Presentation Transcript

1. Presenter: Jeremy Leach

   Teleflex (TFX)

2. Teleflex is a diversified manufacturer that is involved in three different segments: Medical, Commercial, and Aerospace. This involves them creating products ranging from anesthesia devices to cargo handling systems.

   Company Profile

   *Morningstar and Company’s Annual Report
3. “…leading provider of disposable medical products and devices for critical care and surgical applications.” Acquired Arrow International in 2007 “…leading global provider of catheter products for critical and cardiac care.” Serves hospitals and health care providers in over 120 countries. Reputable Brand Names "I think Teleflex will be pure-play medical in the next two to three years," analyst Paul Joseph Mammola of Sidoti & Co said. “This acquisition made Teleflex a healthcare-focused company” – Jeffrey Black (CEO) The medical segment accounted for 62 percent of the company's 2008 revenue and about 75 percent of its second-quarter revenue.

   Medical Segment

   *Company’s Annual Report and Reuters

4. Revenue by Category (Medical Segment)

   *Company’s Annual Report (2008)

5. Revenue by Region (Medical Segment)

   OEM: Original Equipment Manufacturer. This is when the company manufacturers products that are sold to other companies and retailed under the second company’s brand name. EMEA: Europe, the Middle East, and Africa. *Company’s Annual Report (2008) & Wikipedia
6. Commercial products consist of driver controls for recreational boats, rigging services for industrial customers and auxiliary power and alternative fuel systems for a range of vehicles. Leader in steering and controls for recreational marine. Established market positions and strong brands. “Teleflex is a Tier 1 supplier of gear shift systems to the automotive industry and a market leader in mobile auxiliary power systems for large vehicles.”

   Commercial Segment

   *Company’s Annual Report & Morningstar
7. “Teleflex Aerospace serves the world’s airlines and OEMs with advanced engine repair services, cargo-handling systems and equipment, and related aftermarket services.” Leading provider of on-board aircraft cargo-handling systems. Teleflex's air cargo systems control a market share of approximately 50%. “Our advanced cargo-handling systems and aftermarket services from Telair International are designated a “preferred provider” by Boeing and Airbus on many of their major wide-body platforms.” “The company's jet turbine repair blade business, in partnership with General Electric GE, is the dominant industry supplier.”

   Aerospace Segment

   *Company’s Annual Report & Morningstar
8. “Teleflex Announces Upcoming Departure of Chief Financial Officer.” Cited personal reasons, will stay with company until 2010 “Teleflex Inc. Completes Sale of Power Systems Business To Fuel Systems Solutions, Inc.” “Since Power Systems' contribution to Teleflex's earnings is minimal, we are maintaining our fair value estimate.” UPDATE 3-Teleflex raises '09 EPS view, shares rise Quarter 2 EPS beat expectations ($0.96 > $0.88) Raised estimates of 2009 income to $3.40-$3.60 from previous estimates of $3.25 - $3.55. Sent shares up 6% after news was released, currently trading around pre-release price.

   Recent News

   *Reuters & Morningstar
9. Reputable brand names in the all operating segments; especially medical. Aligns itself with industry leaders such as: Boeing, Airbus, and GE. Restructuring business model to focus on the segment that has given them the most consistent financial results; medical. Global positioning reduces risk for economic downturns. Management bonuses are based on the stock outperforming its peers. This ensures that management’s incentives correspond with what is best for Teleflex as a whole.

   Strengths

   *Morningstar
10. Reputation of posting inconsistent financial results, according to Morningstar. Analysts believe Teleflex overpaid on their acquisition of Arrow, which also increased their financial leverage substantially. History of entering into markets that end up not being as profitable as expected.

    Weaknesses

    *Morningstar
11. Acquisition of Arrow allows Teleflex to increase its market positioning in the medical segment. Slowly fazing out commercial and aerospace segments would result in Teleflex being able to focus on what they do best, which is in the medical department. Management’s ability to find niche markets will continue to lead to growth in the foreseeable future. Teleflex’s invested markets tend to be too small for heavy competition, which is a great competitive advantage.

    Opportunities

    *Reuters & Morningstar
12. Increasing the medical segment while fazing out the commercial and aerospace markets will result in less diversity, and therefore more risk.

    Threats

13. Ticker: TFX Sector: Industrials Industry: Diversified Industrials Current Price: $47.09 52-Week Range: $37.21 – $61.11 Market Cap: $1.9B Beta: 0.79

    Basic Info

    *Reuters & Morningstar

14. Time-Series Analysis

    *Morningstar

15. Cross-Sectional Analysis

    *Morningstar

16. 1-Year VS S&P 500 w/ RSI

    *Yahoo Finance

17. 1-Year Chart w/ 200 – Day Moving Average

    *Yahoo Finance
18. Morningstar Fair Value Estimate: $65 Three-Stage DDM Calculated Fair Value: $27 Three-Stage FCFE Calculated Fair Value: $116.02 Average of Three-Stage Models: $71.51 With 15% Margin of Safety: $60.78 – $82.24 $47.07 < 60.78 = Suggests Undervalued

    Intrinsic Value