Slide 1: Fourth Quarter 2016 Earnings Conference Call
Teleflex Incorporated Fourth Quarter 2016 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 855-859-2056 or for international calls, 404- 537-3406, pass code number 65576607 2
Slide 3: Introductions
Introductions Benson Smith Chairman and CEO Liam Kelly President and COO Thomas Powell Executive Vice President and CFO Jake Elguicze Treasurer and Vice President of Investor Relations 3
Slide 4: Note on Forward-Looking Statements and Non-GAAP Financial Measures
Note on Forward-Looking Statements This presentation and our discussion contain forward-looking information and statements including, but not limited to, expected 2017 revenue growth from new product sales; our expectation that our acquisition of Vascular Solutions, Inc. will be accretive to our 201
Slide 5: Executive Summary
Executive Summary Fourth quarter 2016 revenue of $513.9 million • Up 6.1% vs. prior year period on an as-reported basis • Up 6.9% vs. prior year period on a constant currency basis Fourth quarter 2016 Earnings Per Share • GAAP EPS of $1.29, down 31.4% vs. prior year period • Adjusted EPS of $2.13, u
Slide 6: Executive Summary: Succession Planning Update
Executive Summary Succession Planning Update • Benson Smith to retire as Chief Executive Officer effective December 31, 2017 • Mr. Smith, a Teleflex Board member since 2005, will continue to serve as Teleflex’s Chairman of the Board. He has been nominated by Teleflex’s Board of Directors to serve fo
Slide 7: Fourth Quarter Highlights
Fourth Quarter Highlights Fourth quarter 2016 constant currency revenue growth of 6.9% • Sales volume of existing products contribute 4.5% of constant currency growth • Sales volume of new products contribute 1.6% of constant currency growth • Acquisitions contribute 0.4% of constant currency revenu
Slide 8: Segment Revenue Review
Segment Revenue Review Q4’16 Q4’15 12% 12% 19% 19% 9% 8% 9% 9% 14% 14% 11% 10% 26% 28% Vascular North America Surgical North America Vascular North America Surgical North America Anesthesia North America EMEA Anesthesia North America EMEA Asia OEM Asia OEM All Other All Other Constant Currency Reven
Slide 9: Group Purchasing Organization and IDN Review
Group Purchasing Organization and IDN Review Track record of expansion of contractual agreements continues in Q4’16 Group Purchasing Organization Update • 3 renewed agreements • 1 existing agreement not renewed IDN Update • 15 renewed agreements • 4 new agreements • 3 existing agreements not renewed
Slide 10: Product Introductions and Regulatory Approvals: Arrow VPS Rhythm
Product Introductions and Regulatory Approvals Arrow® VPS Rhythm™ Device with Optional TipTracker™ Technology PRODUCT DESCRIPTION Recently received FDA 510(k) clearance for the Arrow ® VPS Rhythm ™ Device expands Teleflex’s Catheter Tip Navigation and Placement portfolio to now include familiar ECG-
Slide 11: Product Introductions and Regulatory Approvals: LMA Gastro Airway
Product Introductions and Regulatory Approvals LMA® Gastro™ Airway with Cuff Pilot™ Technology PRODUCT DESCRIPTION The LMA® Gastro™ Airway is the first laryngeal mask designed specifically to facilitate esophageal access and promote airway control during endoscopic procedures. Indicated for airway m
Slide 12: New Product Revenue Growth Trend
New Product Revenue Growth Trend 25 new products and line extensions introduced in 2016 and 88 since 2013 Revenue growth acceleration from new product introductions expected to continue in 2017 driven by contributions from MiniLap, Percuvance, VPS CG+, VPS Rhythm, AC3, LMA Protector 2.5% 2.0% 2.0% 1
Slide 13: Acquisition Update
Acquisition Update Completed Acquisition of Vascular Solutions 1. Highly strategic and complementary acquisition − Significantly advances Teleflex’s offering of vascular and interventional solutions − Adds over 90 proprietary products and services that are sold to interventional cardiologists, inter
Slide 14: Fourth Quarter Financial Review
Fourth Quarter Financial Review Revenue of $513.9 million • Up 6.1% vs. prior year period on an as-reported basis • Up 6.9% vs. prior year period on a constant currency basis Gross Margin • GAAP gross margin of 53.1%, down 60 bps vs. prior year period • Adjusted gross margin of 53.8%, down 30 bps vs
Slide 15: 2017 Financial Outlook Assumptions
2017 Financial Outlook Assumptions 2017 revenue guidance assumes volume and new product revenue growth rates similar to 2016 levels and an acceleration in total constant currency revenue growth due to acquisition of Vascular Solutions Volume 1.80% 2.40% New Product Introductions 1.40% 1.60% Price 0.
Slide 16: 2017 Financial Outlook Assumptions: Adjusted Gross Margin Drivers
2017 Financial Outlook Assumptions 2017 Adjusted Gross Margin Drivers Gross margin expansion in 2017 as compared to 2016 +140 bps expected to be driven by: • Cost improvement programs • Benefits from 2014 and 2016 restructuring plans • Favorable product mix • Improved pricing • New product introduct
Slide 17: 2017 Financial Outlook Assumptions: Adjusted Operating Margin Drivers
2017 Financial Outlook Assumptions 2017 Adjusted Operating Margin Drivers +260 bps Improved financial leverage generated during 2015 and 2016 expected to continue in 2017 Adjusted gross margin improvement expected to contribute between 130 and 190 basis points SG&A expense cost control allows for in
Slide 18: 2017 Financial Outlook Assumptions: Adjusted EPS
2017 Financial Outlook Assumptions Base business portfolio capable of generating consistent revenue growth and operating leverage, coupled with addition of Vascular Solutions, expected to lead to 2017 adjusted EPS growth of 9.0% to 11.0% 2016 Adjusted Earnings per Share $7.34 $7.34 Base business $1.
Slide 19: Any Questions?
Any Questions? Veleflex:
Slide 20: Thank You
Thank You Veleflex:
Slide 21: Appendices
—=———— Appendices Veleflex:
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures The following appendices include, among other things, tables reconciling the following non-GAAP financial measures to the most comparable GAAP financial measure: • Constant currency revenue growth. This measure excludes the impact of translating the results of internation
Slide 23: Appendix A – Reconciliation of Constant Currency Revenue Growth
APPENDIX A – RECONCILIATION OF CONSTANT CURRENCY REVENUE GROWTH DOLLARS IN MILLIONS Three Months Ended % Increase / (Decrease) December 31, 2016 December 31, 2015 Constant Currency Currency Total Vascular North America $ 95.7 $ 90.3 5.9% 0.0% 5.9% Anesthesia North America 54.9 50.6 8.5% 0.0% 8.5% Su
Slide 24: Appendix B – Reconciliation of Constant Currency Revenue Growth
APPENDIX B – RECONCILIATION OF CONSTANT CURRENCY REVENUE GROWTH DOLLARS IN MILLIONS Twelve Months Ended % Increase / (Decrease) December 31, 2016 December 31, 2015 Constant Currency Currency Total Vascular North America $ 350.5 $ 334.9 4.8% (0.2%) 4.6% Anesthesia North America 198.8 189.2 5.2% (0.2%
Slide 25: Appendix C – Revenue Growth
APPENDIX C – RECONCILIATION OF REVENUE GROWTH DOLLARS IN MILLIONS Year-over-year grow th % Basis Points Three Months Ended Decem ber 31, 2015 Revenue As-Reported $484.5 Foreign Currency (3.9) -0.8% (81) Sales Volume Existing Products 21.6 4.5% 445 New Product Sales 7.8 1.6% 161 Pricing 1.8 0.4% 37 A
Slide 26: Appendix D – Adjusted Gross Profit and Margin
APPENDIX D – RECONCILIATION OF ADJUSTED GROSS PROFIT AND MARGIN DOLLARS IN THOUSANDS Three Months Ended December 31, 2016 December 31, 2015 Teleflex gross profit as-reported $ 273,052 $ 260,316 Teleflex gross margin as-reported 53.1% 53.7% Losses and other charges, net (A) 3,686 1,895 Adjusted Telef
Slide 27: Appendix E – Adjusted Gross Profit and Margin
APPENDIX E – RECONCILIATION OF ADJUSTED GROSS PROFIT AND MARGIN DOLLARS IN THOUSANDS Year Ended 12/31/16 12/31/15 12/31/14 Teleflex gross profit as-reported $ 996,200 $ 944,403 $ 942,428 Teleflex gross margin as-reported 53.3% 52.2% 51.2% Losses and other charges, net (A) 14,559 9,449 4,886 Adjusted
Slide 28: Appendix F – Adjusted Operating Profit and Margin
APPENDIX F – RECONCILIATION OF ADJUSTED OPERATING PROFIT AND MARGIN DOLLARS IN THOUSANDS Three Months Ended Decem ber 31, 2016 Decem ber 31, 2015 Teleflex incom e from continuing operations before interest and taxes $ 67,028 $ 96,747 Teleflex incom e from continuing operations before interest and ta
Slide 29: Appendix G – Adjusted Operating Profit and Margin
APPENDIX G – RECONCILIATION OF ADJUSTED OPERATING PROFIT AND MARGIN DOLLARS IN THOUSANDS Year Ended 12/31/16 12/31/15 12/31/14 Teleflex incom e from continuing operations before interest and taxes $ 319,453 $ 315,891 $ 284,862 Teleflex incom e from continuing operations before interest and taxes m a
Slide 30: Appendix H – Adjusted EPS, Quarter Ended December 31, 2016
APPENDIX H – RECONCILIATION OF ADJUSTED EPS FROM CONTINUING OPERATIONS QUARTER ENDED – DECEMBER 31, 2016 DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA Selling, general Restructuring Net incom e (loss) Diluted earnings Shares used in Cost of Research and (Gain) loss on and and other Interest Incom e att
Slide 31: Appendix I – Adjusted EPS, Quarter Ended December 31, 2015
APPENDIX I – RECONCILIATION OF ADJUSTED EPS FROM CONTINUING OPERATIONS QUARTER ENDED – DECEMBER 31, 2015 DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA Selling, general Restructuring Net incom e (loss) Diluted earnings Shares used in Cost of Research and Interest and and other Incom e attributable to co
Slide 32: Appendix J – Adjusted EPS, Year Ended December 31, 2016
APPENDIX J – RECONCILIATION OF ADJUSTED EPS FROM CONTINUING OPERATIONS YEAR ENDED – DECEMBER 31, 2016 DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA Selling, general Restructuring Net incom e (loss) Diluted earnings Shares used in Cost of Research and (Gain) loss on Loss on and and other Interest Incom
Slide 33: Appendix K – Adjusted EPS, Year Ended December 31, 2015
APPENDIX K – RECONCILIATION OF ADJUSTED EPS FROM CONTINUING OPERATIONS YEAR ENDED – DECEMBER 31, 2015 DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA (Gain) loss Selling, general Restructuring Net incom e (loss) Diluted earnings Shares used in Cost of Research and on sale of Interest Loss on and and othe
Slide 34: Appendix L – Reconciliation of Adjusted Tax Rate
APPENDIX L – RECONCILIATION OF ADJUSTED TAX RATE DOLLARS IN THOUSANDS Three Months Ended Decemb er 31, 2016 Incom e from Taxe s on continuing incom e from ope rations continuing be fore taxe s ope rations Tax rate GAAP bas is $50,816 ($10,060) -19.8% Restructuring and impairment charges (A) 46,351 1
Slide 35: Appendix M – Reconciliation of Adjusted Tax Rate
APPENDIX M – RECONCILIATION OF ADJUSTED TAX RATE DOLLARS IN THOUSANDS Year Ended Decemb er 31, 2016 Incom e from Taxe s on continuing incom e from ope rations continuing be fore taxe s ope rations Tax rate GAAP bas is $245,725 $8,074 3.3% Restructuring and impairment charges (A) 59,227 19,899 Losses
Slide 36: Appendix N – 2017 Constant Currency Revenue Growth Guidance
APPENDIX N – RECONCILIATION OF 2017 CONSTANT CURRENCY REVENUE GROWTH GUIDANCE Low High Forecasted GAAP Revenue Grow th 10.0% 11.5% Estimated Impact of Foreign Currency Exchange Rate Fluctuations 2.5% 2.5% Forecasted Constant Currency Revenue Grow th 12.5% 14.0% 36
Slide 37: Appendix O – 2017 Adjusted Gross Margin Guidance
APPENDIX O – RECONCILIATION OF 2017 ADJUSTED GROSS MARGIN GUIDANCE Low High Forecasted GAAP Gross Margin 54.15% 54.70% Estimated losses and other charges, net 1.25% 1.30% Forecasted Adjusted Gross Margin 55.40% 56.00% Note: In 2017, estimated losses and other charges, net relate primarily to facilit
Slide 38: Appendix P – 2017 Adjusted Operating Margin Guidance
APPENDIX P – RECONCILIATION OF 2017 ADJUSTED OPERATING MARGIN GUIDANCE Low High Forecasted GAAP Operating Margin 16.50% 17.10% Estimated losses and other charges, net 3.85% 3.90% Estimated intangible amortization expense 5.25% 5.30% Forecasted Adjusted Operating Margin 25.60% 26.30% Note: In 2017, e
Slide 39: Appendix Q – 2017 Adjusted Earnings Per Share Guidance
APPENDIX Q – RECONCILIATION OF 2017 ADJUSTED EARNINGS PER SHARE GUIDANCE Low High Forecasted diluted earnings per share attributable to common shareholders $5.04 $5.08 Restructuring, impairment charges and special items, net of tax $1.35 $1.40 Intangible amortization expense, net of tax $1.60 $1.65
Slide 40: Appendix R – 2017 Financial Outlook Assumptions
APPENDIX R – 2017 FINANCIAL OUTLOOK ASSUMPTIONS Euro to U.S. Dollar exchange rate assumed to be ~1.04 for full year 2017 Adjusted weighted average shares expected to be approximately 46.3 to 46.4 million for full year 2017 Calendar of shipping days: • 5 additional shipping days in Q1’17 vs. Q1’16 •
Slide 41: Appendix S – Teleflex Restructuring Plan Summary
APPENDIX S – TELEFLEX RESTRUCTURING PLAN SUMMARY Estimated Annualized Pre-Tax Estimated Pre-Tax Charges Savings Range Once Program Year Savings Year Program Expected to Program Range is Substantially Complete Expected to Begin be Substantially Complete 2014 Manufacturing Footprint Realignment Plan $