Teleflex Reports First Quarter 2020 Revenues of $630.6 million, up 2.8% Versus Prior Year Period

Teleflex

WAYNE, PA — Teleflex Incorporated (NYSE: TFX) announced financial results for the first quarter ended March 29, 2020.

First quarter 2020 net revenues were $630.6 million, an increase of 2.8% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues increased 4.0% over the year ago period.

First quarter 2020 GAAP earnings per share from continuing operations increased 212.4% to $2.78, compared to $0.89 in the prior year period. First quarter 2020 adjusted diluted earnings per share from continuing operations increased 21.4% to $2.72, compared to $2.24 in the prior year period.

Liam Kelly, President and Chief Executive Officer, said, “We were pleased with the first quarter 2020 performance for Teleflex, with results that included 4% constant currency revenue growth and $2.72 in adjusted EPS, a 21.4% year-over-year increase. These results occurred despite a worse than expected global impact from COVID-19, including a slow-down in the performance of non-emergent procedures during the last two weeks of March within the United States, and are a testament to the diverse product portfolio that we have created during the past decade. By geography, during the first quarter we saw a negative impact from COVID-19 in the Americas and Asia, while EMEA saw a benefit due to elevated ordering for certain anesthesia, respiratory, and vascular access products.”

Mr. Kelly continued, ”As we enter the second year of our three-year long-range plan, and despite the challenges caused by the global pandemic, Teleflex remains in a strong financial position, supported by a healthy balance sheet, which includes over $400 million of cash on hand, and access to additional liquidity under our revolving credit facility. We continue to remain confident in underlying business fundamentals, including robust demand for our innovative and critical care products. That said, due to the rapidly evolving environment and continued uncertainties from the impact of the COVID-19 global pandemic, we are withdrawing our previously announced 2020 financial guidance, as at this time, Teleflex cannot accurately predict the specific extent or duration of the impact of the COVID-19 outbreak on its financial and operating results.”

Mr. Kelly concluded, “While we are disappointed in the necessity of retracting our prior 2020 financial guidance, we remain confident in our ability to generate significant constant currency revenue growth, margin expansion, and adjusted earnings per share and free-cash flow growth over the long term.”

NET REVENUE BY SEGMENT

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The following table and commentary provide information regarding net revenues in each of the Company’s reportable operating segments for the three months ended March 29, 2020 on both a GAAP and constant currency basis. The discussion below the tables of the principal factors behind changes in net revenues for the three months ended March 29, 2020 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)
March 29, 2020 March 31, 2019 Total Sales Growth Currency Impact Constant Currency Revenue Growth
Americas $ 358.0 $ 344.0 4.1 % (0.2 ) % 4.3 %
EMEA 156.1 154.6 1.0 % (2.8 ) % 3.8 %
Asia 53.1 60.8 (12.6 ) % (3.4 ) % (9.2 ) %
OEM 63.4 54.2 16.9 % (0.6 ) % 17.5 %
Total $ 630.6 $ 613.6 2.8 % (1.2 ) % 4.0 %
Americas first quarter 2020 net revenues were $358.0 million, an increase of 4.1% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues increased 4.3% compared to the prior year period. The increase in constant currency revenue was primarily attributable to increases in sales volumes of existing products, mostly in interventional urology, as well as an increase in new product sales, which were partially offset by a decrease in revenues caused by the COVID-19 pandemic.

EMEA first quarter 2020 net revenues were $156.1 million, an increase of 1.0% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues increased 3.8% compared to the prior year period. The increase in constant currency revenue was primarily attributable to an increase in sales volumes of existing products, inclusive of a benefit from the COVID-19 pandemic.

Asia first quarter 2020 net revenues were $53.1 million, a decrease of 12.6% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues decreased 9.2% compared to the prior year period. The decrease in constant currency revenue was primarily attributable to a decrease in sales volumes of existing products, inclusive of the negative impact from the COVID-19 pandemic.

OEM first quarter 2020 net revenues were $63.4 million, an increase of 16.9% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues increased 17.5% compared to the prior year period. The increase in constant currency revenue was primarily attributable to the acquisition of IWG High Performance Conductors, Inc., and an increase in sales volumes of existing products.

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NET REVENUE BY GLOBAL PRODUCT CATEGORY

The following table and commentary provide information regarding net revenues in each of the Company’s global product categories for the three months ended March 29, 2020 on both a GAAP and constant currency basis.

Three Months Ended % Increase / (Decrease)
March 29, 2020 March 31, 2019 Total Revenue Growth Currency Impact Constant Currency Revenue Growth
Vascular Access $ 150.3 $ 143.9 4.4 % (1.2 ) % 5.6 %
Interventional 99.9 103.2 (3.2 ) % (0.9 ) % (2.3 ) %
Anesthesia 75.7 80.3 (5.7 ) % (1.8 ) % (3.9 ) %
Surgical 75.4 86.7 (13.0 ) % (1.5 ) % (11.5 ) %
Interventional Urology 74.2 59.7 24.2 % (0.1 ) % 24.3 %
OEM 63.4 54.2 16.9 % (0.6 ) % 17.5 %
Other 91.7 85.6 7.2 % (2.0 ) % 9.2 %
Total $ 630.6 $ 613.6 2.8 % (1.2 ) % 4.0 %
First quarter 2020 net revenues from sales of Vascular Access products were $150.3 million, an increase of 4.4% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues increased 5.6% compared to the prior year period.

First quarter 2020 net revenues from sales of Interventional products were $99.9 million, a decrease of 3.2% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues decreased 2.3% compared to the prior year period.

First quarter 2020 net revenues from sales of Anesthesia products were $75.7 million, a decrease of 5.7% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues decreased 3.9% compared to the prior year period.

First quarter 2020 net revenues from sales of Surgical products were $75.4 million, a decrease of 13.0% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues decreased 11.5% compared to the prior year period.

First quarter 2020 net revenues from sales of Interventional Urology products were $74.2 million, an increase of 24.2% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues increased 24.3% compared to the prior year period.

First quarter 2020 net revenues from sales of OEM products were $63.4 million, an increase of 16.9% compared to the prior year period.  Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues increased 17.5% compared to the prior year period.

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First quarter 2020 net revenues from sales of other products were $91.7 million, an increase of 7.2% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, first quarter 2020 net revenues increased 9.2% 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 first quarter of 2020 totaled $56.7 million compared to $54.6 million for the prior year period.

Cash and cash equivalents at March 29, 2020 were $406.5 million compared to $301.1 million at December 31, 2019.

Net accounts receivable at March 29, 2020 were $441.7 million compared to $418.7 million at December 31, 2019.

Net inventories at March 29, 2020 were $488.9 million compared to $476.6 million at December 31, 2019.

WITHDRAWING 2020 OUTLOOK

As a result of the ongoing uncertainty regarding both the scope and duration of the COVID-19 global pandemic, Teleflex is withdrawing its previously issued 2020 financial guidance (on February 20).  Since February 20, the impact of COVID-19 has rapidly expanded globally across Asia, Europe and the United States. Due to the anticipation for a surge in demand for capacity to treat those affected with COVID-19, medical authorities globally (including the U.S. Surgeon General, the American College of Surgeons, the American Hospital Association, the Center for Medicaid and Medicare Services, and the U.K. National Health Service) have advised the deferral of elective medical procedures. As a result, the Company anticipates material disruption caused by the evolving COVID-19 pandemic and macroeconomic environment. In addition, given the ongoing uncertainty of the scope and duration of the pandemic, the Company is currently unable to estimate the magnitude or duration of specific impacts on its business. Given a high-degree of uncertainty around the potential negative financial impact from COVID-19, Teleflex will not update 2020 guidance until the impact of COVID-19 becomes sufficiently clear.

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