Slide 1: Fourth Quarter 2014 Earnings Conference Call
1 TELEFLEX INCORPORATED FOURTH QUARTER 2014 EARNINGS CONFERENCE CALL 1
Slide 2: Conference Call Logistics
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 82954645 2
Slide 3: Introductions
Introductions Benson Smith Chairman, President and CEO Thomas Powell Executive Vice President and CFO Jake Elguicze Treasurer and Vice President of Investor Relations 3
Slide 4: Forward-Looking Statements/Non-GAAP Financial Measures
Forward-Looking Statements/Non-GAAP Financial Measures This presentation and our discussion contain forward-looking information and statements including, but not limited to, our forecasted 2015 constant currency revenue growth, adjusted gross and operating margins and adjusted earnings per share; ex
Slide 5: Fourth Quarter and Full Year 2014 Highlights
5 FOURTH QUARTER AND FULL YEAR 2014 HIGHLIGHTS 5
Slide 6: Fourth Quarter Highlights
Fourth Quarter Highlights Fourth quarter constant currency revenue growth and adjusted earnings per share achievement exceeded our expectations Revenue of $476.0 million, up 5.7% vs. prior year period on an as- reported basis; up 9.0% vs. prior year period on a constant currency basis Adjusted EPS o
Slide 7: Fourth Quarter Highlights
Fourth Quarter Highlights 185 bps improvement in sales of existing products in Q4’14 compared to Q4’13 resulting from continued improvement in end-markets Improvement in the average selling prices of products contributes 151 bps of top-line growth in Q4’14 compared to Q4’13 New product introductions
Slide 8: Fourth Quarter Highlights: Vidacare
Fourth Quarter Highlights Vidacare contributes 3.5% to Teleflex’s constant currency revenue growth • Q4’14 revenue of $23.0 million, ahead of initial internal expectations • Q4’14 revenue up ~ 16% versus Q4’13 on an as-reported basis • FDA approved new pediatric indication for use for the Arrow OnCo
Slide 9: Mayo Healthcare Pty Ltd.
Mayo Healthcare Pty Ltd. • Contributed 1.6% to Teleflex’s constant currency revenue growth in Q4; mixture of additional volume and improved pricing • Successful SAP “go-live” in fourth quarter Fourth Quarter Highlights 9
Slide 10: ARROW VPS Vascular Positioning System
The ARROW® VPS® Vascular Positioning System combines intravascular electrocardiogram (ECG), the intravascular Doppler ultrasound and a software algorithm, to accurately place catheter tips in the lower one-third of the Superior Vena Cava-Cavo Atrial Junction (SVC-CAJ). The system displays a Blue Bul
Slide 11: Acquired assets of Mini-Lap Technologies
Fourth Quarter Highlights Acquired assets of Mini-Lap Technologies, Inc. • Developer of next-generation minimally invasive surgical instruments • Trocar-less entry improves surgical capability and patient outcomes • Multiple products to address various segments of laparoscopic surgery market • Compl
Slide 12: Completed acquisition of Human Medics
Fourth Quarter Highlights Completed acquisition of Human Medics • Distributor of Teleflex surgical and respiratory products since 2004 • Consistent with strategic approach, this acquisition establishes direct distribution organization in Korea • Accretive, all-cash transaction completed in January 2
Slide 13: Full Year Highlights
Full Year Highlights Revenue of $1.84 billion, up 8.5% vs. prior year on an as-reported basis; up 8.8% vs. prior year on a constant currency basis Adjusted gross margin of 51.5%, up 190 bps vs. prior year Adjusted operating margin of 20.0%, up 70 bps vs. prior year Adjusted EPS of $5.74, up 14.1% vs
Slide 14: Fourth Quarter 2014 Financial Review
14 FOURTH QUARTER 2014 FINANCIAL REVIEW 14
Slide 15: Financial Results
Financial Results Revenue of $476.0 million • Up 5.7% vs. prior year period on an as-reported basis • Up 9.0% vs. prior year period on a constant currency basis Adjusted gross margin of 51.1%, up 110 bps vs. prior year period Adjusted operating margin of 18.4%, down 60 bps vs. prior year period Adju
Slide 16: Segment Revenue Review
Segment Revenue Review Q4’14 Vascular N.A: $68.7 million, up 10.2% Anesthesia/Respiratory N.A: $58.2 million, up 0.7% Surgical N.A: $40.8 million, up 9.7% EMEA: $146.9 million, up 8.9% Asia: $63.6 million, up 10.9% OEM: $35.0 million, up 4.8% All Other: $62.8 million, up 16.3% Note: Increases and de
Slide 17: 2014 Financial Scorecard
17 Guidance Metric Target Actual Achievement Constant Currency Revenue 7.0 - 9.0% 8.8% Adjusted Gross Margin 52.0 - 52.5% 51.5% Adjusted Operating Margin 20.0 - 21.0% 20.0% Adjusted Tax Rate 22.5 - 23.5% 19.9% Adjusted EPS $5.35 - 5.55 $5.74 Cash Flow from Operations $250M $290M 2014 Financial Score
Slide 18: 2015 Financial Outlook
2015 FINANCIAL OUTLOOK Veleflex:
Slide 19: 2015 Financial Outlook Assumptions
19 Constant currency revenue growth expected to be between 4% and 6% • Vidacare product sales expected to contribute to year-over-year growth • Revenue growth stemming from new product introductions expected to return to 2013 levels • Assumption of modest base volume and core product pricing growth
Slide 20: 2015 Financial Outlook Assumptions
20 2015 Financial Outlook Assumptions Adjusted Gross margin anticipated to improve by approximately 150bps to 250bps and reach 53.0% to 54.0% • Manufacturing cost improvement and productivity initiatives • Product mix, including Vidacare contribution at 85% gross margin • Pricing and margin gains fr
Slide 21: 2015 Financial Outlook Assumptions
21 2015 Financial Outlook Assumptions Adjusted earnings per share anticipated to be between $6.10 and $6.35 per share • Represents growth of between 6.3% and 10.6% as compared to 2014 adjusted EPS • Foreign currency expected to be a headwind of approximately 14% Euro to U.S. Dollar exchange rate ass
Slide 22: 2015 Revenue Outlook
22 2015 Revenue Outlook Volume - Core Business 1.35% 1.65% New Product Introductions 0.75% 1.25% Vidacare 0.40% 0.60% Pricing - Core Business 0.00% 0.50% Forecasted Constant Currency Revenue Growth Excluding M&A and Distributor-to-Direct 2.50% 4.00% Mini-Lap Technologies 0.50% 0.75% Pricing - Distri
Slide 23: 2015 Adjusted Gross Margin Outlook
23 2015 Adjusted Gross Margin Outlook 2015 Adjusted Gross Margin Drivers Manufacturing productivity Product mix Distributor to direct conversions Mini-Lap acquisition Foreign exchange Note: figures represent adjusted gross margin. See Appendix for reconciliation of GAAP to adjusted results.
Slide 24: 2015 Adjusted Operating Margin Outlook
24 2015 Adjusted Operating Margin Outlook 2015 Adjusted Operating Margin Drivers Gross margin expansion EMEA operating expenses Foreign exchange Investments in distributor to direct strategy and Vidacare sales and marketing Note: figures represent adjusted operating margin. See Appendix for reconcil
Slide 25: 2015 Adjusted Earnings per Share Outlook
25 2015 Adjusted Earnings per Share Outlook Significant operating leverage from core operations Adjusted earnings per share growth reflects expected foreign currency headwind of approximately 14% 2014 Adjusted Earnings per Share $5.74 $5.74 Base business $1.10 $1.30 Distributor-to-direct and Mini-La
Slide 26: 2015 Financial Outlook Summary
26 2015 Financial Outlook Summary Continue to expect strong constant currency revenue growth fueled by a combination of modest volume growth, new product introductions, distributor- to-direct conversions, Vidacare and recent acquisition of Mini-Lap Technologies, Inc. Manufacturing cost improvement a
Slide 27: Question & Answer
QUESTION & ANSWER Veleflex:
Slide 28: Additional Information
28 ADDITIONAL INFORMATION 28
Slide 29: Restructuring plan charges, cash outlays and savings
Aggregate pre-tax charges of approximately $37 to $44 million1 , of which approximately $26 to $31 million will result in future cash outlays • 2014 pre-tax charges of $14.21 million, of which $3.1 million resulted in a cash outlay • 2015 pre-tax charges of approximately $14 to $18 million1, of whic
Slide 30: Appendices
APPENDICES Veleflex:
Slide 31: Appendix A – Reconciliation of Segment Constant Currency Revenue Growth
Appendix A – Reconciliation of Segment Constant Currency Revenue Growth Dollars in Millions 31 December 31, 2014 December 31, 2013 Constant Currency Currency Total Vascular North America 68.7$ 62.6$ 10.2% (0.5%) 9.7% Anesthesia/Respiratory North America 58.2 57.8 0.7% (0.3%) 0.4% Surgical North Amer
Slide 32: Appendix B – Reconciliation of Revenue Growth
Appendix B – Reconciliation of Revenue Growth Dollars in Millions 32 Year-over- year growth Three Months Ended December 31, 2013 Revenue As-Reported $450.5 Foreign Currency (14.9) -3.30% Vidacare 15.7 3.49% Mayo 7.3 1.62% All other 17.3 3.84% Three Months Ended December 31, 2014 Revenue As-Reported
Slide 33: Appendix C – Reconciliation of Teleflex Gross Profit and Margin
33 Appendix C – Reconciliation of Teleflex Gross Profit and Margin December 31, 2014 December 31, 2013 Teleflex gross profit as-reported 241,015$ 224,943$ Teleflex gross margin as-reported 50.6% 49.9% Losses, other charges and charge reversals (A) 2,109 253 Adjusted Teleflex gross profit 243,124$ 22
Slide 34: Appendix D – Reconciliation of Teleflex Operating Profit and Margin
34 Appendix D – Reconciliation of Teleflex Operating Profit and Margin December 31, 2014 December 31, 2013 Teleflex income from continuing operations before interest and taxes 69,155$ 54,064$ Teleflex income from continuing operations before interest and taxes margin 14.5% 12.0% Restructuring and ot
Slide 35: Appendix E – EPS Reconciliation, Quarter Ended December 31, 2014
Appendix E – EPS Reconciliation from Continuing Operations Quarter Ended – December 31, 2014 Dollars in millions, except per share data 35 Cost of goods sold Selling, general and administrative expenses Research and development expenses Restructuring and other impairment charges Interest expense, ne
Slide 36: Appendix F – EPS Reconciliation, Quarter Ended December 31, 2013
Appendix F – EPS Reconciliation from Continuing Operations Quarter Ended – December 31, 2013 Dollars in millions, except per share data 36 Cost of goods sold Selling, general and administrative expenses Research and Development expenses Restructuring and other impairment charges Interest expense, ne
Slide 37: Appendix G – Reconciliation of Teleflex Adjusted Tax Rate
37 Appendix G – Reconciliation of Teleflex Adjusted Tax Rate Dollars in Thousands Three Months Ended December 31, 2014 Income from continuing operations before taxes Taxes on income from continuing operations Tax rate GAAP basis $52,559 $426 0.8% Restructuring and impairment charges 1,358 511 Losses
Slide 38: Appendix H – Reconciliation of Segment Constant Currency Revenue Growth
Appendix H – Reconciliation of Segment Constant Currency Revenue Growth Dollars in Millions 38 December 31, 2014 December 31, 2013 Constant Currency Currency Total Vascular North America 259.2$ 231.1$ 12.5% (0.3%) 12.2% Anesthesia/Respiratory North America 222.7 228.5 (2.3%) (0.3%) (2.6%) Surgical N
Slide 39: Appendix I – Reconciliation of Teleflex Gross Profit and Margin
39 Appendix I – Reconciliation of Teleflex Gross Profit and Margin December 31, 2014 December 31, 2013 Teleflex gross profit as-reported 942,428$ 838,945$ Teleflex gross margin as-reported 51.2% 49.5% Losses, other charges and charge reversals (A) 4,886 2,275 Adjusted Teleflex gross profit 947,314$
Slide 40: Appendix J – Reconciliation of Teleflex Operating Profit and Margin
40 Appendix J – Reconciliation of Teleflex Operating Profit and Margin December 31, 2014 December 31, 2013 Teleflex income from continuing operations before interest and taxes 284,862$ 233,261$ Teleflex income from continuing operations before interest and taxes margin 15.5% 13.8% Restructuring and
Slide 41: Appendix K – EPS Reconciliation, Full Year 2014
Appendix K – EPS Reconciliation from Continuing Operations Full Year Ended – December 31, 2014 Dollars in millions, except per share data 41 Cost of goods sold Selling, general and administrative expenses Research and development expenses Restructuring and other impairment charges Interest expense,
Slide 42: Appendix L – EPS Reconciliation, Full Year 2013
Appendix L – EPS Reconciliation from Continuing Operations Full Year Ended – December 31, 2013 Dollars in millions, except per share data 42 Cost of goods sold Selling, general and administrative expenses Research and development expenses Restructuring and other impairment charges Interest expense,
Slide 43: Appendix M – Reconciliation of 2015 Constant Currency Revenue Growth Guidance
Appendix M – Reconciliation of 2015 Constant Currency Revenue Growth Guidance 43 Low High Forecasted GAAP Revenue Growth (2%) ─ Estimated impact of foreign currency fluctuations 6% 6% Forecasted Constant Currency Revenue Growth 4% 6%
Slide 44: Appendix N – Reconciliation of 2015 Gross Margin Guidance
Appendix N – Reconciliation of 2015 Gross Margin Guidance 44 Note: In 2015, losses, other charges and charge reversals relate to expenses associated with the Restructuring Plan approved by the Board of Directors on April 28, 2014. Low High GAAP Gross Margin 52.25% 53.00% Losses, other charges and ch
Slide 45: Appendix O – Reconciliation of 2015 Operating Margin Guidance
Appendix O – Reconciliation of 2015 Operating Margin Guidance 45 Note: In 2015, losses, other charges and charge reversals include expenses associated with the Restructuring Plan approved by the Board of Directors on April 28, 2014; acquisition and integration costs, and charges related to facility
Slide 46: Appendix P – Reconciliation of 2015 Adjusted Earnings per Share Guidance
Appendix P – Reconciliation of 2015 Adjusted Earnings per Share Guidance 46 Low High Diluted earnings per share attributable to common shareholders $4.22 $4.37 Restructuring, impairment charges and special items, net of tax $0.75 $0.80 Intangible amortization expense, net of tax $0.95 $1.00 Amortiza
Slide 47: Appendix Q – Reconciliation of Teleflex Adjusted Tax Rate
47 Appendix Q – Reconciliation of Teleflex Adjusted Tax Rate Dollars in Thousands Twelve Months Ended December 31, 2014 Income from continuing operations before taxes Taxes on income from continuing operations Tax rate GAAP basis $220,110 $28,650 13.0% Restructuring and impairment charges 17,869 5,1