Teleflex Reports Second Quarter 2021 Results and Full Year Outlook

Teleflex

WAYNE, PA — Teleflex Incorporated (NYSE: TFX) announced financial results for the second quarter ended June 27, 2021.

Second quarter financial summary

  • Reported revenues of $713.5 million, up 25.8% year-over-year; up 21.0% on a constant currency basis
  • GAAP diluted EPS from continuing operations of $1.76 as compared to $0.24 in the prior year period
  • Adjusted diluted EPS from continuing operations of $3.35, up 73.6% year-over-year

2021 guidance summary

  • GAAP revenue growth unchanged at 10.50% to 11.75%, inclusive of a $28 to $32 million headwind in the second half of 2021 from the June 28, 2021 respiratory divestiture that was not contemplated in the prior guidance range
  • Constant currency revenue growth unchanged at 8.50% to 9.75%
  • GAAP diluted EPS increased to $9.50 to $9.60 from $8.00 to $8.10 prior, and adjusted diluted EPS increased to $12.90 to $13.10 from $12.65 to $12.85 prior, inclusive of $0.10-$0.15 dilution in the second half of 2021 from the respiratory divestiture that was not contemplated in the prior guidance range

Liam Kelly, Chairman, President and Chief Executive Officer, said, “Although we continue to see varying levels of recovery across our product lines and geographic segments from challenges due to COVID-19, our second quarter results showed continued positive business momentum. In the quarter, we generated solid revenue growth and sequential improvement in adjusted gross and operating margins, which led to $3.35 in adjusted EPS, a significant improvement of more than 70% on a year-over-year basis. On June 28, 2021, we divested the majority of our respiratory assets reflecting our disciplined portfolio review process. Based on the strength of our first half results and our outlook for the remainder of the year, we are maintaining our 2021 constant currency revenue guidance range and raising the full year adjusted earnings per share guidance range, despite dilution in the second half from the respiratory asset sale, which we did not factor into the previously issued range.”

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 six months ended June 27, 2021 and June 28, 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 June 27, 2021 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.

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Three Months Ended % Increase / (Decrease)
June 27, 2021 June 28, 2020 Total Sales
Growth
Currency
Impact
Constant
Currency
Revenue Growth
Americas $414.8 $312.5 32.7% 0.9% 31.8%
EMEA 157.1 131.6 19.4% 11.0% 8.4%
Asia 80.6 67.1 20.2% 9.9% 10.3%
OEM 61.0 55.8 9.2% 2.3% 6.9%
Total $713.5 $567.0 25.8% 4.8% 21.0%
Six Months Ended % Increase / (Decrease)
June 27, 2021 June 28, 2020 Total Sales
Growth
Currency
Impact
Constant
Currency
Revenue Growth
Americas $790.3 $670.5 17.9% 0.6% 17.3%
EMEA 298.3 287.8 3.7% 8.9% (5.2)%
Asia 144.3 120.2 20.0% 9.8% 10.2%
OEM 114.5 119.2 (4.0)% 1.8% (5.8)%
Total $1,347.4 $1,197.7 12.5% 3.9% 8.6%
  • Americas second quarter 2021 net revenues were $414.8 million, an increase of 32.7% year-over-year; 31.8% increase on a constant currency basis.
  • EMEA second quarter 2021 net revenues of $157.1 million, rose 19.4% year-over-year; 8.4% increase on a constant currency basis.
  • Asia second quarter 2021 net revenues were $80.6 million, an increase of 20.2% year-over-year; 10.3% increase on a constant currency basis.
  • OEM second quarter 2021 net revenues were $61.0 million, an increase of 9.2% year-over-year; 6.9% increase on a constant currency basis.

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 months ended June 27, 2021 on both a GAAP and constant currency basis.

Three Months Ended % Increase / (Decrease)
June 27, 2021 June 28, 2020 Total Revenue
Growth
Currency
Impact
Constant
Currency
Revenue Growth
Vascular Access $167.7 $164.9 1.7% 3.8% (2.1)%
Interventional 112.1 82.6 35.7% 4.8% 30.9%
Anesthesia 95.4 64.9 47.1% 8.3% 38.8%
Surgical 98.2 67.3 46.0% 7.0% 39.0%
Interventional Urology 92.2 40.1 129.8% 0.4% 129.4%
OEM 61.0 55.8 9.2% 2.3% 6.9%
Other 86.9 91.4 (5.0)% 4.9% (9.9)%
Total $713.5 $567.0 25.8% 4.8% 21.0%
Six Months Ended % Increase / (Decrease)
June 27, 2021 June 28, 2020 Total Revenue
Growth
Currency
Impact
Constant
Currency
Revenue Growth
Vascular Access $331.7 $315.2 5.2% 3.5% 1.7%
Interventional  208.3  182.5 14.1% 3.6% 10.5%
Anesthesia  180.3  140.6 28.3% 6.6% 21.7%
Surgical  178.6  142.7 25.1% 5.4% 19.7%
Interventional Urology  165.6  114.3 44.8% 0.2% 44.6%
OEM  114.5  119.2 (4.0)% 1.8% (5.8)%
Other  168.5  183.1 (8.0)% 4.6% (12.6)%
Total $1,347.4 $1,197.7 12.5% 3.9% 8.6%
  • Second quarter 2021 Vascular Access net revenues were $167.7 million, an increase of 1.7% year-over-year; 2.1% decline on a constant currency basis.
  • Second quarter 2021 net revenues from Interventional products were $112.1 million, an increase of 35.7% year-over-year; 30.9% increase on a constant currency basis.
  • Second quarter 2021 net revenues from Anesthesia products were $95.4 million, an increase of 47.1% year-over-year; 38.8% increase on a constant currency basis.
  • Second quarter 2021 net revenues from Surgical products were $98.2 million, an increase of 46.0% year-over-year; 39.0% increase on a constant currency basis.
  • Second quarter 2021 net revenues from Interventional Urology products were $92.2 million, an increase of 129.8% year-over-year; 129.4% increase on a constant currency basis.
  • Second quarter 2021 net revenues from OEM products were $61.0 million, an increase of 9.2% year-over-year; 6.9% increase on a constant currency basis.
  • Second quarter 2021 net revenues from Other products were $86.9 million, a decrease of 5.0% year-over-year; 9.9% decrease on a constant currency basis.
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OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS

  • Depreciation expense, amortization of intangible assets and deferred financing charges for the six months ended June 27, 2021 totaled $122.2 million compared to $115.1 million for the prior year period.
  • Cash and cash equivalents at June 27, 2021 were $361.8 million compared to $375.9 million at December 31, 2020.
  • Net accounts receivable at June 27, 2021 were $414.2 million compared to $395.1 million at December 31, 2020.
  • Net inventories at June 27, 2021 were $517.3 million (including $26.9 million in inventory held for sale associated with the respiratory divestiture) compared to $513.2 million at December 31, 2020.

INITIAL CLOSE OF RESPIRATORY DIVESTITURE COMPLETED
On June 28, 2021, Teleflex completed the previously announced divestiture of a significant portion of its Respiratory business to Medline Industries, Inc. for $286 million in cash, reduced by $12 million in working capital not transferring to Medline. The Company estimates a revenue headwind of $28 to $32 million and adjusted earnings per share dilution of $0.10 to $0.15 in 2021 or approximately 1% of 2021 adjusted earnings per share, net of a manufacturing services agreement that Teleflex has entered into with Medline as of the initial closing of the sale transaction.

  • The divestiture enables stronger organizational focus on higher growth and margin business opportunities
  • The transaction is expected to be accretive to pro forma revenue growth, gross, and operating margin profile over time
  • Following the initial close, Teleflex utilized proceeds from the divestiture to pay down debt, augmenting its financial flexibility to support its growth strategy

COMMITMENT TO ESG INITIATIVES
Teleflex released its 2020 Global Impact Report, which illustrates the Company’s commitment to working with integrity, minimizing its impact on global and local communities, empowering and supporting employees, and promoting economic and social prosperity. The report provides an in-depth look at Teleflex’s Corporate Social Responsibility (CSR) program, along with initiatives that support its four main pillars: Principles of Ethics & Governance, Planet & Environment, People & Human Rights, and Prosperity & Sustainable Procurement. To learn more about Teleflex’s initiatives under these pillars, or to read the full report, visit the CSR site for Teleflex found here.

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2021 OUTLOOK
The Company maintained its 2021 GAAP revenue growth guidance of 10.50% to 11.75% year-over-year, including a $28 to $32 million headwind in the second half of 2021 from the respiratory divestiture on June 28, 2021, that was not contemplated in the prior guidance range. On a constant currency basis, the Company maintained its 2021 revenue growth guidance range of 8.50% to 9.75% year-over year. Teleflex reaffirmed its 2021 revenue growth guidance of at least 30% year-over-year for the Interventional Urology business.

The Company raised its 2021 GAAP diluted earnings per share from continuing operations to a range of $9.50 to $9.60 from $8.00 to $8.10 previously. The Company raised its 2021 adjusted diluted earnings per share from continuing operations to a range of $12.90 to $13.10 from $12.65 to $12.85 prior. GAAP and adjusted earnings per share reflect $0.10 to $0.15 dilution in the second half of 2021 from the respiratory divestiture that was not contemplated in the prior guidance range.

Forecasted 2021 Constant Currency Revenue Growth Reconciliation

Low High
Forecasted 2021 GAAP revenue growth 10.50% 11.75%
Estimated impact of foreign currency exchange rate fluctuations 2.0% 2.0%
Forecasted 2021 constant currency revenue growth 8.50% 9.75%
Forecasted 2021 Adjusted Diluted Earnings Per Share From Continuing Operations Reconciliation
Low High
Forecasted GAAP diluted earnings per share from continuing operations $9.50 $9.60
Restructuring, restructuring related and impairment items, net of tax $0.95 $0.96
Acquisition, integration and divestiture related items, net of tax $(1.00) $(0.98)
Other items, net of tax $0.19 $0.21
MDR $0.40 $0.42
Intangible amortization expense, net of tax $2.86 $2.89
Forecasted adjusted diluted earnings per share from continuing operations $12.90 $13.10

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