Teleflex Incorporated (Teleflex), a US based medical device company, has reported net revenues of $2.4 billion for the full year of 2008, compared with the net revenues of $1.9 billion in the previous year-end. It also reported a net income of $119.8 million or $3.01 per diluted share, for the full year of 2008, compared with the net income of $146.5 million or $3.73 per diluted share, in the previous year-end.
Fourth quarter 2008 financial highlights
Fourth quarter revenues from continuing operations increased 2% to $596.5 million from $583.1 million in the fourth quarter of 2007 as a result of 4% core growth, offset by an unfavorable currency impact.
Income from continuing operations excluding special charges increased 47% to $41.4 million or $1.04 per diluted share against $28.1 million or $0.71 per diluted share in the prior year quarter. Operating profit improvements were achieved in our Medical, Aerospace and Commercial segments, and we experienced a reduction in corporate costs versus the prior year quarter. Income from continuing operations including special charges increased to $30.9 million or $0.78 per diluted share against a loss of $46.2 million or $1.17 per share in the prior year quarter. Results for the period included certain charges described in the reconciliation table below.
The loss from discontinued operations for the fourth quarter was $11.4 million or $0.29 per diluted share against income of $111.6 million or $2.83 per diluted share in 2007. 2007 results from discontinued operations include a gain, net of tax, of $107.5 million from the sale of the automotive and industrial businesses.
Net income was $19.6 million or $0.49 per diluted share against $65.4 million or $1.66 per diluted share in the prior year quarter.
“The solid performance of our core operations reflects the strength of our businesses and our management teams’ ability to execute,” said Jeffrey P. Black, chairman and chief executive officer of Teleflex.
Fourth quarter business segment commentary
Medical Segment revenues in the quarter increased 4% to $373.4 million from $360.2 million in the prior year. The increase resulted from core growth of 7%, offset by an unfavorable currency impact of 3%.
Adjusted segment operating profit rose to $74.5 million from $69.3 million in the prior year. Adjusted segment operating margins in the quarter were 19.9% versus 19.2% in the prior year quarter. A reconciliation of adjusted segment operating profit and margin are noted in the table below.
“We achieved core revenue growth in the fourth quarter from every region and major product category, led by an increase in sales to medical device manufacturers and disposable products sold for critical care applications,” commented Black. “In addition, we are continuing to support our customers by developing new products, supporting best practices and enhancing clinical education and training.”
Added Black, “We are pleased to see the fourth quarter core revenue growth and operating profit achieved by our Medical business, further confirming our investment strategy in adding the Arrow product offerings to our Medical business.”
Aerospace Segment revenues increased 4% to $125.5 million from $120.4 million in the prior year. The improvement resulted from a 5% increase from an acquisition and core revenue growth of 2%, offset by a 3% negative impact of currency translation. Increases in engine repair services revenues more than offset a decline in cargo handling revenues. Segment operating profit increased 7% to $15.9 million from $14.8 million in the prior year. Segment operating margins improved 30 basis points to 12.6% in the quarter.
Black stated, “Overall, it was a good quarter for the Segment. The favorable mix that we have seen in the prior quarters continued in the fourth quarter of 2008 in our repairs business. The investments that we made over the past few years in new technologies continue to pay dividends for our Aerospace business, as well as for our customers.”
Commercial Segment revenues were $97.6 million, a 5% decline against the prior year. The decrease resulted from declines of 2% in core revenues, 2% from currency translation, and 1% from dispositions. The decline in core revenues resulted from a significant decrease in sales of products in the marine business which was nearly offset by an increase in auxiliary power units sold in the power systems business and 13% core growth in sales of rigging services products. Segment operating profit improved to $8.1 million, against $5.0 million in the prior year quarter. Segment operating margins increased to 8.3% from 4.9% in the prior year, benefiting from positive effects of foreign currency translation.
Commented Black, “Our power systems and rigging services businesses executed well in the quarter, with increased sales and strong operating profit improvement. We also took action to further restructure our marine business as it continued its decline in both sales and profitability as a result of the extremely challenging recreational marine market.”
Full year 2008 financial highlights
Core revenues increased in both Medical and Aerospace while Commercial revenues declined. Revenues also benefited from acquisitions and currency translation.
Full year 2008 income from continuing operations excluding special charges increased 25% to $161.2 million or $4.05 per diluted share against $128.5 million or $3.24 per diluted share in the prior year. Income from continuing operations for 2008 including special charges increased to $134.0 million or $3.36 per diluted share against a loss of $42.4 million or $1.08 per share in the prior year.
Special charges for full year 2008 included restructuring and transaction-related charges, net of tax, of $22.8 million or $0.57 per diluted share, primarily related to the acquisition of Arrow International (“Arrow”) and the Commercial segment restructuring announced in December 2008. Results for 2008 also included a fair market value adjustment to inventory, net of tax, of $4.4 million or $0.11 per diluted share associated with the acquisition of Arrow.
Results from continuing operations for 2007 included certain charges for purchased in-process research and development, fair market value adjustments to inventory and deferred financing costs in connection with the Arrow acquisition, as well as special charges related to restructuring programs. Charges in 2007 also included intangible asset impairment charges primarily related to the company’s power systems business, a tax charge related to completed and future cash repatriation, and losses on sales of assets. These items reduced earnings by $170.8 million, net of tax, or $4.32 per diluted share for the full year.
Full year 2008 loss from discontinued operations was $14.2 million or $0.36 per diluted share against income from discontinued operations of $188.9 million or $4.81 per diluted share in 2007. Income from discontinued operations in 2007 included gains on dispositions.
Cash flow from continuing operations for 2008 was $176.8 million. Excluding tax payments of $90.2 million related to the divestiture of the automotive and industrial businesses completed in 2007, cash flow from continuing operations was $267.0 million versus $283.1 million in the prior year.
Commented Black, “It was a strong year for Teleflex as we achieved good results on our stated goals. We delivered double-digit growth in earnings before special charges, another year of strong cash flow generation, Medical adjusted segment operating margins of 20% for the full year, and operating margin improvement in both our Aerospace and Commercial segments.”
Added Black, “We consistently performed throughout the year and achieved over $40 million of pre-tax synergies associated with the Arrow acquisition. Teleflex enters 2009 with an improved balance sheet, the ability to generate significant cash flow and a portfolio of businesses better positioned to manage through this difficult and challenging economic environment. We are reaffirming our previous 2009 guidance for diluted earnings per share from continuing operations excluding special items of $4.10 to