the sale transaction.
- The divestiture enables stronger organizational focus on higher growth and margin business opportunities
- The transaction is expected to be accretive to pro forma revenue growth, gross, and operating margin profile over time
- Following the initial close, Teleflex utilized proceeds from the divestiture to pay down debt, augmenting its financial flexibility to support its growth strategy
COMMITMENT TO ESG INITIATIVES
Teleflex released its 2020 Global Impact Report, which illustrates the Company’s commitment to working with integrity, minimizing its impact on global and local communities, empowering and supporting employees, and promoting economic and social prosperity. The report provides an in-depth look at Teleflex’s Corporate Social Responsibility (CSR) program, along with initiatives that support its four main pillars: Principles of Ethics & Governance, Planet & Environment, People & Human Rights, and Prosperity & Sustainable Procurement. To learn more about Teleflex’s initiatives under these pillars, or to read the full report, visit the CSR site for Teleflex found here.
2021 OUTLOOK
The Company maintained its 2021 GAAP revenue growth guidance of 10.50% to 11.75% year-over-year, including a $28 to $32 million headwind in the second half of 2021 from the respiratory divestiture on June 28, 2021, that was not contemplated in the prior guidance range. On a constant currency basis, the Company maintained its 2021 revenue growth guidance range of 8.50% to 9.75% year-over year. Teleflex reaffirmed its 2021 revenue growth guidance of at least 30% year-over-year for the Interventional Urology business.
The Company raised its 2021 GAAP diluted earnings per share from continuing operations to a range of $9.50 to $9.60 from $8.00 to $8.10 previously. The Company raised its 2021 adjusted diluted earnings per share from continuing operations to a range of $12.90 to $13.10 from $12.65 to $12.85 prior. GAAP and adjusted earnings per share reflect $0.10 to $0.15 dilution in the second half of 2021 from the respiratory divestiture that was not contemplated in the prior guidance range.
Forecasted 2021 Constant Currency Revenue Growth Reconciliation
| Low | High | |||||
| Forecasted 2021 GAAP revenue growth | 10.50% | 11.75% | ||||
| Estimated impact of foreign currency exchange rate fluctuations | 2.0% | 2.0% | ||||
| Forecasted 2021 constant currency revenue growth | 8.50% | 9.75% | ||||
Forecasted 2021 Adjusted Diluted Earnings Per Share From Continuing Operations Reconciliation
| Low | High | ||||||
| Forecasted GAAP diluted earnings per share from continuing operations | $9.50 | $9.60 | |||||
| Restructuring, restructuring related and impairment items, net of tax | $0.95 | $0.96 | |||||
| Acquisition, integration and divestiture related items, net of tax | $(1.00) | $(0.98) | |||||
| Other items, net of tax | $0.19 | $0.21 | |||||
| MDR | $0.40 | $0.42 | |||||
| Intangible amortization expense, net of tax | $2.86 | $2.89 | |||||
| Forecasted adjusted diluted earnings per share from continuing operations | $12.90 | $13.10 | |||||
CONFERENCE CALL WEBCAST AND ADDITIONAL INFORMATION
A webcast of Teleflex’s second quarter 2021 investor conference call can be accessed live from a link on the company’s website at teleflex.com. The call will begin at 8:00 am ET on July 29, 2021.
An audio replay of the investor call will be available beginning at 11:00 am ET on July 29, 2021, either on the Teleflex website or by telephone. The call can be accessed by dialing (800) 585-8367 (U.S./Canada) or (416) 621-4642 (International). The confirmation code is 5188749.
ADDITIONAL NOTES
References in this release to the impact of foreign currency exchange rate fluctuations on adjusted diluted earnings per share include both the impact of translating foreign currencies into U.S. dollars and the impact of foreign currency exchange rate fluctuations on foreign currency denominated transactions.
In the discussion of segment results, “new products” refers to products for which we initiated commercial sales within the past 36 months and “existing products” refers to products we have sold commercially for more than 36 months.
Certain financial information is presented on a rounded basis, which may cause minor differences.
Segment results and commentary exclude the impact of discontinued operations.
NOTES ON NON-GAAP FINANCIAL MEASURES
We report our financial results in accordance with accounting principles generally accepted in the United States, commonly referred to as “GAAP.” In this press release, we provide supplemental information, consisting of the following non-GAAP financial measures: constant currency revenue growth and adjusted diluted earnings per share. These non-GAAP measures are described in more detail below. Management uses these financial measures to assess Teleflex’s financial performance, make operating decisions, allocate financial resources, provide guidance on possible future results, and assist in its evaluation of period-to-period and peer comparisons. The non-GAAP measures may be useful to investors because they provide insight into management’s assessment of our business, and provide supplemental information pertinent to a comparison of period-to-period results of our ongoing operations. The non-GAAP 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. Moreover, our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies.
Tables reconciling changes in historical constant currency net revenues to historical GAAP net revenues are set forth above under “Net Revenue by Segment” and “Net Revenue by Global Product Category”. Tables reconciling historical adjusted diluted earnings per share from continuing operations to historical GAAP diluted earnings per share from continuing operations are set forth below.
Constant currency revenue growth: This non-GAAP measure is based upon net revenues, adjusted to eliminate the impact of translating the results of international subsidiaries at different currency exchange rates from period to period. The impact of changes in foreign currency may vary significantly from period to period, and such changes generally are outside of the control of our management. We believe that this measure facilitates a comparison of our operating performance exclusive of currency exchange rate fluctuations that do not reflect our underlying performance or business trends.
Adjusted diluted earnings per share: This non-GAAP measure is based upon diluted earnings per share from continuing operations, the most directly comparable GAAP measure, adjusted to exclude, depending on the period presented, the items described below. Management does not believe that any of the excluded items are indicative of our underlying core performance or business trends.
Restructuring, restructuring related and impairment items – Restructuring programs involve discrete initiatives designed to, among other things, consolidate or relocate manufacturing, administrative and other facilities, outsource distribution operations, improve operating efficiencies and integrate acquired businesses. Depending on the specific restructuring program involved, our restructuring charges may include employee termination, contract termination, facility closure, employee relocation, equipment relocation, outplacement and other exit costs associated with the restructuring program. Restructuring related charges are directly related to our restructuring programs and consist of facility consolidation costs, including accelerated depreciation expense related to facility closures, costs to transfer manufacturing operations between locations, and retention bonuses offered to certain employees as an incentive for them to remain with our company after completion of the restructuring program. Impairment charges occur if, due to events or changes in circumstances, we determine that the carrying value of an asset exceeds its fair value. Impairment charges do not directly affect our liquidity, but could have a material adverse effect on our reported financial results.
Acquisition, integration and divestiture related items – Acquisition and integration expenses are incremental charges, other than restructuring or restructuring related expenses, that are directly related to specific business or asset acquisition transactions. These charges may include, among other things, professional, consulting and other fees; systems integration costs; legal entity restructuring expense; inventory step-up amortization (amortization, through cost of goods sold, of the increase in fair value of inventory resulting from a fair value calculation as of the acquisition date); fair value adjustments to contingent consideration liabilities; and bridge loan facility and backstop financing fees in connection with loan facilities that ultimately were not utilized. Divestiture related activities involve specific business or asset sales. Depending primarily on the terms of a divestiture transaction, the carrying value of the divested business or assets on our financial statements and other costs we incur as a direct result of the divestiture transaction, we may recognize a gain or loss in connection with the divestiture related activities.
Other items – These are discrete items that occur sporadically and can affect period-to-period comparisons. See footnote C to the reconciliation tables set forth below.
European medical device regulation – The European Union (“EU”) has adopted the EU Medical Device Regulation (“MDR”), which replaces the existing Medical Devices Directive (“MDD”) and imposes more stringent requirements for the marketing and sale of medical devices in the EU, including requirements affecting clinical evaluations, quality systems and post-market surveillance. Manufacturers of currently marketed medical devices will have until May 2021 to meet the MDR requirements, although certain devices that previously satisfied MDD requirements can continue to be marketed in the EU until May 2024, subject to certain limitations. Significantly, the MDR will require the re-registration of previously approved medical devices. As a result, Teleflex will incur expenditures in connection with the new registration of medical devices that previously had been registered under the MDD. Therefore, these expenditures are not considered to be ordinary course expenditures in connection with regulatory matters (in contrast, no adjustment has been made to exclude expenditures related to the registration of medical devices that were not registered previously under the MDD).
Intangible amortization expense – Certain intangible assets, including customer relationships, intellectual property, distribution rights, trade names and non-competition agreements, initially are recorded at historical cost and then amortized over their respective estimated useful lives. The amount of such amortization can vary from period to period as a result of, among other things, business or asset acquisitions or dispositions.
Tax adjustments – These adjustments represent the impact of the expiration of applicable statutes of limitations for prior year returns, the resolution of audits, the filing of amended returns with respect to prior tax years and/or tax law or certain other discrete changes affecting our deferred tax liability.
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
| Quarter Ended – June 27, 2021 | |||||||||||||||||||||||||
| Cost of goods sold |
Selling, general and administrative expenses |
Research and development expenses |
Restructuring and impairment charges |
Debt Extinguishment | Income taxes | Income (loss) from continuing operations |
Diluted earnings per share from continuing operations |
||||||||||||||||||
| GAAP Basis | $315.9 | $224.2 | $33.3 | $11.5 | $13.0 | $16.4 | $83.3 | $1.76 | |||||||||||||||||
| Adjustments | |||||||||||||||||||||||||
| Restructuring, restructuring related and impairment items (A) | 7.4 | 0.6 | — | 11.5 | — | 1.4 | 18.1 | $0.38 | |||||||||||||||||
| Acquisition, integration and divestiture related items (B) | (0.2) | 6.3 | — | — | — | 0.3 | 5.9 | $0.12 | |||||||||||||||||
| Other items (C) | — | — | — | — | 13.0 | 3.0 | 10.0 | $0.21 | |||||||||||||||||
| MDR (D) | — | — | 5.2 | — | — | — | 5.2 | $0.11 | |||||||||||||||||
| Intangible amortization expense | 22.4 | 19.6 | — | — | — | 7.0 | 34.9 | $0.74 | |||||||||||||||||
| Tax adjustments | — | — | — | — | — | (1.4) | 1.4 | $0.03 | |||||||||||||||||
| Adjusted basis | $286.3 | $197.8 | $28.0 | $— | — | $26.8 | $158.7 | $3.35 | |||||||||||||||||
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
| Quarter Ended – June 28, 2020 | |||||||||||||||||||||
| Cost of goods sold |
Selling, general and administrative expenses |
Research and development expenses |
Restructuring and impairment charges |
Income taxes | Income (loss) from continuing operations |
Diluted earnings per share from continuing operations |
|||||||||||||||
| GAAP Basis | $288.7 | $191.2 | $29.4 | $19.0 | $11.8 | $11.4 | $0.24 | ||||||||||||||
| Adjustments | |||||||||||||||||||||
| Restructuring, restructuring related and impairment items (A) | 6.3 | 0.1 | — | 19.0 | 0.9 | 24.6 | $0.52 | ||||||||||||||
| Acquisition, integration and divestiture related items (B) | — | 16.9 | — | — | 0.2 | 16.7 | $0.35 | ||||||||||||||
| Other items (C) | — | 0.3 | — | — | 0.1 | 0.2 | — | ||||||||||||||
| MDR (D) | — | — | 2.7 | — | — | 2.7 | $0.06 | ||||||||||||||
| Intangible amortization expense | 21.1 | 18.5 | 0.1 | — | 6.4 | 33.3 | $0.71 | ||||||||||||||
| Tax adjustments | — | — | — | — | (2.3) | 2.3 | $0.05 | ||||||||||||||
| Adjusted basis | $261.2 | $155.4 | $26.6 | $— | $17.1 | $91.3 | $1.93 | ||||||||||||||
(A) Restructuring, restructuring related and impairment items – For the three months ended June 27, 2021, pre-tax restructuring charges were $4.8 million; pre-tax restructuring related charges were $8.0 million; and pre-tax impairment charges were $6.7 million. For the three months ended June 28, 2020, pre-tax restructuring charges were $19.0 million; pre-tax restructuring related charges were $6.4 million; and there were no pre-tax impairment charges.
(B) Acquisition, integration and divestiture related items – For the three months ended June 27, 2021, these charges primarily related to contingent consideration liabilities, charges primarily related to our divestiture of certain respiratory assets, and a reversal of previously recognized income related to a distributor conversion in Japan. For the three months ended June 28, 2020, these items primarily related to contingent consideration liabilities, and charges related to our acquisition of IWG High Performance Conductors, Inc.
(C) Other items – For the three months ended June 27, 2021 other costs were associated with debt extinguishment and for the three months ended June 28, 2020 other items included expenses associated with prior year tax matters.
(D) MDR – These costs were associated with our efforts to comply with the European Medical Device Regulation.
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
| Year to Date Ended – June 27, 2021 | ||||||||||||||||||||||||
| Cost of goods sold | Selling, general and administrative expenses | Research and development expenses | Restructuring and impairment charges | Debt Extinguishment | Income taxes | Income (loss) from continuing operations | Diluted earnings per share from continuing operations | |||||||||||||||||
| GAAP Basis | $605.3 | $427.3 | $63.2 | $19.5 | $13.0 | $28.8 | $158.2 | $3.34 | ||||||||||||||||
| Adjustments | ||||||||||||||||||||||||
| Restructuring, restructuring related and impairment items (A) | 13.7 | 0.9 | — | 19.5 | — | 3.5 | 30.6 | $0.64 | ||||||||||||||||
| Acquisition, integration and divestiture related items (B) | 3.1 | 13.1 | 0.1 | — | — | 1.4 | 14.9 | $0.31 | ||||||||||||||||
| Other items (C) | — | — | — | — | 13.0 | 3.0 | 10.0 | $0.21 | ||||||||||||||||
| MDR (D) | — | — | 9.4 | — | — | 9.4 | $0.20 | |||||||||||||||||
| Intangible amortization expense | 44.9 | 39.0 | — | — | — | 14.0 | 69.9 | $1.47 | ||||||||||||||||
| Tax adjustments | — | — | — | — | — | (2.0) | 2.0 | $0.04 | ||||||||||||||||
| Adjusted basis | $543.6 | $374.3 | $53.7 | $— | — | $48.8 | $294.8 | $6.22 | ||||||||||||||||
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
| Year to Date Ended – June 28, 2020 | ||||||||||||||||||||||||
| Cost of goods sold | Selling, general and administrative expenses | Research and development expenses | Restructuring and impairment charges | Income taxes | Income (loss) from continuing operations | Diluted earnings per share from continuing operations | ||||||||||||||||||
| GAAP Basis | $585.7 | $339.0 | $56.8 | $20.4 | $22.9 | $142.6 | $3.02 | |||||||||||||||||
| Adjustments | ||||||||||||||||||||||||
| Restructuring, restructuring related and impairment items (A) | 11.2 | 0.3 | — | 20.4 | 1.6 | 30.2 | $0.64 | |||||||||||||||||
| Acquisition, integration and divestiture related items (B) | 1.7 | (27.4) | — | 0.6 | (26.3) | ($0.56) | ||||||||||||||||||
| Other items (C) | — | 0.3 | — | 0.1 | 0.2 | — | ||||||||||||||||||
| MDR (D) | — | — | 4.5 | — | — | 4.5 | $0.09 | |||||||||||||||||
| Intangible amortization expense | 42.0 | 36.4 | 0.2 | — | 12.6 | 66.0 | $1.40 | |||||||||||||||||
| Tax adjustments | — | — | (2.4) | 2.4 | $0.05 | |||||||||||||||||||
| Adjusted basis | $530.7 | $329.4 | $52.1 | — | $35.5 | $219.6 | $4.65 | |||||||||||||||||
(A) Restructuring, restructuring related and impairment items – For the six months ended June 27, 2021, pre-tax restructuring charges were $12.8 million; pre-tax restructuring related charges were $14.6 million; and pre-tax impairment charges were $6.7 million. For the six months ended June 28, 2020, pre-tax restructuring charges were $20.4 million; pre-tax restructuring related charges were $11.5 million; and there were no pre-tax impairment charges.
(B) Acquisition, integration and divestiture related items – For the six months ended June 27, 2021, these charges primarily related to contingent consideration liabilities, inventory step up for Z-Medica, and charges primarily related to our divestiture of certain respiratory assets. For the six months ended June 28, 2020, these items related primarily to the reversal of contingent consideration liabilities, partially offset by charges primarily related to our acquisition of IWG High Performance Conductors, Inc.
(C) Other items – For the six months ended June 27, 2021 other costs were associated with debt extinguishment and for the six months ended June 28, 2020 other items included expenses associated with prior year tax matters.
(D) MDR – These costs were associated with our efforts to comply with the European Medical Device Regulation.
ABOUT TELEFLEX INCORPORATED
Teleflex is a global provider of medical technologies designed to improve the health and quality of people’s lives. We apply purpose driven innovation – a relentless pursuit of identifying unmet clinical needs – to benefit patients and healthcare providers. Our portfolio is diverse, with solutions in the fields of vascular access, interventional cardiology and radiology, anesthesia, emergency medicine, surgical, urology and respiratory care. Teleflex employees worldwide are united in the understanding that what we do every day makes a difference. For more information, please visit teleflex.com.
Teleflex is the home of Arrow®, Deknatel®, LMA®, Pilling®, QuickClot, Rusch®, UroLift®, and Weck® – trusted brands united by a common sense of purpose.
CAUTION CONCERNING FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements, including, but not limited to, statements regarding forecasted 2021 GAAP and constant currency revenue growth and GAAP and adjusted diluted earnings per share; our estimates regarding the projected impact of foreign currency exchange rate fluctuations on our 2021 financial results; and our estimates with regard to the projected impacts of the divestiture of a significant portion of our respiratory business on our financial results. Actual results could differ materially from those in the forward-looking statements due to, among other things, the adverse economic conditions associated with the COVID-19 global health pandemic and the associated financial crisis, stay-at-home and other orders, which may significantly reduce customer spending and which may have a negative impact on the Company’s business, changes in business relationships with and purchases by or from major customers or suppliers; delays or cancellations in shipments; demand for and market acceptance of new and existing products; our inability to provide products to our customers, which may be due to, among other things, events that impact key distributors, suppliers and third-party vendors that sterilize our products; our inability to integrate acquired businesses into our operations, realize planned synergies and operate such businesses profitably in accordance with our expectations; the inability of acquired businesses to generate revenues in accordance with our expectations; our inability to effectively execute our restructuring plans and programs; our inability to realize anticipated savings from restructuring plans and programs; the impact of healthcare reform legislation and proposals to amend, replace or repeal the legislation; changes in Medicare, Medicaid and third party coverage and reimbursements; the impact of enacted tax legislation and related regulations; competitive market conditions and resulting effects on revenues and pricing; increases in raw material costs that cannot be recovered in product pricing; global economic factors, including currency exchange rates, interest rates, trade disputes, sovereign debt issues and the impact of the United Kingdom’s departure from the European Union, commonly known as “Brexit”; public health epidemics; difficulties in entering new markets; general economic conditions; and other factors described or incorporated in our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K. We expressly disclaim any obligation to update forward-looking statements, except as otherwise specifically stated by us or as required by law or regulation.
| TELEFLEX INCORPORATED | |||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 27, 2021 | June 28, 2020 | June 27, 2021 | June 28, 2020 | ||||||||||||
| (Dollars and shares in thousands, except per share) | |||||||||||||||
| Net revenues | $ | 713,473 | $ | 567,034 | $ | 1,347,398 | $ | 1,197,676 | |||||||
| Cost of goods sold | 315,917 | 288,662 | 605,315 | 585,680 | |||||||||||
| Gross profit | 397,556 | 278,372 | 742,083 | 611,996 | |||||||||||
| Selling, general and administrative expenses | 224,159 | 191,193 | 427,307 | 338,989 | |||||||||||
| Research and development expenses | 33,283 | 29,364 | 63,230 | 56,760 | |||||||||||
| Restructuring and impairment charges | 11,494 | 19,005 | 19,492 | 20,351 | |||||||||||
| Income from continuing operations before interest and taxes |
128,620 | 38,810 | 232,054 | 195,896 | |||||||||||
| Interest expense | 16,171 | 15,682 | 32,969 | 31,121 | |||||||||||
| Interest income | (232 | ) | (163 | ) | (891 | ) | (742 | ) | |||||||
| Loss on extinguishment of debt | 12,986 | — | 12,986 | — | |||||||||||
| Income from continuing operations before taxes |
99,695 | 23,291 | 186,990 | 165,517 | |||||||||||
| Taxes on income from continuing operations | 16,412 | 11,848 | 28,840 | 22,922 | |||||||||||
| Income from continuing operations | 83,283 | 11,443 | 158,150 | 142,595 | |||||||||||
| Operating (loss) income from discontinued operations |
(46 | ) | 22 | (47 | ) | 18 | |||||||||
| Tax (expense) benefit on operating loss from discontinued operations |
(11 | ) | 9 | (11 | ) | 7 | |||||||||
| (Loss) income from discontinued operations | (35 | ) | 13 | (36 | ) | 11 | |||||||||
| Net income | $ | 83,248 | $ | 11,456 | $ | 158,114 | $ | 142,606 | |||||||
| Earnings per share: | |||||||||||||||
| Basic: | |||||||||||||||
| Income from continuing operations | $ | 1.78 | $ | 0.25 | $ | 3.39 | $ | 3.07 | |||||||
| Loss from discontinued operations | — | — | (0.01 | ) | — | ||||||||||
| Net income | $ | 1.78 | $ | 0.25 | $ | 3.38 | $ | 3.07 | |||||||
| Diluted: | |||||||||||||||
| Income from continuing operations | $ | 1.76 | $ | 0.24 | $ | 3.34 | $ | 3.02 | |||||||
| Loss from discontinued operations | — | — | (0.01 | ) | — | ||||||||||
| Net income | $ | 1.76 | $ | 0.24 | $ | 3.33 | $ | 3.02 | |||||||
| Weighted average common shares outstanding | |||||||||||||||
| Basic | 46,741 | 46,442 | 46,719 | 46,412 | |||||||||||
| Diluted | 47,433 | 47,242 | 47,420 | 47,237 | |||||||||||
| TELEFLEX INCORPORATED | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| June 27, 2021 | December 31, 2020 | ||||||
| (Dollars in thousands) | |||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 361,781 | $ | 375,880 | |||
| Accounts receivable, net | 414,195 | 395,071 | |||||
| Inventories | 490,318 | 513,196 | |||||
| Prepaid expenses and other current assets | 116,818 | 115,436 | |||||
| Prepaid taxes | 27,180 | 22,842 | |||||
| Current assets held-for-sale | 26,936 | — | |||||
| Total current assets | 1,437,228 | 1,422,425 | |||||
| Property, plant and equipment, net | 449,754 | 473,912 | |||||
| Operating lease assets | 115,110 | 100,635 | |||||
| Goodwill | 2,537,432 | 2,585,966 | |||||
| Intangible assets, net | 2,381,329 | 2,519,746 | |||||
| Deferred tax assets | 8,442 | 8,073 | |||||
| Other assets | 41,666 | 41,802 | |||||
| Noncurrent assets held-for-sale | 95,426 | — | |||||
| Total assets | $ | 7,066,387 | $ | 7,152,559 | |||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities | |||||||
| Current borrowings | $ | 92,500 | $ | 100,500 | |||
| Accounts payable | 106,567 | 102,520 | |||||
| Accrued expenses | 138,280 | 136,276 | |||||
| Payroll and benefit-related liabilities | 121,822 | 122,366 | |||||
| Accrued interest | 5,522 | 7,135 | |||||
| Income taxes payable | 14,836 | 17,361 | |||||
| Other current liabilities | 46,265 | 53,869 | |||||
| Liabilities held-for-sale | 1,056 | — | |||||
| Total current liabilities | 526,848 | 540,027 | |||||
| Long-term borrowings | 2,215,666 | 2,377,888 | |||||
| Deferred tax liabilities | 483,269 | 484,678 | |||||
| Pension and postretirement benefit liabilities | 51,179 | 74,499 | |||||
| Noncurrent liability for uncertain tax positions | 10,078 | 10,127 | |||||
| Noncurrent operating lease liabilities | 101,302 | 86,097 | |||||
| Other liabilities | 211,943 | 242,786 | |||||
| Total liabilities | 3,600,285 | 3,816,102 | |||||
| Commitments and contingencies | |||||||
| Total shareholders’ equity | 3,466,102 | 3,336,457 | |||||
| Total liabilities and shareholders’ equity | $ | 7,066,387 | $ | 7,152,559 | |||
| TELEFLEX INCORPORATED | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| Six Months Ended | |||||||
| June 27, 2021 | June 28, 2020 | ||||||
| (Dollars in thousands) | |||||||
| Cash flows from operating activities of continuing operations: | |||||||
| Net income | $ | 158,114 | $ | 142,606 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Income (loss) from discontinued operations | 36 | (11 | ) | ||||
| Depreciation expense | 35,982 | 34,461 | |||||
| Intangible asset amortization expense | 83,867 | 78,638 | |||||
| Deferred financing costs and debt discount amortization expense | 2,388 | 1,984 | |||||
| Loss on extinguishment of debt | 12,986 | — | |||||
| Fair value step up of acquired inventory sold | 3,993 | 1,707 | |||||
| Changes in contingent consideration | 11,428 | (29,951 | ) | ||||
| Impairment of long-lived assets | 6,739 | — | |||||
| Stock-based compensation | 11,693 | 8,482 | |||||
| Deferred income taxes, net | 1,050 | 1,055 | |||||
| Payments for contingent consideration | — | (79,771 | ) | ||||
| Interest benefit on swaps designated as net investment hedges | (9,126 | ) | (9,805 | ) | |||
| Other | (16,679 | ) | (18,981 | ) | |||
| Changes in assets and liabilities, net of effects of acquisitions and disposals: | |||||||
| Accounts receivable | (23,159 | ) | 45,843 | ||||
| Inventories | (13,648 | ) | (34,875 | ) | |||
| Prepaid expenses and other assets | (16,551 | ) | 11,819 | ||||
| Accounts payable, accrued expenses and other liabilities | 32,625 | (26,449 | ) | ||||
| Income taxes receivable and payable, net | (16,663 | ) | 7,257 | ||||
| Net cash provided by operating activities from continuing operations | 265,075 | 134,009 | |||||
| Cash flows from investing activities of continuing operations: | |||||||
| Expenditures for property, plant and equipment | (36,659 | ) | (39,052 | ) | |||
| Proceeds from sale of assets | 404 | 400 | |||||
| Payments for businesses and intangibles acquired, net of cash acquired | (3,539 | ) | (265,895 | ) | |||
| Deposits | (1,250 | ) | — | ||||
| Net interest proceeds on swaps designated as net investment hedges | 9,288 | 9,986 | |||||
| Net cash used in investing activities from continuing operations | (31,756 | ) | (294,561 | ) | |||
| Cash flows from financing activities of continuing operations: | |||||||
| Proceeds from new borrowings | 400,000 | 1,010,000 | |||||
| Reduction in borrowings | (575,000 | ) | (500,000 | ) | |||
| Debt extinguishment, issuance and amendment fees | (9,774 | ) | (7,727 | ) | |||
| Net proceeds from share based compensation plans and the related tax impacts | 6,339 | 2,668 | |||||
| Payments for contingent consideration | (30,489 | ) | (60,947 | ) | |||
| Dividends paid | (31,793 | ) | (31,558 | ) | |||
| Net cash (used in) provided by financing activities from continuing operations | (240,717 | ) | 412,436 | ||||
| Cash flows from discontinued operations: | |||||||
| Net cash used in operating activities | (371 | ) | (317 | ) | |||
| Net cash used in discontinued operations | (371 | ) | (317 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | (6,330 | ) | 885 | ||||
| Net (decrease) increase in cash and cash equivalents | (14,099 | ) | 252,452 | ||||
| Cash and cash equivalents at the beginning of the period | 375,880 | 301,083 | |||||
| Cash and cash equivalents at the end of the period | $ | 361,781 | $ | 553,535 | |||
Contact:
Lawrence Keusch
Vice President, Investor Relations and Strategy Development
610-948-2836
