EX-99.1 2 ex991-q22017earningspressr.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
image0a03.jpg
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 Jake Elguicze                     
 Treasurer and Vice President of Investor Relations    
  610-948-2836

FOR IMMEDIATE RELEASE                          August 3, 2017

TELEFLEX REPORTS SECOND QUARTER 2017 RESULTS

Second Quarter Revenues of $528.6 million, up 11.6% Versus Prior Year Period; up 12.9% on Constant Currency Basis

Second Quarter GAAP Diluted EPS of $1.67, up 33.6% Over Prior Year Period

Second Quarter Adjusted Diluted EPS of $2.04, up 7.9% Versus Prior Year Period

Raised 2017 Guidance Range for GAAP Revenue Growth from a Range of 10.0% to 11.5% to a Range of 11.5% to 13.0%

Reaffirmed 2017 Guidance Range for Constant Currency Revenue Growth of 12.5% to 14.0%

Raised 2017 Guidance for GAAP Diluted EPS from a Range of $5.59 to $5.66 to a Range of $5.91 to $5.98

Raised 2017 Guidance for Adjusted Diluted EPS from a Range of $8.05 to $8.23 to a Range of $8.20 to $8.35

Wayne, PA -- Teleflex Incorporated (NYSE: TFX) (the “Company”) today announced financial results for the second quarter ended July 2, 2017.

Second quarter 2017 net revenues were $528.6 million, an increase of 11.6% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, second quarter 2017 net revenues increased 12.9% over the year ago period.

Second quarter 2017 GAAP diluted earnings per share from continuing operations increased 33.6% to $1.67, as compared to $1.25 in the prior year period. Second quarter 2017 adjusted diluted earnings per share from continuing operations increased 7.9% to $2.04, compared to $1.89 in the prior year period.

“During the second quarter of 2017, Teleflex continued to achieve solid results across our strategic business units and geographies, positioning us to reaffirm our full year constant currency revenue growth guidance range, while enabling us to once again increase our full year 2017 GAAP and adjusted earnings per share guidance ranges,” said Benson Smith, Chairman and Chief Executive Officer. “Setting aside the impact of Vascular Solutions and one fewer shipping day in the quarter as compared to the second quarter of 2016, Teleflex posted solid growth on a constant currency basis, driven by strong performance in our OEM, Vascular North America, Surgical North America and EMEA segments. In addition, Vascular Solutions continues to perform in-line with our expectations and the integration activities associated with this acquisition remain on-track. Also within the quarter, we made significant




progress with our distributor to direct conversion in China, and as such, we anticipate an acceleration in revenue growth in the second half of the year in China, as compared to the headwind we experienced during the first half of 2017."

Added Mr. Smith, "During the second quarter of 2017, we continued to execute on our margin expansion initiatives, delivering solid gross and operating margins. Finally, the Company continued to generate strong cash flow, enabling us to repay borrowings equivalent to approximately ten percent of the Vascular Solutions purchase price within only a few months after closing the transaction."

SECOND QUARTER NET REVENUE BY SEGMENT

The following table provides information regarding net revenues in each of the Company's reportable operating segments and all of its other operating segments for the three months ended July 2, 2017 and June 26, 2016 on both a GAAP and constant currency basis. The discussion below the table of the principal factors behind changes in net revenues for the three months ended July 2, 2017 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 "Foreign Currency" column of the table.

 
Three Months Ended
 
% Increase/ (Decrease)
 
July 2, 2017
 
June 26, 2016
 
Constant Currency
 
Foreign Currency
 
Total Change
 
 
(Dollars in millions)
 
 
 
 
 
 
Vascular North America
$
93.5

 
$
88.2

 
6.3

%
 
(0.2
)
%
 
6.1

%
Surgical North America
 
44.7

 
 
43.1

 
4.0

%
 
(0.3
)
%
 
3.7

%
Anesthesia North America
 
49.1

 
 
49.2

 
(0.1
)
%
 
(0.1
)
%
 
(0.2
)
%
EMEA
 
132.0

 
 
131.7

 
3.2

%
 
(3.0
)
%
 
0.2

%
Asia
 
64.0

 
 
63.2

 
3.1

%
 
(1.8
)
%
 
1.3

%
OEM
 
45.1

 
 
40.3

 
12.5

%
 
(0.5
)
%
 
12.0

%
All Other
 
100.2

 
 
57.9

 
73.1

%
 
(0.1
)
%
 
73.0

%
Total
$
528.6

 
$
473.6

 
12.9

%
 
(1.3
)
%
 
11.6

%


Vascular North America second quarter 2017 net revenues were $93.5 million, an increase of 6.1% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, second quarter 2017 net revenues increased 6.3% compared to the prior year period. The increase in constant currency revenue is primarily attributable to an increase in sales volumes of existing products, which reflects the unfavorable impact of one less shipping day in the second quarter 2017, and an increase in new product sales.

Surgical North America second quarter 2017 net revenues were $44.7 million, an increase of 3.7% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, second quarter 2017 net revenues increased 4.0% compared to the prior year period. The increase in constant currency revenue is primarily attributable to an increase in new product sales and price increases. Sales volumes of existing products, which




were marginally higher than in the prior year period, were adversely affected by the impact of one less shipping day in the second quarter 2017.

Anesthesia North America second quarter 2017 net revenues were $49.1 million, a decrease of 0.2% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, second quarter 2017 net revenues decreased 0.1% compared to the prior year period. The decrease in constant currency revenue is primarily attributable to a decrease in sales volumes of existing products, which reflects the unfavorable impact of one less shipping day in the second quarter 2017, partially offset by an increase in net revenues generated by an acquired business and an increase in new product sales.

EMEA second quarter 2017 net revenues were $132.0 million, an increase of 0.2% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, second quarter 2017 net revenues increased 3.2% compared to the prior year period. The increase in constant currency revenue is primarily attributable to an increase in sales volumes of existing products, despite the unfavorable impact of one less shipping day in the second quarter 2017, and an increase in new product sales.

Asia second quarter 2017 net revenues were $64.0 million, an increase of 1.3% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, second quarter 2017 net revenues increased 3.1%. The increase in constant currency revenue is primarily attributable to price increases and an increase in new product sales. Increases in sales volumes of existing products were more than offset by volume declines resulting from the distributor to direct sales conversion in China.

OEM and Development Services (“OEM”) second quarter 2017 net revenues were $45.1 million, an increase of 12.0% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, second quarter 2017 net revenues increased 12.5% compared to the prior year period. The increase in constant currency revenue is primarily attributable to net revenues generated by an acquired business and an increase in sales volumes of existing products.

All Other second quarter 2017 net revenues were $100.2 million, an increase of 73.0% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, second quarter 2017 net revenues increased 73.1% compared to the prior year period. The increase in constant currency revenue is primarily attributable to net revenues generated by sales of Vascular Solutions' products.

OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS

Depreciation expense, amortization of intangible assets and deferred financing charges for the first six months of 2017 totaled $72.3 million compared to $64.6 million for the prior year period.
    
Cash and cash equivalents at July 2, 2017 were $676.2 million compared to $543.8 million at December 31, 2016.

Net accounts receivable at July 2, 2017 were $303.7 million compared to $272.0 million at December 31, 2016.





Net inventories at July 2, 2017 were $368.5 million compared to $316.2 million at December 31, 2016.

2017 OUTLOOK

The Company raised its full year 2017 GAAP revenue growth guidance range from 10.0% to 11.5% to a range of 11.5% to 13.0% over the prior year. The Company's previous 2017 GAAP revenue growth guidance range reflected the anticipated 2.5% unfavorable impact of foreign currency exchange rate fluctuations. The Company's current 2017 GAAP revenue growth guidance range reflects an anticipated 1.0% unfavorable impact of foreign currency exchange rate fluctuations. On a constant currency basis, the Company reaffirmed its estimate that revenues for full year 2017 will increase 12.5% to 14.0%. The forecasted revenue growth includes the impact of Vascular Solutions' product sales, which are expected to contribute approximately 8.5% to 9.0% to our revenue growth on a GAAP and constant currency basis.

The Company raised its full year 2017 GAAP diluted earnings per share from continuing operations guidance from a range of $5.59 to $5.66 to a range of $5.91 to $5.98. The Company raised its full year 2017 adjusted diluted earnings per share from continuing operations guidance from a range of $8.05 to $8.23 to a guidance range of $8.20 to $8.35.

Forecasted 2017 Constant Currency Revenue Growth Reconciliation

 
Low
High
 
 
 
Forecasted 2017 GAAP revenue growth
11.5

%
13.0

%
 
 
 
Estimated impact of foreign currency exchange rate fluctuations
1.0

%
1.0

%
 
 
 
Forecasted 2017 constant currency revenue growth
12.5

%
14.0

%


Forecasted 2017 Adjusted Earnings Per Share Reconciliation

 
Low
High
 
 
 
Diluted earnings per share attributable to common shareholders
$5.91
 
 
$5.98
 
 
 
 
Restructuring, impairment charges and special items, net of tax
$0.96
 
 
$1.00
 
 
 
 
Intangible amortization expense, net of tax
$1.32
 
 
$1.35
 
 
 
 
Amortization of debt discount on convertible notes, net of tax
$0.01
 
 
$0.02
 
 
 
 
Adjusted diluted earnings per share
$8.20
 
 
$8.35
 





CONFERENCE CALL WEBCAST AND ADDITIONAL INFORMATION

As previously announced, Teleflex will comment on its financial results on a conference call to be held today at 8:00 a.m. (ET). The call will be available live and archived on the company’s website at www.teleflex.com and the accompanying presentation will be posted prior to the call. An audio replay will be available until August 10, 2017 at 11:59pm (ET), by calling 855-859-2056 (U.S./Canada) or 404-537-3406 (International), Passcode: 56173289.


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 we have sold for 36 months or less, and "existing products" refers to products we have sold 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

This press release includes certain non-GAAP financial measures, which include:

Adjusted diluted earnings per share. This non-GAAP measure is based upon diluted earnings per share, adjusted to exclude, depending on the period presented (i) restructuring and other impairment charges; (ii) certain losses and other charges, including, for 2017, costs related to the Company's acquisition of Vascular Solutions, facility consolidation costs and income associated with a litigation settlement and, for 2016, charges primarily related to facility consolidation costs; (iii) amortization of the debt discount on the Company’s convertible notes; (iv) intangible amortization expense; (v) tax benefits resulting primarily from the expiration of applicable statutes of limitations for prior year returns, the resolution of audits, the filing of amended returns with respect to prior tax years and/or tax law changes affecting the Company's deferred tax liability; and (vi) loss on extinguishment of debt. In addition, the calculation of diluted shares within adjusted earnings per share gives effect to the anti-dilutive impact of the Company’s convertible note hedge agreements, which reduce the potential economic dilution that otherwise would occur upon conversion of the Company’s senior subordinated convertible notes (under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares).





Constant currency revenue growth. This non-GAAP measure is based upon net revenues, adjusted to eliminate the impact of translating the results of international subsidiaries at different currency exchange rates from period to period.

Management believes these measures are useful to investors because they eliminate items that do not reflect Teleflex’s day-to-day operations and, as a result, they facilitate comparisons of financial results exclusive of items that can fluctuate in a manner that may not reflect the performance of our business. In addition, management believes that the calculation of non-GAAP diluted shares is useful to investors because it provides insight into the offsetting economic effect of the convertible note hedge against conversions of the convertible notes. Management uses these financial measures for internal managerial purposes, when publicly providing guidance on possible future results, and to assist in our evaluation of period-to-period comparisons. These financial measures are presented in addition to results presented in accordance with generally accepted accounting principles (“GAAP”) and should not be relied upon as a substitute for GAAP financial measures. Tables reconciling historical adjusted diluted earnings per share to historical GAAP earnings per share are set forth below. A table reconciling historical constant currency net revenues to GAAP net revenues is set forth above under “Second Quarter Net Revenues by Segment.” Tables reconciling forecasted 2017 constant currency revenue growth and forecasted 2017 adjusted earnings per share to their respective most directly comparable forecasted GAAP measures are set forth above under “2017 Outlook.”



























RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
Quarter Ended - July 2, 2017
 
 
 
 
 
 
 
 
 
Cost of goods sold
Selling, general and administrative expenses
Research and development expenses
Restructuring and other impairment charges
(Gain) loss on sale of business and assets
Interest expense, net
Loss on extinguishment of debt, net
Income taxes
Net income (loss) attributable to common shareholders from continuing operations
Diluted earnings per share available to common shareholders
Shares used in calculation of GAAP and adjusted earnings per share
GAAP Basis
$
238.3
 
$
158.9
 
$
20.3
 
$
0.9
 
—
 
$
19.7
 
$0.0
$
12.1
 
$
78.4
 
$
1.67
 
46,818

Adjustments
 
 
 
 
 
 
 
 
 
 
 
Restructuring and other impairment charges
—
 
—
 
—
 
0.9
 
—
 
—
 
—

0.5
 
0.3
 
$
0.01
 
—

Losses and other charges, net (A)
5.0
 
(6.3
)
0.3
 
—
 
—
 
—
 
—

(0.4
)
(0.5
)
$
0.02
)
—

Amortization of debt discount on convertible notes
—
 
—
 
—
 
—
 
—
 
0.4
 
—

0.1
 
0.2
 
$
0.01
 
—

Intangible amortization expense
—
 
22.5
 
0.1
 
—
 
—
 
—
 
—

6.5
 
16.1
 
$
0.34
 
—

Tax adjustment (B)
—
 
—
 
—
 
—
 
—
 
—
 
—

—
 
—
 
—
 
—

Loss on extinguishment of debt, net
—
 
—
 
—
 
—
 
—
 
—
 
0.0

0.0
 
0.0
 
$0.00
 
—

Shares due to Teleflex under note hedge (C)
—
 
—
 
—
 
—
 
—
 
—
 
—

—
 
—
 
$
0.02
 
(501
)
Adjusted basis
$
233.3
 
$
142.7
 
$
19.8
 
—
 
—
 
$
19.4
 
—

$
18.8
 
$
94.6
 
$
2.04
 
46,317

Quarter Ended - June 26, 2016
 
 
 
 
 
 
 
 
 
 
Cost of goods sold
Selling, general and administrative expenses
Research and development expenses
Restructuring and other impairment charges
(Gain) loss on sale of business and assets
Interest expense, net
Loss on extinguishment of debt, net
Income taxes
Net income (loss) attributable to common shareholders from continuing operations
Diluted earnings per share available to common shareholders
Shares used in calculation of GAAP and adjusted earnings per share
GAAP Basis
$
217.2
 
$
143.0
 
$
15.5
 
($0.1)
 
$
0.4
)
$
11.8
 
$19.3
$
8.0
 
$
59.1
 
$
1.25
 
47,246

Adjustments
 
 
 
 
 
 
 
 
 
 
 
Restructuring and other impairment charges
—
 
—
 
—
 
(0.1
)
—
 
—
 
—

0.1
 
(0.2
)
($0.00)
 
—

Losses and other charges, net (A)
4.0
 
1.2
 
0.0
 
—
 
(0.4
)
—
 
—

1.9
 
2.9
 
$
0.07
 
—

Amortization of debt discount on convertible notes
—
 
—
 
—
 
—
 
—
 
1.4
 
—

0.5
 
0.9
 
$
0.02
 
—

Intangible amortization expense
—
 
15.9
 
0.1
 
—
 
—
 
—
 
—

4.3
 
11.8
 
$
0.25
 
—

Tax adjustment (B)
—
 
—
 
—
 
—
 
—
 
—
 
—

0.5
 
(0.5
)
$
0.01
)
—

Loss on extinguishment of debt, net
—
 
—
 
—
 
—
 
—
 
—
 
19.3

7.0
 
12.2
 
$
0.26
 
—

Shares due to Teleflex under note hedge (C)
—
 
—
 
—
 
—
 
—
 
—
 
—

—
 
—
 
$
0.07
 
(1,675
)
Adjusted basis
$
213.2
 
$
125.9
 
$
15.3
 
—
 
—
 
$
10.3
 
—

$
22.4
 
$
86.2
 
$
1.89
 
45,571





(A) In 2017, losses and other charges, net related primarily to income associated with a litigation settlement, somewhat offset by costs associated with the acquisition of Vascular Solutions and facility consolidation costs. In 2016, losses and other charges, net related primarily to facility consolidations.

(B) The tax adjustment represents a net benefit resulting primarily from the expiration of applicable statutes of limitations for prior year returns, the resolution of audits, the filing of amended returns with respect to prior tax years and/or tax law changes affecting our deferred tax liability.

(C) Adjusted diluted shares are calculated by giving effect to the anti-dilutive impact of the Company’s convertible note hedge agreements, which reduce the potential economic dilution that otherwise would occur upon conversion of the Company's convertible notes. Under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.

































RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
Year-to-date Ended - July 2, 2017
 
 
 
 
 
 
 
 
 
Cost of goods sold
Selling, general and administrative expenses
Research and development expenses
Restructuring and other impairment charges
(Gain) loss on sale of business and assets
Interest expense, net
Loss on extinguishment of debt, net
Income taxes
Net income (loss) attributable to common shareholders from continuing operations
Diluted earnings per share available to common shareholders
Shares used in calculation of GAAP and adjusted earnings per share
GAAP Basis
$
470.7
 
$
322.9
 
$
38.1
 
$
13.8
 
—
 
$
37.3
 

$5.6

$
9.4
 
$
118.7
 
$
2.54
 
46,716

Adjustments
 
 
 
 
 
 
 
 
 
 
 
Restructuring and other impairment charges
—
 
—
 
—
 
13.8
 
—
 
—
 
—

3.5
 
10.3
 
$
0.22
 
—

Losses and other charges, net (A)
16.6
 
3.3
 
0.6
 
—
 
—
 
2.1
 
—

7.3
 
15.2
 
$
0.33
 
—

Amortization of debt discount on convertible notes
—
 
—
 
—
 
—
 
—
 
0.8
 
—

0.3
 
0.5
 
$
0.01
 
—

Intangible amortization expense
—
 
41.2
 
0.2
 
—
 
—
 
—
 
—

11.6
 
29.8
 
$
0.64
 
—

Tax adjustment (B)
—
 
—
 
—
 
—
 
—
 
—
 
—

0.5
 
(0.5
)
($0.01)
 
—

Loss on extinguishment of debt, net
—
 
—
 
—
 
—
 
—
 
—
 
5.6

2.0
 
3.5
 
$
0.08
 
—

Shares due to Teleflex under note hedge (C)
—
 
—
 
—
 
—
 
—
 
—
 
—

—
 
—
 
$
0.04
 
(489
)
Adjusted basis
$
454.1
 
$
278.4
 
$
37.3
 
—
 
—
 
$
34.5
 
—

$
34.7
 
$
177.5
 
$
3.84
 
46,227

Year-to-date Ended - June 26, 2016
 
 
 
 
 
 
 
 
 
 
Cost of goods sold
Selling, general and administrative expenses
Research and development expenses
Restructuring and other impairment charges
(Gain) loss on sale of business and assets
Interest expense, net
Loss on extinguishment of debt, net
Income taxes
Net income (loss) attributable to common shareholders from continuing operations
Diluted earnings per share available to common shareholders
Shares used in calculation of GAAP and adjusted earnings per share
GAAP Basis
$
416.9
 
$
279.3
 
$
27.8
 
$
9.8
 
$
1.4
)
$
25.5
 
$19.3
$
10.6
 
$
110.1
 
$
2.29
 
48,014

Adjustments
 
 
 
 
 
 
 
 
 
 
 
Restructuring and other impairment charges
—
 
—
 
—
 
9.8
 
—
 
—
 
—

2.4
 
7.4
 
$
0.15
 
—

Losses and other charges, net (A)
6.6
 
1.8
 
0.0
 
—
 
(1.4
)
—
 
—

2.8
 
4.4
 
$
0.08
 
—

Amortization of debt discount on convertible notes
—
 
—
 
—
 
—
 
—
 
4.9
 
—

1.8
 
3.1
 
$
0.06
 
—

Intangible amortization expense
—
 
31.2
 
0.2
 
—
 
—
 
—
 
—

8.4
 
23.0
 
$
0.48
 
—

Tax adjustment (B)
—
 
—
 
—
 
—
 
—
 
—
 
—

5.5
 
(5.5
)
$
0.11
)
—

Loss on extinguishment of debt, net
—
 
—
 
—
 
—
 
—
 
—
 
19.3

7.0
 
12.2
 
$0.25
 
—

Shares due to Teleflex under note hedge (C)
—
 
—
 
—
 
—
 
—
 
—
 
—

—
 
—
 
$
0.19
 
(2,648
)
Adjusted basis
$
410.3
 
$
246.3
 
$
27.6
 
—
 
—
 
$
20.6
 
—

$
38.5
 
$
154.7
 
$
3.41
 
45,366






(A) In 2017, losses and other charges, net related primarily to costs associated with the acquisition of Vascular Solutions and facility consolidation costs, somewhat offset by income associated with a litigation settlement. In 2016, losses and other charges, net related primarily to facility consolidations.

(B) The tax adjustment represents a net benefit resulting primarily from the expiration of applicable statutes of limitations for prior year returns, the resolution of audits, the filing of amended returns with respect to prior tax years and/or tax law changes affecting our deferred tax liability.

(C) Adjusted diluted shares are calculated by giving effect to the anti-dilutive impact of the Company’s convertible note hedge agreements, which reduce the potential economic dilution that otherwise would occur upon conversion of the Company's convertible notes. Under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.


ABOUT TELEFLEX INCORPORATED

Teleflex is a global provider of medical technologies designed to improve the health and quality of people’s lives. We apply purpose driven innovation - a relentless pursuit of identifying unmet clinical needs - to benefit patients and healthcare providers. Our portfolio is diverse, with solutions in the fields of vascular and interventional access, surgical, anesthesia, cardiac care, urology, emergency medicine and respiratory care. Teleflex employees worldwide are united in the understanding that what we do every day makes a difference. For more information, please visit teleflex.com.

Teleflex is the home of Arrow®, Deknatel®, Hudson RCI®, LMA®, Pilling®, Rusch® and Weck® - trusted brands united by a common sense of purpose.

CAUTION CONCERNING FORWARD-LOOKING INFORMATION

This press release contains forward-looking statements, including, but not limited to, forecasted 2017 GAAP and constant currency revenue growth and GAAP and adjusted diluted earnings per share. Actual results could differ materially from those in the forward-looking statements due to, among other things, changes in business relationships with and purchases by or from major customers or suppliers; delays or cancellations in shipments; demand for and market acceptance of new and existing products; our inability to integrate acquired businesses into our operations, realize planned synergies and operate such businesses profitably in accordance with our expectations; our inability to effectively execute our restructuring programs; our inability to realize anticipated savings from restructuring plans and programs; the impact of healthcare reform legislation and proposals to amend the legislation; changes in Medicare, Medicaid and third party coverage and reimbursements; 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, sovereign debt issues and the impact of the United Kingdom's vote to leave the European Union; 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.





TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
July 2, 2017
 
June 26, 2016
 
July 2, 2017
 
June 26, 2016
 
(Dollars and shares in thousands, except per share)
Net revenues
$
528,613

 
$
473,553

 
$
1,016,494

 
$
898,446

Cost of goods sold
238,329
 
 
217,154
 
 
470,650
 
 
416,900
 
Gross profit
290,284
 
 
256,339
 
 
545,844
 
 
481,546
 
Selling, general and administrative expenses
158,934
 
 
142,983
 
 
322,903
 
 
279,331
 
Research and development expenses
20,278
 
 
15,472
 
 
38,105
 
 
27,825
 
Restructuring charges
870
 
 
(119
)
 
13,815
 
 
9,849
 
Gain on sale of assets
—
 
 
(378
)
 
—
 
 
(1,397
)
Income from continuing operations before interest, loss on extinguishment of debt and taxes
110,202
 
 
98,441
 
 
171,021
 
 
165,938
 
Interest expense
19,894
 
 
11,907
 
 
37,620
 
 
25,691
 
Interest income
(161
)
 
(129
)
 
(330
)
 
(209
)
Loss on extinguishment of debt
11
 
 
19,261
 
 
5,593
 
 
19,261
 
Income from continuing operations before taxes
90,458
 
 
67,402
 
 
128,138
 
 
121,195
 
Taxes on income from continuing operations
12,095
 
 
8,007
 
 
9,426
 
 
10,620
 
Income from continuing operations
78,363
 
 
59,395
 
 
118,712
 
 
110,575
 
Operating income (loss) from discontinued operations
(566
)
 
6
 
 
(848
)
 
(376
)
Benefit on income (loss) from discontinued operations
(206
)
 
(187
)
 
(309
)
 
(257
)
Income (loss) from discontinued operations
(360
)
 
193
 
 
(539
)
 
(119
)
Net income
78,003
 
 
59,588
 
 
118,173
 
 
110,456
 
Less: Income from continuing operations attributable to noncontrolling interest
—
 
 
285
 
 
—
 
 
464
 
Net income attributable to common shareholders
$
78,003

 
$
59,303

 
$
118,173

 
$
109,992

Earnings per share available to common shareholders:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Income from continuing operations
$
1.74

 
$
1.36

 
$
2.64

 
$
2.58

Income (loss) from discontinued operations
(0.01
)
 
—
 
 
(0.01
)
 
—
 
Net income
$
1.73

 
$
1.36

 
$
2.63

 
$
2.58

Diluted:
 
 
 
 
 
 
 
Income from continuing operations
$
1.67

 
$
1.25

 
$
2.54

 
$
2.29

Loss from discontinued operations
—
 
 
0.01
 
 
(0.01
)
 
—
 
Net income
$
1.67

 
$
1.26

 
$
2.53

 
$
2.29

Dividends per share
$
0.34

 
$
0.34

 
$
0.68

 
$
0.68

Weighted average common shares outstanding
 
 
 
 
 
 
 
Basic
44,996
 
 
43,549
 
 
44,945
 
 
42,598
 
Diluted
46,818
 
 
47,246
 
 
46,716
 
 
48,014
 
Amounts attributable to common shareholders:
 
 
 
 
 
 
 
Income from continuing operations, net of tax
$
78,363

 
$
59,110

 
$
118,712

 
$
110,111

Income (loss) from discontinued operations, net of tax
(360
)
 
193
 
 
(539
)
 
(119
)
Net income
$
78,003

 
$
59,303

 
$
118,173

 
$
109,992






TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
July 2, 2017
 
December 31, 2016
 
(Dollars in thousands)
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
676,214

 
$
543,789

Accounts receivable, net
303,702
 
 
271,993
 
Inventories, net
368,526
 
 
316,171
 
Prepaid expenses and other current assets
47,298
 
 
40,382
 
Prepaid taxes
11,878
 
 
8,179
 
Assets held for sale
—
 
 
2,879
 
Total current assets
1,407,618
 
 
1,183,393
 
Property, plant and equipment, net
369,301
 
 
302,899
 
Goodwill
1,854,076
 
 
1,276,720
 
Intangible assets, net
1,612,904
 
 
1,091,663
 
Deferred tax assets
1,963
 
 
1,712
 
Other assets
44,162
 
 
34,826
 
Total assets
$
5,290,024

 
$
3,891,213

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Current borrowings
$
112,039

 
$
183,071

Accounts payable
81,973
 
 
69,400
 
Accrued expenses
85,050
 
 
65,149
 
Current portion of contingent consideration
584
 
 
587
 
Payroll and benefit-related liabilities
78,951
 
 
82,679
 
Accrued interest
5,294
 
 
10,450
 
Income taxes payable
3,438
 
 
7,908
 
Other current liabilities
8,722
 
 
8,402
 
Total current liabilities
376,051
 
 
427,646
 
Long-term borrowings
1,887,716
 
 
850,252
 
Deferred tax liabilities
468,034
 
 
271,377
 
Pension and postretirement benefit liabilities
128,335
 
 
133,062
 
Noncurrent liability for uncertain tax positions
18,378
 
 
17,520
 
Other liabilities
52,981
 
 
52,015
 
Total liabilities
2,931,495
 
 
1,751,872
 
Commitments and contingencies
 
 
 
Convertible notes - redeemable equity component
—
 
 
1,824
 
Mezzanine equity
—
 
 
1,824
 
Total shareholders' equity
2,358,529
 
 
2,137,517
 
Total liabilities and shareholders' equity
$
5,290,024

 
$
3,891,213






TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended
 
July 2, 2017
 
June 26, 2016
 
(Dollars in thousands)
Cash flows from operating activities of continuing operations:
 
 
 
Net income
$
118,173

 
$
110,456

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Loss from discontinued operations
539
 
 
119
 
Depreciation expense
28,084
 
 
26,609
 
Amortization expense of intangible assets
41,375
 
 
31,397
 
Amortization expense of deferred financing costs and debt discount
2,825
 
 
6,554
 
Loss on extinguishment of debt
5,593
 
 
19,261
 
Gain on sale of assets
—
 
 
(1,397)
 
Fair value step up of acquired inventory sold
10,442
 
 
—
 
Changes in contingent consideration
(237)
 
 
1,242
 
Stock-based compensation
9,534
 
 
7,949
 
Deferred income taxes, net
(8,779)
 
 
(1,292)
 
Other
(3,300)
 
 
(1,970)
 
Changes in operating assets and liabilities, net of effects of acquisitions and disposals:
 
 
 
Accounts receivable
5,071
 
 
(10,237)
 
Inventories
(12,187)
 
 
(3,284)
 
Prepaid expenses and other current assets
4
 
 
238
 
Accounts payable and accrued expenses
6,541
 
 
(3,500)
 
Income taxes receivable and payable, net
(5,988)
 
 
(657)
 
   Net cash provided by operating activities from continuing operations
197,690
 
 
181,488
 
Cash flows from investing activities of continuing operations:
 
 
 
Expenditures for property, plant and equipment
(36,833)
 
 
(19,535)
 
Proceeds from sale of assets
6,332
 
 
3,985
 
Payments for businesses and intangibles acquired, net of cash acquired
(993,459)
 
 
(3,117)
 
Net cash used in investing activities from continuing operations
(1,023,960)
 
 
(18,667)
 
Cash flows from financing activities of continuing operations:
 
 
 
Proceeds from new borrowings
1,194,500
 
 
665,000
 
Reduction in borrowings
(228,273)
 
 
(656,479)
 
Debt extinguishment, issuance and amendment fees
(19,114)
 
 
(8,182)
 
Net proceeds from share based compensation plans and the related tax impacts
1,305
 
 
6,593
 
Payments for contingent consideration
(153)
 
 
(133)
 
Dividends paid
(30,590)
 
 
(28,998)
 
Net cash provided by (used in) financing activities from continuing operations
917,675
 
 
(22,199)
 
Cash flows from discontinued operations:
 
 
 
Net cash used in operating activities
(961)
 
 
(1,183)
 
Net cash used in discontinued operations
(961)
 
 
(1,183)
 
Effect of exchange rate changes on cash and cash equivalents
41,981
 
 
(1,315)
 
Net increase in cash and cash equivalents
132,425
 
 
138,124
 
Cash and cash equivalents at the beginning of the period
543,789
 
 
338,366
 
Cash and cash equivalents at the end of the period
$
676,214

 
$
476,490

 
 
 
 
Non cash financing activities of continuing operations:
 
 
 
Settlement and exchange of convertible notes with common or treasury stock
$
983

 
$
35,197

Acquisition of treasury stock associated with settlement and exchange of convertible note hedge and warrant agreements
$
19,361

 
$
85,895