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EX-99.1 - EXHIBIT 99.1 - TELEFLEX INC | ex991-q22017earningspressr.htm |
8-K - 8-K - TELEFLEX INC | a8-3x20178xkreq22017earnin.htm |
1
Teleflex Incorporated
Second Quarter 2017
Earnings Conference Call
Exhibit 99.2
2
Conference Call Logistics
The release, accompanying slides, and replay webcast are available online at
www.teleflex.com (click on “Investors”)
Telephone replay available by dialing 855-859-2056 or for international calls, 404-
537-3406, pass code number 56173289
3
Introductions
Benson Smith
Chairman and CEO
Liam Kelly
President and COO
Thomas Powell
Executive Vice President and CFO
Jake Elguicze
Treasurer and Vice President of Investor Relations
4
Note on Forward-Looking Statements
This presentation and our discussion contain forward-looking information and statements including, but not limited
to, forecasted 2017 GAAP and constant currency revenue growth, GAAP and adjusted gross and operating margins
and GAAP and adjusted earnings per share and the items that are expected to impact each of those forecasted
results; our expectations with respect to the launch of new products; and other matters which inherently involve risks
and uncertainties which could cause actual results to differ from those projected or implied in the forward–looking
statements. These risks and uncertainties are addressed in our SEC filings, including our most recent Form 10-K.
Note on Non-GAAP Financial Measures
This presentation refers to certain non-GAAP financial measures, including, but not limited to, constant currency
revenue growth, adjusted diluted earnings per share, adjusted gross and operating margins and adjusted tax rate.
These non-GAAP financial measures should not be considered replacements for, and should be read together with,
the most comparable GAAP financial measures. Tables reconciling these non-GAAP financial measures to the most
comparable GAAP financial measures are contained within the appendices to this presentation.
Additional Notes
Unless otherwise noted, the following slides reflect continuing operations.
5
Executive Summary
Second quarter 2017 revenue of $528.6 million
• Up 11.6% vs. prior year period on an as-reported basis
• Up 12.9% vs. prior year period on a constant currency basis
Second quarter 2017 Earnings Per Share
• GAAP EPS of $1.67, up 33.6% vs. prior year period
• Adjusted EPS of $2.04, up 7.9% vs. prior year period
2017 Full Year Financial Guidance
• Raised GAAP revenue growth range from 10.0% - 11.5% to 11.5% - 13.0%
• Reaffirmed constant currency revenue growth range of 12.5% - 14.0%
• Raised GAAP EPS range from $5.59 - $5.66 to $5.91 - $5.98
• Raised adjusted EPS range from $8.05 - $8.23 to $8.20 to $8.35
Note: See appendices for reconciliations of non-GAAP information
6
Second Quarter Highlights
Note: See appendices for reconciliations of non-GAAP information
Q2 2017
Constant Currency
Revenue Growth
Volume (excluding the impact of shipping days) 1.4%
New product introductions 1.5%
Price 0.6%
M&A excluding Vascular Solutions 1.0%
Shipping day impact (1.2%)
Vascular Solutions 9.6%
Constant currency revenue growth 12.9%
June quarter-to-date volume negatively impacted by ~60bps due to China Distributor Conversion
7
June Year-To-Date Highlights
Note: See appendices for reconciliations of non-GAAP information
June YTD 2017
Constant Currency
Revenue Growth
Volume (excluding the impact of shipping days) 1.4%
New product introductions 1.7%
Price 0.7%
M&A excluding Vascular Solutions 0.8%
Shipping day impact 2.3%
Vascular Solutions 7.5%
Constant currency revenue growth 14.4%
June year-to-date volume negatively impacted by ~60bps due to China Distributor Conversion
8
Segment Revenue Review
Q2’17 Q2’16
Constant Currency Revenue Commentary
Vascular N.A.: $93.5 million, up 6.3% Anesthesia N.A.: $49.1 million, down 0.1%
Surgical N.A.: $44.7 million, up 4.0% EMEA: $132.0 million, up 3.2%
Asia: $64.0 million, up 3.1% OEM: $45.1 million, up 12.5%
All Other: $100.2 million, up 73.1%
Note: Increases and decreases in revenue referred to above are as compared to results for the second quarter of 2016.
See appendices for reconciliations of non-GAAP information.
18%
8%
9%
25%
12%
9%
19%
Vascular North America Surgical North America
Anesthesia North America EMEA
Asia OEM
All Other
19%
9%
10%
28%
13%
9%
12%
Vascular North America Surgical North America
Anesthesia North America EMEA
Asia OEM
All Other
9
Group Purchasing Organization and IDN Review
Track record of expansion of contractual agreements continues in Q2’17
Group Purchasing Organization Update
• 4 renewed agreements
• 1 new agreement
• 1 existing agreement not renewed
IDN Update
• 12 renewed agreements
• 5 new agreements
• 6 existing agreements not renewed
10
Product Introductions and Regulatory Approvals
Arrow® Seldinger Arterial Catheterization Device
PRODUCT DESCRIPTION
Recently received FDA 510(k) clearance for
the Arrow® Seldinger Arterial
Catheterization Device.
The Arrow® Seldinger Arterial
Catheterization Device is indicated for
short-term use and is designed to improve
patient safety by eliminating confusion of
catheter identification, reduce the risk of
complications associated with insertion
technique, and provide optimal
diagnostics leading to effective treatment
for patients.
Teleflex expects to launch this device in
the United States during 2017.
11
Product Introductions and Regulatory Approvals
RePlas™ Freeze-Dried Plasma Phase I Clinical Study
PRODUCT DESCRIPTION
On May 15, 2017, Teleflex announced the commencement of a Phase I clinical study (FDP-1) of its
RePlas™ Freeze-Dried Plasma. Replas™ Freeze-Dried Plasma is lyophilized fresh frozen plasma that is
provided in a proprietary package facilitating reconstitution prior to infusion.
Teleflex is developing the product in collaboration with the U.S. Army. The U.S. Army is sponsoring the
clinical trial to study the use of the product for the treatment of battlefield trauma and other trauma
related injuries.
RePlas™ Freeze-Dried Plasma was administered to the first patient as part of a 24-patient Phase I study
(FDP-1) being conducted at Hoxworth Blood Center at the University of Cincinnati.
In FDP-1, healthy volunteers receive increased doses of autologous freeze-dried plasma – their own
blood plasma that was processed using the proprietary freeze drying process, to assess safety of the
product.
12
Second Quarter Financial Review
Revenue of $528.6 million
• Up 11.6% vs. prior year period on an as-reported basis
• Up 12.9% vs. prior year period on a constant currency basis
Gross Margin
• GAAP gross margin of 54.9%, up 80 bps vs. prior year period
• Adjusted gross margin of 55.9%, up 90 bps vs. prior year period
Operating Margin
• GAAP operating margin of 20.8%, in-line with prior year period
• Adjusted operating margin of 25.1%, down 10 bps vs. prior year period
Tax Rate
• GAAP tax rate of 13.4%, up 150 bps vs. prior year period
• Adjusted tax rate of 16.6%, down 400 bps vs. prior year period
Earnings Per Share
• GAAP EPS of $1.67, up 33.6% vs. prior year period
• Adjusted EPS of $2.04, up 7.9% vs. prior year period
Note: See appendices for reconciliations of non-GAAP information
13
2017 Financial Outlook Assumptions
2017 Revenue Guidance
• Raised as-reported revenue growth range from 10.0% - 11.5% to 11.5% - 13.0%
• Reaffirmed constant currency revenue growth range of 12.5% - 14.0%
2017 Gross Margin Guidance
• Raised GAAP gross margin range from 54.10% - 54.65% to 54.25% - 54.80%
• Reaffirmed adjusted gross margin range of 55.4% - 56.0%
2017 Operating Margin Guidance
• Raised GAAP operating margin range from 18.2% - 18.8% to 18.8% - 19.4%
• Reaffirmed adjusted operating margin range of 25.6% - 26.3%
2017 Earnings Per Share Guidance
• Raised GAAP earnings per share range from $5.59 - $5.66 to $5.91 - $5.98
• Raised adjusted earnings per share range from $8.05 - $8.23 to $8.20 - $8.35
Note: See appendices for reconciliations of non-GAAP information
14
Any Questions?
15
Thank You
16
Appendices
17
Non-GAAP Financial Measures
The following appendices include, among other things, tables reconciling the following non-GAAP financial measures
to the most comparable GAAP financial measure:
• Constant currency revenue growth. This measure excludes the impact of translating the results of international
subsidiaries at different currency exchange rates from period to period.
• Adjusted diluted earnings per share. This measure excludes, depending on the period presented (i) restructuring
and other impairment charges; (ii) certain losses and other charges, including, for 2017, costs related to the
Company's acquisition of Vascular Solutions, facility consolidation costs and income associated with a litigation
settlement and, for 2016, charges primarily related to facility consolidation costs; (iii) amortization of the debt
discount on the Company’s convertible notes; (iv) intangible amortization expense; (v) tax benefits resulting
primarily from 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 changes affecting the Company's deferred
tax liability; and (vi) loss on extinguishment of debt. In addition, the calculation of diluted shares within adjusted
earnings per share gives effect to the anti-dilutive impact of the Company’s convertible note hedge agreements,
which reduce the potential economic dilution that otherwise would occur upon conversion of the Company’s senior
subordinated convertible notes (under GAAP, the anti-dilutive impact of the convertible note hedge agreements is
not reflected in diluted shares).
• Adjusted gross margin. This measure excludes, depending on the period presented, certain losses and other
charges primarily related to inventory step-up costs associated with our acquisition of Vascular Solutions and
facility consolidation costs.
• Adjusted operating margin. This measure excludes, depending on the period presented, (i) the impact of
restructuring and other impairment charges; (ii) losses and other charges primarily related to income associated
with a litigation settlement and acquisition and facility consolidation costs; and (iii) intangible amortization expense.
• Adjusted tax rate. This measure is the percentage of the Company’s adjusted taxes on income from continuing
operations to its adjusted income from continuing operations before taxes. Adjusted taxes on income from
continuing operations excludes, depending on the period presented, the impact of tax benefits or costs associated
with (i) restructuring and impairment charges; (ii) amortization of the debt discount on the Company’s convertible
notes; (iii) intangible amortization expense; (iv) loss on extinguishment of debt; (v) the resolution of, or expiration of
statutes of limitations with respect to, various prior years’ tax matters, the filing of amended tax returns with respect
to prior years and tax law changes affecting our deferred tax liability; and (vi) losses and other charges primarily
related to income associated with a litigation settlement and acquisition and facility consolidation costs.
18
APPENDIX A –
RECONCILIATION OF CONSTANT CURRENCY REVENUE GROWTH
DOLLARS IN MILLIONS
July 2, 2017 June 26, 2016 Constant Currency Currency Total
Vascular North America 93.5$ 88.2$ 6.3% (0.2%) 6.1%
Anesthesia North America 49.1 49.2 (0.1%) (0.1%) (0.2%)
Surgical North America 44.7 43.1 4.0% (0.3%) 3.7%
EMEA 132.0 131.7 3.2% (3.0%) 0.2%
Asia 64.0 63.2 3.1% (1.8%) 1.3%
OEM 45.1 40.3 12.5% (0.5%) 12.0%
All Other 100.2 57.9 73.1% (0.1%) 73.0%
Net Revenues 528.6$ 473.6$ 12.9% (1.3%) 11.6%
Three Months Ended % Increase / (Decrease)
19
APPENDIX B –
RECONCILIATION OF REVENUE GROWTH
DOLLARS IN MILLIONS
% Basis Points
Three Months Ended June 26, 2016 Revenue As-Reported $473.6
Foreign Currency (5.5) -1.3% (130)
Volume (excluding the impact of shipping days) 6.5 1.4% 140
Shipping day impact (5.7) -1.2% (120)
Acquisitions 1 49.8 10.6% 1,060
New Product Sales 7.2 1.5% 150
Pricing 2.8 0.6% 60
Three Months Ended July 2, 2017 Revenue As-Reported $528.6 11.6%
1 = includes Vascular Solutions 45.0 9.6% 960
1 = includes Cartika 3.0 0.6% 62
1 = includes Pyng 1.8 0.4% 38
Year-over-year growth
20
APPENDIX C –
RECONCILIATION OF REVENUE GROWTH
DOLLARS IN MILLIONS
% Basis Points
Six Months Ended June 26, 2016 Revenue As-Reported $898.4
Foreign Currency (9.8) -1.3% (130)
Volume (excluding the impact of shipping days) 12.7 1.4% 140
Shipping day impact 21.0 2.3% 230
Acquisitions 1 74.0 8.3% 830
New Product Sales 14.7 1.7% 170
Pricing 5.5 0.7% 70
Six Months Ended July 2, 2017 Revenue As-Reported $1,016.5 13.1%
1 = includes Vascular Solutions 66.7 7.5% 750
1 = includes Cartika 5.5 0.6% 60
1 = includes Pyng 1.8 0.2% 20
Year-over-year growth
21
APPENDIX D –
RECONCILIATION OF ADJUSTED GROSS PROFIT AND MARGIN
DOLLARS IN THOUSANDS
July 2, 2017 June 26, 2016
Teleflex gross profit as-reported 290,284$ 256,399$
Teleflex gross margin as-reported 54.9% 54.1%
Losses and other charges, net (A) 5,013 3,975
Adjusted Teleflex gross profit 295,297$ 260,374$
Adjusted Teleflex gross margin 55.9% 55.0%
Teleflex revenue as-reported 528,613$ 473,553$
Three Months Ended
(A) In 2017, losses and other charges, net related primarily to inventory step-up costs associated with the acquisition of Vascular
Solutions totaling $2.6 million and facility consolidation costs. In 2016, losses and other charges, net related primarily to facility
consolidation costs.
22
APPENDIX E –
RECONCILIATION OF ADJUSTED OPERATING PROFIT AND MARGIN
DOLLARS IN THOUSANDS
(A) In 2017, losses and other charges, net related primarily to income associated with a litigation settlement, somewhat offset by costs associated
with the acquisition of Vascular Solutions and facility consolidation costs. In 2016, losses and other charges, net related primarily to facility
consolidations.
July 2, 2017 June 26, 2016
Teleflex income from continuing operations before interest and taxes 110,202$ 98,441$
Teleflex income from continuing operations before interest and taxes margin 20.8% 20.8%
Restructuring and other impairment charges 870 (119)
Losses and other charges, net (A) (924) 4,834
Intangible amortization expense 22,590 16,040
Adjusted Teleflex income from continuing operations before interest, taxes and
intangible amortization expense 132,738$ 119,196$
Adjusted Teleflex income from continuing operations before interest, taxes and
intangible amortization expense margin 25.1% 25.2%
Teleflex revenue as-reported 528,613$ 473,553$
Three Months Ended
23
APPENDIX F –
RECONCILIATION OF ADJUSTED EPS FROM CONTINUING OPERATIONS
QUARTER ENDED – JULY 2, 2017
DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
Cost of
goods
sold
Selling, general
and
administrative
expenses
Research and
development
expenses
Restructuring
and other
impairment
charges
(Gain) loss on
sale of business
and assets
Interest
expense, net
Loss on
extinguishment
of debt, net
Income
taxes
Net income (loss)
attributable to common
shareholders from
continuing operations
Diluted earnings
per share available
to common
shareholders
Shares used in
calculation of GAAP
and adjusted
earnings per share
GAAP Basis $238.3 $158.9 $20.3 $0.9 — $19.7 $0.0 $12.1 $78.4 $1.67 46,818
Adjustments
Restructuring and
other impairment
charges
— — — 0.9 — — — 0.5 0.3 $0.01 —
Losses and other
charges, net (A)
5.0 (6.3) 0.3 — — — — (0.4) (0.5) ($0.02) —
Amortization of debt
discount on
convertible notes
— — — — — 0.4 — 0.1 0.2 $0.01 —
Intangible amortization
expense
— 22.5 0.1 — — — — 6.5 16.1 $0.34 —
Tax adjustment (B) — — — — — — — — — — —
Loss on
extinguishment of
debt, net
— — — — — — 0.0 0.0 0.0 $0.00 —
Shares due to
Teleflex under note
hedge (C)
— — — — — — — — — $0.02 (501)
Adjusted basis $233.3 $142.7 $19.8 — — $19.4 — $18.8 $94.6 $2.04 46,317
(A) In 2017, losses and other charges, net related primarily to income associated w ith a litigation settlement, somew hat offset by costs associated w ith the acquisition of Vascular Solutions and facility consolidation costs.
(B) The tax adjustment represents a net benefit resulting primarily from the expiration of applicable statutes of limitations for prior year returns, the resolution of audits, the f iling of amended returns w ith respect to prior tax years and/or tax
law changes affecting our deferred tax liability.
(C) Adjusted diluted shares are calculated by giving effect to the anti-dilutive impact of the Company’s convertible note hedge agreements, w hich reduce the potential economic dilution that otherw ise w ould occur upon conversion of the
Company's convertible notes. Under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.
24
APPENDIX G –
RECONCILIATION OF ADJUSTED EPS FROM CONTINUING OPERATIONS
QUARTER ENDED – JUNE 26, 2016
DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
Cost of
goods
sold
Selling, general
and
administrative
expenses
Research and
development
expenses
Restructuring
and other
impairment
charges
(Gain) loss
on sale of
business
and assets
Interest
expense,
net
Loss on
extinguishment
of debt, net
Income
taxes
Net income (loss)
attributable to common
shareholders from
continuing operations
Diluted earnings
per share available
to common
shareholders
Shares used in
calculation of GAAP
and adjusted
earnings per share
GAAP Basis $217.2 $143.0 $15.5 ($0.1) ($0.4) $11.8 $19.3 $8.0 $59.1 $1.25 47,246
Adjustments:
Restructuring and
other impairment
charges
— — — (0.1) — — — 0.1 (0.2) $0.00 —
Losses and other
charges, net (A)
4.0 1.2 0.0 — (0.4) — — 1.9 2.9 $0.07 —
Amortization of debt
discount on
convertible notes
— — — — — 1.4 — 0.5 0.9 $0.02 —
Intangible
amortization
expense
— 15.9 0.1 — — — — 4.3 11.8 $0.25 —
Loss on
extinguishment of
debt, net
— — — — — — 19.3 7.0 12.2 $0.26 —
Tax adjustment (B) — — — — — — — 0.5 (0.5) ($0.01) —
Shares due to
Teleflex under note
hedge (C)
— — — — — — — — — $0.07 (1,675)
Adjusted basis $213.2 $125.9 $15.3 — — $10.3 — $22.4 $86.2 $1.89 45,571
(A) In 2016, losses and other charges, net related primarily to facility consolidations.
(B) The tax adjustment represents a net benefit resulting primarily from 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 changes affecting our deferred tax liability.
(C) Adjusted diluted shares are calculated by giving effect to the anti-dilutive impact of the Company’s convertible note hedge agreements, which reduce the potential economic dilution that otherwise
would occur upon conversion of the Company's convertible notes. Under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.
25
APPENDIX H –
RECONCILIATION OF ADJUSTED TAX RATE
DOLLARS IN THOUSANDS
Three Months Ended July 2, 2017
Income from
continuing
operations
before taxes
Taxes on
income from
continuing
operations Tax rate
GAAP basis $90,458 $12,095 13.4%
Restructuring and impairment charges 870 533
Losses and other charges, net (A) (924) (444)
Amortization of debt discount on convertible notes 378 138
Intangible amortization expense 22,590 6,496
Loss on extinguishment of debt 11 5
Tax adjustment (B) 0 0
Adjusted basis $113,383 $18,823 16.6%
Three Months Ended June 26, 2016
GAAP basis $67,402 $8,007 11.9%
Restructuring and impairment charges (119) 102
Losses and other charges, net (A) 4,834 1,899
Amortization of debt discount on convertible notes 1,440 525
Intangible amortization expense 16,040 4,287
Loss on extinguishment of debt 19,261 7,025
Tax adjustment (B) 0 538
Adjusted basis $108,858 $22,383 20.6%
(B) The tax adjustment represents a net benefit resulting primarily from the expiration of applicable statutes of limitations
for prior year returns, the resolution of audits, the f iling of amended returns w ith respect to prior tax years and/or tax law
changes affecting our deferred tax liability.
(A) In 2017, losses and other charges, net related primarily to income associated w ith a litigation settlement, somew hat
offset by costs associated w ith the acquisition of Vascular Solutions and facility consolidation costs. In 2016, losses and
other charges, net related primarily to facility consolidations.
26
APPENDIX I –
RECONCILIATION OF 2017 CONSTANT CURRENCY REVENUE GROWTH GUIDANCE
Low High
Forecasted GAAP Revenue Growth 11.5% 13.0%
Estimated Impact of Foreign Currency Exchange Rate Fluctuations 1.0% 1.0%
Forecasted Constant Currency Revenue Growth 12.5% 14.0%
27
APPENDIX J –
RECONCILIATION OF 2017 ADJUSTED GROSS MARGIN GUIDANCE
Note: In 2017, estimated losses and other charges, net relate primarily to facility consolidation and acquisition related expenses.
Low High
Forecasted GAAP Gross Margin 54.25% 54.80%
Estimated losses and other charges, net 1.15% 1.20%
Forecasted Adjusted Gross Margin 55.40% 56.00%
28
APPENDIX K –
RECONCILIATION OF 2017 ADJUSTED OPERATING MARGIN GUIDANCE
Note: In 2017, estimated losses and other charges, net relate primarily to facility consolidation and acquisition related expenses.
Low High
Forecasted GAAP Operating Margin 18.80% 19.40%
Estimated losses and other charges, net 2.68% 2.73%
Estimated intangible amortization expense 4.12% 4.17%
Forecasted Adjusted Operating Margin 25.60% 26.30%
29
APPENDIX L –
RECONCILIATION OF 2017 ADJUSTED EARNINGS PER SHARE GUIDANCE
Low High
Forecasted diluted earnings per share attributable to common shareholders $5.91 $5.98
Restructuring, impairment charges and special items, net of tax $0.96 $1.00
Intangible amortization expense, net of tax $1.32 $1.35
Amortization of debt discount on convertible notes, net of tax $0.01 $0.02
Forecasted adjusted diluted earnings per share $8.20 $8.35