0000096943false00000969432024-08-012024-08-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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| Date of Report (Date of Earliest Event Reported) | August 1, 2024 |
TELEFLEX INCORPORATED
(Exact name of Registrant as Specified in Its Charter)
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| Delaware | 1-5353 | 23-1147939 |
(State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (IRS Employer Identification No.) |
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| 550 E. Swedesford Rd., Suite 400 | Wayne, | PA | | 19087 |
| (Address of Principal Executive Offices) | | (Zip Code) |
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| Registrant’s Telephone Number, Including Area Code | | (610) | 225-6800 | |
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| Not applicable |
| (Former Name or Former Address, If Changed Since Last Report) |
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| Securities registered pursuant to Section 12(b) of the Act: |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
| Common Stock, par value $1 per share | TFX | New York Stock Exchange | |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On August 1, 2024, Teleflex Incorporated (the “Company”) issued a press release (the “Press Release”) announcing its financial results for the quarter ended June 30, 2024. A copy of the Press Release is furnished as Exhibit 99.1 to this Current Report.
In addition to the financial information included in the Press Release that has been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), the Press Release includes certain non-GAAP financial measures. These measures include adjusted revenue growth, adjusted constant currency revenue growth and adjusted diluted earnings per share. Adjusted revenue is based upon net revenues, adjusted to exclude the impact of an increase in reserves for prior years. The reserve, which relates to legislation that requires suppliers of medical devices to the Italian National Healthcare System to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year, was increased as a result of a recent ruling from the Italian courts. The amounts related to the prior years do not represent normal adjustments to revenue, are not expected to recur in future periods and are not recurring in nature, making it difficult to contribute to a meaningful evaluation of our operating performance. Adjusted constant currency revenue growth is based upon net revenues, adjusted to eliminate the impacts related to the Italian payback measure referred to above and 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 these measures facilitate a comparison of our operating performance exclusive of fluctuations that do not reflect our underlying performance or business trends. Adjusted diluted earnings per share is based upon diluted earnings per share available to common stockholders, the most directly comparable GAAP measure, adjusted to exclude, depending on the period presented, the impact (net of tax) of (i) restructuring, restructuring related and impairment items; (ii) acquisition, integration and divestiture related items; (iii) other items identified in the reconciliation tables set forth in the Press Release, as applicable; (iv) costs incurred in connection with our implementation of a new global enterprise resource planning system and related information technology transition costs; (v) the impact from increases in our reserves related to the Italian payback measure pertaining to prior years as described in adjusted revenue; (vi) pension termination and related charges; (vii) certain expenditures associated with the registration of medical devices under the European Union Medical Device Regulation; (viii) intangible amortization expense; (ix) direct and incremental costs and discrete changes affecting our deferred tax liability within income tax expenses incurred in connection with legal entity rationalizations; and (x) tax adjustments. Management does not believe that any of the excluded items are indicative of our underlying core performance or business trends.
Management uses these non-GAAP financial measures to assess the Company'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.
The information furnished pursuant to Item 2.02 of this Current Report, including Exhibit 99.1 hereto, shall not be considered “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section, nor shall it be incorporated by reference into future filings by the Company under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, unless the Company expressly sets forth in such future filing that such information is to be considered "filed" or incorporated by reference therein.
Item 7.01. Regulation FD Disclosure.
In connection with the conference call to be held by the Company on August 1, 2024 to discuss its financial results for the quarter ended June 30, 2024, the Company plans to reference a slide presentation, which will be made available in advance of the call through the Company’s website. A copy of the slide presentation is furnished as Exhibit 99.2 to this Current Report.
The information furnished pursuant to Item 7.01 of this Current Report, including Exhibit 99.2, shall not be considered “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section, nor shall it be incorporated by reference into future filings by the Company under the Securities Act of 1933, as amended or under the Securities Exchange Act of 1934, as amended, unless the Company expressly sets forth in such future filing that such information is to be considered “filed” or incorporated by reference therein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
104 The Cover Page from this Current Report on Form 8-K, formatted in Inline XBRL
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: August 1, 2024 | TELEFLEX INCORPORATED
By: /s/ Thomas E. Powell Name: Thomas E. Powell Title: Executive Vice President and Chief Financial Officer |
Exhibit 99.1
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FOR IMMEDIATE RELEASE | August 1, 2024 |
Teleflex Reports Second Quarter Financial Results and Full Year 2024 Outlook
Announces $500 million share repurchase authorization inclusive of a $200 million accelerated share repurchase of common stock
Wayne, PA -- Teleflex Incorporated (NYSE: TFX) (the “Company”) today announced financial results for the second quarter ended June 30, 2024.
Second quarter financial summary
•GAAP revenue of $749.7 million, up 0.9% compared to the prior year period
•Adjusted revenue of $763.5 million, excluding the impact from increases in our reserves related to the Italian payback measure pertaining to prior years, up 2.7% compared to the prior year period, up 3.4% on a constant currency basis.1
•GAAP diluted EPS from continuing operations of $1.69, compared to $2.35 in the prior year period
•Adjusted diluted EPS from continuing operations of $3.42, compared to $3.41 in the prior year period
2024 guidance summary
•Raising GAAP revenue growth guidance range to 3.40% to 4.40%
•Raising adjusted constant currency revenue growth guidance range to 4.25% to 5.25%, which excludes the impact from increases in our reserves related to the Italian payback measure pertaining to prior years1
•Lowering GAAP EPS from continuing operations guidance range to $6.43 to $6.83
•Raising adjusted diluted EPS from continuing operations guidance range to $13.80 to $14.20
Share repurchase program
•Announced share repurchase authorization for up to $500 million of common stock, including the commencement of an accelerated share repurchase program for $200 million
"The second quarter was consistent with our strategic focus on durable revenue growth." said Liam Kelly, Teleflex's Chairman, President and Chief Executive Officer. "Revenue momentum for Barrigel remained strong, and we continued to be on track with our integration of Palette Life Sciences AB. Our first half results reflect the benefits of our diversified product portfolio and corporate strategy for growth. As a sign of confidence, our Board of Directors has authorized a share repurchase program for up to $500 million of our common stock, inclusive of a $200 million accelerated share repurchase. The Teleflex Board of Directors and Management remain confident in the company’s long-term growth profile and ability to create significant shareholder value. Our strong balance sheet allows us to opportunistically repurchase shares as part of a broader capital allocation strategy while not compromising the company’s capacity to invest in the growth of our business, including the execution of value creating M&A opportunities.”
(1) Refer to Notes on Non-GAAP Financial Measures for detail on Italian payback measure.
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 six months ended June 30, 2024 and the comparable prior year periods on a GAAP, adjusted and adjusted constant currency basis.
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| Three Months Ended |
| As reported | | Adjusted |
| June 30, 2024 | | July 2, 2023 | | Reported Revenue Growth | | June 30, 2024 | | July 2, 2023 | | Adjusted Constant Currency Revenue Growth |
| Americas | $426.8 | | $424.7 | | 0.5% | | $426.8 | | $424.7 | | 0.6% |
| EMEA | 147.1 | | 147.8 | | (0.5)% | | 160.9 | | 147.8 | | 9.8% |
| Asia | 87.0 | | 86.7 | | 0.4% | | 87.0 | | 86.7 | | 4.0% |
| OEM | 88.8 | | 84.1 | | 5.6% | | 88.8 | | 84.1 | | 5.8% |
| Consolidated | $749.7 | | $743.3 | | 0.9% | | $763.5 | | $743.3 | | 3.4% |
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| Six Months Ended |
| As reported | | Adjusted |
| June 30, 2024 | | July 2, 2023 | | Reported Revenue Growth | | June 30, 2024 | | July 2, 2023 | | Adjusted Constant Currency Revenue Growth |
| Americas | $833.1 | | $836.5 | | (0.4)% | | $833.1 | | $836.5 | | (0.5)% |
| EMEA | 306.7 | | 291.2 | | 5.3% | | 320.5 | | 291.2 | | 9.7% |
| Asia | 171.2 | | 165.4 | | 3.5% | | 171.2 | | 165.4 | | 7.4% |
| OEM | 176.5 | | 161.1 | | 9.6% | | 176.5 | | 161.1 | | 9.5% |
| Consolidated | $1,487.5 | | $1,454.2 | | 2.3% | | $1,501.3 | | $1,454.2 | | 3.6% |
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NET REVENUE BY GLOBAL PRODUCT CATEGORY
The following table provides information regarding net revenues in each of the Company's global product categories for the three and six months ended June 30, 2024 and the comparable prior year periods on a GAAP, adjusted and adjusted constant currency basis.
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| Three Months Ended |
| As reported | | Adjusted |
| June 30, 2024 | | July 2, 2023 | | Reported Revenue Growth | | June 30, 2024 | | July 2, 2023 | | Adjusted Constant Currency Revenue Growth |
| Vascular Access | $181.1 | | $173.8 | | 4.2% | | $181.1 | | $173.8 | | 4.8% |
| Interventional | 141.2 | | 124.8 | | 13.1% | | 141.2 | | 124.8 | | 13.8% |
| Anesthesia | 102.5 | | 100.8 | | 1.6% | | 102.5 | | 100.8 | | 2.3% |
| Surgical | 111.3 | | 106.0 | | 5.1% | | 111.3 | | 106.0 | | 6.4% |
| Interventional Urology | 83.1 | | 77.8 | | 6.8% | | 83.1 | | 77.8 | | 7.1% |
| OEM | 88.8 | | 84.1 | | 5.6% | | 88.8 | | 84.1 | | 5.8% |
| Other (1) | 41.7 | | 76.0 | | (45.1)% | | 55.5 | | 76.0 | | (26.4)% |
| Consolidated | $749.7 | | $743.3 | | 0.9% | | $763.5 | | $743.3 | | 3.4% |
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| Six Months Ended |
| As reported | | Adjusted |
| June 30, 2024 | | July 2, 2023 | | Reported Revenue Growth | | June 30, 2024 | | July 2, 2023 | | Adjusted Constant Currency Revenue Growth |
| Vascular Access | $362.5 | | $351.4 | | 3.1% | | $362.5 | | $351.4 | | 3.4% |
| Interventional | 275.8 | | 241.7 | | 14.1% | | 275.8 | | 241.7 | | 14.6% |
| Anesthesia | 198.8 | | 194.2 | | 2.4% | | 198.8 | | 194.2 | | 2.7% |
| Surgical | 216.8 | | 205.0 | | 5.8% | | 216.8 | | 205.0 | | 6.7% |
| Interventional Urology | 162.8 | | 153.2 | | 6.3% | | 162.8 | | 153.2 | | 6.6% |
| OEM | 176.5 | | 161.1 | | 9.6% | | 176.5 | | 161.1 | | 9.5% |
| Other (1) | 94.3 | | 147.6 | | (36.2)% | | 108.1 | | 147.6 | | (26.8)% |
| Consolidated | $1,487.5 | | $1,454.2 | | 2.3% | | $1,501.3 | | $1,454.2 | | 3.6% |
(1) In 2024, amounts reflect the impact from increases in our reserves related to the Italian payback measure pertaining to prior years.
OTHER FINANCIAL HIGHLIGHTS
•Depreciation expense, amortization of intangible assets and deferred financing charges for the six months ended June 30, 2024 totaled $135.9 million compared to $122.0 million for the prior year period.
•Cash and cash equivalents at June 30, 2024 were $238.6 million compared to $222.8 million at December 31, 2023.
•Net accounts receivable at June 30, 2024 were $448.9 million compared to $443.5 million at December 31, 2023.
•Inventories at June 30, 2024 were $636.9 million compared to $626.2 million at December 31, 2023.
2024 OUTLOOK
The Company increased its full year 2024 revenue growth outlook on a GAAP basis from a range of 3.35% to 4.35% to a range of 3.40% to 4.40%, reflecting the impact from increases in our reserves for the three and six months ended June 30, 2024 related to the Italian payback measure pertaining to prior years and our estimate of an approximately 0.40% negative impact of foreign exchange rate fluctuations. On an adjusted constant currency basis, which excludes the impact from the Italian payback measure pertaining to prior years, the Company raised its full year 2024 revenue growth outlook from a range of 3.75% to 4.75% to a range of 4.25% to 5.25% year-over-year.
The Company lowered its full year 2024 GAAP diluted earnings per share from continuing operations outlook from a range of $6.87 to $7.22 to a range of $6.43 to $6.83, representing a year-over-year change of (14.9)% to (9.7)%. The Company raised its full year 2024 adjusted diluted earnings per share from continuing operations guidance from a range of $13.60 to $13.95 to a range of $13.80 to $14.20, representing growth of 2.1% to 5.0% year-over-year.
Forecasted 2024 Adjusted Constant Currency Revenue Growth Reconciliation
| | | | | | | | | | | |
| Low | | High |
Forecasted 2024 GAAP revenue growth | 3.40% | | 4.40% |
| Estimated impact of foreign currency exchange rate fluctuations | (0.40)% | | (0.40)% |
| Italian payback measure | (0.45)% | | (0.45)% |
Forecasted 2024 adjusted constant currency revenue growth | 4.25% | | 5.25% |
Forecasted 2024 Adjusted Diluted Earnings Per Share From Continuing Operations Reconciliation
| | | | | | | | | | | |
| Low | | High |
| Forecasted GAAP diluted earnings per share from continuing operations | $6.43 | | $6.83 |
| Restructuring, restructuring related and impairment items, net of tax | $0.59 | | $0.59 |
| Acquisition, integration and divestiture related items, net of tax | $0.35 | | $0.35 |
| Pension termination and related charges, net of tax | $1.77 | | $1.77 |
| ERP Implementation, net of tax | $0.33 | | $0.33 |
| MDR, net of tax | $0.19 | | $0.19 |
| Italian payback measure, net of tax | $0.29 | | $0.29 |
| Intangible amortization expense, net of tax | $3.81 | | $3.81 |
| Tax adjustments | $0.04 | | $0.04 |
| Forecasted adjusted diluted earnings per share from continuing operations, net of tax | $13.80 | | $14.20 |
SHARE REPURCHASE PROGRAM
The Board of Directors has authorized a share repurchase program for up to $500 million of the Company’s common stock. The timing, price and actual number of shares of Common Stock that may be repurchased under the share repurchase authorization will depend on a variety of factors including price, market conditions and corporate and regulatory requirements. The repurchases may occur in open market transactions, transactions structured through investment banking institutions, in privately negotiated transactions, by direct purchases of common stock or a combination of the foregoing, and the timing and amount of stock repurchased will depend on market and business conditions, applicable legal and credit requirements and other corporate considerations. The share repurchase program does not require the Company to repurchase shares of its Common Stock and it may be discontinued, suspended or amended at any time, without prior notice. The Company intends to commence an accelerated share repurchase of $200 million of common stock under the share repurchase program, effective August 2, 2024.
CONFERENCE CALL WEBCAST AND ADDITIONAL INFORMATION
A webcast of Teleflex's second quarter 2024 investor conference call can be accessed live from a link on the Company's website at teleflex.com. The call will begin at 8:00 am ET on August 1, 2024.
An audio replay of the investor call will be available beginning at 11:00 am ET on August 1, 2024, either on the Teleflex website or by telephone. The call can be accessed by dialing 1 800 770 2030 (U.S. and Canada) or 1 609 800 9909 (all other locations). The confirmation code is 69028.
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: adjusted revenue, adjusted 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 adjusted constant currency net revenues and adjusted net revenues to historical GAAP net revenues and historical adjusted diluted earnings per share from continuing operations to historical GAAP diluted earnings per share from continuing operations are set forth below.
Adjusted revenue: This non-GAAP measure is based upon net revenues, adjusted to exclude the impact in the three and six months ended June 30, 2024 of an increase in our reserves, and corresponding reduction to revenue within our EMEA segment, for prior years. The reserve relates to the Italian payback measure, a law that requires suppliers of medical devices to the Italian National Healthcare System to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year. As a result of a recent ruling from the Italian courts, we recognized a $15.8 million increase in our reserves during the three and six months ended June 30, 2024, of which $13.8 million related to prior years. The prior year amounts do not represent normal adjustments to revenue, are not expected to recur in future periods and are not recurring in nature, making it difficult to contribute to a meaningful evaluation of our operating performance. Accordingly, management has excluded the $13.8 million prior year amount as it is not indicative of our underlying core performance or business trends.
Adjusted constant currency revenue growth: This non-GAAP measure is based upon net revenues, adjusted to exclude, depending on the period presented, the items described in Adjusted revenue and 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; 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.
Italian payback measure - These adjustments represent the exclusion of the impact from increases in our reserves related to the Italian payback measure pertaining to prior years as described in Adjusted revenue.
Pension termination and related charges - These adjustments represent charges associated with the planned termination of the Teleflex Incorporated Retirement Income Plan, a frozen U.S. defined benefit pension plan, and related direct incremental expenses including certain charges stemming from the liquidation of surplus plan assets. These charges and costs do not represent normal and recurring operating expenses, will be inconsistent in amounts and frequency, and are not expected to recur once the plan termination process has been completed. Accordingly, management has excluded these amounts to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.
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. The MDR requirements became effective in May 2021, although certain devices that previously satisfied MDD requirements can continue to be marketed in the EU until December 2027 for highest-risk devices and December 2028 for lower-risk devices, 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.
ERP implementation - These adjustments represent direct and incremental costs incurred in connection with our implementation of a new global enterprise resource planning ("ERP") solution and related IT transition costs. An implementation of this scale is a significant undertaking and will require substantial time and attention of management and key employees. The associated costs do not represent normal and recurring operating expenses and will be inconsistent in amounts and frequency making it difficult to contribute to a meaningful evaluation of our operating performance.
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 Net Revenue (Dollars in millions)
Net revenue by segment
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| Three Months Ended | | % Increase / (Decrease) |
| June 30, 2024 | | July 2, 2023 | |
| Reported revenue | | Adjustment | | Adjusted Revenue | | Reported revenue | | Adjustment | | Adjusted Revenue | | Reported Revenue Growth | | Currency Impact | | Adjustment impact | | Adjusted Constant Currency Revenue Growth | | |
| Americas | $426.8 | | $— | | $426.8 | | $424.7 | | $— | | $424.7 | | 0.5% | | (0.1)% | | —% | | 0.6% | | |
| EMEA | 147.1 | | (13.8) | | 160.9 | | 147.8 | | — | | 147.8 | | (0.5)% | | (0.9)% | | (9.4)% | | 9.8% | | |
| Asia | 87.0 | | — | | 87.0 | | 86.7 | | — | | 86.7 | | 0.4% | | (3.6)% | | —% | | 4.0% | | |
| OEM | 88.8 | | — | | 88.8 | | 84.1 | | — | | 84.1 | | 5.6% | | (0.2)% | | —% | | 5.8% | | |
| Consolidated | $749.7 | | ($13.8) | | $763.5 | | $743.3 | | $— | | $743.3 | | 0.9% | | (0.6)% | | (1.9)% | | 3.4% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended | | % Increase / (Decrease) |
| June 30, 2024 | | July 2, 2023 | |
| Reported revenue | | Adjustment | | Adjusted Revenue | | Reported revenue | | Adjustment | | Adjusted Revenue | | Reported Revenue Growth | | Currency Impact | | Adjustment impact | | Adjusted Constant Currency Revenue Growth | | |
| Americas | $833.1 | | $— | | $833.1 | | $836.5 | | $— | | $836.5 | | (0.4)% | | 0.1% | | —% | | (0.5)% | | |
| EMEA | 306.7 | | (13.8) | | 320.5 | | 291.2 | | — | | 291.2 | | 5.3% | | 0.3% | | (4.7)% | | 9.7% | | |
| Asia | 171.2 | | — | | 171.2 | | 165.4 | | — | | 165.4 | | 3.5% | | (3.9)% | | —% | | 7.4% | | |
| OEM | 176.5 | | — | | 176.5 | | 161.1 | | — | | 161.1 | | 9.6% | | 0.1% | | —% | | 9.5% | | |
| Consolidated | $1,487.5 | | ($13.8) | | $1,501.3 | | $1,454.2 | | $— | | $1,454.2 | | 2.3% | | (0.3)% | | (1.0)% | | 3.6% | | |
Net revenue by global product category
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | % Increase / (Decrease) |
| June 30, 2024 | | July 2, 2023 | |
| Reported revenue | | Adjustment | | Adjusted Revenue | | Reported revenue | | Adjustment | | Adjusted Revenue | | Reported Revenue Growth | | Currency Impact | | Adjustment impact | | Adjusted Constant Currency Revenue Growth |
| Vascular Access | $181.1 | | $— | | $181.1 | | $173.8 | | $— | | $173.8 | | 4.2% | | (0.6)% | | —% | | 4.8% |
| Interventional | 141.2 | | — | | 141.2 | | 124.8 | | — | | 124.8 | | 13.1% | | (0.7)% | | —% | | 13.8% |
| Anesthesia | 102.5 | | — | | 102.5 | | 100.8 | | — | | 100.8 | | 1.6% | | (0.7)% | | —% | | 2.3% |
| Surgical | 111.3 | | — | | 111.3 | | 106.0 | | — | | 106.0 | | 5.1% | | (1.3)% | | —% | | 6.4% |
| Interventional Urology | 83.1 | | — | | 83.1 | | 77.8 | | — | | 77.8 | | 6.8% | | (0.3)% | | —% | | 7.1% |
| OEM | 88.8 | | — | | 88.8 | | 84.1 | | — | | 84.1 | | 5.6% | | (0.2)% | | —% | | 5.8% |
| Other (1) | 41.7 | | (13.8) | | 55.5 | | 76.0 | | — | | 76.0 | | (45.1)% | | (0.4)% | | (18.3)% | | (26.4)% |
| Consolidated | $749.7 | | ($13.8) | | $763.5 | | $743.3 | | $— | | $743.3 | | 0.9% | | (0.6)% | | (1.9)% | | 3.4% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended | | % Increase / (Decrease) |
| June 30, 2024 | | July 2, 2023 | |
| Reported revenue | | Adjustment | | Adjusted Revenue | | Reported revenue | | Adjustment | | Adjusted Revenue | | Reported Revenue Growth | | Currency Impact | | Adjustment impact | | Adjusted Constant Currency Revenue Growth |
| Vascular Access | $362.5 | | $— | | $362.5 | | $351.4 | | $— | | $351.4 | | 3.1% | | (0.3)% | | —% | | 3.4% |
| Interventional | 275.8 | | — | | 275.8 | | 241.7 | | — | | 241.7 | | 14.1% | | (0.5)% | | —% | | 14.6% |
| Anesthesia | 198.8 | | — | | 198.8 | | 194.2 | | — | | 194.2 | | 2.4% | | (0.3)% | | —% | | 2.7% |
| Surgical | 216.8 | | — | | 216.8 | | 205.0 | | — | | 205.0 | | 5.8% | | (0.9)% | | —% | | 6.7% |
| Interventional Urology | 162.8 | | — | | 162.8 | | 153.2 | | — | | 153.2 | | 6.3% | | (0.3)% | | —% | | 6.6% |
| OEM | 176.5 | | — | | 176.5 | | 161.1 | | — | | 161.1 | | 9.6% | | 0.1% | | —% | | 9.5% |
| Other (1) | 94.3 | | (13.8) | | 108.1 | | 147.6 | | — | | 147.6 | | (36.2)% | | (0.1)% | | (9.3)% | | (26.8)% |
| Consolidated | $1,487.5 | | ($13.8) | | $1,501.3 | | $1,454.2 | | $— | | $1,454.2 | | 2.3% | | (0.3)% | | (1.0)% | | 3.6% |
(1) In 2024, amounts reflect the impact from increases in our reserves related to the Italian payback measure pertaining to prior years.
Reconciliation of Consolidated Statement of Income Items (Dollars in millions, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended June 30, 2024 |
| Revenue | Gross margin | SG&A (1) | R&D (1) | Operating margin (2) | Income before income taxes | Income tax expense | Effective income tax rate | Diluted earnings per share from continuing operations |
| GAAP Basis | $749.7 | 55.6% | 33.4% | 5.5% | 15.6% | $97.5 | $17.3 | 17.8% | $1.69 |
| Adjustments | | | | | | | | | |
| Restructuring, restructuring related and impairment items (A) | — | 0.5 | (0.1) | — | 1.6 | 12.2 | 2.1 | | 0.21 |
| Acquisition, integration and divestiture related items (B) | — | — | (0.7) | — | 0.7 | 5.6 | — | | 0.12 |
| | | | | | | | | |
| Italian payback measure (C) | 13.8 | 0.7 | (0.6) | — | 1.4 | 13.8 | — | | 0.29 |
| ERP implementation | — | — | (0.4) | — | 0.4 | 3.0 | 0.4 | | 0.06 |
| MDR | — | — | — | (0.5) | 0.4 | 3.1 | — | | 0.07 |
| | | | | | | | | |
| | | | | | | | | |
| Intangible amortization expense | — | 4.0 | (2.6) | — | 6.6 | 49.6 | 5.0 | | 0.94 |
| | | | | | | | | |
| Tax adjustments | — | — | — | — | — | — | (2.1) | | 0.04 |
| Adjustments total | 13.8 | 5.2 | (4.4) | (0.5) | 11.1 | 87.3 | 5.4 | | 1.73 |
| Adjusted basis | $763.5 | 60.8% | 29.0% | 5.0% | 26.7% | $184.8 | $22.7 | 12.3% | $3.42 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended July 2, 2023 |
| Gross margin | SG&A (1) | R&D (1) | Operating margin (2) | Income before income taxes | Income tax expense | Effective income tax rate | Diluted earnings per share from continuing operations |
| GAAP Basis | 54.9% | 30.0% | 5.3% | 19.3% | $127.0 | $15.5 | 12.2% | $2.35 |
| Adjustments | | | | | | | | |
| Restructuring, restructuring related and impairment items (A) | 1.0 | — | (0.2) | 1.5 | 10.8 | 1.7 | | 0.19 |
| Acquisition, integration and divestiture related items (B) | — | 1.0 | — | (1.0) | (7.5) | — | | (0.16) |
| | | | | | | | |
| | | | | | | | |
| ERP implementation | — | (0.2) | — | 0.2 | 1.3 | 0.3 | | 0.02 |
| MDR | — | — | (1.0) | 1.0 | 7.6 | — | | 0.16 |
| Intangible amortization expense | 3.1 | (2.5) | — | 5.6 | 42.0 | 2.1 | | 0.85 |
| Tax adjustments | — | — | — | — | — | — | | — |
| Adjustments total | 4.1 | (1.7) | (1.2) | 7.3 | 54.2 | 4.1 | | 1.06 |
| Adjusted basis | 59.0% | 28.3% | 4.1% | 26.6% | $181.2 | $19.6 | 10.8% | $3.41 |
Notes: (1) Selling, general and administrative expenses and research and development expenses are shown as a percentage of as reported and adjusted revenues.
(2) Operating margin defined as Income from continuing operations before interest, loss on extinguishment of debt and taxes as a percentage of as reported and adjusted revenues.
Totals may not sum due to rounding.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2024 |
| Revenue | Gross margin | SG&A (1) | R&D (1) | Operating margin (2) | Income before income taxes | Income tax expense | Effective income tax rate | Diluted earnings per share from continuing operations |
| GAAP Basis | $1,487.5 | 56.0% | 42.5% | 5.3% | 7.5% | $71.7 | $(24.2) | (33.8)% | $2.02 |
| Adjustments | | | | | | | | | |
| Restructuring, restructuring related and impairment items (A) | — | 0.4 | (0.1) | — | 1.2 | 18.0 | 3.1 | | 0.32 |
| Acquisition, integration and divestiture related items (B) | — | 0.1 | (0.5) | — | 0.6 | 9.0 | 0.4 | | 0.18 |
| | | | | | | | | |
| Italian payback measure (C) | 13.8 | 0.3 | (0.4) | — | 0.9 | 13.8 | — | | 0.29 |
| ERP implementation | — | — | (0.2) | — | 0.2 | 3.1 | 0.4 | | 0.06 |
| MDR | — | — | — | (0.5) | 0.4 | 6.3 | — | | 0.13 |
| Pension termination costs | — | — | (9.3) | — | 9.3 | 138.6 | 58.2 | | 1.70 |
| | | | | | | | | |
| Intangible amortization expense | — | 4.1 | (2.6) | — | 6.6 | 99.8 | 10.1 | | 1.89 |
| Tax adjustments | — | — | — | — | — | — | (2.1) | | 0.04 |
| Adjustments total | 13.8 | 4.9 | (13.1) | (0.5) | 19.2 | 288.6 | 70.1 | | 4.61 |
| Adjusted basis | $1,501.3 | 60.9% | 29.4% | 4.8% | 26.7% | $360.3 | $45.9 | 12.7% | $6.63 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended July 2, 2023 |
| Gross margin | SG&A (1) | R&D (1) | Operating margin (2) | Income before income taxes | Income tax expense | Effective income tax rate | Diluted earnings per share from continuing operations |
| GAAP Basis | 55.0% | 31.4% | 5.6% | 17.8% | $224.4 | $35.7 | 15.9% | $3.99 |
| Adjustments | | | | | | | | |
| Restructuring, restructuring related and impairment items (A) | 1.1 | — | (0.2) | 1.6 | 22.8 | 3.5 | | 0.41 |
| Acquisition, integration and divestiture related items (B) | — | 0.3 | — | (0.3) | (4.4) | 0.1 | | (0.10) |
| | | | | | | | |
| ERP implementation | — | (0.2) | — | 0.2 | 2.5 | 0.6 | | 0.04 |
| MDR | — | — | (1.2) | 1.2 | 17.9 | — | | 0.38 |
| Intangible amortization expense | 3.1 | (2.6) | — | 5.7 | 83.6 | 4.1 | | 1.68 |
| Tax adjustments | — | — | — | — | — | (4.8) | | 0.10 |
| Adjustments total | 4.2 | (2.5) | (1.4) | 8.4 | 122.4 | 3.5 | | 2.51 |
| Adjusted basis | 59.2% | 28.9% | 4.2% | 26.2% | $346.8 | $39.2 | 11.3% | $6.50 |
Notes: (1) Selling, general and administrative expenses and research and development expenses are shown as a percentage of as reported and adjusted revenues.
(2) Operating margin defined as Income from continuing operations before interest, loss on extinguishment of debt and taxes as a percentage of as reported and adjusted revenues.
Totals may not sum due to rounding.
Tickmarks to Reconciliation Tables
(A)Restructuring, restructuring related and impairment items – For the three months ended June 30, 2024, pre-tax restructuring charges were $7.9 million and restructuring related charges were $4.4 million. For the three months ended July 2, 2023, pre-tax restructuring charges were $1.5 million and restructuring related charges were $9.3 million. For the six months ended June 30, 2024, pre-tax restructuring charges were $8.4 million; restructuring related charges were $7.5 million; and impairment charges were $2.1 million. For the six months ended July 2, 2023, pre-tax restructuring charges were $3.7 million and restructuring related charges were $19.1 million.
(B)Acquisition, integration and divestiture related items – For the three and six months ended June 30, 2024 and July 2, 2023, these charges related to changes in the estimated fair value of our contingent consideration liabilities and the acquisition of Palette Life Sciences AB.
(C)Italian payback measure – Adjustment reflects the impact of an increase in reserves for prior years related to the Italian payback measure and its impact on the adjusted basis for each Non-GAAP financial measure presented within the table.
ABOUT TELEFLEX INCORPORATED
As a global provider of medical technologies, Teleflex is driven by our purpose to improve the health and quality of people’s lives. Through our vision to become the most trusted partner in healthcare, we offer a diverse portfolio with solutions in the therapy areas of anesthesia, emergency medicine, interventional cardiology and radiology, surgical, vascular access, and urology. We believe that the potential of great people, purpose driven innovation, and world-class products can shape the future direction of healthcare.
Teleflex is the home of Arrow™, Barrigel™, Deknatel™, LMA™, Pilling™, QuikClot™ Rüsch™, UroLift™ and Weck™ – trusted brands united by a common sense of purpose.
At Teleflex, we are empowering the future of healthcare. For more information, please visit teleflex.com.
CAUTION CONCERNING FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements, including, but not limited to, the implementation and execution of our share repurchase program, including our planned accelerated share repurchase; statements related to our long-term growth profile and ability to create significant shareholder value; our ability to opportunistically repurchase shares as part of a broader capital allocation strategy while not compromising the company’s capacity to invest in the growth of our business, including the execution of value creating M&A opportunities; forecasted 2024 GAAP and constant currency revenue growth and GAAP and adjusted diluted earnings per share; and our estimates regarding the projected impact of foreign currency exchange rate fluctuations on our 2024 financial results. Actual results could differ materially from those in the forward-looking statements due to, among other things, 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 international conflicts and hostilities, such as the ongoing conflicts in the Ukraine and the Middle East; 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
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2024 | | July 2, 2023 | | June 30, 2024 | | July 2, 2023 |
| (Dollars and shares in thousands, except per share) |
| Net revenues | $ | 749,691 | | | $ | 743,259 | | | $ | 1,487,540 | | | $ | 1,454,191 | |
| Cost of goods sold | 333,233 | | | 335,436 | | | 654,948 | | | 654,988 | |
| Gross profit | 416,458 | | | 407,823 | | | 832,592 | | | 799,203 | |
| Selling, general and administrative expenses | 250,631 | | | 223,306 | | | 493,461 | | | 456,022 | |
| Research and development expenses | 41,094 | | | 39,448 | | | 78,393 | | | 80,917 | |
| Pension settlement charge | — | | | — | | | 138,139 | | | — | |
| Restructuring and impairment charges | 7,855 | | | 1,508 | | | 10,514 | | | 3,729 | |
| | | | | | | |
| Income from continuing operations before interest and taxes | 116,878 | | | 143,561 | | | 112,085 | | | 258,535 | |
| Interest expense | 21,168 | | | 17,762 | | | 43,851 | | | 36,099 | |
| Interest income | (1,787) | | | (1,156) | | | (3,453) | | | (1,999) | |
| | | | | | | |
| Income from continuing operations before taxes | 97,497 | | | 126,955 | | | 71,687 | | | 224,435 | |
| Taxes (benefit) on income from continuing operations | 17,332 | | | 15,532 | | | (24,219) | | | 35,716 | |
| Income from continuing operations | 80,165 | | | 111,423 | | | 95,906 | | | 188,719 | |
| Operating loss from discontinued operations | (164) | | | (114) | | | (751) | | | (825) | |
| Tax benefit on operating loss from discontinued operations | (37) | | | (26) | | | (172) | | | (189) | |
| Loss from discontinued operations | (127) | | | (88) | | | (579) | | | (636) | |
| Net income | $ | 80,038 | | | $ | 111,335 | | | $ | 95,327 | | | $ | 188,083 | |
| Earnings per share: | | | | | | | |
| Basic: | | | | | | | |
| Income from continuing operations | $ | 1.70 | | | $ | 2.37 | | | $ | 2.03 | | | $ | 4.02 | |
| Loss from discontinued operations | — | | | — | | | (0.01) | | | (0.02) | |
| Net income | $ | 1.70 | | | $ | 2.37 | | | $ | 2.02 | | | $ | 4.00 | |
| Diluted: | | | | | | | |
| Income from continuing operations | $ | 1.69 | | | $ | 2.35 | | | $ | 2.02 | | | $ | 3.99 | |
| Loss from discontinued operations | — | | | — | | | (0.01) | | | (0.01) | |
| Net income | $ | 1.69 | | | $ | 2.35 | | | $ | 2.01 | | | $ | 3.98 | |
| Weighted average common shares outstanding | | | | | | | |
| Basic | 47,151 | | | 46,981 | | | 47,130 | | | 46,965 | |
| Diluted | 47,361 | | | 47,329 | | | 47,378 | | | 47,307 | |
| | | | | | | |
TELEFLEX INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| (Dollars in thousands) |
| ASSETS | | | |
| Current assets | | | |
| Cash and cash equivalents | $ | 238,567 | | | $ | 222,848 | |
| Accounts receivable, net | 448,897 | | | 443,467 | |
| Inventories | 636,908 | | | 626,216 | |
| Prepaid expenses and other current assets | 94,826 | | | 107,471 | |
| Prepaid taxes | 18,890 | | | 7,404 | |
| | | |
| Total current assets | 1,438,088 | | | 1,407,406 | |
| Property, plant and equipment, net | 491,996 | | | 479,913 | |
| Operating lease assets | 112,010 | | | 123,521 | |
| Goodwill | 2,892,629 | | | 2,914,055 | |
| Intangible assets, net | 2,379,916 | | | 2,501,960 | |
| Deferred tax assets | 6,424 | | | 6,748 | |
| Other assets | 120,577 | | | 98,943 | |
| | | |
| Total assets | $ | 7,441,640 | | | $ | 7,532,546 | |
| LIABILITIES AND EQUITY | | | |
| Current liabilities | | | |
| Current borrowings | $ | 93,750 | | | $ | 87,500 | |
| Accounts payable | 113,450 | | | 132,247 | |
| Accrued expenses | 153,403 | | | 146,880 | |
| | | |
| Payroll and benefit-related liabilities | 113,112 | | | 146,535 | |
| Accrued interest | 5,771 | | | 5,583 | |
| Income taxes payable | 19,731 | | | 41,453 | |
| Other current liabilities | 57,534 | | | 46,547 | |
| | | |
| Total current liabilities | 556,751 | | | 606,745 | |
| Long-term borrowings | 1,624,222 | | | 1,727,572 | |
| Deferred tax liabilities | 453,028 | | | 456,080 | |
| Pension and postretirement benefit liabilities | 23,026 | | | 23,989 | |
| Noncurrent liability for uncertain tax positions | 3,271 | | | 3,370 | |
| | | |
| Noncurrent operating lease liabilities | 102,572 | | | 111,300 | |
| Other liabilities | 120,051 | | | 162,502 | |
| Total liabilities | 2,882,921 | | | 3,091,558 | |
| Commitments and contingencies | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Total shareholders' equity | 4,558,719 | | | 4,440,988 | |
| Total liabilities and shareholders' equity | $ | 7,441,640 | | | $ | 7,532,546 | |
TELEFLEX INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | | | |
| Six Months Ended |
| June 30, 2024 | | July 2, 2023 |
| (Dollars in thousands) |
| Cash flows from operating activities of continuing operations: | | | |
| Net income | $ | 95,327 | | | $ | 188,083 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Loss from discontinued operations | 579 | | | 636 | |
| Depreciation expense | 34,487 | | | 36,723 | |
| Intangible asset amortization expense | 99,686 | | | 83,600 | |
| Deferred financing costs and debt discount amortization expense | 1,716 | | | 1,700 | |
| Pension settlement charge | 138,139 | | | — | |
| | | |
| | | |
| Fair value step up of acquired inventory sold | 1,722 | | | — | |
| Changes in contingent consideration | 5,852 | | | (6,776) | |
| Assets impairment charge | 2,110 | | | — | |
| Stock-based compensation | 15,739 | | | 14,020 | |
| | | |
| Deferred income taxes, net | (62,953) | | | 460 | |
| | | |
| Interest benefit on swaps designated as net investment hedges | (8,000) | | | (10,288) | |
| Other | 2,168 | | | 2,824 | |
| Changes in assets and liabilities, net of effects of acquisitions and disposals: | | | |
| Accounts receivable | (11,238) | | | (16,587) | |
| Inventories | (23,775) | | | (45,630) | |
| Prepaid expenses and other assets | 11,443 | | | 12,120 | |
| Accounts payable, accrued expenses and other liabilities | (34,157) | | | (53,766) | |
| Income taxes receivable and payable, net | (64,313) | | | (36,501) | |
| Net cash provided by operating activities from continuing operations | 204,532 | | | 170,618 | |
| Cash flows from investing activities of continuing operations: | | | |
| Expenditures for property, plant and equipment | (73,232) | | | (39,374) | |
| | | |
| Payments for businesses and intangibles acquired, net of cash acquired | (70) | | | (129) | |
| | | |
| Net proceeds on swaps designated as net investment hedges | 18,262 | | | 10,275 | |
| Proceeds from sales of investments | 7,300 | | | — | |
| Purchase of investments | (7,300) | | | — | |
| Net cash used in investing activities from continuing operations | (55,040) | | | (29,228) | |
| Cash flows from financing activities of continuing operations: | | | |
| | | |
| Reduction in borrowings | (98,250) | | | (154,500) | |
| | | |
| Net proceeds from share based compensation plans and related tax impacts | 2,398 | | | 572 | |
| Payments for contingent consideration | (122) | | | (121) | |
| Dividends paid | (32,018) | | | (31,941) | |
| | | |
| Net cash used in financing activities from continuing operations | (127,992) | | | (185,990) | |
| Cash flows from discontinued operations: | | | |
| Net cash used in operating activities | (2,239) | | | (454) | |
| Net cash used in discontinued operations | (2,239) | | | (454) | |
| Effect of exchange rate changes on cash and cash equivalents | (3,542) | | | 3,836 | |
| Net increase (decrease) in cash and cash equivalents | 15,719 | | | (41,218) | |
| Cash and cash equivalents at the beginning of the period | 222,848 | | | 292,034 | |
| Cash and cash equivalents at the end of the period | $ | 238,567 | | | $ | 250,816 | |
Contacts:
Teleflex Incorporated:
Lawrence Keusch
Vice President, Investor Relations and Strategy Development
investors.teleflex.com
610-948-2836
Second Quarter 2024 Earnings Conference Call 8/1/2024 Teleflex Incorporated Exhibit 99.2
The release, accompanying slides, and replay webcast are available online at www.teleflex.com (click on Investors) An audio replay of the call will be available beginning at 11:00 am Eastern Time on August 1, 2024 either on the Teleflex website or by telephone. The call can be accessed by dialing 1 800 770 2030 (U.S.) or 1 609 800 9909 (all other locations). The confirmation code is 69028. Conference Call Logistics
Today’s Speakers TELEFLEX EARNINGS CONFERENCE CALL 8/1/2024 Lawrence Keusch VP, Investor Relations and Strategy Development Liam Kelly Chairman, President and CEO Thomas Powell Executive VP and CFO
This presentation contains forward-looking statements, including, but not limited to our expectation that our Ringer Balloon Perfusion Catheter will enter a limited market release phase in August 2024; our forecasted 2024: GAAP, adjusted revenue and adjusted constant currency growth, GAAP and adjusted gross and operating margins and GAAP and adjusted earnings per share and, in each case, our estimates with respect to the items expected to impact those forecasted results; our expectation that we will continue to focus on our strategy to drive durable growth and that we will continue to invest in organic and inorganic growth drivers; 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. We expressly disclaim any obligation to update forward-looking statements, except as otherwise specifically stated by us or as required by law or regulation. Note on Forward-Looking Statements TELEFLEX EARNINGS CONFERENCE CALL 8/1/20244 Note on Non-GAAP Financial Measures This presentation refers to certain non-GAAP financial measures, including, but not limited to, adjusted revenue, adjusted 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 this presentation and the appendices at the end of this presentation. Additional Notes This document contains certain highlights with respect to our second quarter 2024 and developments and does not purport to be a complete summary thereof. Accordingly, we encourage you to read our Earnings Release for the quarter ended June 30, 2024 located in the investor section of our website at www.teleflex.com and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 to be filed with the Securities and Exchange Commission. Unless otherwise noted, the following slides reflect continuing operations.
Liam Kelly Chairman, President and CEO Executive Overview
Q2 Performance Summary ◦ Increased adjusted constant currency revenue growth guidance range to 4.25% to 5.25%, compared to the prior range of 3.75% to 4.75% ◦ Increased adjusted diluted EPS from continuing operations guidance to $13.80 to $14.20, compared to the prior range of $13.60 to $13.95 ◦ Q2'24 adjusted constant currency revenue grew 3.4% year- over-year ◦ Q2'24 adjusted gross margin of 60.8% and adjusted operating margin of 26.7% ◦ Q2'24 adjusted EPS of $3.42, a 0.3% increase year-over-year Q2'24 Highlights 2024 Financial Guidance Note: See tables appearing in this presentation and the appendices hereto for reconciliations of non-GAAP financial information. TELEFLEX EARNINGS CONFERENCE CALL 8/1/2024
Q2'24 Segment Revenue Review TELEFLEX EARNINGS CONFERENCE CALL 8/1/20247 Three Months Ended June 30, 2024 As reported Adjusted Dollars in Millions June 30, 2024 July 2, 2023 Reported Revenue Growth June 30, 2024 July 2, 2023 Adjusted Constant Currency Revenue Growth Americas $426.8 $424.7 0.5% $426.8 $424.7 0.6% EMEA 147.1 147.8 (0.5)% 160.9 147.8 9.8% Asia 87.0 86.7 0.4% 87.0 86.7 4.0% OEM 88.8 84.1 5.6% 88.8 84.1 5.8% Consolidated $749.7 $743.3 0.9% $763.5 $743.3 3.4% Note: See tables appearing in this presentation and the appendices hereto for reconciliations of non-GAAP financial information.
Q2'24 Global Product Category Revenue Review TELEFLEX EARNINGS CONFERENCE CALL 8/1/20248 (1) Includes revenues generated from sales of our respiratory and urology products (other than interventional urology products) and sales pursuant to the manufacturing and supply transition agreement related to our Respiratory business divestiture. In 2024, amounts reflect the impact from increases in our reserves related to the Italian payback measure pertaining to prior years. Refer to Non-GAAP Financial Measures for detail on Italian payback measure. Three Months Ended June 30, 2024 As reported Adjusted Dollars in Millions June 30, 2024 July 2, 2023 Reported Revenue Growth June 30, 2024 July 2, 2023 Adjusted Constant Currency Revenue Growth Vascular Access $181.1 $173.8 4.2% $181.1 $173.8 4.8% Interventional 141.2 124.8 13.1% 141.2 124.8 13.8% Anesthesia 102.5 100.8 1.6% 102.5 100.8 2.3% Surgical 111.3 106.0 5.1% 111.3 106.0 6.4% Interventional Urology 83.1 77.8 6.8% 83.1 77.8 7.1% OEM 88.8 84.1 5.6% 88.8 84.1 5.8% Other(1) 41.7 76.0 (45.1)% 55.5 76.0 (26.4)% Consolidated $749.7 $743.3 0.9% $763.5 $743.3 3.4% Note: See tables appearing in this presentation and the appendices hereto for reconciliations of non-GAAP financial information.
CAUTION: Federal (USA) law restricts this device to sale or use by or on the order of a physician. Refer to the Instructions for Use for a complete listing of the indications, contraindications, warnings, and precautions. Information in this document is not a substitute for the product Instructions for Use. Not all products may be available in all countries. 1. Data on file at Teleflex. Applicable to the US Market. Expanding Interventional Portfolio – Announced FDA 510(k) clearance of the Ringer Perfusion Balloon Catheter (PBC), the only commercially available Percutaneous Transluminal Coronary Angioplasty (PTCA) perfusion balloon catheter.1 – The Ringer PBC is indicated for balloon dilatation of coronary artery or coronary bypass graft stenoses where the physician desires distal blood perfusion during balloon inflation for the purpose of improving myocardial perfusion. In addition, during PTCA the device's lumen serves as a passage for delivery of secondary devices creating new opportunities for procedural innovation. – The Ringer PBC will enter a limited market release phase in August of 2024. Clinical and Commercial Updates TELEFLEX EARNINGS CONFERENCE CALL 8/1/20249
Thomas Powell Executive VP and CFO Financial Overview
Q2'24 Financial Review TELEFLEX EARNINGS CONFERENCE CALL 8/1/202411 Gross margin Operating margin Effective tax rate Earnings per share Note: See appendices for reconciliations of non-GAAP financial information. ◦ GAAP gross margin of 55.6% vs. 54.9% in the prior year period ◦ Adjusted gross margin of 60.8%, up 180 bps year-over-year ◦ GAAP operating margin of 15.6% vs. 19.3% in prior year period ◦ Adjusted operating margin of 26.7%, up 10 bps year-over-year ◦ GAAP tax rate of 17.8% vs. 12.2% in prior year period ◦ Adjusted tax rate of 12.3% vs. 10.8% in prior year period ◦ GAAP EPS of $1.69 vs. $2.35 in prior year period ◦ Adjusted EPS of $3.42, up 0.3% year-over-year Global revenue growth ◦ Revenue increased 0.9% year-over-year on a GAAP basis ◦ Adjusted revenue increased 2.7% year-over-year ◦ Adjusted revenue increased 3.4% year-over-year on a constant currency basis
2024 Financial Guidance Summary TELEFLEX EARNINGS CONFERENCE CALL 8/1/202412 2024 Guidance Low High GAAP Revenue Growth 3.40% 4.40% Impact of Foreign Exchange Rate Fluctuations (0.40)% (0.40)% Impact of Italian Payback Measure (0.45)% (0.45)% Adjusted Constant Currency Revenue Growth 4.25% 5.25% Adjusted Gross Margin 60.25% 61.00% Adjusted Operating Margin 26.50% 27.00% Adjusted EPS $13.80 $14.20 Adjusted EPS % Growth 2.1% 5.0% Note: See appendices for reconciliations of non-GAAP financial information.
TELEFLEX EARNINGS CONFERENCE CALL 8/1/202413 Key Takeaways Our diversified portfolio and global footprint drove durable growth in the second quarter. Our execution remains strong, we are launching new products, and our margins remain healthy. The solid first half results and IABP opportunity in the fourth quarter have allowed us to increase adjusted constant currency revenue, margins and EPS for 2024. We will continue to focus on our strategy to drive durable growth. We will continue to invest in organic and inorganic growth drivers. Our capital allocation strategy now incorporates share repurchase.
TELEFLEX EARNINGS CONFERENCE CALL 8/1/202414 Thank You!
Appendices
The presentation to which these appendices are attached and the following appendices include, among other things, tables reconciling the following applicable non-GAAP financial measures to the most comparable GAAP financial measure: Adjusted revenue. This non-GAAP measure is based upon net revenues, adjusted to exclude the impact in the three and six months ended June 30, 2024 of an increase in our reserves, and corresponding reduction to revenue within our EMEA segment, for prior years. The reserve relates to the Italian payback measure, a law that requires suppliers of medical devices to the Italian National Healthcare System to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year. As a result of a recent ruling from the Italian courts, we recognized a $15.8 million increase in our reserves during the three and six months ended June 30, 2024, of which $13.8 million related to prior years. The prior year amounts do not represent normal adjustments to revenue, are not expected to recur in future periods and are not recurring in nature, making it difficult to contribute to a meaningful evaluation of our operating performance. Accordingly, management has excluded the $13.8 million prior year amount as it is not indicative of our underlying core performance or business trends. Adjusted constant currency revenue growth. This non-GAAP measure is based upon net revenues, adjusted to exclude, depending on the period presented, the items described in Adjusted revenue and 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 impact of (i) restructuring, restructuring related and impairment items; (ii) acquisition, integration and divestiture related items; (iii) Italian payback measure; (iv) costs incurred in connection with our implementation of a new global ERP solution and related IT transition costs; (v) pension termination and related charges; (vi) certain costs associated with the registration of medical devices under the European Union Medical Device Regulation; (vii) intangible amortization expense; and (viii) tax adjustments. Management does not believe that any of the excluded items are indicative of our underlying core performance or business trends. Adjusted gross profit and margin. These measures exclude, depending on the period presented, the impacts of (i) restructuring, restructuring related and impairment items, (ii) acquisition, integration and divestiture related items and (iii) Italian payback measure. Adjusted operating profit and margin. These measures exclude, depending on the period presented, the impact of (i) restructuring, restructuring related and impairment items; (ii) acquisitions, integration and divestiture related items; (iii) Italian payback measure; (iv) costs incurred in connection with our implementation of a new global ERP solution and related IT transition costs; (v) pension termination and related charges; (vi) intangible amortization expense; and (vii) certain costs associated with the registration of medical devices under the European Union Medical Device Regulation. 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, restructuring related and impairment items; (ii) acquisition, integration and divestiture related items; (iii) Italian payback measure; (iv) costs incurred in connection with our implementation of a new global ERP solution and related IT transition costs; (v) certain costs associated with the registration of medical devices under the European Union Medical Device Regulation; (vi) intangible amortization expense; and (vii) tax adjustments. Non-GAAP Financial Measures TELEFLEX EARNINGS CONFERENCE CALL 8/1/202416
The following is an explanation of certain of the adjustments that are applied with respect to one or more of the non-GAAP financial measures that appear in the presentation to which these appendices are attached: 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; 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. Italian payback measure - These adjustments represent the exclusion of the impact from increases in our reserves related to the Italian payback measure pertaining to prior years as described in Adjusted revenue. Other items - These are discrete items that occur sporadically and can affect period-to-period comparisons. Pension termination and related charges - These adjustments represent charges associated with the planned termination of the Teleflex Incorporated Retirement Income Plan, a frozen U.S. defined benefit pension plan, and related direct incremental expenses including certain charges stemming from the liquidation of surplus plan assets. These charges and costs do not represent normal and recurring operating expenses, will be inconsistent in amounts and frequency, and are not expected to recur once the plan termination process has been completed. Accordingly, management has excluded these amounts to facilitate an evaluation of our current operating performance and a comparison to our past operating performance. Non-GAAP Adjustments TELEFLEX EARNINGS CONFERENCE CALL 8/1/202417
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. The MDR requirements became effective in May 2021, although certain devices that previously satisfied MDD requirements can continue to be marketed in the EU until December 2027 for highest-risk devices and December 2028 for lower-risk devices, 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. ERP implementation - These adjustments represent direct and incremental costs incurred in connection with our implementation of a new global enterprise resource planning ("ERP") solution and related IT transition costs. An implementation of this scale is a significant undertaking and will require substantial time and attention of management and key employees. The associated costs do not represent normal and recurring operating expenses and will be inconsistent in amounts and frequency making it difficult to contribute to a meaningful evaluation of our operating performance. 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. Non-GAAP Adjustments TELEFLEX EARNINGS CONFERENCE CALL 8/1/202418
Three Months Ended June 30, 2024 June 30, 2024 July 2, 2023 % Increase / (Decrease) Reported Revenue Adjustment Adjusted Revenue Reported Revenue Adjustment Adjusted Revenue Reported Revenue Growth Currency Impact Adjustment Impact Adjusted Constant Currency Revenue Growth Americas $426.8 $— $426.8 $424.7 $— $424.7 0.5% (0.1)% —% 0.6% EMEA 147.1 (13.8) 160.9 147.8 — 147.8 (0.5)% (0.9)% (9.4)% 9.8% Asia 87.0 — 87.0 86.7 — 86.7 0.4% (3.6)% —% 4.0% OEM 88.8 — 88.8 84.1 — 84.1 5.6% (0.2)% —% 5.8% Consolidated $749.7 $(13.8) $763.5 $743.3 $— $743.3 0.9% (0.6)% (1.9)% 3.4% TELEFLEX EARNINGS CONFERENCE CALL 8/1/202419 Appendix A1 - Q2'24 Segment Reconciliation of Net Revenue (Dollars in millions)
Six Months Ended June 30, 2024 June 30, 2024 July 2, 2023 % Increase / (Decrease) Reported Revenue Adjustment Adjusted Revenue Reported Revenue Adjustment Adjusted Revenue Reported Revenue Growth Currency Impact Adjustment Impact Adjusted Constant Currency Revenue Growth Americas $833.1 $— $833.1 $836.5 $— $836.5 (0.4)% 0.1% —% (0.5)% EMEA 306.7 (13.8) 320.5 291.2 — 291.2 5.3% 0.3% (4.7)% 9.7% Asia 171.2 — 171.2 165.4 — 165.4 3.5% (3.9)% —% 7.4% OEM 176.5 — 176.5 161.1 — 161.1 9.6% 0.1% —% 9.5% Consolidated $1,487.5 $(13.8) $1,501.3 $1,454.2 $— $1,454.2 2.3% (0.3)% (1.0)% 3.6% TELEFLEX EARNINGS CONFERENCE CALL 8/1/202420 Appendix A2 - 2024 Segment Reconciliation of Net Revenue (Dollars in millions)
Three Months Ended June 30, 2024 June 30, 2024 July 2, 2023 % Increase / (Decrease) Reported Revenue Adjustment Adjusted Revenue Reported Revenue Adjustment Adjusted Revenue Reported Revenue Growth Currency Impact Adjustment Impact Adjusted Constant Currency Revenue Growth Vascular Access $181.1 $— $181.1 $173.8 $— $173.8 4.2% (0.6)% —% 4.8% Interventional 141.2 — 141.2 124.8 — 124.8 13.1% (0.7)% —% 13.8% Anesthesia 102.5 — 102.5 100.8 — 100.8 1.6% (0.7)% —% 2.3% Surgical 111.3 — 111.3 106.0 — 106.0 5.1% (1.3)% —% 6.4% Interventional Urology 83.1 — 83.1 77.8 — 77.8 6.8% (0.3)% —% 7.1% OEM 88.8 — 88.8 84.1 — 84.1 5.6% (0.2)% —% 5.8% Other (1) 41.7 (13.8) 55.5 76.0 — 76.0 (45.1)% (0.4)% (18.3)% (26.4)% Consolidated $749.7 $(13.8) $763.5 $743.3 $— $743.3 0.9% (0.6)% (1.9)% 3.4% TELEFLEX EARNINGS CONFERENCE CALL 8/1/202421 Appendix A3 - Q2'24 Global Product Category Reconciliation of Net Revenue (Dollars in millions) (1) Includes revenues generated from sales of our respiratory and urology products (other than interventional urology products) and sales pursuant to the manufacturing and supply transition agreement related to our Respiratory business divestiture. In 2024, amounts reflect the impact from increases in our reserves related to the Italian payback measure pertaining to prior years. Refer to Non-GAAP Financial Measures for detail on Italian payback measure.
Six Months Ended June 30, 2024 June 30, 2024 July 2, 2023 % Increase / (Decrease) Reported Revenue Adjustment Adjusted Revenue Reported Revenue Adjustment Adjusted Revenue Reported Revenue Growth Currency Impact Adjustment Impact Adjusted Constant Currency Revenue Growth Vascular Access $362.5 $— $362.5 $351.4 $— $351.4 3.1% (0.3)% —% 3.4% Interventional 275.8 — 275.8 241.7 — 241.7 14.1% (0.5)% —% 14.6% Anesthesia 198.8 — 198.8 194.2 — 194.2 2.4% (0.3)% —% 2.7% Surgical 216.8 — 216.8 205.0 — 205.0 5.8% (0.9)% —% 6.7% Interventional Urology 162.8 — 162.8 153.2 — 153.2 6.3% (0.3)% —% 6.6% OEM 176.5 — 176.5 161.1 — 161.1 9.6% 0.1% —% 9.5% Other (1) 94.3 (13.8) 108.1 147.6 — 147.6 (36.2)% (0.1)% (9.3)% (26.8)% Consolidated $1,487.5 $(13.8) $1,501.3 $1,454.2 $— $1,454.2 2.3% (0.3)% (1.0)% 3.6% TELEFLEX EARNINGS CONFERENCE CALL 8/1/202422 Appendix A4 - 2024 Global Product Category Reconciliation of Net Revenue (Dollars in millions) (1) Includes revenues generated from sales of our respiratory and urology products (other than interventional urology products) and sales pursuant to the manufacturing and supply transition agreement related to our Respiratory business divestiture. In 2024, amounts reflect the impact from increases in our reserves related to the Italian payback measure pertaining to prior years. Refer to Non-GAAP Financial Measures for detail on Italian payback measure.
Appendix B1 – Reconciliation of Consolidated Statement of Income Items (Dollars in millions, except per share data) TELEFLEX EARNINGS CONFERENCE CALL 8/1/202423 Three Months Ended June 30, 2024 Revenue Gross margin SG&A (1) R&D (1) Operating margin (2) Income before income taxes Income tax expense Effective income tax rate Diluted earnings per share from continuing operations GAAP Basis $749.7 55.6% 33.4% 5.5% 15.6% $97.5 $17.3 17.8% $1.69 Adjustments Restructuring, restructuring related and impairment items (A) — 0.5 (0.1) — 1.6 12.2 2.1 0.21 Acquisition, integration and divestiture related items (B) — — (0.7) — 0.7 5.6 — 0.12 Italian payback measure (C) 13.8 0.7 (0.6) — 1.4 13.8 — 0.29 ERP implementation — — (0.4) — 0.4 3.0 0.4 0.06 MDR — — — (0.5) 0.4 3.1 — 0.07 Intangible amortization expense — 4.0 (2.6) — 6.6 49.6 5.0 0.94 Tax adjustments — — — — — — (2.1) 0.04 Adjustments total 13.8 5.2 (4.4) (0.5) 11.1 87.3 5.4 1.73 Adjusted basis $763.5 60.8% 29.0% 5.0% 26.7% $184.8 $22.7 12.3% $3.42 Notes: (1) Selling, general and administrative expenses and research and development expenses are shown as a percentage of as reported and adjusted revenues. (2) Operating margin defined as Income from continuing operations before interest, loss on extinguishment of debt and taxes as a percentage of as reported and adjusted revenues. See slide titled Non-GAAP Adjustments included at the beginning of the appendices to this presentation for Non-GAAP definitions. Totals may not sum due to rounding.
Three Months Ended July 2, 2023 Gross margin Selling, general and administrative expenses (1) Research and development expenses (1) Operating margin (2) Income before income taxes Income tax expense Effective income tax rate Diluted earnings per share from continuing operations GAAP Basis 54.9% 30.0% 5.3% 19.3% $127.0 $15.5 12.2% $2.35 Adjustments Restructuring, restructuring related and impairment items (A) 1.0 — (0.2) 1.5 10.8 1.7 0.19 Acquisition, integration and divestiture related items (B) — 1.0 — (1.0) (7.5) — (0.16) ERP implementation — (0.2) — 0.2 1.3 0.3 0.02 MDR — — (1.0) 1.0 7.6 — 0.16 Intangible amortization expense 3.1 (2.5) — 5.6 42.0 2.1 0.85 Tax adjustments — — — — — — — Adjustments total 4.1 (1.7) (1.2) 7.3 54.2 4.1 1.06 Adjusted basis 59.0% 28.3% 4.1% 26.6% $181.2 $19.6 10.8% $3.41 TELEFLEX EARNINGS CONFERENCE CALL 8/1/202424 Notes: (1) Selling, general and administrative expenses and research and development expenses are shown as a percentage of net revenues. (2) Operating margin defined as Income from continuing operations before interest, loss on extinguishment of debt and taxes as a percentage of net revenues. See slide titled Non-GAAP Adjustments included at the beginning of the appendices to this presentation for Non-GAAP definitions. Totals may not sum due to rounding. Appendix B2 – Reconciliation of Consolidated Statement of Income Items (Dollars in millions, except per share data)
Appendix B3 – Reconciliation of Consolidated Statement of Income Items (Dollars in millions, except per share data) TELEFLEX EARNINGS CONFERENCE CALL 8/1/202425 Six Months Ended June 30, 2024 Revenue Gross margin SG&A (1) R&D (1) Operating margin (2) Income before income taxes Income tax expense Effective income tax rate Diluted earnings per share from continuing operations GAAP Basis $1,487.5 56.0% 42.5% 5.3% 7.5% $71.7 $(24.2) (33.8)% $2.02 Adjustments Restructuring, restructuring related and impairment items (A) — 0.4 (0.1) — 1.2 18.0 3.1 0.32 Acquisition, integration and divestiture related items (B) — 0.1 (0.5) — 0.6 9.0 0.4 0.18 Italian payback measure (C) 13.8 0.3 (0.4) — 0.9 13.8 — 0.29 ERP implementation — — (0.2) — 0.2 3.1 0.4 0.06 MDR — — — (0.5) 0.4 6.3 — 0.13 Pension termination costs — — (9.3) — 9.3 138.6 58.2 1.70 Intangible amortization expense — 4.1 (2.6) — 6.6 99.8 10.1 1.89 Tax adjustments — — — — — — (2.1) 0.04 Adjustments total 13.8 4.9 (13.1) (0.5) 19.2 288.6 70.1 4.61 Adjusted basis $1,501.3 60.9% 29.4% 4.8% 26.7% $360.3 $45.9 12.7% $6.63 Notes: (1) Selling, general and administrative expenses and research and development expenses are shown as a percentage of as reported and adjusted revenues. (2) Operating margin defined as Income from continuing operations before interest, loss on extinguishment of debt and taxes as a percentage of as reported and adjusted revenues. See slide titled Non-GAAP Adjustments included at the beginning of the appendices to this presentation for Non-GAAP definitions. Totals may not sum due to rounding.
Six Months Ended July 2, 2023 Gross margin Selling, general and administrative expenses (1) Research and development expenses (1) Operating margin (2) Income before income taxes Income tax expense Effective income tax rate Diluted earnings per share from continuing operations GAAP Basis 55.0% 31.4% 5.6% 17.8% $224.4 $35.7 15.9% $3.99 Adjustments Restructuring, restructuring related and impairment items (A) 1.1 — (0.2) 1.6 22.8 3.5 0.41 Acquisition, integration and divestiture related items (B) — 0.3 — (0.3) (4.4) 0.1 (0.10) ERP implementation — (0.2) — 0.2 2.5 0.6 0.04 MDR — — (1.2) 1.2 17.9 — 0.38 Intangible amortization expense 3.1 (2.6) — 5.7 83.6 4.1 1.68 Tax adjustments — — — — — (4.8) 0.10 Adjustments total 4.2 (2.5) (1.4) 8.4 122.4 3.5 2.51 Adjusted basis 59.2% 28.9% 4.2% 26.2% $346.8 $39.2 11.3% $6.50 TELEFLEX EARNINGS CONFERENCE CALL 8/1/202426 Notes: (1) Selling, general and administrative expenses and research and development expenses are shown as a percentage of net revenues. (2) Operating margin defined as Income from continuing operations before interest, loss on extinguishment of debt and taxes as a percentage of net revenues. See slide titled Non-GAAP Adjustments included at the beginning of the appendices to this presentation for Non-GAAP definitions. Totals may not sum due to rounding. Appendix B4 – Reconciliation of Consolidated Statement of Income Items (Dollars in millions, except per share data)
TELEFLEX EARNINGS CONFERENCE CALL 8/1/202427 A. Restructuring, restructuring related and impairment items – For the three months ended June 30, 2024, pre-tax restructuring charges were $7.9 million and restructuring related charges were $4.4 million. For the three months ended July 2, 2023, pre-tax restructuring charges were $1.5 million and restructuring related charges were $9.3 million. For the six months ended June 30, 2024, pre-tax restructuring charges were $8.4 million; restructuring related charges were $7.5 million; and impairment charges were $2.1 million. For the six months ended July 2, 2023, pre-tax restructuring charges were $3.7 million and restructuring related charges were $19.1 million. B. Acquisition, integration and divestiture related items – For the three and six months ended June 30, 2024 and July 2, 2023, these charges related to changes in the estimated fair value of our contingent consideration liabilities and the acquisition of Palette Life Sciences AB. C. Italian payback measure – Adjustment reflects the impact of an increase in reserves for prior years related to the Italian payback measure and its impact on the adjusted basis for each Non-GAAP financial measure presented within the table. Appendix B Tickmarks
Appendix C - 2024 Adj. Gross and Operating Margin Guidance Reconciliation TELEFLEX EARNINGS CONFERENCE CALL 8/1/202428 Low High Forecasted GAAP Gross Margin 55.51% 56.26% Estimated restructuring, restructuring related and impairment items 0.58% 0.58% Estimated acquisition, integration and divestiture related items 0.06% 0.06% ERP implementation —% —% Italian payback measure 0.20% 0.20% Estimated intangible amortization expense 3.90% 3.90% Forecasted Adjusted Gross Margin 60.25% 61.00% Low High Forecasted GAAP Operating Margin 12.41% 12.91% Estimated restructuring, restructuring related and impairment items 1.13% 1.13% Estimated acquisition, integration and divestiture related items 0.57% 0.57% Estimated other items 0.01% 0.01% Pension termination and related charges 4.63% 4.63% Estimated ERP implementation 0.64% 0.64% Estimated MDR 0.29% 0.29% Italian payback measure 0.39% 0.39% Estimated intangible amortization expense 6.43% 6.43% Forecasted Adjusted Operating Margin 26.50% 27.00%
Appendix D - Reconciliation of 2024 Adjusted Earnings Per Share Guidance TELEFLEX EARNINGS CONFERENCE CALL 8/1/202429 Low High Forecasted GAAP Diluted Earnings Per Share from continuing operations $6.43 $6.83 Estimated restructuring, restructuring related and impairment items, net of tax $0.59 $0.59 Estimated acquisition, integration and divestiture related items, net of tax $0.35 $0.35 Pension termination and related charges, net of tax $1.77 $1.77 Estimated ERP implementation, net of tax $0.33 $0.33 Estimated MDR, net of tax $0.19 $0.19 Italian payback measure, net of tax $0.29 $0.29 Estimated intangible amortization expense, net of tax $3.81 $3.81 Tax adjustments $0.04 $0.04 Forecasted Adjusted Diluted Earnings Per Share from continuing operations, net of tax $13.80 $14.20
2024 Financial Review - Six Months Ended June 30, 2024 TELEFLEX EARNINGS CONFERENCE CALL 8/1/202430 Gross margin Operating margin Effective tax rate Earnings per share ◦ GAAP gross margin of 56.0% vs. 55.0% in the prior year period ◦ Adjusted gross margin of 60.9%, up 170 bps year-over-year ◦ GAAP operating margin of 7.5% vs. 17.8% in prior year period ◦ Adjusted operating margin of 26.7%, up 50 bps year-over-year ◦ GAAP tax rate of (33.8)% vs. 15.9% in prior year period ◦ Adjusted tax rate of 12.7% vs. 11.3% in prior year period ◦ GAAP EPS of $2.02 vs. $3.99 in prior year period ◦ Adjusted EPS of $6.63, up 2.0% year-over-year Global revenue growth ◦ Revenue increased 2.3% year-over-year on a GAAP basis ◦ Adjusted revenue increased 3.2% year-over-year ◦ Adjusted revenue increased 3.6% year-over-year on a constant currency basis Note: See appendices for reconciliations of non-GAAP financial information.
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Aug. 01, 2024 |
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TELEFLEX INCORPORATED
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Aug. 01, 2024
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DE
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1-5353
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23-1147939
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550 E. Swedesford Rd., Suite 400
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Wayne,
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PA
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19087
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(610)
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225-6800
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