Slide 1: Teleflex Incorporated Fourth Quarter 2017 Earnings Conference Call
Teleflex Incorporated Fourth Quarter 2017 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 6373419 An accompanying supplemental schedule
Slide 3: Introductions
Introductions Liam Kelly President and CEO 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, the expected impact of the expanded indications for the UroLift System; our expectations with regard to the impact of the Vascular Solutions distr
Slide 5: 4Q17 Highlights
4Q17 Highlights Strength in New Products Offset by Order Timing and EMEA Constant currency revenue growth from new products continues to accelerate as we exit the year Excluding impact of fewer shipping days, constant currency revenue growth strong in Vascular North America and Interventional North
Slide 6: 4Q and FY17 Financial Summary
4Q and FY17 Financial Summary Fourth quarter 2017 revenue of $595.1 million • Up 15.8% vs. prior year period on an as-reported basis • Up 12.6% vs. prior year period on a constant currency basis Fourth quarter 2017 Earnings Per Share • GAAP EPS of ($0.92), down 171.3% vs. prior year period • Adjuste
Slide 7: 4Q Constant Currency Revenue Growth
4Q Constant Currency Revenue Growth Q4 2017 Constant Currency Revenue Growth New Product introductions 2.0% Price 0.7% Volume (excluding shipping day impact) (0.9%) Shipping Day Impact (5.0%) Vascular Solutions 8.0% NeoTract 7.4% Other M&A 0.4% Constant Currency Revenue Growth 12.6% 7 Note: See appe
Slide 8: Segment Revenue Review
Segment Revenue Review Q4’17 Q4’16 11% 15% 14% 16% 9% 7% 8% 9% 9% 14% 13% 11% 10% 4% 26% 24% Vascular North America Surgical North America Vascular North America Surgical North America Anesthesia North America Interventional North America Anesthesia North America Interventional North America EMEA As
Slide 9: Acquisition Update
Acquisition Update Integration on Schedule − Management team intact − No regrettable sales force turnover − Continue to nurture high performing culture − Maintain employee engagement − Investing to ensure that hyper-growth revenue trajectory continues 2017 Financial Results and Forward Looking Finan
Slide 10: 2018 UroLift Commercial Strategy
Acquisition Update 2018 UroLift Commercial Strategy Leverage Drive utilization Begin early expanded in current majority market reimbursement accounts penetration coverage 10
Slide 11: Product Introductions and Regulatory Approvals: UroLift Median Lobe
Product Introductions and Regulatory Approvals UroLift® Obstructive Median Lobe US only 510(k) KEY TAKEAWAYS Recently received FDA 510(k) clearance for Median changes to the IFU for both UroLift and Lobe Bladder UroLift 2 devices: Removal of obstructive median lobe contraindication Addition of a
Slide 12: RePlas Freeze-Dried Plasma Regulatory Update and Timeline
Product Introductions and Regulatory Approvals RePlas® Freeze-Dried Plasma Regulatory Update and Timeline FDA and DoD launch joint program to expedite Dec 2017 medical products intended to save lives of US Military; including freeze-dried plasma FDA confirms accelerated BLA approval Jan 2018 pathway
Slide 13: Fourth Quarter Financial Review
Fourth Quarter Financial Review Revenue of $595.1 million • Up 15.8% vs. prior year period on an as-reported basis • Up 12.6% vs. prior year period on a constant currency basis Gross Margin • GAAP gross margin of 55.6%, up 250 bps vs. prior year period • Adjusted gross margin of 56.5%, up 270 bps vs
Slide 14: 2018 Financial Outlook Assumptions
2018 Financial Outlook Assumptions 2018 revenue guidance assumes a modest improvement in base business revenue growth rates from 2017 levels, and an acceleration in total organic constant currency revenue growth due to acquisitions of NeoTract and Vascular Solutions 2018 Guidance 2017 Low High Actua
Slide 15: 2018 Financial Outlook Assumptions: Adjusted Gross Margin Drivers
2018 Financial Outlook Assumptions 60% +170 bps to +220 bps 2018 Adjusted Gross Margin Drivers +170 bps Gross margin expansion in 2018 as compared 55% to 2017 expected to be driven by: • NeoTract and Vascular Solutions acquisitions 57.5% to • Cost improvement programs 55.8% 58.0% 50% • Benefits from
Slide 16: 2018 Financial Outlook Assumptions: Adjusted Operating Margin Drivers
2018 Financial Outlook Assumptions +100 bps to 27% +140 bps 2018 Adjusted Operating Margin Drivers +100 bps 25% Improved financial leverage generated during 2016 and 2017 expected to continue in 2018 23% Adjusted gross margin improvement expected to contribute between 170 and 220 basis points 26.1%
Slide 17: 2018 Financial Outlook Assumptions: Adjusted EPS
2018 Financial Outlook Assumptions Vascular Solutions and NeoTract, coupled with continued contribution from our base business, expected to lead to 2018 adjusted EPS growth of 13.7% to 16.1% 2018 Guidance Low High 2017 Adjusted Earnings per Share $8.40 $8.40 Base Business, VSI, and NeoTract $1.61 $1
Slide 18: Any Questions?
Any Questions? Veleflex:
Slide 19: Thank You
Thank You Veleflex:
Slide 20: Appendices
—=———— Appendices Veleflex:
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures The presentation to which these appendices are attached and 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 e
Slide 22: Constant Currency Revenue Growth, Three Months Ended
APPENDIX A – RECONCILIATION OF CONSTANT CURRENCY REVENUE GROWTH DOLLARS IN MILLIONS Three Months Ended % Increase / (Decrease) December 31, 2017 December 31, 2016 Constant Currency Currency Total Vascular North America $ 80.7 $ 80.3 0.3% 0.2% 0.5% Interventional North America 61.7 22.2 177.2% 0.4% 1
Slide 23: Constant Currency Revenue Growth, Twelve Months Ended
APPENDIX B – RECONCILIATION OF CONSTANT CURRENCY REVENUE GROWTH DOLLARS IN MILLIONS Twelve Months Ended % Increase / (Decrease) December 31, 2017 December 31, 2016 Constant Currency Currency Total Vascular North America $ 313.6 $ 295.2 6.1% 0.1% 6.2% Interventional North America 220.6 82.4 167.5% 0.
Slide 24: Revenue Growth
APPENDIX C – RECONCILIATION OF REVENUE GROWTH DOLLARS IN MILLIONS Year-Over-Year Growth % Basis Points Three Months Ended December 31, 2016 Revenue As-Reported $ 513.9 Foreign Currency $ 14.7 3.2% 320 Volume (exclding the impact of shipping days) $ (4.9) -0.9% -90 Shipping Day Impact $ (26.7) -5.0%
Slide 25: Reconciliation of Adjusted Gross Profit and Margin, Quarter
APPENDIX D – RECONCILIATION OF ADJUSTED GROSS PROFIT AND MARGIN DOLLARS IN THOUSANDS Three Months Ended December 31, 2017 December 31, 2016 Teleflex gross profit as-reported $ 330,731 $ 273,052 Teleflex gross margin as-reported 55.6% 53.1% Restructuring, restructuring related and impairment items (A
Slide 26: Reconciliation of Adjusted Gross Profit and Margin, Year
APPENDIX E – RECONCILIATION OF ADJUSTED GROSS PROFIT AND MARGIN DOLLARS IN THOUSANDS Year Ended December 31, 2017 December 31, 2016 Teleflex gross profit as-reported $ 1,171,802 $ 996,200 Teleflex gross margin as-reported 54.6% 53.3% Restructuring, restructuring related and impairment items (A) 12,7
Slide 27: Reconciliation of Adjusted Operating Profit and Margin, Quarter
APPENDIX F – RECONCILIATION OF ADJUSTED OPERATING PROFIT AND MARGIN DOLLARS IN THOUSANDS Three Months Ended Decem ber 31, 2017 Decem ber 31, 2016 Teleflex incom e from continuing operations before interest, loss on extinguishm ent of debt and taxes $ 90,904 $ 67,028 Teleflex incom e from continuing
Slide 28: Reconciliation of Adjusted Operating Profit and Margin, Year
APPENDIX G – RECONCILIATION OF ADJUSTED OPERATING PROFIT AND MARGIN DOLLARS IN THOUSANDS Year Ended Decem ber 31, 2017 Decem ber 31, 2016 Teleflex incom e from continuing operations before interest, loss on extinguishm ent of debt and taxes $ 372,279 $ 319,453 Teleflex incom e from continuing operat
Slide 29: Reconciliation of Adjusted EPS, Quarter Ended December 31, 2017
APPENDIX H – RECONCILIATION OF ADJUSTED EPS FROM CONTINUING OPERATIONS QUARTER ENDED – DECEMBER 31, 2017 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 Interest Incom e attributa
Slide 30: Reconciliation of Adjusted EPS, Quarter Ended December 31, 2016
APPENDIX I – 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 Interest Incom e attributa
Slide 31: Appendices H and I – Tickmarks
APPENDICES H AND I – TICKMARKS (A) Restructuring, restructuring related and impairment items - Restructuring programs involve discrete initiatives designed to, among other things, consolidate or relocate manufacturing, administrative and other facilities, improve operating efficiencies and integrate
Slide 32: Reconciliation of Adjusted EPS, Year Ended December 31, 2017
APPENDIX J – RECONCILIATION OF ADJUSTED EPS FROM CONTINUING OPERATIONS YEAR ENDED – DECEMBER 31, 2017 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 Interest Incom e attr
Slide 33: Reconciliation of Adjusted EPS, Year Ended December 31, 2016
APPENDIX K – 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 Interest Incom e attr
Slide 34: Appendices J and K – Tickmarks
APPENDICES J AND K – TICKMARKS (A) Restructuring, restructuring related and impairment items - Restructuring programs involve discrete initiatives designed to, among other things, consolidate or relocate manufacturing, administrative and other facilities, improve operating efficiencies and integrate
Slide 35: Reconciliation of Adjusted Tax Rate, Quarter
APPENDIX L – RECONCILIATION OF ADJUSTED TAX RATE DOLLARS IN THOUSANDS Incom e from Taxes on continuing incom e from operations continuing Three Months Ended December 31, 2017 before taxes operations Tax rate GAAP basis $67,397 $110,244 163.6% Restructuring, restructuring related and impairment items
Slide 36: Reconciliation of Adjusted Tax Rate, Year
APPENDIX M – RECONCILIATION OF ADJUSTED TAX RATE DOLLARS IN THOUSANDS Incom e from Taxes on continuing incom e from operations continuing Year Ended December 31, 2017 before taxes operations Tax rate GAAP basis $284,911 $129,648 45.5% Restructuring, restructuring related and impairment items 29,371
Slide 37: 2018 Constant Currency Revenue Growth Guidance
APPENDIX N – RECONCILIATION OF 2018 CONSTANT CURRENCY REVENUE GROWTH GUIDANCE Low High Forecasted GAAP Revenue Grow th 14.0% 15.0% Estimated Impact of Foreign Currency Exchange Rate Fluctuations -2.0% -2.0% Forecasted Constant Currency Revenue Grow th 12.0% 13.0% 37
Slide 38: 2018 Adjusted Gross Margin Guidance
APPENDIX O – RECONCILIATION OF 2018 ADJUSTED GROSS MARGIN GUIDANCE Low High Forecasted GAAP Gross Margin 57.1% 57.7% Restructuring, restructuring related and impairment items (A) 0.35% 0.30% Acquisition, integration and divestiture related items (B) 0.05% 0.00% Forecasted Adjusted Gross Margin 57.5%
Slide 39: 2018 Adjusted Operating Margin Guidance
APPENDIX P – RECONCILIATION OF 2018 ADJUSTED OPERATING MARGIN GUIDANCE Low High Forecasted GAAP Operating Margin 19.40% 20.00% Estimated restructuring, restructuring related and impairment items (A) 0.50% 0.45% Estimated acquisition, integration and divestiture related items (B) 0.70% 0.65% Estimate
Slide 40: 2018 Adjusted Earnings Per Share Guidance
APPENDIX Q – RECONCILIATION OF 2018 ADJUSTED EARNINGS PER SHARE GUIDANCE Low High Forecasted diluted earnings per share attributable to common shareholders $7.10 $7.20 Restructuring, restructuring related and impairment items, net of tax (A) $0.17 $0.20 Acquisition, integration and divestiture items
Slide 41: 2018 Financial Outlook Assumptions
APPENDIX R – 2018 FINANCIAL OUTLOOK ASSUMPTIONS Euro to U.S. Dollar exchange rate assumed to be approximately 1.18 for full year 2018 Adjusted weighted average shares expected to be approximately 46.9 million for full year 2018 2018 Calendar of shipping days: • Q1’18 vs. Q1’17: 1 less day • Q2’18 vs
Slide 42: Teleflex Restructuring Plan Summary
APPENDIX S – TELEFLEX RESTRUCTURING PLAN SUMMARY With respect to our restructuring plans and programs that were ongoing at December 31, 2017, the table below summarizes (1) the estimated total charges that will be incurred and the estimated annual pre-tax savings once the plans and programs are comp
Slide 43: Group Purchasing Organization and IDN Review
APPENDIX T – GROUP PURCHASING ORGANIZATION AND IDN REVIEW Group Purchasing Organization Update • 21 renewed agreements • 2 new agreements • 3 existing agreements not renewed IDN Update • 37 renewed agreements • 25 new agreements • 7 existing agreements not renewed 43
Slide 44: Reporting Segment Changes
APPENDIX U - REPORTING SEGMENT CHANGES Vascular N.A. Interventional N.A. All Other Interventional Access N.A. Interventional Access N.A. Interventional Urology N.A. Cardiac N.A. Latin America Vascular Solutions N.A. Urology N.A. / Respiratory N.A Cardiac N.A. Vascular Solutions N.A. Vascular Solutio
Slide 45: Full Year 2017 vs. 2016 Constant Currency Revenue Growth
APPENDIX V - FULL YEAR 2017 VS. 2016 CONSTANT CURRENCY REVENUE GROWTH FY 2017 Constant Currency Revenue Growth New Product introductions 1.9% Price 0.6% Volume (excluding shipping day impact) 1.0% Shipping Day Impact (0.3%) Vascular Solutions 8.1% NeoTract 2.1% Other M&A 0.7% Constant Currency Reven