Teleflex Incorporated (NYSE: TFX) today announced financial results for the first quarter ended March 28, 2010.
“Building on the strong operational performance of 2009, we delivered another solid quarter to start 2010”
Financial Highlights
For the first quarter 2010, revenues from continuing operations were $436.5 million compared to $440.1 million in the prior year quarter, down 1%. Core revenue in the Medical segment was flat, while the Aerospace and Commercial segments had core revenue declines of 20% and 6%, respectively. The decline in overall core revenue was offset by a favorable currency impact of 3%.
For the first quarter 2010, GAAP income from continuing operations attributable to common shareholders increased 46% to $35.6 million, or $0.89 per diluted share compared to $24.4 million, or $0.61 per diluted share in the prior year quarter. On an adjusted basis, and as detailed in the tables below, first quarter 2010 income from continuing operations increased 28% to $36.0 million, or $0.90 per diluted share, compared to $28.1 million, or $0.71 per diluted share, in the prior year quarter.
For the first quarter 2010, GAAP net income attributable to common shareholders was $37.7 million compared to $215.5 million in the prior year quarter. These results included income from discontinued operations of $2.0 million in the first quarter of 2010, and income from discontinued operations of $191.2 million in the prior year quarter.
For the first quarter 2010, GAAP cash flow from continuing operations was $32.2 million as compared to a use of cash of $7.6 million in the prior year quarter. On a adjusted basis, and as detailed in the tables below, first quarter 2010 cash flow from continuing operations was $22.5 million.
"Building on the strong operational performance of 2009, we delivered another solid quarter to start 2010," said Jeffrey P. Black, Chairman and Chief Executive Officer. "Beginning in 2010, we as a company are focusing on achieving sustainable, profitable growth. During the first quarter we delivered sales growth in many of our medical product areas, expanded consolidated gross margins by over 200 basis points, and continued to invest in research and development to drive future growth."
"In addition, we launched a number of innovative new products to the market, saw continued progress with the FDA, and further strengthened and reshaped our portfolio with the divestiture of our SSI Surgical Services business," Mr. Black said.
First Quarter Business Segment Commentary
Medical Segment
Medical Segment revenues in the first quarter of 2010 increased 3% to $343.5 million from $334.8 million in the prior year period. The increase resulted from a favorable currency impact of 3%. Revenue increases in respiratory, urology, anesthesia, cardiac care and specialty products sold to medical OEM's were offset by a decline in surgical and vascular access sales. The decline in vascular access sales was due to the voluntary recall of custom IV tubing product that was announced in February of 2010.
Medical Segment sales by product group were comprised of the following:
Segment operating profit and margins in the first quarter of 2010 increased to $73.5 million, or 21.4%, compared to $69.4 million, or 20.7%, in the prior year quarter. Excluding the $0.6 million impact of integration costs not qualified for restructuring, segment operating profit and margins in the first quarter of 2009 were $70.0 million, or 20.9%, as noted in the tables below.
Aerospace Segment
Aerospace Segment revenues in the first quarter of 2010 declined 16% to $36.9 million from $43.7 million in the prior year period. Higher sales of wide-body cargo handling systems to OEM's, and increases in actuation sales, were offset by lower cargo systems sales for aftermarket conversions, lower sales of narrow-body cargo handling systems, lower demand for cargo containers, and reduced cargo spares and repair sales, resulting in a 20% decline in core revenue during the quarter. This was somewhat compensated for by a favorable currency impact of 4%.
Segment operating profit decreased to $1.7 million from $3.0 million in the same period last year. This was principally due to the unfavorable mix of reduced spares and repairs sales. Segment operating margin for the quarter was 4.7% versus 6.9% in the prior year quarter.
Commercial Segment
Commercial Segment revenues in the first quarter of 2010 declined 9% to $56.1 million from $61.6 million in the same period last year. Reductions in core revenue, which accounted for 6% of the decline, were principally a result of a decrease in sales of rigging products, partially offset by increased sales of Marine OEM and aftermarket sales. The impact of the Marine gauge business divestiture contributed 4% to the decline. This was somewhat balanced by a favorable currency impact of 1%.
During the first quarter of 2010, operating profit in the Commercial segment increased to $3.1 million from $2.0 million in the prior year period, principally due to increased marine sales volumes, and the impact of cost reduction initiatives put in place during 2009. Segment operating margin for the quarter was 5.5% versus 3.3% in the prior year quarter.
Balance Sheet Highlights
Cash and cash equivalents on hand at March 28, 2010 was $210.7 million compared to $188.3 million at December 31, 2009, up 12%.
Net accounts receivable at March 28, 2010 were $297.4 million compared to $265.3 million at December 31, 2009, up 12%. As we previously indicated, excluding the $39.7 million impact of the adoption of the amendment to Accounting Standards Codification topic 860 "Transfers and Servicing" ("ASC 860"), net accounts receivable declined 3%.
Net inventory at March 28, 2010 was $353.8 million compared to $360.8 million at December 31, 2009, a decline of 2%.
Net debt at March 28, 2010 was $972.0 million compared to $1,008.2 million at December 31, 2009, a decline of 4%. Excluding the $39.7 million impact of ASC 860, net debt declined 8%.
Business Outlook for 2010
The Company's financial estimates for 2010 include total revenues of approximately $1.9 billion and diluted earnings per share from continuing operations excluding special items in the range of $4.10 to $4.25. Cash flow from continuing operations, exclusive of the impact of the adoption of ASC 860, is expected to be in the range of $275 to $280 million. Restructuring and other special charges related to the Arrow integration program are anticipated to be $0.05 per diluted share for the year.
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