TFX
$357.01
Teleflex
($11.00)
(2.99%)
Earnings Details
3rd Quarter September 2019
Thursday, October 31, 2019 6:30:00 AM
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Summary

Teleflex Beats

Teleflex (TFX) reported 3rd Quarter September 2019 earnings of $2.97 per share on revenue of $648.3 million. The consensus earnings estimate was $2.75 per share on revenue of $643.3 million. The Earnings Whisper number was $2.79 per share. Revenue grew 6.3% on a year-over-year basis.

The company said it expects 2019 earnings of $11.05 to $11.10 per share. The company's previous guidance was earnings of $10.90 to $11.10 per share and the current consensus earnings estimate is $11.03 per share for the year ending December 31, 2019.

Teleflex Inc designs, develops, manufactures and supplies single-use medical devices used by hospitals and healthcare providers for common diagnostic and therapeutic procedures in critical care and surgical applications.

Results
Reported Earnings
$2.97
Earnings Whisper
$2.79
Consensus Estimate
$2.75
Reported Revenue
$648.3 Mil
Revenue Estimate
$643.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Teleflex Reports Third Quarter 2019 Results

Third Quarter Revenues from Continuing Operations of $648.3 million, up 6.3% versus the Prior Year Period; up 8.0% on a Constant Currency Basis

Third Quarter GAAP Diluted EPS from Continuing Operations of $4.85, up 300.8% Versus the Prior Year Period

Third Quarter Adjusted Diluted EPS from Continuing Operations of $2.97, up 17.9% Versus the Prior Year Period

Lowered 2019 Guidance Range for GAAP Revenue Growth from a Range of Between 6.0% and 6.5% to a Range of Between 5.75% and 6.0%

Increased 2019 Guidance Range for Constant Currency Revenue Growth from a Range of Between 7.5% and 8.0% to a Range of Between 8.0% and 8.25%

Increased 2019 Guidance Range for GAAP Diluted EPS from Continuing Operations from a Range of Between $6.82 and $6.94 to a Range of Between $9.85 and $9.90

Narrowed 2019 Guidance Range for Adjusted Diluted EPS from Continuing Operations from a Range of Between $10.90 and $11.10 to a Range of Between $11.05 and $11.10

WAYNE, Pa., Oct. 31, 2019 (GLOBE NEWSWIRE) -- Teleflex Incorporated (NYSE: TFX) (the “Company”) today announced financial results for the third quarter ended September 29, 2019.

Third quarter 2019 net revenues were $648.3 million, an increase of 6.3% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 8.0% over the year ago period.

Third quarter 2019 GAAP earnings per share from continuing operations were $4.85, compared to GAAP earnings per share of $1.21 in the prior year period.  Third quarter 2019 adjusted diluted earnings per share from continuing operations increased 17.9% to $2.97, compared to $2.52 in the prior year period.

Liam Kelly, President and Chief Executive Officer, said, “The third quarter of 2019 was another excellent one for the Company, as we generated upper-single digit constant currency revenue growth, while also achieving significant year-over-year, and sequential, gross and operating margin expansion."

Mr. Kelly continued, "Similar to our first half of 2019 results, during the third quarter we continued to see strength across nearly every global product category and geographic region.  Based on the strong performance during the first nine months of the year, as well as our expectations for the fourth quarter, we are once again increasing our full year constant currency revenue growth guidance from a range of between 7.5% and 8%, to a range of between 8% and 8.25%."

Mr. Kelly concluded, "In addition to strong third quarter top-line performance, we were also able to increase our adjusted earnings per share by 17.9%, despite a greater negative impact from foreign currency exchange rate volatility than we had previously expected.  Based on our financial performance during the first nine months of the year, coupled with our projections for the fourth quarter, we are narrowing our full year adjusted earnings per share guidance from a range of between $10.90 and $11.10, to a range of between $11.05 and $11.10.  In summary, Teleflex continues to perform at a high level, which gives me even more confidence in the Company's ability to achieve our previously provided long-term financial objectives, and in doing so, deliver on our commitments to our shareholders, our customers, and our employees."

NET REVENUE BY SEGMENT

The following table provides information regarding net revenues in each of the Company's reportable operating segments for the three and nine months ended September 29, 2019 and September 30, 2018 on both a GAAP and constant currency basis. The discussion below the table of the principal factors behind changes in net revenues for the three months ended September 29, 2019 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)
 September 29, 2019
September 30, 2018
 Total Sales
Growth
Currency
Impact
Constant
Currency
Revenue
Growth
Americas$374.5$338.7 10.6%(0.1)%10.7%
EMEA 140.5 139.6 0.7%(4.4)%5.1%
Asia 77.9 76.5 1.7%(3.3)%5.0%
OEM 55.4 54.9 1.1%(0.8)%1.9%
Total$648.3$609.7 6.3%(1.7)%8.0%


 Nine Months Ended
 % Increase / (Decrease)
 September 29, 2019
September 30, 2018
 Total Sales
Growth
Currency
Impact
Constant
Currency
Revenue
Growth
Americas$1,092.3$993.5 10.0%(0.2)%10.2%
EMEA 442.1 452.9 (2.4)%(6.2)%3.8%
Asia 213.9 207.1 3.2%(5.2)%8.4%
OEM 166.1 153.3 8.4%(1.2)%9.6%
Total$1,914.4$1,806.8 6.0%(2.4)%8.4%
            

Americas third quarter 2019 net revenues were $374.5 million, an increase of 10.6% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 10.7% compared to the prior year period.  The increase in constant currency revenue was primarily attributable to increases in sales volumes of existing products and an increase in new product sales.

EMEA third quarter 2019 net revenues were $140.5 million, an increase of 0.7% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 5.1% compared to the prior year period. The increase in constant currency revenue was primarily attributable to an increase in sales volumes of existing products, an increase in new product sales, and net revenues generated by acquired businesses.

Asia third quarter 2019 net revenues were $77.9 million, an increase of 1.7% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 5.0% compared to the prior year period.  The increase in constant currency revenue was primarily attributable to price increases and an increase in sales volumes of existing products.

OEM third quarter 2019 net revenues were $55.4 million, an increase of 1.1% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 1.9% compared to the prior year period.  The increase in constant currency revenue was primarily attributable to an increase in sales volumes of existing products.

NET REVENUE BY GLOBAL PRODUCT CATEGORY

The following table and commentary provides information regarding net revenues in each of the Company's global product categories for the three and nine months ended September 29, 2019 and September 30, 2018 on both a GAAP and constant currency basis.

    
 Three Months Ended
 % Increase / (Decrease)
 September 29, 2019
September 30, 2018
 Total
Revenue
Growth
Currency
Impact
Constant
Currency
Revenue
Growth
Vascular Access$148.7$142.1 4.6%(1.5)%6.1%
Interventional 106.9 100.0 6.9%(1.3)%8.2%
Anesthesia 87.1 87.5 (0.5)%(2.0)%1.5%
Surgical 92.6 89.9 3.0%(2.0)%5.0%
Interventional Urology 73.6 49.0 50.3%(0.1)%50.4%
OEM 55.4 54.9 1.1%(0.8)%1.9%
Other 83.9 86.3 (2.8)%(2.4)%(0.4)%
Total$648.3$609.7 6.3%(1.7)%8.0%


 Nine Months Ended
 % Increase / (Decrease)
 September 29, 2019
September 30, 2018
 Total
Revenue
Growth
Currency
Impact
Constant
Currency
Revenue
Growth
Vascular Access$446.2$426.3 4.7%(2.2)%6.9%
Interventional 314.9 288.3 9.2%(2.0)%11.2%
Anesthesia 253.1 261.8 (3.3)%(3.0)%(0.3)%
Surgical 274.9 266.0 3.3%(3.0)%6.3%
Interventional Urology 201.3 139.0 44.9%(0.2)%45.1%
OEM 166.1 153.3 8.4%(1.2)%9.6%
Other 257.9 272.1 (5.2)%(3.4)%(1.8)%
Total$1,914.4$1,806.8 6.0%(2.4)%8.4%
            

Third quarter 2019 net revenues from sales of Vascular Access products were $148.7 million, an increase of 4.6% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 6.1% compared to the prior year period.

Third quarter 2019 net revenues from sales of Interventional products were $106.9 million, an increase of 6.9% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 8.2% compared to the prior year period.

Third quarter 2019 net revenues from sales of Anesthesia products were $87.1 million, a decrease of 0.5% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 1.5% compared to the prior year period.

Third quarter 2019 net revenues from sales of Surgical products were $92.6 million, an increase of 3.0% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 5.0% compared to the prior year period.

Third quarter 2019 net revenues from sales of Interventional Urology products were $73.6 million, an increase of 50.3% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 50.4% compared to the prior year period.

Third quarter 2019 net revenues from sales of OEM products were $55.4 million, an increase of 1.1% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues increased 1.9% compared to the prior year period.

Third quarter 2019 net revenues from sales of other products were $83.9 million, a decrease of 2.8% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2019 net revenues decreased 0.4% compared to the prior year period.

OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS

Depreciation expense, amortization of intangible assets and deferred financing charges for the first nine months of 2019 totaled $163.3 million compared to $160.0 million for the prior year period.

Cash and cash equivalents at September 29, 2019 were $257.5 million compared to $357.2 million at December 31, 2018.

Net accounts receivable at September 29, 2019 were $396.7 million compared to $366.3 million at December 31, 2018.

Net inventories at September 29, 2019 were $472.6 million compared to $427.8 million at December 31, 2018.

2019 OUTLOOK

The Company lowered its full year 2019 revenue guidance range from an increase of between 6% and 6.5% over the prior year on a GAAP basis to a range of between 5.75% and 6.0% over the prior year on a GAAP basis. The Company increased its estimate of the unfavorable impact of foreign currency exchange rate fluctuations on full year 2019 revenues from approximately 1.5% to approximately 2.25%. The Company raised its full year 2019 revenue guidance on a constant currency basis from a range of between 7.5% and 8% to a range of between 8.0% and 8.25%.

The Company raised its full year 2019 GAAP diluted earnings per share from continuing operations guidance from a range of between $6.82 and $6.94 to a range of between $9.85 and $9.90. The increase in the full year 2019 GAAP diluted earnings per share range is primarily due to a discrete tax benefit, recognized in the third quarter, resulting from a non-U.S. legal entity restructuring that eliminated the need to provide for foreign withholding taxes on the future repatriations of earnings of non-U.S. affiliates. The Company narrowed its adjusted diluted earnings per share from continuing operations from a range of between $10.90 and $11.10 to a range of between $11.05 and $11.10 for full year 2019, representing an increase of between 11.6% and 12.1% over 2018, and reflecting our estimate of an approximately 4.25% negative impact from foreign currency exchange rate fluctuations.

Forecasted 2019 Constant Currency Revenue Growth Reconciliation

 LowHigh
   
Forecasted 2019 GAAP revenue growth5.75%6.0%
   
Estimated impact of foreign currency exchange rate fluctuations(2.25)%(2.25)%
   
Forecasted 2019 constant currency revenue growth8.0%8.25%
     

Forecasted 2019 Adjusted Diluted Earnings Per Share From Continuing Operations Reconciliation

 LowHigh
   
Forecasted GAAP diluted earnings per share from continuing operations$9.85 $9.90 
   
Restructuring, restructuring related and impairment items, net of tax$0.75 $0.76 
   
Acquisition, integration and divestiture related items, net of tax$0.93 $0.94 
   
Other items, net of tax$0.23 $0.24 
   
Intangible amortization expense, net of tax$2.55 $2.56 
   
Tax adjustments($3.26)($3.30)
   
Forecasted adjusted diluted earnings per share from continuing operations$11.05 $11.10 
     

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 November 5, 2019 at 10:00am (ET), by calling 855-859-2056 (U.S./Canada) or 404-537-3406 (International), Passcode: 1185417.

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."  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.  Tables reconciling forecasted 2019 constant currency revenue growth and forecasted 2019 adjusted earnings per share from continuing operations to their respective most directly comparable forecasted GAAP measures, which are forecasted 2019 GAAP revenue growth and forecasted 2019 GAAP diluted earnings per share from continuing operations, respectively, are set forth above under “2019 Outlook.”

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 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 2020 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 - September 29, 2019
 Cost of
goods sold
Selling, general and
administrative
expenses
Research and development expensesRestructuring
and
impairment
charges
(Gain) Loss
on sale of
business and
assets
Income taxesIncome (loss) from
continuing operations
Diluted earnings
per share from
continuing
operations
              
GAAP Basis$272.6$229.9 $28.0$1.3($1.1)($130.4)$228.9 $4.85 
              
Adjustments             
              
Restructuring, restructuring related and impairment items (A)4.30.0 0.01.3 0.7 4.9 $0.10 
              
Acquisition, integration and divestiture related items (B)0.115.6 (1.1)(0.0)14.7 $0.31 
              
Other items (C)(0.9) (0.2)(0.7)($0.01)
              
MDR (D) 1.0  1.0 $0.02 
              
Intangible amortization expense37.3 0.1 7.6 29.8 $0.63 
              
Tax adjustments  138.4 (138.4)($2.93)
              
Adjusted basis$268.3$177.9 $26.8 $16.0 $140.2 $2.97 
              

RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts

Quarter Ended - September 30, 2018
 Cost of
goods sold
Selling, general
and
administrative
expenses
Research and development
expenses
Restructuring
and
impairment
charges
Income taxesIncome (loss)
from continuing
operations
Diluted earnings
per share from
continuing
operations
           
GAAP Basis$267.1$214.9$26.4$19.2($1.3)$56.5 $1.21 
           
Adjustments          
           
Restructuring, restructuring related and impairment items (A)4.40.20.119.28.7 15.1 $0.32 
           
Acquisition, integration and divestiture related items (B)0.415.00.20.7 14.9 $0.32 
           
Other items (C)0.30.1 0.2 $0.00 
           
Intangible amortization expense36.90.15.8 31.1 $0.66 
           
Tax adjustments0.0 (0.0)($0.00)
           
Adjusted basis$262.3$162.6$26.0$14.1 $117.8 $2.52 
           


(A)Restructuring, restructuring related and impairment items - For the three months ended September 29, 2019, pre-tax restructuring charges were $1.3 million, and pre-tax restructuring related charges were $4.3 million; there were no pre-tax impairment charges. For the three months ended September 30, 2018, pre-tax restructuring charges were $2.0 million, pre-tax restructuring related charges were $4.6 million, and pre-tax impairment charges were $17.2 million.
(B)Acquisition, integration and divestiture related items - For the three months ended September 29, 2019, these charges primarily related to contingent consideration liabilities and our acquisition of Essential Medical, Inc., partially offset by the gain on sale of an asset.  For the three months ended September 30, 2018, these charges primarily related to contingent consideration liabilities and our acquisition of NeoTract, Inc.  There were no divestiture related activities for the three months ended September 30, 2018.
(C)Other items - For the three months ended September 29, 2019, other items included debt modification expenses and product relabeling costs, offset by a credit associated with an insurance settlement.  For the three months ended September 30, 2018, these items included product relabeling costs.
(D)MDR - For the three months ended September 29, 2019, 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

Nine Months Ended - September 29, 2019
 Cost of
goods sold
Selling, general
and
administrative
expenses
Research and
development
expenses
Restructuring
and
impairment charges
(Gain)/Loss on
sale of
businesses and
assets
Income taxesIncome (loss) from
continuing
operations
Diluted earnings
per share from
continuing
operations
             
GAAP Basis$821.1$693.8$82.7$20.3($3.8)($115.6)$354.2 $7.53 
             
Adjustments            
             
Restructuring, restructuring related and impairment items (A)10.90.00.020.3 4.1 27.3 $0.58 
             
Acquisition, integration and divestiture related items (B)0.141.8(3.8)(1.9)40.0 $0.85 
             
Other items (C)1.5 0.4 1.2 $0.03 
             
MDR (D)1.6  1.6 $0.03 
             
Intangible amortization expense112.30.3 23.0 89.6 $1.91 
             
Tax adjustments 143.6 (143.6)($3.05)
             
Adjusted basis$810.1$538.0$80.7 $53.6 $370.3 $7.87 
             

RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts

Nine Months Ended - September 30, 2018
 Cost of
goods sold
Selling, general
and
administrative
expenses
Research and
development
expenses
Restructuring
and
impairment
charges
Income taxesIncome (loss)
from continuing
operations
Diluted earnings
per share from
continuing
operations
          
GAAP Basis$788.1 $660.1$78.4$77.6$14.5 $108.9$2.33
          
Adjustments         
          
Restructuring, restructuring related and impairment items (A)9.9 0.20.277.610.6 77.4$1.65
          
Acquisition, integration and divestiture related items (B)1.1 53.40.51.0 53.9$1.15
          
Other items (C)(1.3)2.5(0.1)1.2$0.03
          
Intangible amortization expense 111.60.320.0 91.9$1.96
          
Tax adjustments (0.5)0.5$0.01
          
Adjusted basis$778.5 $492.4$77.4$45.6 $333.9$7.14
          


(A)Restructuring, restructuring related and impairment items - For the nine months ended September 29, 2019 pre-tax restructuring charges were $13.4 million, pre-tax restructuring related charges were $11.0 million, and pre-tax impairment charges were $6.9 million.  For the nine months ended September 30, 2018, pre-tax restructuring charges were $58.5 million, pre-tax restructuring related charges were $10.3 million, and pre-tax impairment charges were $19.1 million.
(B)Acquisition, integration and divestiture related items - For the nine months ended September 29, 2019,  these charges primarily related to contingent consideration liabilities and our acquisition of Essential Medical, Inc., partially offset by the gain on sale of a business and another asset. For the nine months ended September 30, 2018, these charges primarily related to contingent consideration liabilities and our acquisition of NeoTract, Inc.  There were no divestiture related activities during the nine months ended September 30, 2018.
(C)Other items - For the nine months ended September 29, 2019, other items included debt modification expenses, expenses associated with a franchise tax audit, and product relabeling costs, somewhat offset by a credit associated with an insurance settlement. Other items for the nine months ended September 30, 2018 included the reversal of previously recognized income due to distributor acquisitions related to Vascular Solutions and relabeling costs. In addition, these items included a charge we incurred as a result of our continuing evaluation of the impact of the Tax Cuts and Jobs Act ("TCJA") on our consolidated operations.  During the second quarter of 2018, we identified provisions of the TCJA that could have adverse consequences due to our organization structure.  We implemented certain changes in our organization structure (pursuant to applicable tax law, these changes retroactively affected the 2017 tax year), and as a result, we incurred a $1.9 million net worth tax in a foreign jurisdiction with respect to the 2017 tax year.  Because the decision to make the change resulting in the net worth tax occurred in the second quarter of 2018, and as permitted under GAAP, we recorded the net worth tax charge in 2018; the adjustment eliminating the charge is included in the table above among "Other Items" for the 2018 period.
(D)MDR - For the nine months ended September 29, 2019, these costs were associated with our efforts to comply with the European Medical Device Regulation. The costs associated with the European Medical Device Regulation initiative include $0.3 million that were a component of the "Other items" line item in the reconciliation table for the three months ended March 31, 2019 included in our first quarter 2019 earnings release.
  

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®, Hudson RCI®, LMA®, Pilling®, 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, forecasted 2019 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 2019 financial results; and confidence in our ability to achieve our previously stated long-term financial objectives.  Actual results could differ materially from those in the forward-looking statements due to, among other things, 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 pending departure from the European Union, commonly known as "Brexit"; 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 Three Months Ended Nine Months Ended
    
        
 September 29,
2019
 September 30,
2018
 September 29,
2019
  September 30,
2018
    
        
  
 (Dollars and shares in thousands, except per share)
Net revenues$648,319  $609,672  $1,914,410  $1,806,768 
Cost of goods sold272,639  267,099  821,064  788,147 
Gross profit375,680  342,573  1,093,346  1,018,621 
Selling, general and administrative expenses229,896  214,894  693,775  660,148 
Research and development expenses27,984  26,365  82,729  78,410 
Restructuring and impairment charges1,268  19,209  20,348  77,625 
(Gain) on sale of assets(1,089)   (3,828)  
Income from continuing operations before interest and taxes117,621  82,105  300,322  202,438 
Interest expense19,545  27,171  62,995  79,763 
Interest income(470) (320) (1,281) (776)
Loss on extinguishment of debt       
Income from continuing operations before taxes98,546  55,254  238,608  123,451 
(Benefit) taxes on income from continuing operations(130,383) (1,286) (115,567) 14,532 
Income from continuing operations228,929  56,540  354,175  108,919 
Operating (loss) income from discontinued operations(9) (83) (1,291) 1,246 
Tax benefit on operating income (loss) from discontinued operations(9) (67) (317) (47)
Loss from discontinued operations  (16) (974) 1,293 
Net income$228,929  $56,524  $353,201  $110,212 
Earnings per share:       
Basic:       
Income from continuing operations$4.95  $1.23  $7.67  $2.39 
(Loss) Income from discontinued operations    (0.02) 0.03 
Net income$4.95  $1.23  $7.65  $2.42 
Diluted:       
Income from continuing operations$4.85  $1.21  $7.53  $2.33 
Income (loss) from discontinued operations    (0.02) 0.03 
Net income$4.85  $1.21  $7.51  $2.36 
Weighted average common shares outstanding       
Basic46,248  45,851  46,156  45,587 
Diluted47,176  46,815  47,051  46,785 
            

TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

 September 29, 2019 December 31, 2018
 (Dollars in thousands)
ASSETS       
Current assets   
Cash and cash equivalents$257,544  $357,161 
Accounts receivable, net396,663  366,286 
Inventories, net472,594  427,778 
Prepaid expenses and other current assets81,531  72,481 
Prepaid taxes29,278  12,463 
Total current assets1,237,610  1,236,169 
Property, plant and equipment, net429,568  432,766 
Operating lease assets115,193   
Goodwill2,231,330  2,246,579 
Intangible assets, net2,175,673  2,325,052 
Deferred tax assets2,952  2,446 
Other assets64,856  34,979 
Total assets$6,257,182  $6,277,991 
LIABILITIES AND EQUITY   
Current liabilities   
Current borrowings$50,000  $86,625 
Accounts payable100,630  106,709 
Accrued expenses91,569  97,551 
Current portion of contingent consideration135,168  136,877 
Payroll and benefit-related liabilities99,831  104,670 
Accrued interest19,686  6,031 
Income taxes payable3,299  5,943 
Other current liabilities30,180  38,050 
Total current liabilities530,363  582,456 
Long-term borrowings1,949,068  2,072,200 
Deferred tax liabilities468,945  608,221 
Pension and postretirement benefit liabilities72,016  92,914 
Noncurrent liability for uncertain tax positions11,084  10,718 
Noncurrent contingent consideration71,712  167,370 
Noncurrent operating lease liabilities104,136   
Other liabilities196,882  204,134 
Total liabilities3,404,206  3,738,013 
Commitments and contingencies   
Total shareholders' equity2,852,976  2,539,978 
Total liabilities and shareholders' equity$6,257,182  $6,277,991 
        

TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 Nine Months Ended
 September 29, 2019  September 30, 2018
 (Dollars in thousands)
Cash flows from operating activities of continuing operations:       
Net income$353,201  $110,212 
Adjustments to reconcile net income to net cash provided by operating activities:   
Loss (income) from discontinued operations974  (1,293)
Depreciation expense47,286  44,517 
Amortization expense of intangible assets112,661  111,974 
Amortization expense of deferred financing costs and debt discount3,313  3,548 
Gain on sale of assets(3,828)  
Changes in contingent consideration40,894  47,344 
Stock-based compensation20,037  16,469 
Impairment of long-lived assets6,911  19,110 
Deferred income taxes, net(140,963) 8,664 
Payments for contingent consideration(26,092) (2,100)
Interest benefit on swaps designated as net investment hedges(13,820)  
Other(7,142) (10,928)
Changes in assets and liabilities, net of effects of acquisitions and disposals:   
Accounts receivable(41,221) (29,830)
Inventories(53,259) (19,665)
Prepaid expenses and other assets(13,184) (6,468)
Accounts payable, accrued expenses and other liabilities31,631  54,581 
Income taxes receivable and payable, net(28,232) (43,191)
Net cash provided by operating activities from continuing operations289,167  302,944 
Cash flows from investing activities of continuing operations:   
Expenditures for property, plant and equipment(83,797) (55,751)
Proceeds from sale of assets3,135   
Payments for businesses and intangibles acquired, net of cash acquired(1,265) (22,550)
Net interest proceeds on swaps designated as net investment hedges8,330   
Net cash used in investing activities from continuing operations(73,597) (78,301)
Cash flows from financing activities of continuing operations:   
Proceeds from new borrowings25,000   
Reduction in borrowings(185,500) (98,500)
Debt extinguishment, issuance and amendment fees(4,964) (188)
Net proceeds from share based compensation plans and the related tax impacts14,014  18,666 
Payments for contingent consideration(112,006) (73,152)
Dividends paid(47,071) (46,526)
Net cash used in financing activities from continuing operations(310,527) (199,700)
Cash flows from discontinued operations:   
Net cash provided by (used in) operating activities2,651  (701)
Net cash provided by (used in) discontinued operations2,651  (701)
Effect of exchange rate changes on cash and cash equivalents(7,311) (1,524)
Net (decrease) increase in cash and cash equivalents(99,617) 22,718 
Cash and cash equivalents at the beginning of the period357,161  333,558 
Cash and cash equivalents at the end of the period$257,544  $356,276 
    
Non cash investing activities of continuing operations:   
Property, plant and equipment additions due to build-to-suit lease transaction$  $28,147 
    
Non cash financing activities of continuing operations:   
Acquisition of treasury stock associated with settlement and exchange of convertible note hedge and warrant agreements$  $56,075 
        

Contact:
Jake Elguicze
Treasurer and Vice President of Investor Relations
610-948-2836

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Source: Teleflex Incorporated