Teleflex Incorporated (TFX) posted an 18.3% rise in adjusted earnings to $1.36 per share for the fourth quarter of 2013 from $1.15 in the same quarter of 2012. With this, earnings significantly beat the Zacks Consensus Estimate of $1.27.
Adjusted net earnings rose 22.9% to $58.5 million from $47.6 million in the year-ago quarter. Following the favorable earnings announcement, shares of the company rose 0.8% till the last closing date.
Net revenues went up 7.5% to $450.5 million, exceeding the Zacks Consensus Estimate of $436 million. Excluding foreign exchange fluctuations, net revenues rose 6.9% from the prior-year quarter.
The increase in revenues was attributable to contribution from the acquisitions of LMA International in Oct 2012 and Vidacare Corporation in Dec 2013, an increase in the average selling price of products, launch of new products and an additional shipping day in the reported quarter versus the same quarter of 2012.
Product Group Results
Revenues from Critical Care products increased 10.6% to $316.7 million. Excluding the impact of foreign currency, net revenues rose 10.2%, due to higher sales of anesthesia, vascular, urology, and interventional access products. The rise in anesthesia product sales was attributable to the contribution from the LMA International business as well as the Vidacare Corporation business, partially offset by lower sales of respiratory products compared with the fourth quarter of 2012.
Revenues from Surgical Care products went up 5.2% to $80.5 million. Excluding the foreign currency impact, net revenues increased 4.0% in the quarter, driven by increased sales of ligation, suture and access products, partially offset by a decline in sales of general surgical instrument products and chest drainage products from the prior-year quarter.
Revenues from Cardiac Care products fell 6.0% (both a reported and constant currency basis) to $19.2 million. The decrease was driven by a decline in sales of intra-aortic balloon pumps.
Revenues from OEM and Development Services dipped 4.8% (both a reported and constant currency basis) to $34.1 million. Excluding the impact of foreign currency fluctuations, revenues declined 5.7% from the prior year quarter due to a decline in sales of catheter and performance fiber products.
Segment Results
Revenues from Americas rose 6.2% to $212.4 million in the quarter. Excluding foreign currency fluctuations, net revenues escalated 6.6%, largely driven by LMA and Vidacare product sales, price increases and introductions of new products, partially offset by lower sales volume of existing products.
Revenues from EMEA scaled up 9.2% to $144.9 million. Excluding the foreign currency impact, net revenues rose 5.2%, due to LMA and Vidacare product sales, price increases and higher sales volume of existing products.
Revenues from Asia increased 17.1% to $59.1 million. Excluding foreign currency fluctuations, net revenues escalated 21.6% in the quarter, driven by LMA product sales, higher sales volume of existing products, and price hike.
Full Year Results
For full year 2013, Teleflex reported a 13.5% rise in adjusted earnings to $5.03 per share from $4.43 in 2012. Adjusted net earnings rose 16.1% to $211.6 million from $182.2 million a year ago.
Net revenues went up 9.4% to $1,696 million. Excluding foreign exchange fluctuations, net revenues rose 9.0% in the year.
Financial Position
Teleflex had cash and cash equivalents of $432.0 million as of Dec 31, 2013, up 28.2% from $337.0 million as of Dec 31, 2012. Long-term borrowings increased 29.6% to $1,334.7 million as of Dec 31, 2013 compared with $1,029.7 million as of Dec 31, 2012.
In 2013, cash flow from operating activities went up 18.6% to $229.9 million from $193.9 million in 2012, mainly driven by higher earnings. Capital expenditure fell 2.8% to $63.6 million compared with $65.4 million in 2012.
2014 Guidance
For 2014, Teleflex anticipates revenue growth between 6.0 and 8.0% versus 2013. In constant currency, the company expects revenues to increase by 7.0 and 9.0%.
Teleflex also expects adjusted earnings per share in the range of $5.35 to $5.55. The current Zacks Consensus Estimate of $5.49 lies within the guided range.
Our Take
Headquartered in Limerick, Pa., Teleflex is a leading provider of specialty medical devices for a range of procedures in critical care and surgery globally. We are encouraged about its significant earnings beat in the fourth quarter and higher EPS and revenue guidance. However, we are concerned about weak sales of some of its product lines. Currently, Teleflex retains a Zacks Rank #3 (Hold).
Some better-ranked stocks in the medical instruments industry include Cynosure, Inc. (CYNO), Natus Medical Inc. (BABY), and ABIOMED, Inc. (ABMD). Cynosure and Natus Medical carry a Zacks Rank #1 (Strong Buy), while ABIOMED carries a Zacks Rank #2 (Buy).
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