WAYNE, PA — Teleflex Incorporated (NYSE: TFX) announced financial results for the third quarter ended September 27, 2020.
Third quarter 2020 net revenues were $628.3 million, a decrease of 3.1% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues decreased 4.1% over the year ago period. The Company estimates that COVID-19 had a net negative impact to revenue of approximately $78 million, or 12%.
Third quarter 2020 GAAP earnings per share from continuing operations decreased 49.3% to $2.46, compared to $4.85 in the prior year period. Third quarter 2020 adjusted diluted earnings per share from continuing operations decreased 6.7% to $2.77, compared to $2.97 in the prior year period.
Liam Kelly, Chairman, President and Chief Executive Officer, said, “Our third quarter results reflect improving trends across many of our global product categories, led by a faster-than-expected recovery within our Interventional Urology business, and continued strength within our Vascular Access product sales. From a regional perspective, we saw particular strength within the Americas, as the pace of recovery in the United States during the third quarter was encouraging.”
Mr. Kelly continued, “In addition to the significant sequential improvement in our constant currency revenue performance, we also saw a significant improvement within our adjusted gross and operating margins, as well as our adjusted earnings per share, as compared to the second quarter of the year. And while we are not reinstating full year 2020 financial guidance, we continue to believe that we will see continued sequential improvement during the fourth quarter of the year as compared to our third quarter 2020 results.”
Mr. Kelly concluded, “Lastly, I am pleased to announce that during October we signed a definitive agreement to acquire Z-Medica, LLC, a market leader in hemostatic products. We are excited about this acquisition, given Z-Medica’s revenue growth, gross and operating margin profile, all of which are above our average, and our expectation that the acquisition will be accretive to our adjusted earnings per share in 2021.”
NET REVENUE BY SEGMENT
The following tables and commentary provide information regarding net revenues in each of the Company’s reportable operating segments for the three and nine months ended September 29, 2019 and September 27, 2020 on both a GAAP and constant currency basis. The discussion below the tables of the principal factors behind changes in net revenues for the three months ended September 27, 2020 as compared to the prior year period applies to both GAAP revenue and constant currency revenue, although GAAP revenue also was affected by foreign currency exchange rate fluctuations, as indicated in the “Currency Impact” column of the table.
| Three Months Ended |
% Increase / (Decrease) |
|||||||||||||||
| September 27, 2020 |
September 29, 2019 |
Total Sales Growth |
Currency Impact |
Constant Currency Revenue Growth |
||||||||||||
| Americas | $ | 375.0 | $ | 374.5 | 0.1 | % | (0.3 | )% | 0.4 | % | ||||||
| EMEA | 135.7 | 140.5 | (3.5 | )% | 3.5 | % | (7.0 | )% | ||||||||
| Asia | 68.2 | 77.9 | (12.4 | )% | 1.8 | % | (14.2 | )% | ||||||||
| OEM | 49.4 | 55.4 | (10.9 | )% | 0.9 | % | (11.8 | )% | ||||||||
| Total | $ | 628.3 | $ | 648.3 | (3.1 | )% | 1.0 | % | (4.1 | )% | ||||||
| Nine Months Ended |
% Increase / (Decrease) |
|||||||||||||||
| September 27, 2020 |
September 29, 2019 |
Total Sales Growth |
Currency Impact |
Constant Currency Revenue Growth |
||||||||||||
| Americas | $ | 1,045.6 | $ | 1,092.3 | (4.3 | )% | (0.3 | )% | (4.0 | )% | ||||||
| EMEA | 423.4 | 442.1 | (4.2 | )% | (0.6 | )% | (3.6 | )% | ||||||||
| Asia | 188.4 | 213.9 | (11.9 | )% | (1.3 | )% | (10.6 | )% | ||||||||
| OEM | 168.6 | 166.1 | 1.5 | % | — | % | 1.5 | % | ||||||||
| Total | $ | 1,826.0 | $ | 1,914.4 | (4.6 | )% | (0.4 | )% | (4.2 | )% | ||||||
Americas third quarter 2020 net revenues were $375.0 million, an increase of 0.1% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues increased 0.4% compared to the prior year period. The increase in constant currency revenue was primarily attributable to price increases and an increase in new product sales, partially offset by a net decrease in sales volumes of existing products caused by the COVID-19 pandemic. The Company estimates that COVID-19 had a negative impact to revenue of approximately $34 million, or 9%.
EMEA third quarter 2020 net revenues were $135.7 million, a decrease of 3.5% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues decreased 7.0% compared to the prior year period. The decrease in constant currency revenue was primarily attributable to a net decrease in sales volumes of existing products caused by the COVID-19 pandemic. The Company estimates that COVID-19 had a negative impact to revenue of approximately $6 million, or 4%.
Asia third quarter 2020 net revenues were $68.2 million, a decrease of 12.4% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues decreased 14.2% compared to the prior year period. The decrease in constant currency revenue was primarily attributable to a net decrease in sales volumes of existing products caused by the COVID-19 pandemic. The Company estimates that COVID-19 had a negative impact to revenue of approximately $16 million, or 21%.
OEM third quarter 2020 net revenues were $49.4 million, a decrease of 10.9% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues decreased 11.8% compared to the prior year period. The decrease in constant currency revenue was primarily attributable to a decrease in sales volumes of existing products caused by the COVID-19 pandemic, partially offset by net revenues generated by the acquisition of IWG High Performance Conductors, Inc. (HPC). The Company estimates that COVID-19 had a negative impact to revenue of approximately $22 million, or 40%.
NET REVENUE BY GLOBAL PRODUCT CATEGORY
The following tables and commentary provide information regarding net revenues in each of the Company’s global product categories for the three months and nine months ended September 29, 2019 and September 27, 2020 on both a GAAP and constant currency basis.
| Three Months Ended | % Increase / (Decrease) | ||||||||||||
| September 27, 2020 |
September 29, 2019 |
Total Revenue Growth |
Currency Impact |
Constant Currency Revenue Growth |
|||||||||
| Vascular Access | $ | 160.0 | $ | 148.7 | 7.6 | % | 0.8 | % | 6.8 | % | |||
| Interventional | 93.2 | 106.9 | (12.8 | )% | 0.7 | % | (13.5 | )% | |||||
| Anesthesia | 75.7 | 87.1 | (13.2 | )% | 1.2 | % | (14.4 | )% | |||||
| Surgical | 82.2 | 92.6 | (11.2 | )% | 1.1 | % | (12.3 | )% | |||||
| Interventional Urology | 81.8 | 73.6 | 11.1 | % | 0.1 | % | 11.0 | % | |||||
| OEM | 49.4 | 55.4 | (10.9 | )% | 0.9 | % | (11.8 | )% | |||||
| Other | 86.0 | 83.9 | 2.5 | % | 2.0 | % | 0.5 | % | |||||
| Total | $ | 628.3 | $ | 648.3 | (3.1 | )% | 1.0 | % | (4.1 | )% | |||
| Nine Months Ended | % Increase / (Decrease) | ||||||||||||
| September 27, 2020 |
September 29, 2019 |
Total Revenue Growth |
Currency Impact |
Constant Currency Revenue Growth |
|||||||||
| Vascular Access | $ | 475.3 | $ | 446.2 | 6.5 | % | (0.6 | )% | 7.1 | % | |||
| Interventional | 275.7 | 314.9 | (12.4 | )% | (0.3 | )% | (12.1 | )% | |||||
| Anesthesia | 216.2 | 253.1 | (14.6 | )% | (0.6 | )% | (14.0 | )% | |||||
| Surgical | 224.9 | 274.9 | (18.2 | )% | (0.6 | )% | (17.6 | )% | |||||
| Interventional Urology | 196.1 | 201.3 | (2.6 | )% | — | % | (2.6 | )% | |||||
| OEM | 168.6 | 166.1 | 1.5 | % | — | % | 1.5 | % | |||||
| Other | 269.2 | 257.9 | 4.4 | % | (0.6 | )% | 5.0 | % | |||||
| Total | $ | 1,826.0 | $ | 1,914.4 | (4.6 | )% | (0.4 | )% | (4.2 | )% | |||
Third quarter 2020 net revenues from sales of Vascular Access products were $160.0 million, an increase of 7.6% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues increased 6.8% compared to the prior year period. The Company estimates that COVID-19 had a net positive impact to revenue of approximately $2 million, or 1%.
Third quarter 2020 net revenues from sales of Interventional products were $93.2 million, a decrease of 12.8% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues decreased 13.5% compared to the prior year period. The Company estimates that COVID-19 had a negative impact to revenue of approximately $17 million, or 16%.
Third quarter 2020 net revenues from sales of Anesthesia products were $75.7 million, a decrease of 13.2% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues decreased 14.4% compared to the prior year period. The Company estimates that COVID-19 had a negative impact to revenue of approximately $9 million, or 10%.
Third quarter 2020 net revenues from sales of Surgical products were $82.2 million, a decrease of 11.2% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues decreased 12.3% compared to the prior year period. The Company estimates that COVID-19 had a negative impact to revenue of approximately $12 million, or 13%.
Third quarter 2020 net revenues from sales of Interventional Urology products were $81.8 million, an increase of 11.1% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues increased 11.0% compared to the prior year period. The Company estimates that COVID-19 had a negative impact to revenue of approximately $21 million, or 29%.
Third quarter 2020 net revenues from sales of OEM products were $49.4 million, a decrease of 10.9% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues decreased 11.8% compared to the prior year period. The Company estimates that COVID-19 had a negative impact to revenue of approximately $22 million , or 40%.
Third quarter 2020 net revenues from sales of other products were $86.0 million, an increase of 2.5% compared to the prior year period. Excluding the impact of foreign currency exchange rate fluctuations, third quarter 2020 net revenues increased 0.5% compared to the prior year period. The Company estimates that COVID-19 had a positive impact to revenue of approximately $1 million, or 1%.
OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS
Depreciation expense, amortization of intangible assets and deferred financing charges for the nine months ended September 27, 2020 totaled $173.2 million compared to $163.3 million for the nine months ended September 29, 2019.
Cash and cash equivalents at September 27, 2020 were $347.5 million compared to $301.1 million at December 31, 2019.
Net accounts receivable at September 27, 2020 were $390.5 million compared to $418.7 million at December 31, 2019.
Net inventories at September 27, 2020 were $526.1 million compared to $476.6 million at December 31, 2019.
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