Teleflex Reports Fourth Quarter and Full Year 2012 Results

Teleflex Reports Fourth Quarter and Full Year 2012 Results

Fourth Quarter Revenues Rise 4.0% to $419.0 million; up 5.1% on Constant Currency Basis

Fourth Quarter GAAP Diluted EPS of $0.72; Adjusted Diluted EPS of $1.14

Reaffirms 2013 Guidance Ranges for Constant Currency Revenue Growth of 11% to 13% and Adjusted Diluted EPS of $4.70 to $4.90

LIMERICK, Pa.--(BUSINESS WIRE)-- Teleflex Incorporated (NYS: TFX) today announced financial results for the fourth quarter and full year ended December 31, 2012.

Fourth quarter 2012 net revenues were $419.0 million, an increase of 4.0% over the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 5.1% over the prior year period.

Fourth quarter 2012 GAAP diluted earnings per share from continuing operations were $0.72, as compared to $1.01 in the prior year period. Fourth quarter 2012 adjusted diluted earnings per share from continuing operations were $1.14, as compared to $1.05 in the prior year period, an increase of 8.6%.

"Teleflex's fourth quarter operating and financial performance capped off an extremely successful year on many fronts," said Benson Smith, Chairman, President and CEO. "Our higher than anticipated adjusted earnings growth reflects a better than expected contribution from LMA, as well as the operating leverage in the business as we grow revenue and expand our margins through higher sales volume, new product introductions and the continued implementation of our pricing strategy."

Added Mr. Smith, "Our goals in 2013 are to build upon our solid operating platform, capture additional share in the markets we serve, and generate revenue growth above the industry average. We believe the actions we have taken over the past two years to invest in innovative technologies, rationalize our cost base, and prudently invest our capital, position us to generate significantly higher revenue growth and increased profitability for our shareholders."

FOURTH QUARTER NET REVENUE BY PRODUCT GROUP AND SEGMENT

Product Group Revenues

Critical Care fourth quarter 2012 net revenues were $286.1 million, an increase of 6.8% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 8.1% compared to the prior year period. The increase in constant currency revenue growth was due to higher sales of anesthesia, vascular access and urology products. The growth in sales of anesthesia products was primarily due to the contribution from the LMA International N.V. ("LMA") acquisition. Constant currency sales growth was partially offset by a decline in sales of respiratory products and the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.

Surgical Care fourth quarter 2012 net revenues were $76.3 million, an increase of 4.0% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 4.8% compared to the prior year period. The increase in constant currency revenue growth was due to higher sales of ligation, endo-fascial, closure and general surgical instrument products, partially offset by a decline in sales of chest drainage products and the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.

Cardiac Care fourth quarter 2012 net revenues were $20.9 million, a decrease of 5.3% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues decreased 3.3% compared to the prior year period. The decrease in constant currency revenue growth was due to a decline in sales of intra-aortic balloon pumps, partially offset by higher sales of intra-aortic balloon catheters.

OEM and Development Services ("OEM") fourth quarter 2012 net revenues were $35.7 million, a decrease of 8.1% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues decreased 7.4% compared to the prior year period. The decrease in revenue was primarily due to the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.

Segment Revenues

Americas fourth quarter 2012 net revenues were $200.1 million, an increase of 8.4% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 8.1% compared to the prior year period. The increase in constant currency revenue growth was due to incremental sales from our acquisition of LMA, new product introductions and price increases, partially offset by the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.

EMEA fourth quarter 2012 net revenues were $132.7 million, a decrease of 1.6% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 2.3% compared to the prior year period. The increase in constant currency revenue growth was due to LMA product sales, new product introductions and price increases, partially offset by the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.

Asia fourth quarter 2012 net revenues were $50.5 million, an increase of 13.2% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 12.4% compared to the prior year period. The increase in constant currency revenue growth was due to LMA product sales and price increases.

FULL YEAR RESULTS

Net revenues for the full year 2012 were $1.551 billion, an increase of 3.9% compared to the prior year period. Excluding the impact of foreign currency fluctuations, net revenues for 2012 increased 6.8% compared to 2011.

GAAP loss per share from continuing operations was ($4.47) for the full year 2012, as compared to diluted earnings per share of $2.90 in the prior year period. The financial results for 2012 reflect a goodwill impairment charge of $315.1 million, net of tax, or $7.71 per share, incurred in the first quarter of 2012.

Adjusted diluted earnings per share from continuing operations for the twelve months of 2012 was $4.40, an increase of 14.9% over the prior year period. This increase reflects additional sales volume and the introduction of new products to the marketplace, improved pricing, gross profit expansion, and reduced tax expense. The improvement in profitability was partially offset by investment in sales, marketing and research and development.

OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS

Depreciation expense and amortization of intangible assets and deferred financing costs for the twelve months of 2012 were $94.9 million compared to $96.5 million for the prior year period.

Cash and cash equivalents at December 31, 2012 were $337.0 million compared to $584.1 million at December 31, 2011. The decrease in cash and cash equivalents is largely attributable to the acquisition of LMA which was completed on October 23, 2012.

Net accounts receivable at December 31, 2012 were $298.0 million compared to $286.2 million at December 31, 2011.

Net inventories at December 31, 2012 were $323.3 million compared to $298.8 million at December 31, 2011.

Net debt obligations at December 31, 2012 were $692.7 million compared to $445.9 million at December 31, 2011.

2013 OUTLOOK

The Company's financial estimates for 2013 are as follows:

Constant currency revenue growth between 11% and 13% for full year 2013.

Adjusted diluted earnings per share in the range of $4.70 to $4.90.

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.comand the accompanying presentation will be posted prior to the call. An audio replay will be available until February 26, 2013, 11:59pm (ET), by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 10277897.

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.

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/loss on sale of businesses and assets, loss on extinguishment of debt in connection with refinancing transactions, costs associated with severance payments and benefits to be provided to our former chief executive officer, charges relating to a stock keeping unit reduction program, 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 relating to the resolution of various tax matters relating to prior years; 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 generally accepted accounting principles ("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.