Teleflex Incorporated (NYSE: TFX) today announced financial results for the fourth quarter and year ended December 31, 2009.
“2009 had its challenges, but as the calendar has changed to a new decade our company has changed as well”
Financial Highlights
For the fourth quarter 2009, revenues from continuing operations were $515.0 million compared to $497.2 million in the fourth quarter of 2008, up 4%. The increase resulted principally from a favorable currency impact of 4%. Core revenue was up 2% in the Medical segment and down 7% and 4% in the Aerospace and Commercial segments, respectively.
For the full year 2009, Teleflex revenues from continuing operations decreased 9% to $1,890.1 million from $2,066.7 million in 2008, principally due to a decline in core revenues in our Aerospace and Commercial businesses, and an unfavorable currency impact of 3%.
Income from continuing operations attributable to common shareholders in the fourth quarter of 2009 increased to $48.0 million, or $1.20 per diluted share compared to $20.1 million, or $0.51 per diluted share in the prior year quarter. As detailed in the tables below, fourth quarter 2009 income from continuing operations excluding special charges increased 32% to $40.3 million, or $1.01 per diluted share compared to $30.6 million or $0.77 per diluted share in the prior year quarter.
Income from continuing operations attributable to common shareholders for the full year 2009 increased to $141.8 million, or $3.55 per diluted share compared to $97.4 million or $2.44 per diluted share in the prior year. As detailed in the tables below, full year 2009 income from continuing operations excluding special items increased 17% to $145.4 million or $3.64 per diluted share, compared to $124.6 million or $3.13 per diluted share in the prior year.
Fourth quarter 2009 cash flow from continuing operations increased 89% to $108.6 million, up from $57.5 million in the prior year quarter.
Cash flow from continuing operations for the full year 2009 totaled $287.3 million, excluding a tax payment of approximately $97.5 million related to the gain on sale of ATI. Excluding tax payments of $90.2 million related to the divestiture of the automotive and industrial businesses, cash flow from continuing operations for 2008 was $195.9 million.
Net income attributable to common shareholders for the fourth quarter and full year 2009 was $42.7 million and $303.0 million, respectively. These results included a loss from discontinued operations of $5.3 million in the fourth quarter, and income from discontinued operations of $161.2 million for the full year 2009.
“2009 had its challenges, but as the calendar has changed to a new decade our company has changed as well,” said Jeffrey P. Black chairman and chief executive officer. “We are a company that reduced its exposure to cyclical industries through the divestiture of components of our Aerospace and Commercial segments, made progress with the FDA remediation, continued to make investments in areas that offer long-term growth potential, and executed very well financially. We are prepared to execute in 2010 as well.”
Fourth Quarter Business Segment Commentary
Medical Segment
Medical Segment revenues in the quarter increased 6% to $396.8 million from $373.4 million in the prior year period. The increase resulted from core growth of 2%, and a favorable currency impact of 4%. Core revenue increases in vascular access, respiratory, and anesthesia products more than offset declines in cardiac care, surgical and orthopedic devices sold to medical OEM’s.
Medical Segment sales by product group were comprised of the following:
*Certain reclassifications within product categories have been made to 2008 results to conform with current year presentation.
Adjusted segment operating profit in the quarter, which excludes the impact of certain integration costs not qualified for restructuring increased to $83.1 million from $74.5 million in the prior year period. The improvement resulted from increased volume, lower operating expenses, reduced FDA remediation spending, synergies from the Arrow integration activities, and the effect of the weaker U.S. dollar compared with the prior year quarter. Adjusted segment operating margins in the quarter improved to 21.0% versus 19.9% in the prior year quarter. A reconciliation of adjusted segment operating profit and margins are noted on the table below.
Aerospace Segment
Aerospace Segment revenues in the quarter declined 2% to $58.6 million from $59.7 million in the prior year period. Higher sales of wide and narrow-body cargo handling systems to OEM’s, and increases in cargo spares, components and repair sales, were reduced by lower cargo systems sales for aftermarket conversions, and lower demand for cargo containers, resulting in a 7% decline in core revenue during the quarter. This was somewhat compensated for by a favorable currency impact of 5%.
Segment operating profit increased to $6.8 million from $6.2 million in the same period last year. This was principally due to the favorable mix of higher margin spares and repairs sales, as well as cost reduction initiatives. Segment operating margin for the quarter was 11.6% versus 10.3% in the prior year quarter.
Commercial Segment
Commercial Segment revenues in the quarter declined 7% to $59.7 million from $64.2 million in the same period last year. Reductions in core revenue, which accounted for 4% of the decline, were principally a result of a decrease in sales of rigging and Marine OEM products, partially offset by sales of the modern burner unit to the U.S. military and Marine aftermarket sales. The impact of the Marine gauge business divestiture contributed 4% to the decline. This was somewhat balanced by a favorable currency impact of 1%.
During the fourth quarter of 2009, operating profit in the Commercial segment declined to $3.7 million from $4.7 million in the prior year period, principally due to lower sales volumes, which more than offset the impact of cost reduction initiatives. Segment operating margin for the quarter was 6.2% versus 7.3% in the prior year quarter.
Balance Sheet Highlights
Cash on hand at December 31, 2009 was $188.3 million compared to $107.3 million at December 31, 2008, up 75%.
Net accounts receivable at December 31, 2009 was $265.3 million compared to $311.9 million at December 31, 2008, a decline of 15%.
Net inventory at December 31, 2009 was $360.8 million compared to $424.7 million at December 31, 2008, a decline of 15%.
Net debt at December 31, 2009 was $1,008.2 million compared to $1,439.1 million at December 31, 2008, a decline of 30%.
Business Outlook for 2010
The Company’s financial estimates for 2010 include total revenues in excess of $1.92 billion and diluted earnings per share from continuing operations excluding special items in the range of $4.10 to $4.25. Cash flow from continuing operations, exclusive of the impact of the adoption of the amendment to Accounting Standards Codification topic 860 “Transfers and Servicing”, is expected to be in the range of $275 to $280 million. Restructuring and other special charges related to the Arrow integration program are anticipated to be $0.05 per diluted share for the year.