TFX
$370.40
Teleflex
($13.96)
(3.63%)
Earnings Details
4th Quarter December 2019
Thursday, February 20, 2020 6:30:00 AM
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Summary

Teleflex Beats

Teleflex (TFX) reported 4th Quarter December 2019 earnings of $3.28 per share on revenue of $681.0 million. The consensus earnings estimate was $3.21 per share on revenue of $678.6 million. The Earnings Whisper number was $3.25 per share. Revenue grew 6.1% on a year-over-year basis.

The company said it expects 2020 earnings of $12.50 to $12.70 per share on revenue of $2.76 billion to $2.79 billion. The current consensus earnings estimate is $12.69 per share on revenue of $2.78 billion for the year ending December 31, 2020.

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
$3.28
Earnings Whisper
$3.25
Consensus Estimate
$3.21
Reported Revenue
$681.0 Mil
Revenue Estimate
$678.6 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

Teleflex Reports Fourth Quarter and Full Year 2019 Results; Provides 2020 Guidance

Fourth Quarter 2019 Revenues of $681.0 million, up 6.1% Versus Prior Year Period; up 7.1% on a Constant Currency Basis

Fourth Quarter 2019 GAAP Diluted EPS from Continuing Operations of $2.28, up 21.9% Versus Prior Year Period

Fourth Quarter 2019 Adjusted Diluted EPS from Continuing Operations of $3.28, up 18.4% Versus Prior Year Period

Full Year 2019 Revenues of $2.595 billion, up 6.0% Versus Prior Year; up 8.1% on a Constant Currency Basis

Full Year 2019 GAAP Diluted EPS from Continuing Operations of $9.81, up 133.6% Versus Prior Year

Full Year 2019 Adjusted Diluted EPS from Continuing Operations of $11.15, up 12.6% Versus Prior Year

2020 Guidance Range for GAAP Revenue Growth of between 6.5% and 7.5%

2020 Guidance Range for Constant Currency Revenue Growth of between 7.2% and 8.2%

2020 Guidance Range for GAAP Diluted EPS from Continuing Operations of between $7.70 and $7.85

2020 Guidance Range for Adjusted Diluted EPS from Continuing Operations of between $12.50 and $12.70, up between 12.1% and 13.9%

Announces Acquisition of IWG High Performance Conductors, Inc.

WAYNE, Pa., Feb. 20, 2020 (GLOBE NEWSWIRE) -- Teleflex Incorporated (NYSE: TFX) (the “Company”) today announced financial results for the fourth quarter and full year ended December 31, 2019.

Fourth quarter 2019 net revenues were $681.0 million, an increase of 6.1% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues increased 7.1% over the year ago period.

Fourth quarter 2019 GAAP earnings per share from continuing operations increased 21.9% to $2.28, compared to  $1.87 in the prior year period.  Fourth quarter 2019 adjusted diluted earnings per share from continuing operations increased 18.4% to $3.28, compared to $2.77 in the prior year period.

Full year 2019 net revenues were $2.595 billion, an increase of 6.0% compared to the prior year.  Excluding the impact of foreign currency exchange rate fluctuations, full year 2019 net revenues increased 8.1% over the prior year.

Full year 2019 GAAP earnings per share from continuing operations increased 133.6% to $9.81, compared to $4.20 in the prior year.  Full year 2019 adjusted diluted earnings per share from continuing operations increased 12.6% to $11.15, compared to $9.90 in the prior year.

Liam Kelly, President and Chief Executive Officer, said, “The fourth quarter of 2019 capped an excellent year for Teleflex, as we once-again generated upper single-digit constant currency revenue growth, while also achieving the highest adjusted gross and operating margins in company history."

Mr. Kelly continued, "2019 was the first year of our three-year long-range plan, and I am pleased that during the first year we were able to exceed our constant currency revenue growth expectations.  Additionally, during 2019 we were able to proactively pull-forward one-time investment spending that we expect will pay benefits in future years.  Finally, we exited the year with gross and operating margins that provide us confidence in our ability to achieve our previously provided long-range targets."

Mr. Kelly concluded, "As we transition into the second year of our three-year long-range plan, we remain confident in our ability to generate significant constant currency revenue growth, margin expansion, and adjusted earnings per share growth.  Lastly, I am pleased to announce the acquisition of privately-held IWG High Performance Conductors, Inc. (HPC), an industry-leading manufacturer of highly engineered minimally invasive medical solutions.  The acquisition of HPC will expand our comprehensive OEM product portfolio by adding insulated wire and micro-diameter tubing components for medical devices including intra-cardiac mapping catheters, cerebral protection systems for TAVR procedures, and RF nerve ablation for pain management.  We are quite excited to complete this acquisition, given its above-company average revenue growth and operating margin profile."

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 twelve months ended December 31, 2019 and December 31, 2018 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 December 31, 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 tables.

 Three Months Ended % Increase / (Decrease)
 
 December 31,
2019
 December 31,
2018
 Total Sales
Growth
 Currency
Impact
 Constant Currency
Revenue Growth
 
Americas$400.0  $358.2  11.6 % (0.1)% 11.7 % 
EMEA 145.9   150.9  (3.3)% (2.7)% (0.6)% 
Asia 80.5   79.8  1.0 % (1.7)% 2.7 % 
OEM 54.6   52.7  3.6 % (0.7)% 4.3 % 
Total$681.0  $641.6  6.1 % (1.0)% 7.1 % 


 Twelve Months Ended % Increase / (Decrease)
 
 December 31,
2019
 December 31,
2018
 Total Sales
Growth
 Currency
Impact
 Constant Currency
Revenue Growth
 
Americas$1,492.3  $1,351.7  10.4 % (0.2)% 10.6 % 
EMEA 588.1   603.8  (2.6)% (5.3)% 2.7 % 
Asia 294.3   286.9  2.6 % (4.2)% 6.8 % 
OEM 220.7   206.0  7.2 % (1.0)% 8.2 % 
Total$2,595.4  $2,448.4  6.0 % (2.1)% 8.1 % 
                     

Americas fourth quarter 2019 net revenues were $400.0 million, an increase of 11.6% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues increased 11.7% 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 fourth quarter 2019 net revenues were $145.9 million, a decrease of 3.3% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues decreased 0.6% compared to the prior year period. The decrease in constant currency revenue was primarily attributable to a decrease in sales volumes of existing products.

Asia fourth quarter 2019 net revenues were $80.5 million, an increase of 1.0% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues increased 2.7% compared to the prior year period.  The increase in constant currency revenue was primarily attributable to price increases.

OEM fourth quarter 2019 net revenues were $54.6 million, an increase of 3.6% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues increased 4.3% 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 tables and commentary provide information regarding net revenues in each of the Company's global product categories for the three and twelve months ended December 31, 2019 and December 31, 2018 on both a GAAP and constant currency basis.

 Three Months Ended % Increase / (Decrease)
 
 December 31,
2019
 December 31,
2018
 Total
Revenue
Growth
 Currency
Impact
 Constant Currency
Revenue Growth
 
Vascular Access$154.6  $149.1  3.7 % (0.9)% 4.6 % 
Interventional 112.7   107.1  5.2 % (0.8)% 6.0 % 
Anesthesia 85.3   87.6  (2.6)% (1.3)% (1.3)% 
Surgical 95.2   92.7  2.7 % (1.2)% 3.9 % 
Interventional Urology 89.1   57.8  54.3 % (0.1)% 54.4 % 
OEM 54.6   52.7  3.6 % (0.7)% 4.3 % 
Other 89.4   94.7  (5.6)% (1.4)% (4.2)% 
Total$681.0  $641.6  6.1 % (1.0)% 7.1 % 


 Twelve Months Ended % Increase / (Decrease)
  
 December 31,
2019
 December 31,
2018
 Total
Revenue
Growth
 Currency
Impact
 Constant Currency
Revenue Growth

  
Vascular Access$600.9  $575.3  4.4 % (1.9)% 6.3 %  
Interventional 427.6   395.4  8.1 % (1.7)% 9.8 %  
Anesthesia 338.4   349.4  (3.1)% (2.6)% (0.5)%  
Surgical 370.1   358.7  3.2 % (2.5)% 5.7 %  
Interventional Urology 290.5   196.7  47.6 % (0.2)% 47.8 %  
OEM 220.7   206.0  7.2 % (1.0)% 8.2 %  
Other 347.3   366.9  (5.3)% (2.9)% (2.4)%  
Total$2,595.4  $2,448.4  6.0 % (2.1)% 8.1 %  
                      

Fourth quarter 2019 net revenues from sales of Vascular Access products were $154.6 million, an increase of 3.7% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues increased 4.6% compared to the prior year period.

Fourth quarter 2019 net revenues from sales of Interventional products were $112.7 million, an increase of 5.2% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues increased 6.0% compared to the prior year period.

Fourth quarter 2019 net revenues from sales of Anesthesia products were $85.3 million, a decrease of 2.6% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues decreased 1.3% compared to the prior year period.

Fourth quarter 2019 net revenues from sales of Surgical products were $95.2 million, an increase of 2.7% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues increased 3.9% compared to the prior year period.

Fourth quarter 2019 net revenues from sales of Interventional Urology products were $89.1 million, an increase of 54.3% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues increased 54.4% compared to the prior year period.

Fourth quarter 2019 net revenues from sales of OEM products were $54.6 million, an increase of 3.6% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues increased 4.3% compared to the prior year period.

Fourth quarter 2019 net revenues from sales of other products were $89.4 million, a decrease of 5.6% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, fourth quarter 2019 net revenues decreased 4.2% 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 year ended December 31, 2019 totaled $218.4 million compared to $214.7 million for the prior year.

Cash and cash equivalents at December 31, 2019 were $301.1 million compared to $357.2 million at December 31, 2018.

Net accounts receivable at December 31, 2019 were $418.7 million compared to $366.3 million at December 31, 2018.

Net inventories at December 31, 2019 were $476.6 million compared to $427.8 million at December 31, 2018.

2020 OUTLOOK

On a GAAP basis, full year 2020 revenues are expected to increase 6.5% to 7.5% over 2019, reflecting our estimate of an approximately 0.7% unfavorable impact of foreign currency exchange rate fluctuations. On a constant currency basis, the Company estimates that revenues for full year 2020 will increase 7.2% to 8.2% over 2019.

The Company expects full year 2020 GAAP diluted earnings per share from continuing operations to be between $7.70 and $7.85. The Company expects adjusted diluted earnings per share from continuing operations to be between $12.50 and $12.70 for full year 2020, representing an increase of 12.1% to 13.9% over 2019 and reflecting the Company's estimate of an approximately 0.9% negative impact from foreign currency exchange rate fluctuations.

Forecasted 2020 Constant Currency Revenue Growth Reconciliation

 Low
 High
  
        
Forecasted 2020 GAAP revenue growth6.5 %7.5 % 
        
Estimated impact of foreign currency exchange rate fluctuations(0.7)%(0.7)% 
        
Forecasted 2020 constant currency revenue growth7.2 %8.2 % 


Forecasted 2020 Adjusted Diluted Earnings Per Share From Continuing Operations Reconciliation

 Low
 High
  
        
Forecasted GAAP diluted earnings per share from continuing operations$7.70 $7.85  
   
Restructuring, restructuring related and impairment items, net of tax$0.65 $0.67  
   
Acquisition, integration and divestiture related items, net of tax$0.44 $0.45  
      
Other items, net of tax     
      
MDR$0.34 $0.35  
      
Intangible amortization expense, net of tax$2.93 $2.94  
      
Tax adjustments$0.44 $0.44  
      
Forecasted adjusted diluted earnings per share from continuing operations$12.50 $12.70  
        

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 February 25, 2020 at 11:00am (ET), by calling 855-859-2056 (U.S./Canada) or 404-537-3406 (International), Passcode: 5857007.

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.  Tables reconciling forecasted 2020 constant currency revenue growth and forecasted 2020 adjusted diluted earnings per share from continuing operations to their respective most directly comparable forecasted GAAP measures, which are forecasted 2020 GAAP revenue growth and forecasted 2020 GAAP diluted earnings per share from continuing operations, respectively, are set forth above under “2020 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 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 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 - December 31, 2019       
  Cost of goods
sold,
excluding
intangible
asset
amortization
 Selling, general
and
administrative
expenses
 Research and
development
expenses
  Restructuring
and
impairment
charges
 (Gain) Loss
on sale of
business and
assets
  Loss on
extinguishment
of debt
 Income
taxes
  Income (loss) from
continuing
operations
  Diluted earnings
per share from
continuing
operations
 
GAAP Basis$282.7 $240.6 $31.1 $1.9 ($2.2)$8.8 ($6.5)$107.8 $2.28 
Adjustments                       
Restructuring, restructuring related and impairment items (A) 5.0 0.3 (0.0) 1.9    1.1  6.1 $0.13 
Acquisition, integration and divestiture related items (B)  13.5    (2.2)  (0.9) 12.1 $0.26 
Other items (C)  0.3      8.8 2.1  7.0 $0.15 
MDR (D)   1.6        1.6 $0.03 
Intangible amortization expense  37.2 0.1      5.0  32.3 $0.68 
Tax adjustments         12.1  (12.1)($0.26)
Adjusted basis$277.7 $189.3 $29.5      $12.9 $154.7 $3.28 
                        
                        

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

Quarter Ended - December 31, 2018     
  Cost of goods
sold,
excluding
intangible
asset
amortization
 Selling, general
and
administrative
expenses
 Research and
development
expenses
 Restructuring
and
impairment
charges
 (Gain)/Loss
on sale of
business and
assets
  Income taxes  Income (loss)
from continuing
operations
  Diluted earnings
per share from
continuing
operations
 
GAAP Basis$275.8 $218.5 $27.8 $1.6 ($1.4) $8.7 $87.5 $1.87 
Adjustments                    
Restructuring, restructuring related and impairment items (A) 3.5 0.8 0.1 1.6   1.0  5.0 $0.11 
Acquisition, integration and divestiture related items (B)  6.8   (1.4) (0.2) 5.6 $0.12 
Other items (C)  1.8     0.1  1.6 $0.04 
Intangible amortization expense  37.4 0.1    6.5  31.0 $0.66 
Tax adjustments       1.1  (1.1)($0.02)
Adjusted basis$272.3 $171.8 $27.6    $17.2 $129.7 $2.77 
                  
  1. Restructuring, restructuring related and impairment items - For the three months ended December 31, 2019, pre-tax restructuring charges were $1.8 million, pre-tax restructuring related charges were $5.3 million, and pre-tax impairment charges were $0.1 million. For the three months ended December 31, 2018, pre-tax restructuring charges were $1.6 million and pre-tax restructuring related charges were $4.4 million; there were no pre-tax impairment charges.

  2. Acquisition, integration and divestiture related items - For the three months ended December 31, 2019, these charges primarily related to contingent consideration liabilities and our acquisition of IWG High Performance Conductors, Inc., partially offset by the gain on sale of an asset.  For the three months ended December 31, 2018, these charges primarily related to contingent consideration liabilities and our acquisition of Essential Medical, Inc., and acquisitions related to our surgical and interventional product portfolios, partially offset by the gain on sale of an asset.  There were no divestiture related activities for the three months ended December 31, 2019 or December 31, 2018.

  3. Other items - For the three months ended December 31, 2019, other items included debt extinguishment expenses and product relabeling costs.  For the three months ended December 31, 2018, other items included losses associated with settlement of litigation related to an intellectual property matter, expenses associated with a franchise tax audit, and product relabeling costs.

  4. MDR - For the three months ended December 31, 2019, these costs were associated with our efforts to comply with the European Medical Device Regulation. There were no such costs for the three months ended December 31, 2018.

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

Year Ended - December 31, 2019      
  Cost of goods
sold,
excluding
intangible
asset
amortization
 Selling, general
and
administrative
expenses
 Research and
development
expenses
 Restructuring
and
impairment
charges
 (Gain) Loss
on sale of
business and
assets
  Loss on
extinguishment
of debt
 Income taxes  Income (loss) from
continuing
operations
  Diluted earnings
per share from
continuing
operations
 
GAAP Basis$1,103.8 $934.4 $113.9 $22.2 ($6.1)$8.8 ($122.1)$462.0 $9.81 
Adjustments                      
Restructuring, restructuring related and impairment items (A) 15.9 0.4 0.0 22.2    5.1  33.4 $0.71 
Acquisition, integration and divestiture related items (B) 0.1 55.3   (6.1)  (2.8) 52.1 $1.11 
Other items (C)  1.8     8.8 2.5  8.2 $0.17 
MDR (D)   3.2       3.2 $0.07 
Intangible amortization expense  149.5 0.4     28.1  121.9 $2.59 
Tax adjustments        155.8  (155.8)($3.31)
Adjusted basis$1,087.8 $727.3 $110.2     $66.5 $525.0 $11.15 
                       
                       

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

Year Ended - December 31, 2018     
 Cost of goods
sold,
excluding
intangible
asset
amortization
  Selling, general
and
administrative
expenses
 Research and
development
expenses
 Restructuring
and impairment
charges
 (Gain)/Loss
on sale of
business and
assets
  Income taxes Income (loss)
from continuing
operations
  Diluted earnings
per share from
continuing
operations
 
GAAP Basis$1,063.9 $878.7 $106.2 $79.2 ($1.4) $23.2 $196.4 $4.20 
Adjustments                   
Restructuring, restructuring related and impairment items (A)13.4  1.0 0.3 79.2   11.6 82.3 $1.76 
Acquisition, integration and divestiture related items (B)1.1  60.1 0.5  (1.4) 0.8 59.5 $1.27 
Other items (C)(1.3) 4.3     0.1 2.8 $0.06 
Intangible amortization expense  149.1 0.4    26.5 122.9 $2.63 
Tax adjustments       0.6 (0.6)($0.01)
Adjusted basis$1,050.8 $664.3 $104.9    $62.8 $463.5 $9.90 
                  
  1. Restructuring, restructuring related and impairment items - For the twelve months ended December 31, 2019 pre-tax restructuring charges were $15.2 million, pre-tax restructuring related charges were $16.3 million, and pre-tax impairment charges were $7.0 million.  For the twelve months ended December 31, 2018, pre-tax restructuring charges were $60.1 million, pre-tax restructuring related charges were $14.7 million, and pre-tax impairment charges were $19.1 million.

  2. Acquisition, integration and divestiture related items - For the twelve months ended December 31, 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 two assets. For the twelve months ended December 31, 2018, these charges primarily related to contingent consideration liabilities and our acquisition of NeoTract, Inc., partially offset by the gain on sale of an asset.  There were no divestiture related activities during the twelve months ended December 31, 2018.

  3. Other items - For the twelve months ended December 31, 2019, other items included debt modification and extinguishment expenses, expenses associated with a franchise tax audit, and product relabeling costs, partially offset by a credit associated with an insurance settlement. Other items for the twelve months ended December 31, 2018 included the reversal of previously recognized income due to distributor acquisitions related to Vascular Solutions, losses associated with settlement of litigation relating to an intellectual property matter, expenses associated with a franchise tax audit, 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.

  4. MDR - For the twelve months ended December 31, 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 2020 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 2020 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 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 December 31, Twelve Months Ended December 31,
 2019 2018 2019 2018
  
 (Dollars and shares in thousands, except per share)
Net revenues$680,952  $641,615  $2,595,362  $2,448,383 
Cost of goods sold, excluding intangible asset amortization282,686  275,794  1,103,750  1,063,941 
Gross profit398,266  365,821  1,491,612  1,384,442 
Selling, general and administrative expenses240,598  218,540  934,373  878,688 
Research and development expenses31,128  27,798  113,857  106,208 
Restructuring and impairment charges1,857  1,605  22,205  79,230 
Gain on sale of assets(2,249) (1,388) (6,077) (1,388)
Income from continuing operations before interest, loss on extinguishment of debt and taxes126,932  119,266  427,254  321,704 
Interest expense17,275  23,257  80,270  103,020 
Interest income(460) (168) (1,741) (944)
Loss on extinguishment of debt8,822    8,822   
Income from continuing operations before taxes101,295  96,177  339,903  219,628 
(Benefit) taxes on income from continuing operations(6,511) 8,664  (122,078) 23,196 
Income from continuing operations107,806  87,513  461,981  196,432 
(Loss) income from discontinued operations463  4,397  (828) 5,643 
Tax (benefit) on income (loss) from discontinued operations4  1,320  (313) 1,273 
(Loss) income on discontinued operations459  3,077  (515) 4,370 
Net income108,265  90,590  461,466  200,802 
Earnings per share available to common shareholders:      
Basic:       
Income from continuing operations$2.33  $1.90  $10.00  $4.30 
Income (loss) on discontinued operations0.01  0.07  (0.01) 0.09 
Net income$2.34  $1.97  $9.99  $4.39 
Diluted:       
Income from continuing operations$2.28  $1.87  $9.81  $4.20 
Income (loss) on discontinued operations0.01  0.06  (0.01) 0.09 
Net income$2.29  $1.93  $9.80  $4.29 
Weighted average common shares outstanding:       
Basic46,333  45,993  46,200  45,689 
Diluted47,207  46,849  47,090  46,801 


 
TELEFLEX INCORPORATED
CONSOLIDATED BALANCE SHEETS
  
 December 31,
 2019 2018
  
 (Dollars and shares in thousands,
except per share)
ASSETS
Current assets   
Cash and cash equivalents$301,083  $357,161 
Accounts receivable, net418,673  366,286 
Inventories476,557  427,778 
Prepaid expenses and other current assets97,943  72,481 
Prepaid taxes12,076  12,463 
Total current assets1,306,332  1,236,169 
Property, plant and equipment, net430,719  432,766 
Operating lease assets113,160   
Goodwill2,245,305  2,246,579 
Intangibles assets, net2,156,285  2,325,052 
Deferred tax assets5,572  2,446 
Other assets52,447  34,979 
Total assets$6,309,820  $6,277,991 
LIABILITIES AND EQUITY   
Current liabilities   
Current borrowings50,000  86,625 
Accounts payable102,916  106,709 
Accrued expenses100,466  97,551 
Current portion of contingent consideration148,090  136,877 
Payroll and benefit-related liabilities115,981  104,670 
Accrued interest5,514  6,031 
Income taxes payable6,692  5,943 
Other current liabilities33,396  38,050 
Total current liabilities563,055  582,456 
Long-term borrowings1,858,943  2,072,200 
Deferred tax liabilities439,558  608,221 
Pension and postretirement benefit liabilities82,719  92,914 
Noncurrent liability for uncertain tax positions10,294  10,718 
Noncurrent contingent consideration71,818  167,370 
Noncurrent operating lease liabilities101,372   
Other liabilities202,741  204,134 
Total liabilities3,330,500  3,738,013 
Commitments and contingencies   
Shareholders’ equity   
Common shares, $1 par value Issued: 2019 — 47,536 shares; 2018 — 47,248 shares47,536  47,248 
Additional paid-in capital616,980  574,761 
Retained earnings2,824,916  2,427,599 
Accumulated other comprehensive loss(344,392) (341,085)
 3,145,040  2,708,523 
Less: Treasury stock, at cost165,720  168,545 
Total shareholders' equity2,979,320  2,539,978 
Total liabilities and shareholders' equity6,309,820  6,277,991 


 
TELEFLEX INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
 Year Ended December 31,
 2019 2018
  
 (Dollars in thousands)
Cash flows from operating activities of continuing operations:   
Net income$461,466  $200,802 
Adjustments to reconcile net income to net cash provided by operating activities:   
Loss (Income) from discontinued operations515  (4,370)
Depreciation expense64,088  60,494 
Amortization expense of intangible assets149,974  149,486 
Amortization expense of deferred financing costs and debt discount4,307  4,734 
Loss on extinguishment of debt8,822   
Changes in contingent consideration53,915  52,977 
Impairment of long-lived assets6,966  19,110 
Stock-based compensation26,940  22,438 
Net gain on sales of businesses and assets(6,077) (1,388)
Deferred income taxes, net(168,594) (6,097)
Payments for contingent consideration(26,092) (2,100)
Interest benefit on swaps designated as net investment hedges(18,866) (3,277)
Other(5,800) (13,426)
Changes in operating assets and liabilities, net of effects of acquisitions and disposals:   
Accounts receivable(59,793) (23,412)
Inventories(53,170) (37,198)
Prepaid expenses and other current assets(31,023) (10,351)
Accounts payable, accrued expenses and other liabilities36,021  62,404 
Income taxes receivable and payable, net(6,531) (35,740)
Net cash provided by operating activities from continuing operations437,068  435,086 
Cash flows from investing activities of continuing operations:   
Expenditures for property, plant and equipment(102,695) (80,795)
Payments for businesses and intangibles acquired, net of cash acquired(3,462) (121,025)
Proceeds from sales of businesses and assets14,345  3,878 
Net interest proceeds on swaps designated as net investment hedges18,331  1,548 
Net cash used in investing activities from continuing operations(73,481) (196,394)
Cash flows from financing activities of continuing operations:   
Proceeds from new borrowings275,000  35,000 
Reduction in borrowings(528,500) (128,500)
Debt extinguishment, issuance and amendment fees(11,635) (188)
Proceeds from share based compensation plans and the related tax impacts21,206  22,655 
Payments for contingent consideration(112,079) (73,235)
Dividends(62,828) (62,165)
Net cash (used in) provided by financing activities from continuing operations(418,836) (206,433)
Cash flows from discontinued operations:   
Net cash provided by (used in) operating activities2,457  2,292 
Net cash provided by (used in) discontinued operations2,457  2,292 
Effect of exchange rate changes on cash and cash equivalents(3,286) (10,948)
Net increase (decrease) in cash and cash equivalents(56,078) 23,603 
Cash and cash equivalents at the beginning of the year357,161  333,558 
Cash and cash equivalents at the end of the year$301,083  $357,161 
        

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

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Source: Teleflex Incorporated