155 South Limerick Road, Limerick, PA 19468 USA-Phone: 610-948-5100 — Fax: 610-948-0811
Contact: Julie McDowell
Vice President, Corporate Communications
610-948-2836
FOR IMMEDIATE RELEASE
February 28, 2007
TELEFLEX REPORTS FOURTH QUARTER AND FULL YEAR 2006 RESULTS
4Q Cash flow from operations $130M, up 47% 4Q Revenues up 7%, Core growth 5% 4Q EPS from continuing operations excluding special charges, $1.12 per diluted share 4Q EPS from continuing operations 98 cents per diluted share
Limerick, PA —Teleflex Incorporated (NYSE: TFX) today announced financial results for the fourth quarter and year ended December 31, 2006.
Highlights of Fourth Quarter 2006 Fourth quarter revenueswere $692.8 million, up 7% from $646.6 million in the fourth quarter of 2005. Core revenue growth for the quarter was 5%. Fourth quarter income from continuing operationsdecreased to $38.6 million or $0.98 per diluted share from $41.1 million or $1.00 per diluted share in the prior year quarter. Excluding special charges (primarily after-tax restructuring and other costs of $5.5 million) and loss on sale of assets, income from continuing operations for the fourth quarter was $44.1 million or $1.12 per diluted share compared to $40.1 million or $0.98 per diluted share (excluding after-tax restructuring and other costs of $4.6 million and after-tax gain on sale of assets of $5.6 million) in 2005. Stock option expense for the fourth quarter 2005 would have been $0.8 million after-tax or $0.02 per diluted share if the company had expensed options in that year. Fourth quarter loss from discontinued operationswas $0.9 million or $0.02 per diluted share compared to a loss of $3.5 million or $0.09 per diluted share in the prior year. Accordingly, net income for the fourth quarter 2006 was $37.7 million or $0.96 per diluted share, compared to $37.5 million or $0.92 per diluted share in fourth quarter of 2005.
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Jeffrey P. Black, chairman and chief executive officer of Teleflex stated, “Overall, 2006 was a very good year for Teleflex. We posted solid earnings and record revenues and cash flow, and we significantly improved Medical and Aerospace segment margins in the second half of the year. In addition, during the year we increased the dividend to shareholders by 14%, completed a $140 million stock buyback program and strengthened our balance sheet.”
Added Black, “Led by strong fourth quarter performance in the Medical and Aerospace segments, we enter 2007 with solid momentum. The Medical Segment is benefiting from completion of facility consolidations and fourth quarter margins were solidly above our 20% goal. The Aerospace Segment continues to maintain a strong backlog and to benefit from its operational improvement programs. The Commercial Segment continues to manage through a tough end market in automotive and deliver strong performances from the power systems and other industrial businesses.”
Highlights of Full Year 2006 Full year revenues from continuing operationswere $2.65 billion, up 5% from $2.51 billion in 2005. Core revenue growth was 5%. Full year income from continuing operationswas $139.9 million or $3.50 per diluted share, compared to $139.8 million or $3.41 per share in 2005. Excluding special charges, gain or loss on sale of assets and a tax benefit, income from continuing operations for the full year was $152.5 million or $3.81 per diluted share, compared to $149.3 million or $3.65 per share in 2005. Stock option expense for the full year 2005 would have been $3.2 million after-tax or $0.08 per diluted share. The company did not expense options in 2005. Full year loss from discontinued operationswas $0.5 million or $0.01 per diluted share compared to a loss of $1.0 million or $0.02 per diluted share in 2005. Accordingly, net income for the full year was $139.4 million or $3.49 per diluted share, compared to $138.8 million or $3.39 per share in 2005. Cash flow from operationsfor the full year was a record $343.9 million. This was driven by improvement in working capital management during the year, particularly in the fourth quarter when cash flow from operations was over $130 million.
Fourth Quarter Business Segment Commentary Segment commentary excludes the impact of discontinued operations, gains and losses on sale of assets and items included in restructuring and other costs as disclosed in the condensed consolidated statements of income.
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Commercial Commercial Segment revenues increased 6% in the fourth quarter of 2006 to $318.8 million from $301.0 million last year. The increase resulted from core growth of 5% and 1% from currency. Segment revenues benefited primarily from increased sales of auxiliary power systems for trucks that reduce emissions during idling, as well as alternative fuel systems and other industrial applications. This more than offset a decline in revenues from sales of shifters and cables to automotive OEMs in North America and Europe, which resulted from customer price reductions and lower production volumes for some platforms.
Commercial Segment operating profit was $18.3 million compared to $21.8 million in the prior year fourth quarter. Lower segment operating profit in the quarter was largely due to margin compression in the automotive business created by customer price reductions and charges of $2.1 million for obsolete inventory and accelerated depreciation related to automotive platforms at end of life and the impact of some commodity price increases in our marine business.
Medical Medical Segment revenues in the fourth quarter were $230.1 million, an 11% increase over revenues of $206.7 million in 2005. Recently introduced products for respiratory care, anesthesia and sleep therapy were significant contributors to core growth in the quarter, as were sales of medical devices and surgical specialty products, while sales of instruments used in orthopedic procedures continued to be soft. Core growth was 8%, while currency impacted growth by an additional 3%.
Medical Segment operating profit increased 42% to $49.9 million from $35.1 million in 2005, primarily as a result of cost savings resulting from the restructuring actions completed earlier in the year and improvements in efficiency and productivity.
Aerospace Aerospace Segment revenues in the fourth quarter increased 4% to $144.0 million from $138.9 million in 2005. Core growth of 3% was driven primarily by continued strong demand for cargo handling systems for wide body aircraft and for cargo system aftermarket parts, while currency impacted growth by an additional 1%. These increases more than offset lower sales of precision machined components to the military during 2006.
Aerospace Segment operating profit increased 16% to $15.6 million from $13.4 million in 2005. Operating profit increased primarily as a result of cost savings related to facility consolidation and other process and productivity improvements.
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Business Outlook for 2007 Looking ahead to 2007, Black commented, “Our outlook for 2007 anticipates solid revenue growth, operating profit improvement in each of the three segments and continued strong cash flow from operations. Just as importantly, we enter 2007 with a solid foundation and a strong balance sheet that will enable us to pursue acquisitions and other investments for future growth.”
The company anticipates diluted earnings per share from continuing operations before restructuring charges for the full year 2007 to be in the range of $4.15 to $4.35. Restructuring charges for the year are expected to be in the range of $6 to $9 million or $0.11 to $0.16 per diluted share. Cash flow from operations for the full year 2007 should again exceed $300 million. This preliminary outlook excludes the impact of acquisitions and divestitures that may occur during the year.
Fourth Quarter Conference Call Webcast
As previously announced, Teleflex will comment on its fourth quarter and full year results on a conference call to be held Thursday, March 1, 2007, at 10:00 a.m. (ET). The call will be available live and archived on the company’s website atwww.teleflex.com and accompanying charts will be posted prior to the call. An audio replay will be available until March 6th at 5:00 p.m. (ET) by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode # 98533145.
Additional Notes and Notes on Non-GAAP Financial Measures This press release addresses certain income measures which exclude the effect of restructuring, impairment and other costs associated with our restructuring and divestiture programs, a one-time tax benefit, and gains or losses on sale of assets which may be considered non-GAAP financial measures. A table reconciling income and diluted earnings per share from continuing operations to income and diluted earnings per share from continuing operations excluding special charges, tax benefit and gain or loss on sale of assets is set forth below.
4Q 2006
12 Month 2006
Continuing Operations
Continuing Operations
(dollars in thousands, except per share)
Income and diluted earnings per share
$
38,621
$
0.98
$
139,930
$
3.50
Special charges:
Restructuring and other costs
8,983
25,226
Income tax (benefit) on restructuring costs
(3,530
)
(7,712
)
Restructuring costs, net of tax
5,453
0.14
17,514
0.44
Losses:
Loss on sale of assets
106
838
Income tax (benefit) on loss on sale of assets
(50
)
(901
)
Loss on sale of assets, net of tax
56
0.00
(63
)
(0.00
)
One-time tax benefit:
Tax benefit
(4,843
)
(0.12
)
Income and diluted earnings per share excluding special charges, tax benefit, and loss on sale of assets
$
44,130
$
1.12
$
152,538
$
3.81
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4Q 2005
12 Month 2005
Continuing Operations
Continuing Operations
(dollars in thousands, except per share)
Income and diluted earnings per share
$
41,055
$
1.00
$
139,772
$
3.41
Special charges:
Restructuring and other costs
7,343
29,066
Income tax (benefit) on restructuring costs
(2,713
)
(10,316
)
Restructuring costs, net of tax
4,630
0.11
18,750
0.46
Gains:
Gain on sale of assets
(8,654
)
(14,223
)
Income tax on gain on sale of assets
3,074
5,024
Gain on sale of assets, net of tax
(5,580
)
(0.14
)
(9,199
)
(0.22
)
Income and diluted earnings per share excluding special charges and gain on sale of assets
$
40,105
$
0.98
$
149,323
$
3.65
Certain financial information is presented on a rounded basis which may cause minor differences.
Core growth includes activity of a purchased company beyond the initial twelve months after the date of acquisition. Core growth excludes the impact of translating the results of international subsidiaries at different currency exchange rates from year to year, and the comparable activity of divested companies within the most recent twelve-month period.
About Teleflex Teleflex is a diversified company with 2006 revenues of $2.6 billion. The company designs, manufactures and distributes quality-engineered products and services for the commercial, medical and aerospace markets worldwide. Teleflex employs more than 19,000 people worldwide who focus on providing innovative solutions for customers. Additional information about Teleflex can be obtained from the company’s website on the Internet atwww.teleflex.com.
Caution concerning forward-looking information This press release contains forward-looking statements, including, but not limited to, statements relating to our business performance outlook for 2007; forecasted 2007 diluted earnings per share from continuing operations excluding restructuring charges and gain or loss on sale of assets; forecasted 2007 restructuring charges; and forecasted 2007 cash flow from operations. Actual results could differ materially from those in these forward-looking statements due to, among other things, conditions in the end markets we serve, customer reaction to new products and programs, our ability to achieve projected sales growth, price increases or cost reductions, and efficiencies, changes in material costs and surcharges, unanticipated difficulties in connection with consolidation of manufacturing and administrative functions; changes in general and international economic conditions and other factors described in Teleflex’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10K.
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TELEFLEX INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended
December 31,
December 25,
2006
2005
(Dollars and shares in thousands, except per share)
Income from continuing operations before taxes and minority interest.............................
58,812
60,713
Taxes on income from continuing operations.............................................................
13,449
14,518
Income from continuing operations before minority interest............................................
45,363
46,195
Minority interest in consolidated subsidiaries, net of tax...............................................
6,742
5,140
Income from continuing operations......................................................................
38,621
41,055
Operating loss from discontinued operations (including gain (loss) on disposal of $(481) and $21, respectively)..............................................................................
(459
)
(1,341
)
Taxes on loss from discontinued operations..............................................................
443
2,196
Loss from discontinued operations.........................................................................
(902
)
(3,537
)
Net income.....................................................................................................
$
37,719
$
37,518
Earnings (losses) per share:
Basic:
Income from continuing operations..................................................................
$
0.99
$
1.02
Loss from discontinued operations..................................................................
$
(0.02
)
$
(0.09
)
Net income...........................................................................................
$
0.97
$
0.93
Diluted:
Income from continuing operations..................................................................
$
0.98
$
1.00
Loss from discontinued operations...................................................................
$
(0.02
)
$
(0.09
)
Net income...........................................................................................
$
0.96
$
0.92
Dividends per share..........................................................................................
Income from continuing operations before taxes and minority interest.............................
219,027
207,915
Taxes on income from continuing operations.............................................................
54,140
47,806
Income from continuing operations before minority interest............................................
164,887
160,109
Minority interest in consolidated subsidiaries, net of tax...............................................
24,957
20,337
Income from continuing operations......................................................................
139,930
139,772
Operating income (loss) from discontinued operations (including net gain on disposal of $182 and $34,851, respectively)..........................................................................
(483
)
2,304
Taxes on income (loss) from discontinued operations...................................................
17
3,259
Loss from discontinued operations..........................................................................
(500
)
(955
)
Net income.....................................................................................................
$
139,430
$
138,817
Earnings (losses) per share:
Basic:
Income from continuing operations..................................................................
$
3.52
$
3.45
Loss from discontinued operations..................................................................
$
(0.01
)
$
(0.02
)
Net income...........................................................................................
$
3.51
$
3.43
Diluted:
Income from continuing operations..................................................................
$
3.50
$
3.41
Loss from discontinued operations..................................................................
$
(0.01
)
$
(0.02
)
Net income...........................................................................................
$
3.49
$
3.39
Dividends per share..........................................................................................
(Gain) loss on sales of businesses and assets..............................................................
106
(8,654
)
Restructuring and impairment charges.....................................................................
8,983
7,343
Minority interest in consolidated subsidiaries (2).........................................................
(6,742
)
(5,140
)
Income from continuing operations before interest, taxes and minority interest..................
$
68,116
$
69,415
(1)
Segment operating profit includes a segment’s revenues reduced by its materials, labor and other product costs along with the segment’s selling, engineering and administrative expenses and minority interest. Unallocated corporate expenses, (gain) loss on sales of businesses and assets, restructuring and impairment charges, interest income and expense and taxes on income are excluded from the measure.
(2)
Minority interest in consolidated subsidiaries is included in segment operating profit presented above and must be removed in order to calculate income from continuing operations before interest, taxes and minority interest, as presented on the Company’s condensed consolidated statements of income for the three months ended December 31, 2006 and December 25, 2005, respectively.
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TELEFLEX INCORPORATED AND SUBSIDIARIES SUMMARY OF SEGMENT RESULTS (Unaudited)
(Gain) loss on sales of businesses and assets..............................................................
838
(14,223
)
Restructuring and impairment charges.....................................................................
25,226
27,066
Minority interest in consolidated subsidiaries (2).........................................................
(24,957
)
(20,337
)
Income from continuing operations before interest, taxes and minority interest..................
$
254,612
$
248,068
(1)
Segment operating profit includes a segment’s revenues reduced by its materials, labor and other product costs along with the segment’s selling, engineering and administrative expenses and minority interest. Unallocated corporate expenses, (gain) loss on sales of businesses and assets, restructuring and impairment charges, interest income and expense and taxes on income are excluded from the measure.
(2)
Minority interest in consolidated subsidiaries is included in segment operating profit presented above and must be removed in order to calculate income from continuing operations before interest, taxes and minority interest, as presented on the Company’s condensed consolidated statements of income for the year ended December 31, 2006 and December 25, 2005, respectively.
Contact: Julie McDowell
Vice President
Corporate Communications
610-948-2836
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