TELEFLEX INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - TELEFLEX INC	d620952d8k.htm

TELEFLEX INCORPORATED

THIRD QUARTER 2013

EARNINGS CONFERENCE CALL

Exhibit 99.1

Conference Call Logistics

The release, accompanying slides, and replay webcast are available online at

www.teleflex.com (click on “Investors”)

Telephone replay available by dialing 888-286-8010 or for international calls, 617-

801-6888, pass code number 49689482

Introductions

Benson Smith

Chairman, President and CEO

Thomas Powell

Executive Vice President and CFO

Jake Elguicze

Treasurer and Vice President of Investor Relations

Forward-Looking Statements/Additional Notes

This presentation and our discussion contain forward-looking information and statements including, but

not limited to, our acquisition of Vidacare Corporation and its expected contribution to our 2014 revenue and

adjusted earnings per share results; forecasted 2013 constant currency revenue growth; forecasted 2013 gross

and adjusted operating margins; expected impact of the medical device tax on adjusted operating margin;

forecasted 2013 adjusted earnings per share; 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.

This presentation includes certain non-GAAP financial measures, which include revenue growth on a

constant currency basis; adjusted gross profit and margin; adjusted operating income and margins; adjusted

earnings per share; adjusted selling, general and administrative expenses; and adjusted operating expenses.

Adjusted diluted earnings per share excludes, depending on the period presented, (i) the effect of charges

associated with our restructuring program, as well as goodwill and other asset impairment charges; (ii) loss on

extinguishment of debt; (iii) the gain or loss on sales of businesses and assets; (iv) losses and other charges

related to acquisition costs, the reversal of reserves related to certain contingent consideration liabilities and a

previously announced stock keeping unit rationalization program, and a litigation verdict against the Company

with respect to a non-operating joint venture; (v) the amortization of the debt discount on the Company’s

convertible notes; (vi) charges associated with the amortization of additional interest expense related to an

interest rate swap terminated in 2011; (vii) intangible amortization expense; and (viii) tax benefits resulting from

the resolution of prior years’ tax matters and the filing of prior years’ amended tax returns. 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 excludes the impact of translating the results of international subsidiaries at different currency

exchange rates from period to period. Adjusted selling, general and administrative expenses and adjusted

operating expenses exclude income related to contingent consideration and costs associated with acquisitions.

Adjusted operating income and margin exclude certain losses and other charges, restructuring and impairment

charges and (gain) loss on sale of businesses and assets. Reconciliation of these non-GAAP measures to the

most comparable GAAP measures is contained within this presentation.

The following slides reflect continuing operations.

THIRD QUARTER 2013 HIGHLIGHTS

Third Quarter Highlights

•

Revenue

$413.8

million,

11.6%

constant

currency

vs.

prior

year

•

Adjusted gross margin of 49.7%, up 67 bps vs. prior year

•

Adjusted operating margins of 17.3%, up 80 bps vs. prior year

•

Adjusted EPS of $1.33, up 26.7% vs. prior year

Third Quarter Highlights

•

Price initiatives drove 109 bps of top-line growth in Q3 2013

compared to Q3 2012

•

EMEA up 180 bps

•

Americas up 103 bps

•

Asia Pacific up 69 bps

•

OEM down 34 bps

•

Continue to expand GPO & IDN relationships

•

9 new agreements (7 IDN; 2 GPO)

•

1 GPO agreement renewal

ARROW®

JACC

with

Chlorag+ard®

Technology

First and only long-term antimicrobial and

antithrombogenic central venous catheter

Designed for the placement of central venous

catheters by Vascular Access Specialists

Employs Chlorag+ard®

Technology as a

weapon against thrombosis and infection for

up to 30 days, effective against the full

spectrum of bacterial and fungal pathogens

PRODUCT DESCRIPTION

Third Quarter Highlights

LAUNCHED

Q3 2013

•

LMA International N.V. and affiliates

•

Contributed revenue of approximately $34.0 million in Q3 2013

•

Integration and performance continues to be ahead of initial

expectations

Third Quarter Highlights

Leading provider of intraosseous (IO), or inside the bone, access devices

for diagnostic monitoring and therapeutic applications

Based in Shavano Park, TX

87 issued and 8 pending patent applications

Unique platform technology for immediate vascular access and bone

marrow biopsy based driver system

Razor/Razor blade model (Driver and Needle)

Patented technology with strong brand equity

Expands vascular access product portfolio with

a defining technology and moves TFX into the

IO segment

Strengthen EMS channel & Nursing call points

High gross and operating margin profile

Strategic Acquisition

Company

Overview

Strategic Fit

Product

Bone marrow

aspirations, biopsies or

harvesting

Provides safe and rapid

access to vertebrae

during spinal surgery

Strategic Acquisition

Expected to contribute $68 to $72 million of Revenue and between

$0.10 to $0.15 in Adjusted Earnings Per Share in 2014

Intraosseous Infusion

System for immediate

vascular access

THIRD QUARTER 2013 FINANCIAL REVIEW

Financial Results

•

Revenue of $413.8 million

•

Up 12.4% vs. prior year on an as-reported basis

•

Up 11.6% vs. prior year on a constant currency basis

•

Adjusted gross margin of 49.7%

•

Up 67 bps vs. prior year

•

Research & development spending up 5.9% from prior year

•

Adjusted operating margin of 17.3%

•

Up 80 bps vs. prior year

•

Up 145 bps vs. prior year when excluding medical device excise tax

•

Adjusted EPS of $1.33

•

Up 26.7% vs. prior year

THIRD QUARTER PRODUCT & SEGMENT REVENUE REVIEW

Product Revenue Review

70%

18%

Critical Care

Surgical Care

Cardiac Care

OEM

Q3’13

Q3’12

Constant Currency Revenue Commentary

66%

19%

10%

Critical Care

Surgical Care

Cardiac Care

OEM

Critical Care: $289.3 million, up 17.9%

Surgical Care: $73.2 million, up 3.9%

Anesthesia

–

66.9%

Urology

–

8.6%

Vascular

and

interventional

access

–

4.9%

Respiratory

–

down

2.5%

Cardiac Care: $17.6 million, down 1.6%

OEM: $33.7 million, down 9.4%

Note:

Increases and decreases in revenue referred to above are as compared to results for the third quarter of 2012.

Segment Revenue Review

47%

32%

13%

Americas

EMEA

Asia

OEM

Q3’13

Q3’12

Constant Currency Revenue Commentary

46%

32%

12%

10%

Americas

EMEA

Asia

OEM

Americas:

$192.5 million, up 13.8%

EMEA: $132.3 million, up 9.6%

Asia:

$55.3 million, up 25.2%

OEM: $33.7 million, down 9.4%

Note:

Increases and decreases in revenue referred to above are as compared to results for the third quarter of 2012.

2013 FINANCIAL OUTLOOK

2013 Financial Outlook

•

Constant currency revenue growth of between 8.5% to 10%

•

Previously provided constant currency revenue growth range of 10% to 12%

•

Adjusted gross margin of approximately 49.5% to 50%

•

Previously provided adjusted gross margin range of 50% to 51%

•

Including impact of medical device tax, adjusted operating margin

expected to be between 16.0% to 17.0%

•

Medical device tax expected to negatively impact year-over-year adjusted

operating margin by ~ 1%

•

Adjusted earnings per share expected to be between $4.85 to $5.00

•

Previously provided adjusted earnings per share range of $4.70 to $4.90

QUESTION & ANSWER

APPENDICES

Appendix A –

Reconciliation of Product Constant Currency Revenue Growth

Dollars in Millions

September 29, 2013

September 30, 2012

Constant Currency

Currency

Total

Critical Care

289.3

243.7

17.9%

0.8%

18.7%

Surgical Care

73.2

69.6

3.9%

1.3%

5.2%

Cardiac Care

17.6

17.9

(1.6%)

0.0%

(1.6%)

OEM

33.7

36.9

(9.4%)

0.9%

(8.5%)

Net Revenues

413.8

368.1

11.6%

0.8%

12.4%

Three Months Ended

% Increase / (Decrease)

Appendix B –

Reconciliation of Segment Constant Currency Revenue Growth

Dollars in Millions

September 29, 2013

September 30, 2012

Constant Currency

Currency

Total

Americas

192.5

169.6

13.8%

(0.3%)

13.5%

EMEA

132.3

116.0

9.6%

4.4%

14.0%

Asia

55.3

45.6

25.2%

(4.0%)

21.2%

OEM

33.7

36.9

(9.4%)

0.9%

(8.5%)

Net Revenues

413.8

368.1

11.6%

0.8%

12.4%

Three Months Ended

% Increase / (Decrease)

Appendix C –

Reconciliation of Critical Care Product Constant Currency Revenue Growth

Dollars in Millions

September 29, 2013

September 30, 2012

Constant Currency

Currency

Total

Vascular & Interventional Access

112.6

108.1

4.9%

(0.7%)

4.2%

Anesthesia

91.0

54.0

66.9%

1.7%

68.6%

Respiratory

42.9

43.4

(2.5%)

1.4%

(1.1%)

Urology

42.8

38.3

8.6%

3.2%

11.8%

Critical Care Net Sales

289.3

243.7

17.9%

0.8%

18.7%

Three Months Ended

% Increase / (Decrease)

Appendix D –

Third Quarter Income Statement from Continuing Operations

Dollars in millions, except per share

Q3'13

Q3'12

Revenues

413.8

368.1

12.4%

Adjusted gross profit

205.8

180.6

14.0%

Adjusted gross margin

49.7%

49.1%

Adjusted selling, general and administrative expenses

118.5

105.0

12.8%

Research and development expenses

15.6

14.8

5.9%

Adjusted operating expenses

134.1

119.8

12.0%

32.4%

32.5%

Adjusted operating income

71.7

60.8

17.9%

Adjusted operating margin

17.3%

16.5%

(Income) / losses and other charges

(1.5)

9.9

Restructuring and impairment charges

7.1

1.1

Operating income

66.0

49.8

32.5%

Operating margin

16.0%

13.5%

Interest expense, net

13.8

18.2

-24.0%

Loss on extinguishments of debt, net

1.3

Net income attributable to noncontrolling interest

0.2

24.5%

Taxes / (benefit) on income from continuing operations

5.2

7.2

Income from continuing operations attributable to common shareholders

45.5

24.3

87.7%

Diluted earnings per share available to common shareholders

1.05

0.58

Appendix E –

EPS Reconciliation from Continuing Operations

Quarter

Ended

–

September

29,

2013

Cost of

goods

sold

Selling, general

and

administrative

expenses

Income

taxes

Net income

(loss)

attributable to

common

shareholders

from

continuing

operations

GAAP Basis

$209.8

$115.2

$7.1

$1.3

$13.8

$5.2

$45.5

$1.05

43,264

Adjustments

Restructuring and other impairment charges

Loss on extinguishment of debt

—

1.3

—

0.5

0.8

$0.02

—

Losses and other charges (A)

Amortization of debt discount on convertible

notes

Intangible amortization expense

—

12.5

—

4.2

8.3

$0.19

—

Tax Adjustment (B)

—

4.1

-4.1

($0.09)

—

Shares due to Teleflex under note hedge (C)

Adjusted basis

$208.0

$106.0

—

$10.9

$17.4

$55.6

$1.33

41,836

Restructuring

and other

impairment

charges

Loss on

extinguishment

of debt

used in

calculation

of GAAP

and

adjusted

earnings

per share

—

7.1

—

1.5

5.6

-2.3

($0.05)

Interest

expense,

net

Diluted

earnings per

available to

common

shareholders

—

(C) Adjusted diluted shares are calculated by giving effect to the anti-dilutive impact of the convertible note hedge agreements, which reduce the potential economic dilution that otherwise

would occur upon conversion of our senior subordinated convertible notes. Under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.

$0.13

—

1.8

-3.3

—

0.9

—

$0.04

1.8

—

$0.04

—

(A) In 2013, losses and other charges include approximately ($4.4) million, net of tax, or ($0.10) per share, related to the reversal of a contingent consideration liability; $2.1 million, net of

tax, or $0.05 per share, primarily related to acquisition and severance costs.

(B) The tax adjustment represents a net benefit resulting from the resolution of, or the expiration of statues of limitations with respect to various prior years’ U.S. federal, state and foreign

tax matters.

1.0

2.9

—

-1,428

—

Appendix F –

EPS Reconciliation from Continuing Operations

Quarter

Ended

–

September

30,

2012

Cost of

goods

sold

Selling,

general and

administrative

expenses

Income

taxes

Net income

(loss)

attributable to

common

shareholders

from

continuing

operations

GAAP Basis

$187.5

$114.9

$1.1

—

$18.2

$7.2

$24.3

$0.58

41,511

Adjustments

Restructuring and other impairment charges

Losses and other charges (A)

—

9.9

—

1.5

8.4

$0.20

—

Early termination of interest rate swap (B)

—

3.7

1.3

2.3

$0.06

—

Amortization of debt discount on convertible notes

Intangible amortization expense

—

11.1

—

4.0

7.0

$0.17

—

Tax adjustment (C)

Shares due to Teleflex under note hedge (D)

Adjusted basis

$187.5

$94.0

—

$11.8

$16.8

$43.0

$1.05

41,164

Restructuring

and other

impairment

charges

Loss on

extinguishment

of debt

Interest

expense,

net

Diluted

earnings per

available to

common

shareholders

used in

calculation

of GAAP

and

adjusted

earnings

per share

—

1.1

—

0.4

0.7

$0.02

—

Loss on extinguishment of debt

—

2.7

1.0

1.7

$0.04

—

-347

—

1.3

-1.3

($0.03)

—

$0.01

(D) Adjusted diluted shares are calculated by giving effect to the anti-dilutive impact of the convertible note hedge agreements, which reduce the potential economic dilution that otherwise would

occur upon conversion of our senior subordinated convertible notes. Under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.

—

(A) In 2012, losses and other charges include approximately $8.4 million, net of tax, or $0.20 per share, related to acquisition costs.

(B) In 2011, the Company terminated an interest rate swap that, at the date of termination, had a notional amount of $350 million. The interest rate swap was designated as a cash flow hedge

against the term loan under the Company’s senior credit facility. At the date of termination, the interest rate swap was in a liability position, resulting in a cash payment by the Company to the

counterparty of approximately $14.8 million, which included $3.1 million of accrued interest. In accordance with GAAP, the Company amortized this amount as additional interest expense over the

remainder of the original term of the interest rate swap, which expired in September 2012. In the third quarter of 2012, the impact of the amortization, net of tax, was approximately $2.3 million, or

$0.06 per share.

(C) The tax adjustment represents a net benefit resulting from the resolution of, or the expiration of statues of limitations with respect to various prior years’ U.S. federal, state and foreign tax

matters.

—

Appendix G –

Reconciliation of 2013 Outlook Earnings per Share Guidance

Low

High

Diluted earnings per share attributable to common shareholders

$3.45

$3.60

Restructuring and impairment charges, net of tax

$0.50

Intangible amortization expense, net of tax

$0.75

Amortization of debt discount on convertible notes, net of tax

$0.15

Adjusted diluted earnings per share

$4.85

$5.00

Appendix H –

Reconciliation of Teleflex Selling, General and Administrative Expenses

September 29, 2013

September 30, 2012

Teleflex Selling, General and Administrative Expenses as Reported

115,228

114,878

Add: Contingent Consideration Income

4,394

Less: Acquisition and Severance Costs

(1,135)

(9,862)

Adjusted Teleflex Selling, General and Administrative Expenses

118,487

105,016

$ thousands

Three Months Ended

Appendix I –

Reconciliation of Teleflex Gross Profit

September 29, 2013

September 30, 2012

Teleflex Gross Profit as Reported

203,992

180,567

Add: Acquisition Costs

900

Add: North American Distribution Center and Severance Costs

898

Adjusted Teleflex Gross Profit

205,790

180,567

$ thousands

Three Months Ended

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