Teleflex Incorporated (
Q4 2011 Earnings Call
February 23, 2012 8:00 AM ET
Jake Elguicze – Treasurer and VP, IR
Benson Smith – Chairman, President and CEO
Randy Meier – EVP and CFO
Konstantin Tcherepachenets – Morgan Keegan
David Lewis – Morgan Stanley
Rich Newitter – Leerink Swann
Anthony Petrone – Jefferies
Chris Cooley – Stephens
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Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Teleflex Incorporated Earnings Conference Call. My name is Cam and I’ll be your coordinator for today. (Operator Instructions) We will conduct a question-and-answer session at the end of today’s conference. (Operator Instructions) As a reminder, this conference is being recorded.
I will now turn the call over to your host for today’s conference, Mr. Jake Elguicze, Treasurer and Vice President of Investor Relations. Please proceed, sir.
Thank you, operator, and good morning, everyone, and welcome to the Teleflex Incorporated Earnings Conference Call. The press release and slides to accompany this call are available on our website at www.teleflex.com. As a reminder, this call will be available on our website and a replay will be available by dialing 888-286-8010, or for international calls, 617-801-6888, passcode 36708812.
Participating on today’s call are: Benson Smith, Teleflex Chairman, President and Chief Executive Officer; and Randy Meier, Teleflex Executive Vice President and Chief Financial Officer. Benson and Randy will make brief prepared remarks and then, we’ll open up the call to questions.
Before we begin, I’d like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events outlined on Slide 4. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties and actual events or results may differ materially.
The factors that could cause actual results or events to differ materially include, but are not limited to, factors made in our press release today, as well as our filing with the SEC, including our Form 10-K, which can be accessed on our website.
With that, I would like to now turn the call over to Benson.
Thanks, Jake, and good morning, everyone. On today’s call, I’ll begin with an overview of the results for the fourth quarter and full year of 2011 and then, include some strategic highlights. Then, I’ll provide you with an update on product introductions, as well as recent GPO wins and then, Randy, will provide you with a detailed review of our fourth quarter financial performance, as well as a review of our product line and geographic revenue mix. Finally, we’ll share with you our outlook for 2012.
So beginning with the fourth quarter financial highlights. Fourth quarter of 2011 revenue was $411.7 million. This was an all-time record in terms of revenue dollars generated by our medical franchise. It represents an increase of 6.6% over fourth quarter of 2011. On a constant currency basis, sales in the fourth quarter were up 6.8%, this represents the company’s largest constant currency sales percentage increase in recent years. We continue to be very pleased with our ability to generate such strong sales growth and make market share gains, despite operating in what many see as a difficulty macro-environment.
We would like to remind you that our rather unique product and geographic mix of products provides us with some immunity to the elective procedure downturns, as compared to some of our peers.
The sales growth we’ve seen to date, is the result of continued improvement in our sales force, more targeted marketing efforts and investments made in research and development and the associated new products we’ve been able to introduce to the marketplace. And continuing the trend from prior quarters in 2011, the growth in the fourth quarter came from a variety of our franchisees and geographies.
This success in driving revenue growth is encouraging and we plan to continue investment in these areas in 2012 and 2013, to ensure that we continue to leverage our infrastructure and generate sustainable top-line growth and margin expansion. Sustainable revenue growth is the most important element in our ability to reach our other financial strategic goals.
Turning to adjusted gross and operating margins, they were 47.1% and 16.8%, respectively. This represents a year-over-year decline of 20 basis points in gross margin, but an increase of 200 basis points versus prior year on the operating margin line. And finally, adjusted earnings per share for the fourth quarter were $1.07, an increase of 29% from the fourth quarter of 2010.
It’s important to point out, that our adjusted earnings per share in the fourth quarter of 2011 includes $0.17 of expense associated with the decision that we made to accelerate the early termination of our interest rate swap. The acceleration of these costs will allow for a more accurate view of our capital structure costs and provide a benefit to our expected 2012 results.
Let’s now move to some of the strategic highlights for the quarter. First, I’d like to provide an update regarding the price increases that were put in place around the mid-year mark of 2011. Fourth quarter results indicate that these initiatives continue to trend in the right direction.
Overall, pricing was up 50 basis points this quarter, as well as up from 10 basis points of growth that were added in the third quarter of 2011. This was up significantly from the results posted in the first quarter of 2011, where pricing was down approximately 120 basis points from the year earlier. We monitor these developments closely and we continue to be very encouraged with these results.