TFX - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Teleflex Incorporated Third Quarter 017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time.

As a reminder, this call is being recorded. I would now like to turn the conference over to Jake Elguicze, Treasurer and Vice President of Investor Relations.

begin. may You

Jake Elguicze

at and XXXX everyone, slides the Incorporated our Teleflex accompany Good conference welcome call. quarter website on available earnings call and The third this morning, are to www.teleflex.com. press to release

As or website Executive be Operating a Officer; provide and our Vice Kelly, available Smith, and we'll call calls, Powell, international and this and XXX-XXX-XXXX, a call dialing and Executive Liam Participating replay prepared will Q&A. Chairman the XXX-XXX-XXXX to then President are on Chief Financial call today's reminder, by Tom be Officer; on will available Benson, Liam for will passcode Chief XXXXXXX. and Officer. open Chief up Thomas President and Benson remarks

Benson. that as could the you including factors in regarding matters in in to not accessed be that of caution our subject With uncertainties I'd differ and remind in Before press in such turn events XX-K, website. actual that as referenced some that, the risks nature results to and to are, and call statements forward-looking as we to, slides. actual or include, with like discussed but now begin, The may future contain materially. results are events our you events to differ call limited today, statements release will can which our our outlined the factors or filings well like materially wish cause Form SEC, over conference to forward-looking I'd We on fact, are to our the

Benson F. Smith

revenue quarter an on I'm our to to reported constant Teleflex the say thanks very in I'm This achieved revenue basis direct made and currency in to XX.X% everyone. basis. China. of had on X%. that morning, to as good and grew Jake, a an six from currency acceleration we happy distributor first progress constant year, in of third excellent we was you, part for levels report significant that as grew months our also a XX.X% organically we Thank the pleased conversion

revenue attained also expansion, In based ever which margin highest company. broad the becoming level device operating pure-play reaching announced addition is a of to as that during on initiatives, our is Mind significant remain strong since delivered XX.X%, QX, you, an our margin growth tremendous a medical adjusted restructuring and integration it programs previously result, margin this various was we organic acquisitions track. assigned of improvement

performance various Liam an year was as XX.X% you'll The plans. period share we're which of XX.X%. GAAP was increasing margin quarter per and share of flowed and momentarily, the versus through the translated to restructuring associated the In in earnings hear into $X.XX, up with of which earnings fact, from $X.XX, the line our savings increase adjusted per estimate prior bottom

XXXX financial new first Finally, come. performance quarter, well revenue full-year metrics, day profile the will we fourth earnings and to currency range between which addition as allows on XX% of years which growth the business of revenue guidance of XX.XX% a XX.X% expectations, of a help and from our the of as we growth increase base raising many for many the completed Teleflex NeoTract our our again to between including once range of NeoTract, XX.XX%. to the acquisition us of constant The were of and

success XXXX, positioned in this to third between we adjusted are to range This $X.XX been to Our well and between are good year from share a In and up expectations. increasing per for have expectations, increase XXXX. of of closing, new earnings in our the able we're $X.XX start we a time a and marks which share adjusted earnings per $X.XX. $X.XX rage

products, our end in our markets, our many progress have the value. We've the of expansion We in significant and generated Solutions, newly made within introduced driven of and distributor revenue to see efforts, market. to momentum continue shareholder also products global substantial margin of the and conversion stability positive good from integration utilization Vascular

time am in more I As of completed as healthcare than to nears Teleflex remarks. a in in ability CEO the Teleflex's marketplace my prepared close, ever my future. succeed I the confident

I'd over call like Now, to Liam. turn to the

Liam J. Kelly

And you, good Thank Benson. morning, everyone.

to revenue as quarter X.X%; gains quarter revenue This XX.X%. third to revenue volume Solutions, other within company, during X.X%, continue saw contributed approximately China segment, M&A, predominately and our our consolidated grew X%. take the currency with which organic we Beginning the due which improvements of Asia three, components forward Vascular go-direct. organic For to XXXX growth expand consisted of were we volumes X.X%. These growth, contributed year-over-year of by steps constant

decline decision volume a addition uptick in resulting OEM offset saw certain volumes, North lower business also In to and our core product we margin volumes improvements from a Asia, from in These product to nice surgical a American in vascular lines. our business, improvements somewhat volume were by exit within EMEA.

While margin this to the decision the felt small segment. surgical do profile it thing impact, of revenue was that improve near-term to we a in results appropriate negative the longer-term

management may in of we will minimal we exits. also in the no hurricanes potential the investment quarter, three. assessing had do Teleflex revenue whose use. was report factories opportunities community for recent areas, the a on distribution I'm will to centers in team, we future affected or materials quarter and continue impact we currently was Teleflex business the during to that line while the updated hurricanes to dilutive The have As vendors that portfolio have are not the line future to we our rationalize our growth on segments pleased lower employee review margin keep identify product and injured

to thoughts be the the by continue being impacted hurricane. Our people the with of still aftermath

contribution continued, constant several Moving past approximately again time have we once trend to new currency revenue contributing for X.X% seen products. positive quarters The this the of growth.

cardiac revenue in new from first once and product by vascular product as was ACX internal vascular products, revenue as products, growth VPS our the antimicrobial Unlike efforts. marks attributed to revenue and product Balloon preloaded company in product or regions PICCs, that are led growth, Asia. stems have Intra-Aortic results new and the terms with by our primarily new new cardiac coming time as revenue introductions, OEM these well our Pump a we X% was testament it introduced previous new future EMEA achieved and We development to the and pleased anti-thrombogenic quarters, our growth, of and recently respectively. of is again private from OEM this more

to Turning pricing.

to another revenue continued saw first-half American levels average consistent take the was continued basis in market. year, quarter prices products, higher variety of This is our the XX products North we points. achieved the on of we price by During to during predominantly selling within of our that with improvement it ability a which three, drove the and due the

revenue M&A. Finally, coming moving from to growth,

contributed from quarter, Vascular this as larger Solutions, has XX of revenue the as Pyng, than now M&A, points other Pyng, During constant-currency with moved contributors portion Cartika The a approximately year. September of growth. into basis growth Cartika coming were and here organic

not X.X%. constant lower third to XXXX, towards Solutions And Finally, increased of this At seem Vascular approximately consistently is accelerate our normal first however, third primarily than when from revenue as may concerned the Vascular XXXX. currency Solutions Solutions into to lower in the some growth. rate revenue Vascular decision glance, growth growth had as conversions the quarter expected revenue double-digit X.X% to compared revenue due quarter Teleflex's growing been than contributed range. XXXX, are distributor We,

this be there with what Solutions As when may base happened occur, distributor distributors' slows business, the revenue growth is conversions China we Vascular Teleflex periods and with saw quarter the time as that European in of destock. that

issue expect as add the to we, low expect fully close initially of revenue Vascular this about we in to year organic our fourth this which X.X% a Solutions the add of anticipate towards to short-lived Solutions We the range. during growth Vascular to full will at and continue expect of case XXXX. We to XXXX. point provided growth, is the also end be And now be Teleflex's such quarter

product-related was sales currency PICCs provide Vidacare surrounding growth Next, X.X% due devices. revenue I Vascular million, higher additional segment EZ-IO quarter largely America color revenue of drivers. North and increased and to $XX constant OnControl some like and and third to would our to

As over XX%. is like growth out over point to our is PICC the growth that year-to-date in done year-to-date sales would rate have Vidacare past, I XX% I and our

Moving [X.X%] North (sic) revenue million, America, $XX.X to (XX:XX) versus Anesthesia period. X.X% quarter year which third was was of increase prior the an

increase our as LMA acquisition. due the recall, well quarter Unique relatively led volumes product and three in is Gastro as LMA new by with to growth flat in product silicone two, Anesthesia If and quarter lines Pyng you revenue was the during improvement

$XX.X its business, revenue our to Turning North decreased million. to Surgical X.X% America

EMEA our a currency attributable result to primarily product. within As exit revenues vascular, I products. positive largely earlier, lower to growing decision improvement increased was surgical and the revenue constant trajectory, to referenced operations, cardiac of some The continued Shifting on X.X% sales margin the surgical is in million. their European $XXX.X decrease a of to basis overseas

Asia. Moving to

The was XX.X% level of achieved of improvement the revenue revenue vascular quarter XXXX. cardiac, Asian largely This highest to growth fourth third constant increased sales in and products. of Our the revenue million. increased result $XX.X to currency of the quarter within marks since surgical Asia

over it call, positively communicated to the expected and As three, earnings our growth revenue I in China X.X% of contribute quarter. we quarter last on in generating did,

to Turning OEM.

are about acquisition increased revenues and million, I NeoTract regions. Solutions. balanced In the product XX.X% of worth $XX.X like revenue acquisition. speak continue higher million. lines and All we the due briefly the fourth XXXX. We during an our speaking our receive results was first as exit XX.X%, it closing completed such, lastly, sales quarters' products. M&A, extrusions And NeoTract the quarter businesses within recently was third quarter, for to to the we category our including well And quarter totaling strong And to of and on the strong here $XX.X During of up entire Vascular acquisition is the we third is as fiber attributable performance growth, will some into and third in NeoTract quarter; summary, to of completed of the primarily you growth across belief year, day the that of primarily XXXX. catheter Other to positioned growth of Growth to was would the for

organic prostatic urinary systems be to a held developed benign who near-term privately has strong acquisition opportunity. and has organic technology sales currency was novel, or in lower significant to exceeds generate the Teleflex's channel the that long-term importantly, accelerates revenue the Vidacare. that sales profile you ability current commercialization experienced UroLift growth treating revenue call significant with clinical growth and based may System, trajectory Most this future. robust a and which not minimally initiating of acquisition for This revenue and BPH. tract us For company, presence acquisition that positions our growth commercialized since aware, Teleflex growth urological With in those a expand this point. adoption provides within constant due California, invasive NeoTract hyperplasia the enhances product profile and solidifies sustainably NeoTract Teleflex's XXXX, in our is to of growth

Additionally, exceeds UroLift this which of margin, to System as to improve United we due of allow NeoTract enable gross as our to States. us penetration margin the infrastructure expect to further our significant well acquisition XX% capitalize profile international on today us outside to drive NeoTract's

background. As

During approximately $XX approximately XXXX. during $XX million. This quickly accelerated revenue to XXXX million generated of NeoTract

$XXX will that and be While XX% grow and continue in between that million $XXX it during XXXX, revenue XXXX. million we least will estimate at to

continue XXXX. that in breakeven earnings believe be per to that in slightly delusive NeoTract will it adjusted will to XXXX, We become also share

$X.XX to per earnings we and family. the are and the very of in integration $X.XX expect be it have enthusiastic Teleflex of that accretive, report While gone contribute that initial will to share adjusted well, few that now I'm have happy increasingly NeoTract the team, between it XXXX, of thereafter. and part weeks we will

all based from It restructuring been would is before also potential or in the savings peers. feedback form represents the restructuring in like line as we chart to And annual for the programs. costs manufacture we manufacturing restructuring various of additional This Teleflex acquisition to I we products only approved a periodic presence and call the That include provide the you by and a Company, incremental However, initiatives, Tom, I the not of are On continues community does in savings China, Tianjin of update it of their Teleflex These here. – all consists attempt Teleflex that various investment here, cost the Limited. very are certain through summary one like that our the being compared Chinese our finally, acquired that scale, of amount a assist that the our underway with and smaller at this laryngeal that Tianjin, more margin simply it do programs. much of we to from would is of FDA. as attempting which an over business place. and intention even summarize to help assets are have to programs, differentiator the material provide updates China contract a period. expansion in important over is receive and substitution dependent a be next what expected NeoTract This pricing of cost should September, anesthesia for This acquisition Analyst should with The a our get the we to generating be they that respective acquisition programs assets Teleflex provides expected restructuring substantially many to Tianjin improvement on And initiatives comprehensive to that used Medical a us all version wasn't currently again company would forward-looking masks. continue improved and future come additional doing Day once at to manufacturer within to competitive, recently to our synergies. our turn anticipate shown in multi-year savings opportunity non-revenue we understand to completed. year

$XXX December we by incurred Our announced of total of between that and charges we $XX $XXX programs million those million XX, programs these approximately indicate to incur are complete; expect time of costs. that restructuring million the XXXX, as and

the we $XXX savings $XX these we $XX anticipated complete; that programs million leaves million now and additional time to and achieved pre-tax $XX will million. and $XX annual XX, pre-tax expect XXXX, by we between and that with us of generate Turning annualized savings, million and prepared December are This yet realize remarks. between and December represent estimates. synergies realized, million to savings our through synergies synergies That savings will pre-tax figures These estimated million end belief our takes is $X substantially and between XXXX. of of be to these increase and an million we XX, annual it by me the prior all as savings and that $X of to synergy compared my of

and XXXX. turn call the him to guidance review Now, provide to results for our over for I for to would financial like Tom, our to the Tom? third updated quarter

Thomas E. Powell

everyone. Liam. Thanks, good And morning,

Given of the revenue I'll company's performance, previous gross profit line. discussion the at the begin

points interest improved of to $XX.X from higher was the margin adjusted generated high of and million adjusted quarter. point footprint resulting the manufacturing gross spending. was will the increase was to XXX impact finance The to year control gross of Adjusted in the million margin facility Adjusted our sales prior-year an realignment compared The gross NeoTract. $XXX.X increase borrowings Vascular profit related the additional by and million due the to from flexed expansion acquisition Solutions acquisitions prior-year under reductions the The basis in margin cost period. $XX.X when expense an XX.X%. gross largely discretionary in $XXX to improvement through XXX-basis tight increase the Vascular over credit of quarter, margin all-time in Operating programs, products, million quarter. gross For the of in flow to SG&A prior increased XX.X%, was Solutions. margin a margin net versus

tax For rate XX.X%. adjusted the was quarter, the

of from the prior-year The the less XXX-basis was prior-year which Vascular due also to quarter's was a comparable, tax low. cost the favorable and impacted by Solutions increase This associated elevated rate point with rate integration typically mix. tax somewhat is

tax For a quarter benefit the new third minimal accounting the it excess was from only or treatment benefits.

the adjusted quarter share $X.XX. bottom third earnings XX.X% On to line, increased per

now sheet Turning highlights. flow balance to select cash and

capital. during an in over improved increase or primarily comments with was NeoTract, During $XX that increased the X% remaining outcome of The borrowings million completes $XXX operating the offset my cash was on from at million the end, draw times. connection per the first of of million the by of debt prior of notes. third net result increase definition $XXX leverage as as facility X.XX facility, million of credit partially the approximately the stood XXXX, a the an acquisition $XXX the operations offset retirement revolver and convertible repayment by flow in working credit nine partially results, Also, months of of outstanding the $XXX quarter At quarter. the in year. quarter by And million of on increase our

Now, to and at XXXX guidance ranges. positive fourth constant two quarter, as Beginning as revenue both currency reported allow with catalysts that us revenue, we updates. I'll raise the see move growth look to we

our First, August. outlook from provided improved last has in currency we when an update

remain rates a at approximate levels, currency XX versus of XXX-basis an headwind. expectation exchange point basis point previous generate tailwind our Assuming foreign today's would

NeoTract, our the September, included which the generate million in and million to is with in when $XXX that addition continue will acquisition XXXX. was not $XXX we guidance. project announced NeoTract previously full-year of of between revenue Consistent Second in we expectation

NeoTract We growth basis into basis will our expect points add full-year points, to the fourth results XXX approximately consolidation the quarter XXX our rate. that of revenue

represents reported both assumptions, As to new on to the our $X.XXX X% improved is revenue updated and expected be the to of at Based and addition billion. our now billion between as-reported reflects and midpoint NeoTract revenue the the growth currency range an as range of $X.XXX outlook. increase of such, to to we This revision are growth as XX% raising of our XX.X%. in XX.X% XX% previous reported

of our of an of adjustment Revision from midpoint to range X.X% represents a points XX% and raising addition, revenue at XX.XX%. to currency NeoTract our new currency growth constant of basis to growth to XX.XX% we reflect and X.X% XX.X% the addition to are our range of from expectation expectations both of increase constant previous Vascular XXX the In previous the growth the range Solutions of X%.

earlier by in conversions Vascular quarter. decision impact discussed growth As rate direct our call, Solutions accelerate the of fourth into to to Liam the revisions the distributor revenue reflects the of

NeoTract. we The margin, range to XX%. and for to Moving our our expectation to gross predominantly full year is a gross margin are of XX.X% due between expectation in adjusted increase raising

reducing of and reflects increase adjusted to are XX.X% interest in The in a in inclusion adjusted margin, given the expectation Turning between in we an performance. expense, the operating expect XX.X%. change operating range to fourth quarter. NeoTract, we here to operating Shifting margin adjusted full NeoTract our expense of the year margin additional interest associated with financing year-to-date

As we note the term facility a a we credit borrowings through look to out have may revolving indicated, previously offering. portion of

now taxes, modeling full will rates. approximately the closely be full foreign $XX project we expense exchange be such, currency million that anticipate year XXXX adjusted On and that we fourth approximate spot And rate $XX XX%. purposes, rates will recent expectation As our tax is our interest it adjusted million. between in to quarter our year for

adjusted approximately average full weighted XXXX million Our be share count will for shares. the year XX.X

diluted. to to year-to-date environment of be slightly the I'm expectations, to moving last the of by of given $X.XX which XXXX guidance, we compared earnings pleased between closing, with somewhat XX.X%. is more per and provided as In year-to-date expected share are year-over-year we currency results increasing midpoint $X.XXX the reflects offset addition or of at quarter EPS, when to our a favorable performance. NeoTract, XX.X% increase increase a $X.XX, Finally, The adjusted to fourth range and

several improvement has are metrics new and Our seeing revenue. such product broad we growth year-to-date as been based in key

guidance this track non-revenue and increase the expansion to margin our been we've is third earnings for very time year. Our able on dependent much

NeoTract the to concludes forward XXXX. to will line company further successful strong in prepared of finish Additionally, Solutions, acquisitions the Vascular momentum. positioned my well serve in That accelerate and top earnings remarks. for feel the look is a a We XXXX

call questions. to the Operator? I'd over like turn Now, operator to the back for

Operator

Larry from comes Keusch Raymond question of first James. Our

Your open. line is

Lawrence Keusch

good Hi, everyone. morning, Yeah.

Benson F. Smith

Larry morning, Good

Liam J. Kelly

Good morning, Larry.

Thomas E. Powell

Good morning, Larry.

Lawrence Keusch

in start you with the I had guess, So, just that chose why do to these want just really Solutions you that walk – the I deal Could you accelerate just maybe given through anticipated? this business. to earlier to Particularly, us decision distributor differently that year. Vascular close Liam, you than conversions

now? why curious just I'm So,

Liam J. Kelly

a about question. the in interest do Larry, sold, But our one in to got the take a I it normally, We, given So, lucky and bit begin growth It our would bit we distributors was reason Vidacare, for of engage France, this good LMA, longer guess The were allowed transparency we originally, our in anticipating of in the takes as distributors would us to with of anticipated with that go-direct. distributors break a where the conversations history Larry, all the well, decide is longer. the to it's that longer-term experience, which company. process. the now that because in

control process, means up channel the So, our which driving than that well once we originally will it for in growth for had distributors opens door own term that we earlier have direct other earlier longer conversations it XXXX, bodes have VSI and what our begun have for within the hands. anticipated, is in with to us we

the basis of was that decision, Larry. the So,

Lawrence Keusch

thoughts then, I two Okay, a as perfect. follow-up, And here. just guess

on core about new the the half the growth give Can you on is X.X% first in products, preliminary look First, constant NeoTract Not and and really thinking other the Vascular. growth. you growth But for of versus the the indicated thoughts how only so currency business? us you year. given you're of which organic the thing as much then, into as for acceleration sort XXXX, that were some

in You there. mention Percuvance didn't

kind $XX-ish-million XXXX, that's basis you XXXX? of So, just that? of XXX You points of, of in a to growth then, in another sort again, and I wanted get sense thinking are still know,

Liam J. Kelly

turn okay? Percuvance, very I'll then, poised think a for and So, that's so we're to if well organic, Larry, I Okay, the successful XXXX. begin I'll with

second in the investment year the half half. versus organic I slight think during first community told to the growth our I the of a call, quarter revenue uptick earnings in two the expect

contributing advised is that would half also this. quarter become much the very with I to in still is tailwind our that in think It three, second a expectation growth. line I China in

just days Our growth the organic full if for X.X%; scale midpoint scale organic X.X%, excluding of at look and at and that would X.X%. have of guidance billing X.X% you year that X.X%, half growth excluding our of acquisitions acquisitions with our year and full from up at year

So, uptake. are which headwind Larry, to – organic acceleration think back market quarter, and during in expecting again be Percuvance new earnings mentioned the your China growth. three. a was question, didn't to be the reiterated product our And very we we X% into quarter tailwind. the revenue the closed into as also revenue the answer full new I said, guidance the M&A. X.X% the previously to product also, an X% looking into – included contributions we all-time year that call, for pleased new to Percuvance also that following that continue the growth Teleflex. reaching will from And any XXXX, our I go-direct high with And quarter we're expected recall, have two product in I Larry, that clearly,

manufacturer, in the this additional market anticipate And early as into now being dug result, identified we XXXX. As our with third-party we a in issues. back we

offering in the course, it positivity caught the development and this customer high. We product But percutaneous we we're are, of disappointed glad very towards since at demand early this remains stage. especially

will Percuvance in we again, quarter additional clinical are enthusiastic our we'll And as an of And time product clarity. spring the our in without once and Meeting. trials the number we the do same more had even evaluations Percuvance. longer-term X.X% Larry, have expectations new growth on we of the remain with earnings information prospect said, back reiterate, Analyst and of four We product. call will I those the we this provide once would at reengage market, I again, for revenue all really of we contribution customer

well So, our longer-term all outlook. I bodes for think it

Lawrence Keusch

Terrific. Okay. very Liam. Thanks much,

Operator

next David Lewis Our comes Stanley. question of from Morgan

Your line open. is

David Ryan Lewis

morning. Good

Just questions a me. from few quick

up conversion. to Tom, is, on just distributor follow VSI first The

$X.XX acceleration that in accretion those now with are conversions, about how the to So, year guidance? distributor the thinking for you prior relative next VSI

Thomas E. Powell

Well, not we're to I point, a in a would you for we're XXXX, across expect a to efforts versus Liam's to accelerate positive our way this yet position say obviously. it seeing a Europe. as guidance obviously, but negative provide movement, that to be would

a provide premature us for little Just to guidance. that

David Ryan Lewis

Liam, then, you. And for just Okay. two

the implanter so number environment, hires, given two, particularly that nature comment just the The And kind third sense for the better one. NeoTract, relative of rep you much. assuming year, quarter, what U.S. next U.S. growth that you on ours. number be growth to kind XX% of underlying specific in in give if you're utilization things the if of for thoughts fourth than we've can business first us be Thank weak, is, one a investment that would environment very helpful. But comment your seen quarter number U.S. obviously organic you into in the your of are just numbers on

Liam J. Kelly

Sure. Yeah.

U.S. as So, and utilization David, well the of softness. read we I in Environment, reports have served the

delivery on company our of optional. the in probably are care products utilization. the best benchmark we Now, in procedures Dave, used are to not not all transparency, be is where Most a emergent of

procedure we through third our So, of in emergent the as any portfolio, products especially grow probably that and mean, because said. goes is and see as don't that, American and Having what are impacted least down, of positioned volume the regard we the that company delivery said care because our of I in where portfolio we the modestly, of utilization our markets, United utilization States. in the rates to we we continuing the pullback see rates North quarter I see in

said, XXXX. On within hospitals. monitoring and we to don't don't clearly track this pretty investing that's four and best category. anticipate benchmark it a But that, Obviously, market. our not closely, into be the of within the seeing probably quarter volumes to we're So, we're Dave, we company we're for product view as procedure that really I NeoTract,

is investment we year. reps that Our reps a number thesis will next of in again region to add the X of XX reps

add within or And – absolutely point, consultant split year-over-year, look to – assist a the As and we you're consultant the we a either generating urology tipping favorably. will the continue at anticipate will territories do territories hit to territory territories this we the growth accelerate we growth. XX% that we rep to split correct, very

David Ryan Lewis

very you Thank much.

Operator

next Newitter Our Rich from Leerink Partners. of question comes

is line Your open.

Richard Newitter

for of ones. questions. couple Hi, taking the quick thanks A

you Just thanks employees just I new deal how like sales since and going to and was of and is with I'm color the for think announcement, sort? hires. communication just as XX smoothly? entire that of NeoTract, retained just maybe have there distraction organization organization X it existing the company kind on rep given a standalone a force the this there – the any curious. was you has was is, get the follow-up a been, on I any anytime, the hypergrowth absorbed, of Have asset, the still wondering

Liam J. Kelly

the Rich, I'll thanks that. Liam. question. for take It's

gone for very twice this the has exceptionally I close. The have see well. signing So, there initial integration down positively. I think people and within personally NeoTract, been

We have relocate. that sales had, a loss that but to person I think all one was in regrettable transparency close, wanted since

are it Teleflex that the happened have would sales whether was or very within The not. part still engaged. is company very of think momentum team I The solid.

rather have that obviously a is helps fact, UroLift we the their than own don't as career we growth opportunities while making and Teleflex, and BPH, it keep within a Rich, smaller. identity changes gives committed future company business either. regard I standard being obviously its intact, of We that established The larger bigger are a that, team that the part significant it care in envision Rich, all for management for of unit the organization team within own to and helps that think

Richard Newitter

helpful. That's Okay.

is in Just this forward it ahead, benefit think assumptions distributor be conversions, the on accretion positive, respect is to appreciate that Vascular going a the actually to basis as thought XXXX right I year you're about still likely that about that on to Solutions, your with into pull thinking – should incremental increasing well? XXX we points as of an or of kind rate, and also of top – pay-off move organic as of growth be to

Liam J. Kelly

give growth top-line add haven't as call to as in QX to for what and And color point XXXX, a add obviously, we we VSI prepared said Rich, as that So, again, still given will we guidance VSI we'll guidance, my can company. I earnings believe our more on a but do our remarks, Teleflex.

Richard Newitter

nothing what there? pretty the contribution that of do for it in it's top-line, has But XXXX, can and bottom-line you VSI terms clear in changed Okay.

Liam J. Kelly

That's a assumption, Rich. good

Richard Newitter

last One one. helpful. very Okay,

On run the of back of that of then, and tailwinds us whether we those give half that's picked of can XXXX? the more, you first little bit can half also into as kind of of move kind kind any about in up XXXX, China quantification rate you tailwinds to think the just a quantify a

Liam J. Kelly

it it said so see you the see would XX Well, of negative basis that in going tune go turned drag back in quarter China we a China. first in XXXX, and points, headwind would XXXX. the was first headwind half China obviously, slightly at four on XXXX, timeframe, to if what into on a the China, to we X.X% we of continuing quarter about see turning – And I'll becoming of actual positive, I accelerating – that had and look away, a was was where and the our first of been that growth through a a from and three. in tailwind would about fact so in quarters, three

Richard Newitter

you. Thank Okay.

Operator

Our of comes next Jefferies. from Petrone question Anthony

is line Your open.

Anthony Petrone

if call, ride I with And fourth a but Thanks. us you'll the great been it's Benson quarter and congratulations, be don't congratulations. know on

Unknown Speaker

is going be he (XX:XX), the CEO then. to

won't So, your I perception here that is be correct.

Unknown Speaker

Right? Fantastic.

Anthony Petrone

And then, luck. NeoTract, Well, target. thanks everything. one restructuring Two good and on for the on

fourth through walk for to the what's actually in. trying math actually the baked quarter just on So on

about think to rate on $XXX I run higher. million you're be $XXX in math million, So, to million seems but the here by baking $XX much my

Medicare CPT then, be the And actually shift will out think night. Thanks. the shook the into XXXX be have margins. What and heading XXXX? contribution I'll the update the in on codes I that came rate rate wondering in just is NeoTract. follow-up then, to fourth what And reconcile last just yeah, for would for quarter XXXX. in UroLift a maybe rates it So, how I'm out

Liam J. Kelly

Okay.

$XX.X would product. million to at with quarter. $X.X the and code in change no reimbursement million is So, fourth have to for rate CPT million the to happen NeoTract with our the any for change, the And $X.X for that math adding – hear would our we the that million of UroLift, $XX.X adjustments didn't so the

Anthony Petrone

of gains could update we'll – extent But as I a perhaps forward, get know like, as will at price that Got look it. an – mix margins, now between and – the margin just mix, plays know spring on a as driver. uplift Got the you it. Day. restructuring, what we're even wondering Analyst and year you still that into And anything the know next on margin the in outward front, of going look I'm to you Thanks. the this how into you you share margin that maybe flows

Liam J. Kelly

give We'll I when in us. positive and of in we that in million by a restructuring very We bit we're Teleflex that's $X able and been spring. Day to do direct. anomaly And tell this our have a from anticipate cause well that to will pleased having have improvement the modest a positive correct. got pricing think our to benefit able call absolutely positive longer-term up a that we're core take $X you're And we continuous as have real for on million you Okay. positive between Analyst guidance core we obviously, distributor our respect we're I modest to from and programs place. pricing little as pricing in longer-term

and lower making in exit than in then, we NeoTract, business material units. product we margin portfolio. within playing well have higher as And place, having portfolio with and VSI decisions have surgical good core margins now, our our We substitution as to mix did

the our bright looks will Day, Analyst get our guidance for think and we margin on future expansion I story. further So,

Anthony Petrone

last one just And one...

Liam J. Kelly

bit going just provide a more... is little Tom to

Benson F. Smith

more and little think operating a feel the if the still we've the even in through color, guidance guidance excluding you NeoTract. see Analyst we maybe gross margin to of the acquisitions XXXX in Just Day, provided about Vascular ability last just very Solutions our confident

target as rapidly. Liam out, perhaps in as with gross products, kind pointed including operating even acquisitions, and that as we're higher margin. growing margin the margin. look see already gross that very a And increasing is it and margin Teleflex of than kind we carries We low-XXs the the at we speak, as fact, next-generation In of at we look NeoTract, at

real to Vascular And expected so, and what also we see is XXXX, we've driver gross points accretive the to going basis to in that Solutions basis additive to we add points operating margin that on mentioned XXX grow into provided a be XX margin. previously. as operating. forward would We had

to we those previously had And acquisitions we point, continuing material see what of be pricing build our that. other additive initiatives substitution then, communicated. to both to such mix, will on Liam's operation So, in as program

intact story And margin so, Teleflex. for we see still a multi-year expansion

and bullish So, Analyst on the we're in details we'll more future the Day. XXXX pretty at provide

Anthony Petrone

in see And for coming with back-end just on tech just a any what if (XX:XX) BARD sneak the the maybe comment Thanks. market, if could ownership I is of changes down? new BARD, and you

Liam J. Kelly

just of cause in it three of obviously, that advantage. our that, on Any an rapidly. over as I and growing XX%, prepared growing is for take talent the which nature us whether two disruption. in BD. own companies with And well through months. registration would within my anti-thrombogenic the So, with have quarters, antimicrobial which the integration of said would two us we're our size remarks. we do that focused We focused And very we're think resubmitted it as gives said, own clearly we're may BARD positioned products, share or very on think companies of And PICC very – portfolio unite, I a its We have our of are China, some getting opportunity I XX nice under in anticipate would coded regardless BARD that PICC acquisition. that we to

Baird And see that also system positioning that with growth within in positioning a have PICC segment. space company was a also AngioDynamics. our formerly bullish So, gives we're the we continued we of us opportunities quite opportunities that about good another as and system and we that for compete

Anthony Petrone

you again. Thank

Operator

comes Our question Needham next Company. Mike and from Matson of

is line open. Your

Mike Matson

types businesses. Good with of what the the have much taking divestitures probably other wanted about guess, lower I I of you're that growth not looking you my spoke talk just know morning. out some you things? to just of areas for about how margin us and I of Thanks questions. you lower going start continue to shed opportunity you're there, to can but tell some these to

Liam J. Kelly

are correct. us, other me assumption let telling just the say list businesses So, absolutely of on our target your you not what about is

to to and lower up a network. margin our additional products, NeoTract, the acquisitions, broader able operating has in us gross – may we not portfolio our are importance things I to same take look in competitive in lined it Solutions philosophy business lower good that puts been at maybe think a as strategic have less which making be growth, us position like a Vascular

is at that's attractiveness it, So, we're the kind of obviously of interest the another which framework at looking to thing. buyer the another

able be we're So, really not do don't surprised of to this. more if much beyond so that, comment, we than other

Mike Matson

through with in mostly was regard to you if Solutions, sounded where areas to weren't that Europe. Vascular see the going double-digit in these you Okay, And growth like wondering continue that's distributor just helpful. then, transitions, it

the through was double know, you area issues? here where of don't the some or grow U.S. go than I that didn't those would be, on digits going did maybe So, question if any

Liam J. Kelly

saw was distributors And happens? And slightly we uptick we what of a with the in an U.S. APAC. was most absolutely line the correct, you're begin conversations our ahead Europe. impact that the with we go-direct. end in the was Clearly, distributors expectations, – the So, on year-to-date in

stop to ties them. ordering, in for to for up order So, cash they're us their it just product back buy they have not it and sitting warehouse going and

line our within degradation a impact expectation. almost in Europe general and standpoint U.S. seen the exclusively the was with from So, was

Mike Matson

just I pushing squeeze to if is the China. manufacturers. Maybe buy on Thanks. Okay. government It there from one more, like really seems could local

to factor decision So, buy your does all this did into that at at and there all? concern company that you

Liam J. Kelly

the company do very buy has particular phenomenon. little China in to to decision the So, with that

it decision was Tianjin growing and of one will – our (XX:XX). in is this for company for remarks, products product, categories. that with it to chain some help to I which silicone LMA through actually us Chinese But get solidify my by FDA product buy said manufactured new our really the company supply was our that As fast

But grow help product the that And will with that I our it our with in continue profile, North government that it will America. think are to right is So, ability Chinese to you margin help our been marketplace. that manufacturers. two that within very differentiated happening that portfolio are for in the addressed local to easy products we've last to and preference that substitute has with not giving years

Mike Matson

Thank you.

Liam J. Kelly

Thanks, Mike.

Operator

Our Mishan next comes from question of KeyBanc. Matthew

line is open. Your

Matthew Mishan

and you good morning, Hey, taking the questions. thank for

Liam J. Kelly

Good morning.

Benson F. Smith

morning. Good

Thomas E. Powell

Good morning.

Matthew Mishan

core pieces what end, you organic about of near the you guidance the now. to just just And currency moving I constant talk growth. or to how lot you And in could hoping Just X% growth are gave. back low the a go that X% was Are you you're just organic feeling core business? the around high end, seeing coming core around the rate,

Liam J. Kelly

Okay, Matt.

to So, The X%, which the if guidance, M&A the did in beginning at year. the X% X%. of X% we include completed to go our we back gave previously

currency Now, that. guidance XX.XX% XX.XX%. if And of versus performing take we go back where we're to constant you our if to

you days and normalize do billing and that. VSI NeoTract, take you You and take our out out all

call X.X%. You a are at of a it X.XX% of with to midpoint X.XX%, range

insinuate X.X%. growth X.X%, of X.X% give would of an with organic to about our at of and the midpoint give our guidance, the X.XX% our you comparative to original and current or over you guidance that's then, X.X% would midpoint So, to a X.XX% guidance

business, which in about all some as the full prepared my of are those a clearly, of points I remarks I exited moving year for second pieces, XX year in as all in margin the and we So, said half of all, the lower the basis. XXs headwind – basis coming

a in we to relation that on. which in are very growth. component comfortable guidance we continue organic And where So, we is relation key new acceleration are very product, comfortable we're our our to see obviously, where to to and

Matthew Mishan

do, into you're full that's high What think to guidance you're I do looking it, think then, got know not And a really to given Okay, you yield helpful. but year, I you're next the do going think I offering. for – year? the right next full run is? for quarter but think is won't going run what next into fourth going year know mean, you the do the I run rate right rate the I interest be expense rate,

Liam J. Kelly

don't it the of seeing quarter. So, would from offering midway yet, but... be you're number what we're given in through, the slightly have as would the fourth be elevated calculated I exact right,

Thomas E. Powell

and end Matt, the what offering. dependent when we getting up somewhat obviously and, on on the it's Yeah, offering rate and do we

rate I'm sure for our the we'll to able So, interest following would what be certainly be of completion note with longer-term expense. offering, that run communicate more investors a as to

Matthew Mishan

great. international in and North to break the the American to compared distributor to Okay, you on growth And direct issues question, out real North are, for the the as America? then, of Solutions, growth drive like a last versus anyway ability Vascular impact can get what sense your

Liam J. Kelly

we So, million as to Matt, I destocking in quarter happen we fourth be that Europe mean, in said the expectations. have American the conversations. and the destocking about distributor these line in will I growth earlier further was North the of with that our impact, $X.X estimate impact

our thing important place for that opportunities the XXXX in The go-direct. accelerates Matt, here, destocking is takes

but a it's a Teleflex. for positive headwind, short-term longer-term it's So,

Matthew Mishan

Okay, much, and right. very you understood. All congratulations. Thank

Liam J. Kelly

Thank you.

Operator

question comes next from Brian Blair. Weinstein William Our of

Your line is open.

Andrew Brackmann

you for could Brackmann think about pipeline is maybe and here this actually Andrew conversion guys, back kind be bit it this and that distributor will and of Thanks. a little the want go to Hey, talk your runway when I have on you do done? to morning. Brian you more materially

Liam J. Kelly

Andrew. Okay,

is geographies we about refills business value. is would the potential the we attractive bucket which to X% Obviously, acquisition, that, almost X% VSI same said would we've the be one-third, time with in a and that to the for a we So, would about same did be have then exact China, the at in past executed that of consider. it in of go-direct, our

think that holds. on world for in will go-direct, the are a which we and years. still significant the opportunities original statement in overall of we parts coming looking we the we now So, still VSI constantly will are there of execute should still But the execute XXXX, down that some go-direct, our next Obviously, portion on bring at percentage.

Andrew Brackmann

still is you third kind seeing made material your one the in that last end had quarter Got Are Thanks. it. competition products. of quarter you? some headwinds you And Thanks. then, more, that or lower some in respiratory comments behind around

Liam J. Kelly

portfolio, the predominantly the that the three driven in Andrew, earlier, that group. introduced the new Actually, were in growing and our solid we I space about had anesthesia that the intraosseous introductions, you. that be by able happy spoke that a comments I'm LMA comment our with Pyng product Gastro, around acquisition silicone to we and at with also LMA Thank X.X%, portfolio anesthesia made, quarter, very to

of of – But think business. in very we're competition parts that I our we So, always some there's managing well. competition

Andrew Brackmann

guys. Thanks,

Operator

question next Barclays. Matt comes Taylor of to Our

line is Your open.

Matthew Taylor

the Thanks guys. Hi, good morning, questions. taking for

Liam J. Kelly

morning. Good

Matthew Taylor

Good morning, guys.

your when we here to add those and teens to philosophically how if you wanted mid kind of I I'm this and ask about look reinvest earnings things lot rate organically you much curious guess above if I on that have – year. growing. And going of of that each that are through up you just things, would versus we from going how drop could XXXX. a at easily grow acquisitions you've low kind way, of these FX of improving contributions been So, you into is tailwinds next mean with I

So, things? balance you how do those

Liam J. Kelly

half and investment the have Teleflex, will investment, year now put our think in ongoing portfolios of intraosseous anticipation that Europe investment, have investment some thesis and we on that we there anticipate our Matt, to channel begin drive highest invest investment the to within assets are Europe So, of of growing particular to we into obviously, have areas And resources in growing, But in resources. in Vidacare we fast philosophy parts are order identified margin, support would as we in shareholder with to the put But our we VSI is from in we we're that NeoTract, like Teleflex. sales – sales alert Pyng, go-direct. we clearly, will with that the the growth the fastest I was community of behind invest value. are NeoTract. Europe. The said we require there in for go-directs that investment did the will always Matt, continue will in some that an latter

growth to is order Teleflex's to So, in philosophy our accelerate continue that profile.

Matthew Taylor

Great. you Okay. can way And you is there brackets clarify, earlier would any Puerto wanted some just that I on in what that be? suppliers the to the quantification small, potential Rico. It pretty you're impact that be said of like some impact sounded call the analyzing give around us would of

Liam J. Kelly

token, it's small, at keeping watchful Matt, the eye. very You're pretty we're just correct, same a but

per We kits geography. our are happens that for that have out the watching of on industry will building the the some but PVC, not closely come the se that demand its PVC components up into And go also, demand increases to raw as because of that price providers there, go for we hurricane down what of very material.

hurricanes a see that see that impact as a impact as in to is So, significant, on closely see medical being growth but PVC, that cost to going don't the if having we watching that's not will company and we didn't uses have impact, Teleflex, significant every we're our device it QX. just so revenue

Matthew Taylor

Okay. All right. Thank you much. very

Operator

Securities. question Our Dave comes JMP of next Turkaly from

Your line is open.

David L. Turkaly

thank Benson. would too, I, run. Hi, you. you, a to great congratulate like been It's

Benson F. Smith

Dave. Thanks,

David L. Turkaly

that the some to there demand, manufacturing product? product, some that curious the delays a new you fairly thing. like Percuvance XXXX, exactly that good or it arose diligence that using it we've with on some I'm what that Quickly, the happening done issue is a one or is pent-up as is Sure. seems problem like frequently, are happened just people Obviously,

Benson F. Smith

specification products. our provider a the it's manufacturing of Yes, with third-party problem some of

close get working very, a being There's XXXX. So, you, strong. to we a them pent-up in is products. back We sentiment customer and think with the we're for we're very anticipate agree pretty lot demand the with root of cause. early We

to back, waiting can Our it customer product. get to base that sales force so just the they go back are with

and getting reps we're really the the So, customers in to this who sales use it back to of products hands forward want XXXX. looking to back early really in our

David L. Turkaly

But I of Great. competitive still more a are Nostix is on I you which – was sort and both mentioned as you are which on landscape? positioning used it helping is color being PICC prominent follow-up. and/or competitive but any the those think gains. know of driver, of still maybe And selling VasoNova, or quick you for sort even one

Benson F. Smith

sell still So, both. we

PICC just ECG. that the is on overseas We marketplace. philosophy. gives anticipate that them gives guidance nurse where the could right PICC, to from and growth use using for But actually position. come Nostix all than just to the profile, market start is what physicians You'll they VasoNova placing now good, share? ECG, a growth and would a want get category, a portfolio both comparable in both preloaded Nostix see marketplace. this confirmation have categories the profile accelerated in best but The more use I the anticipate to like a us better, more Nostix is bounce products take the in and countries to particular are the who product would growth. from VasoNova, used the But the should you into – is would in The to it a I allows the the Nostix

there. therefore, of why some competitive advantages over So, gaining it that's real systems and some the anticipate momentum that out has

David L. Turkaly

Thanks a lot.

Operator

like for I'd back Jake to remarks. further Elguicze call to over questions. turn are There the no closing any

Jake Elguicze

and everyone call thanks us that today. the operator, the joined quarter earnings conference call. Teleflex Incorporated to concludes This XXXX third on Thanks,

Operator

program disconnect. may a you great thank This the for gentlemen, you and participating in all does conference. day. and today's Everyone, have Ladies conclude

Teleflex (TFX) 2 Nov 172017 Q3 Earnings call transcript