8-K
TELEFLEX INC (TFX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| Date of Report (Date of Earliest Event Reported) | May 15, 2021 |
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TELEFLEX INCORPORATED
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 1-5353 | 23-1147939 | ||||||
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| (State or Other Jurisdiction<br><br>of Incorporation or Organization) | (Commission File Number) | (IRS Employer<br><br>Identification No.) | 550 E. Swedesford Rd., Suite 400 | Wayne, | PA | 19087 | ||
| --- | --- | --- | --- | --- | ||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
| Registrant’s Telephone Number, Including Area Code | (610) | 225-6800 | Not applicable | |||||
| --- | ||||||||
| (Former Name or Former Address, If Changed Since Last Report) | Securities registered pursuant to Section 12(b) of the Act: | |||||||
| --- | --- | --- | --- | |||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, par value $1 per share | TFX | New York Stock Exchange |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.05. Costs Associated with Exit or Disposal Activities.
On May 15, 2021, Teleflex Incorporated (the “Company”) entered into a definitive agreement (the “Sale Agreement”) to divest certain product lines within its global respiratory product portfolio to Medline Industries, Inc. (“Medline”). In connection with its entry into the Sale Agreement, the Company committed to a restructuring plan designed to separate the manufacturing operations that will be transferred to Medline from those that will remain with the Company, which plan includes related workforce reductions (the “Plan”). The Plan includes expanding the Company’s existing locations to accommodate the transfer of capacity from the sites that will be transferred to Medline and replicating the manufacturing processes at the alternate existing Teleflex locations. Initial actions under the Plan are expected to commence in the second quarter of 2021, with more substantial activities scheduled to begin after completion of the initial closing of the transactions contemplated under the Sale Agreement, which is expected to occur in the third quarter of 2021. The Plan is expected to be substantially completed by the end of 2023.
The Company estimates that it will incur aggregate pre-tax restructuring and restructuring related charges in connection with the Plan of $24 million to $30 million, of which the Company expects $6 million to $7 million to be incurred in 2021 and the balance to be incurred in 2022 and 2023. The Company estimates that substantially all of these charges will result in cash outlays, the majority of which will be made in 2022 and 2023. Additionally, the Company expects to incur $22 million to $28 million in aggregate capital expenditures under the plan, which are expected to be incurred mostly in 2022 and 2023.
The following table provides a summary of the Company’s cost estimates by major type of expense associated with the Plan:
| Type of expense | Total estimated amount expected to be incurred |
|---|---|
| Restructuring charges (1) | $5 million to $8 million |
| Restructuring related charges (2) | $19 million to $22 million |
| Total restructuring and restructuring related charges | $24 million to $30 million |
(1) Substantially all of the charges consist of employee termination benefit costs.
(2) Consist of charges that are directly related to the Plan and principally constitute costs to transfer manufacturing operations to other locations and project management costs. Substantially all of the charges are expected to be recognized within costs of goods sold.
As the Plan progresses, the Company will reevaluate the estimated expenses and charges set forth above, and may revise its estimates, as appropriate, consistent with GAAP.
Item 7.01 Regulation FD Disclosure.
On May 18, 2021, the Company issued a press release announcing that it has entered into a definitive agreement to divest certain product lines within its global respiratory product portfolio to Medline. A copy of the press release is furnished as Exhibit 99.1 hereto. The information furnished pursuant to Item 7.01 of this Current Report, including Exhibit 99.1, shall not be considered "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section, nor shall it be incorporated by reference into future filings by the Company under the Securities Act of 1933, as amended or under the Securities Exchange Act of 1934, as amended, unless the Company expressly sets forth in such future filing that such information is to be considered "filed" or incorporated by reference therein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press Release, dated May 18, 2021
104 The Cover Page from this Current Report on Form 8-K, formatted in Inline XBRL
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: May 18, 2021 | TELEFLEX INCORPORATED<br><br><br><br><br><br>By: /s/ Liam J. Kelly<br><br>Name: Liam J. Kelly<br><br>Title: Chairman, President and<br><br>Chief Executive Officer |
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Document
Exhibit 99.1
| FOR IMMEDIATE RELEASE | May 18, 2021 |
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Teleflex Signs Definitive Agreement to Sell Certain Respiratory Assets and Reaffirms Adjusted EPS Guidance
Total consideration is $286 million, reduced by $12 million of working capital to be retained by Teleflex
Assets to be divested generated $139M in 2020 revenue, with 2021 growth expected to be approximately flat
2021 headwinds are estimated at $28-32 million in revenue and $0.10-$0.15 in adjusted diluted earnings per share
Teleflex is maintaining its current 2021 adjusted diluted earnings per share guidance range
WAYNE, Pa.—May 18, 2021—Today, Teleflex Incorporated (NYSE:TFX), a leading global provider for healthcare supplies and services, announced that it has entered into a definitive agreement to sell a significant portion of its Respiratory business to Medline Industries, Inc. (“Medline”) for $286 million in cash, reduced by $12 million in working capital not transferring to Medline. The Teleflex respiratory product lines that will be divested include oxygen and aerosol therapy, active humidification, non-invasive ventilation, and incentive spirometers, which generated $139 million in revenue in 2020. The transaction is expected to close early in the third quarter of 2021, subject to customary regulatory approvals and other closing conditions.
“Following a comprehensive review of our strategy and core capabilities, our Board of Directors and management team decided that divesting a significant portion of our Respiratory business will enable Teleflex to focus further on executing in our core market segments to drive long-term sustainable growth and increase shareholder value,” said Liam Kelly, Chairman, President and Chief Executive Officer of Teleflex. “We expect the proceeds from the divestiture of this business, along with our ability to continue to generate cash from operations, to help us on our journey to execute our strategic plan.” In addition, Mr. Kelly noted, “Following a strong first quarter 2021 performance and the continued recovery in April as outlined on our first quarter 2021 earnings call, we feel confident in maintaining our 2021 full year adjusted earnings per share guidance range, even in light of the dilution from the sale of the respiratory assets. We look forward to providing a full financial update to investors on our second quarter 2021 earnings call. Importantly, this transaction is accretive to our pro-forma revenue growth profile, as well as adjusted gross and operating margins longer term.”
Financial Implications
In 2021, the respiratory product lines that will be divested were expected to generate net revenue approximately flat with the $139 million generated in 2020. Assuming a close to the transaction early in the third quarter of 2021, the company estimates a revenue headwind of $28-32 million and adjusted earnings per share dilution of $0.10-$0.15 in 2021 or approximately 1% of 2021 adjusted earnings per share, net of a manufacturing services agreement that we plan to enter into with Medline upon the initial closing of the sale transaction.
The Company intends to use the divestiture proceeds to pay down debt, augmenting its financial flexibility to support its growth strategy.
Advisors
Guggenheim Securities is acting as financial advisor to Teleflex and Holland & Knight LLP is serving as legal counsel.
Sidley Austin is serving as legal counsel for Medline.
About Teleflex Incorporated
Teleflex is a global provider of medical technologies designed to improve the health and quality of people’s lives. We apply purpose driven innovation – a relentless pursuit of identifying unmet clinical needs – to benefit patients and healthcare providers. Our portfolio is diverse, with solutions in the fields of vascular access, interventional cardiology and radiology, anesthesia, emergency medicine, surgical, urology and respiratory care. Teleflex employees worldwide are united in the understanding that what we do every day makes a difference. For more information, please visit teleflex.com.
Teleflex is the home of Arrow®, Deknatel®, Hudson RCI®, LMA®, Pilling®, Rüsch®, UroLift®, and Weck® – trusted brands united by a common sense of purpose.
Contacts:
| Teleflex Incorporated<br><br>John Hsu<br><br>Vice President, Investor Relations<br><br>610-225-6961 | Medline<br>Blair Klein<br>Vice President, Corporate Communications<br>847-643-3308 |
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Forward-Looking Statements
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements. Any forward-looking statements contained herein are based on our management’s current beliefs and expectations, but are subject to a number of risks, uncertainties and changes in circumstances, which may cause actual results or company actions to differ materially from what is expressed or implied by these statements. These
risks and uncertainties are identified and described in more detail in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.