TFX - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to Q2 Teleflex Incorporated 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 follow at that time.

As a reminder, this conference is being recorded. I would now like to introduce our host for today's conference, Mr. Vice Investor and Treasurer Elguicze, President Relations. of Jake you may begin. Sir,

Jake Elguicze

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

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

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

Liam J. Kelly

Thank you, Jake, good and morning everyone.

growth achieved the revenue our be scale currency and The basis XX.X% two to acquisitions, constant and recent second we fueled Solutions. basis. quarter, as-reported in completed Teleflex revenue currency most on During XX.X% grew Vascular continued by an on the NeoTract quarter constant a rate

To to delivering compared strong businesses We of term. in such that to the $XX.X period. going margin end, revenue, higher which to report continued invest demographics XX% continue behind increase its I momentum, is growth NeoTract prior most that as year profile pleased from and potential, long our that an am are as benefit augment bring to these million approximately

pleased care prostatic procedure we During of AUA most a very benign prostatic as prostate the standard the (XX:XX:XX). (sic) of was the Guidelines treatment recently [benign were see lift, quarter, for urethral provided that included PUL, hyperplasia to in hyperplasia] the

findings addition, confirmed to the analysis compared of cost surgery. as independent In from performed UK in UroLIft the effectiveness

such Turning were period. compared revenue Vascular as year reached thanks strength represents at America rate, we million, in to increase completed prior and to to two Solutions, by quarter $XX.X very which XXXX. as conversions several which We North grew an robust approximately revenue a of driven the were Vascular that pleased worldwide exited both to EMEA, Solutions in part see XX% distributor

O.U.S. leverage established infrastructure. remain As in is Teleflex's was recall, when we acquisition opportunity the the criteria of may to of our performance that you This globally. and highlighted confident we VSI continued announced an we part deal

or of to as quarter to understand to patterns not these to and However, XXXX our back times, first growth our difficult pattern. not predict expectations, year. and in do outlook. are proven believe with we shipping us level a met the as concern ordering subject step revenue cause longer-term ebbs organic familiar distributor have At them that quarter Teleflex day accuracy adjusted Investors temporary flows our with the be goals achieved and the during our in rate we our story from everything the took the

did in associated in until distributor pointed certain holiday from ordering seen suppliers, of the July very constraints We with temporary this the occur, orders trends not improvement. Unfortunately, quarter late and that timing to product are to disappointed some up occur. sequential obviously of issues X as a to due have advance the unpredictable

end positive tracing saw believe Importantly customer represents though, trend. second rate and core quarter we data a growth that organic not do the quarter we during

July, grow believe revenue XX% we of that rebounded we of few you month factors In coupled revenue that the a on few we and during moments, a month. and continue orders with the you revenue basis I bridge X% will week between the how first will why our full including tell nicely, there. other currency get year XX%, fact, constant That in In to and is as can a organic I for of between significantly distributors growth during bought X.X%.

to key gross point XX improvement XX%, to our margin The and basis metrics, margin leverage and within expand, the improvement the statement. is operating a that XX.X% can continued XXX in quarter gross our point be other some operating adjusted during respectively. and testament reaching driven in Turning income margins the to basis

previously Finally, exchange guidance, per we now detail. currency foreign our our this of full guidance quarter share of provided two confidence continue per range achieve which we and increase at favorable between an as that look in provided quarter EPS overview, in being have an culminated $X.XX, adjusted rates revenues XXXX. adjusted to is let's earnings second to when With over as of compared XX.X% to ability last And $X.XX $X.XX year despite into share. less more

with one an saw Beginning quarter two, currency growth; from revenue constant million, on components day. of revenue Second basis. X% X.X%. we included of growth organic additional totaled XX.X% currency increase revenue shipping is constant XXXX the approximately a $XXX.X benefit of quarter of This organic during which a

XX legacy new basis, currency shipping day This from consisted product points constant our approximately was positive adjusted XX the estimate basis impacted growth two So, X.X%. by day on a introduction, X.X% growth organic growth adjusted exit product These quarter contributors adding surgical organic basis revenue we product of basis points. from by XX which offset pricing partially about negatively about volumes, were points. and positive

we contribution to NeoTract, all received X.X%. quarter from Moving which added acquisitions, this was the

the proactive the implant the one end associated revenue it prostate of towards retracted a to NeoTract were to of as even of not this June, normally, interest higher decision in the needle in and number change, been small two with and but we device. supply of fact, have products a excellent been the made to limited product molds made a of impacted Because quarter UroLift issue, in of In field into for would in had we inserted reputation cases no from deployed. devices the these withdraw began we of the see A the number UroLift, the customers. change

any quarter the XXXX. to of cases implants been have during most seen have this the the of returned were any deployed. of since end some We which We from were not issue, UroLift June mold; using original however, because of impact that third rescheduled for delayed

ability how of act to very this support rectify proud and process. We of something feel UroLift, we near quickly want this our our happen, handling issue, confident pleased are the able in were in it and has for or And meet the is you that while demand to for the demand. physician we extremely with no way universal never altered long-term to to short- been have

Previously, it would XX% performance six expectations as over increasing NeoTract. that months the and XXXX the the that for for are grow revenue well as the of first our XXXX our at and Given said now expectation revenue for currency add of least NeoTract growth towards year, we levels remainder We basis rate. XX constant currency it our add would our grow constant approximately full will year point points basis XX approximately that will organic NeoTract expect organic XXXX year rate. to XX% approximately full growth levels, over we

to due to that shipping for of was Vascular timing and our come by was $XX.X the orders basis expect flat currency to year. million. Vascular next the estimate increased revenue America normalizing to revenue in North growth revenue primarily Turning on we When quarter we X.X% quarter. in second day performance segment; second the half the of a constant impact, back This this the

line. Interventional on Solutions OnControl When an of ACX quarter million, of Moving impact, revenue product here growth the was America, for normalizing as our North approximately is and Vascular revenues day The shipping which product basis. $XX we in grew well a estimate to the result Interventional XX.X% constant increase primarily second approximately that increase X.X%. as is currency

quarter basis to was that the product segment X%. that shipping estimate of shipping our business, we America a have X.X% we day supplier its of to North normalizing Anesthesia Like $XX.X decreased QX, which the When quarter third impact, revenue America, increase to impact $XX.X revenues revenues XX.X%. in approximately the million. growth lower to in second days, within a Shifting of Anesthesia some an on North decrease Turning was well as XXXX of primarily million, margin constraints. Surgical X.X%. revenue revenue Surgical normalizing the Surgical would line declined When for the exit was for as constant our is due estimate currency

in our the half that a line forward Surgical currency flat will with into the of constant second the The as As product exit. easing comps basis. first XXXX primarily XXXX, we of the second be to half compared expect we improvement of the to half associated the due approximately on business is look

Moving this impact basis organic Within to When growth estimate within million. we this approximately growth segment were X.X% contributed X.X%. $XXX.X our have second points. rate, operations, shipping the been EMEA and overseas to for days, that revenues revenue up would quarter XX M&A of normalizing M&A

not whose segment. was was organic expanded direct normalizing growth quarter this of $XX.X last X.X%. in days have following led Organic Shipping second increased within on for M&A this contributed a revenues growth an by our take Within this this X.X% currency to constant decision XX% China, Asia; rate, increase did growth this to revenue impact in was an driven our revenue segment When impact million. X.X%. year. our and by segment to business largely M&A, basis Now volumes on approximately the

to our Next, segment. you on OEM I'd like brief

and revenue quarter currency That of OEM products. totaling category reached on OEM impact, the businesses shipping acquisition increase and our was extent, approximately IDN the here Also a And million. revenue approximately a the was comments which in sales of existing the attributable increase GPO on All XX.X%. within two higher to lastly, revenue XX.X%. was XX agreements. lesser the we normalizing up due was total quarter, NeoTract During constant The agreements, X and the up my revenue XX.X% estimate quarter, volume primarily organic which a day that Latin million. grew Other Growth new would for basis, American have XX.X% quarter performance. to our $XX.X been of completes to were and of in When we all second for business second revenue is signed $XX.X during

on Turning a update brief to UroLift.

perspective. During the and evidence numerous from quarter, the milestones clinical product a saw society

potential dysfunction, included also and we in men the recommends to without physicians benign AUA late rate PUL durable UroLift treatment in language who as option [benign the of BPH, announced during This standard has the PUL PUL prostate that favorable (sic) urinary of minimally annual Guidelines for avoid is thrilled that association's rapid sustained symptom a as provide improvement did May. procedure treatment were only the care was the for the AUA only for it updated to with as (XX:XX:XX). First, remains been sexual consider invasive the want sexual procedure that meeting especially hyperplasia should included Not important flow inducing shown men and hyperplasia] dysfunction. prostatic part

UroLift cohort several effectiveness option also of of and five as the posters the meaningful one and minimally compared effects, men life further each clinical transfusions, for cost urinary of the the and UK An treatments of new AUA, predicted including of significant extending a one highlighted invasive in had offers independent BPH for of approximately complications, that and of highlighting tract £XX system other treatments tissue leadership evidence per these actual NHS blood its and complications data a UroLift years year TURP annual presentations Post-surgery of studied most UroLift, with destructive UroLift to are analysis patient. in expensive and, expanded The quality procedures. savings TURP. improved studied indeed, using associated side at million of occurrence We reduces demonstrating over as for infections the urology. the body most

as helps mild earlier bladder approval was study, UroLift of this year been with how BPH progression, I constant X.X%, to can that no I with constant the preserve to drivers based, expect would like growth which in the sustained months While showed year get body is UroLift lobe UroLift was dysfunction, UroLift were rate demonstrated and the slide had this median compromised. currency X% urologist MedLift events after lastly, adverse and study, analysis revenue the organic the organic And year patients half the supports to to growth in thought LIFT revenue of who Those have achieve first the be a the during measured lost full Admittedly, a outcomes reaffirming over currency the explain we that response leads bladder function the think midpoint a those XX% with than of second and year as while safety between the glance necessary a on in rate was be full LIFT the one-year sexual function. well there consistent of randomized moments of in This first at our revenue our on full study its and a appears of to clinical bladder that growth X.X%. The few six of an rate highlights who increase. predictors spend leading which the to preserved, the before and de and that function the efficacy starts there a currency rate, indications had step retreatment And outcomes to evidence IPSS organic later, revenue of may first turn of call and study, low categories. significant range moderate. of the to guidance organic to between earlier still given first-line achieved a novo, two presented in instance including a disease Tom, of basis. year intervention bladder We had some XX% X% growth we better currency acceleration and disease large we the are of constant interventions progression a of later from revenue when our both constant building of deteriorating a between improvement, therapy.

you are believe this revenue drivers growth slide, achievable. of we acceleration see However, defined in the and this well as

First, let's start with NeoTract.

And growth add of approximately growth only second of in half organic will year. fourth for the in XXXX, considered we the be During NeoTract that none while been beginning will first estimate the organic. the rate quarter. of towards changes revenue considered half NeoTract has organic X.X% That quarter, the our one it

turn to the back Growth stems XXXX. has expect behind driver year, The Vascular the been we this first Solutions during the strong six that main occurred further Solutions. in Now half the and Vascular improvement distributor-to-direct that from within let's XXXX. improve of late to months of conversions in

stopped As the second of negotiations acquiring simply will show distributors product of all year began in the as revenue suffered growth. Vascular behind of strong various those international Solutions distributor markets, sure in these we advance I recall, you us, am the of second acquisitions half international With buying them. of as in Teleflex half conversions should the growth XXXX, revenue products distributor

product additional and in eased. expect line there exit. half be additional one compared from shipping in approximately of will exit into Third, revenue the we translate as impact negative the still surgical second the this one the have to first, day year headwinds Fourth, a the point should this growth. of We

of at call second well-defined Tom. That we basis items glance ability half by exercise first point this Asia is would of expect this due confident However, second At there the a of points. prepared volumes points. about the them. the points. remarks. increase, the the moving that of we EZ-IO see business half negatively approximately of feel that XXXX, increase and our time, year XXX my are only large improvements us of primarily it and in handful we to are over QX approximately basis basis about in points, within of Therefore, The impact are in to talking me improvement year. our turn while in volume from And the end the to that lastly, expectation an will to year, our first by of base the to achieve back in the an during I XX half higher appears half is half approximately XX second we within a this while of control, This our by like us this will Tom? coupled negatively the impacted year, XX with takes basis of to the

Thomas E. Powell

Liam, Thanks, everyone. morning, and good

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

was $XXX.X reflects compared year Vascular the Adjusted prior improved For to the Adjusted to exchange adjusted versus expansion quarter, flow-through. XXX in related million year cost was adjusted XX currency the an The when gross initiatives. million The the in of improvement points or operating impact period. was fluctuations foreign to quarter, XX%. increase favorable Solutions of $XXX.X and basis profit the prior XX%. and the impacts point basis a improvement gross margin margin of gross margin the rates, in NeoTract, increase favorable acquisitions margin of gross XX.X%,

However, this operates of a at was higher OpEx structure. NeoTract, partially inclusion cost offset by the which currently

quarter, adjusted the interest $X.X not Vascular from higher margin margin of in to The with earlier. the During $XX.X expense operating million acquisitions and million impact prior $XX.X points year had additional required basis increased mentioned approximately Adjusted NeoTract Solutions gross increase NeoTract. finance million and XX expense reflects approximately Liam that have the to net of borrowings been would of incurred we issue adjusted the the production quarter. associated

Act rate windfall tax enacted For recently the versus in the Tax benefit Cuts year-over-year a year XX.X% tax this and decline reflects prior the of impacts quarter, Jobs The year versus was the adjusted larger Tax XX.X% the period. and last.

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

The model. is leverage of financial potential to testament quarter the performance second business Teleflex's

earnings. moment a to comment take the Before balance quarter I'll on GAAP turning to sheet, second

loss impairment restructuring, related $XX.X expenses, For company's footprint XXXX announced EPS to relate $X.XX. realignment the reflects the of million a which the restructuring impact quarter, loss and was primarily of GAAP GAAP plan. The second recently of

Additionally, longer-term NeoTract. increase expectations expense during the contingent for million a we an quarter, the revenue of as of incurred consideration $XX.X in result

Turning now sheet balance to and flow cash highlights.

of first due offset is over the achieved the milestone. year, X% the months decrease For in cash that It consideration approximately The capital, was prior primarily NeoTract favorable worth $XXX noting first also results. the flow contingent to down operations six totaled by operating working partially million, from year. changes fully

company the such, million of As the $XX milestone. full made payment

on And X.X comments that our facility quarter, the during under stood Finally, level defined credit as my second our times. completes quarter. leverage at the

I'll are year constant revenue, XXXX XX% guidance. growth Now, expect between revenue growth full currency update range And we X% reaffirming of our XX%. and to Beginning revenue continue X.X%. organic be between our and an with to move guidance of we will

as-reported NeoTract So, X.XX% Vascular of full whereas approximately year expected guidance, notably expect our less contribute of and exhausting range as-reported provided previously are we the approximately this rate, now range and towards Based combination revenue XX% X.X%. Because since translates billion Solutions to $X.XXX a growth revenue on XX% most combination growth billion. range currency between to a updated to XX% last of from an guidance we our of assumptions, currency and we to dollar $X.XXX euro, favorable between of a the XX%. contribute between our organic that we and environment

and improvement in called to is which our XX%. provided between margin adjusted also our year XXXX rate due our year benefit We tax guidance of tax tax to XX.X%. between adjusted The to than be reaffirming guidance XX%, compares This full our XX.X% full both XX.X%. between larger and expected. range guidance operating windfall approximately XX.X% rate and of rate adjusted guidance We an XX% range our adjusted for primarily are margin and now expect of previously previously gross a prior tax

outlined, favorable and to in earnings organic share to On line previously foreign we of growth XXXX environment. second was as the adjusted per And $X.XX line, the able less from to outlook currency our in we sight of the an range but $X.XX, to second a of expectations, soft half. expect growth summarize, as remains headwind be quarter offset between bottom acceleration for to relative the have earnings

As continue expectations. the results for NeoTract, exceed to

quarter date, including outlook. and with quarter. also We XX.X% progress Vascular in an performing longer-term of second growth posted pleased well of Solutions revenue are XX% the improved to growth the very during revenue and second the is

we're build to of Our pipeline new products as the pipeline and momentum future select such about excited opportunities RePlas. continues potential

the XX% these front, margin our results together restructuring efficiency provided On tax the deliver rate to came adjusted positive all helped an improved factors the first over quarter gross second added time. for continue real quarter. to outcome. produce and line programs bottom nice margin and the to for The a propel financial And

the adjusted year. prepared quarter, remarks. second And that by earnings share the XX.X% grew per prior concludes versus my For

I'd Q&A. to Now, to the for call like turn back the operator

Operator

comes David question from first Stanley. from Lewis our of Morgan the line And

line open. is Your

David Ryan Lewis

the Liam, ramp Good steep. the looks morning. better, getting very XX% acquired the businesses obviously are worse, core gets but

third. So, of a go I half to X% believe ramp organic kind X.X%, the in has big you back and the to need into

So, you forward, confidence What's disappointments? conviction that investors improve, step one can can recent back of steps and why have pattern level you core your of stop? of should kind deliver can this two given more these importantly,

Liam J. Kelly

David. Thanks,

believe through and the half that comfortable we quarter, will second add in into performing of would drivers. that. is it year, NeoTract so X.X%. why want just So, we drive to the to future. X.X% very is it exceptionally and go-directs the comfort run – bridge the second happy organic that X% to X.X%. And in call to the during is the in the I'm that adds the organic compare blocks therefore to the by is to last half, we well, reaffirm to driven we're give tried to primarily did building roll to VSI the EMEA. if that growth well performing the from X% our as And half you with NeoTract into ability first our our investors the

ability of X% have additional confident of the achieve surgical the will X%. which shipping points. day in volume, fourth exit growth PICC these basis in and falls that's confident Vidacare quarter X.X%. which course, add to add of We organic to supplier our we're deliver year volume, resolution, very order the X%. rebalancing, our guidance will two David, to achieve we going rates make all also surgical which XX full factors, And, ability and anniversary the to our range the And me longer-term quarter rate

are we point the I should investors two think fourth out in elements that those quarter. to that of

off NeoTract quarter fourth roll days the the quarter. will the and also into So, fourth billing in

So, what we it's to see on a uptick that's would And distributor very surgical outside QX, if we're uptick you and is of X% in X% of of control, basis, excess exit, year but agree and of we normalize with NeoTract at confident to to the and to we're in the X.X% the that ability you And term. have our an David, within on expect our all full forma pro deliver sight look quarter, for X% to frankly these. in longer I forma. pro then QX. our and line larger we a quite and that if but unfortunate with timings, X% our you

in me also our gives longer-term that ability. So, confidence

David Ryan Lewis

number And, Liam, confident obviously, you on is the that on can confident And confidence up quarter. very just in the the third Okay. stick with the up follow just of I'd year. growth. just your I'll in core of that. sort going you're interested NeoTract or as reiterate more improvement core, into One, Maybe I'm then just there. sort

making you're that rate Thanks of much. confidence XX%. easily excess the fourth as can in and to number that through so growth you instill Your in head be investments the quarter

Liam J. Kelly

David. Okay,

percent. has core, the at of VSI the the to we buckets as a the take of the that and from accelerate. year. of all, That it first half, drivers building core, day for XX the Vidacare go half at impact layer overcome if in are back the core repositioning issue, surgical Obviously, if Those look as half VSI, give core. those I'll points. the we and excluding then year where grown should accelerate will half the add exit in QX first us core the into and the at should So, basis the blocks the NeoTract. number, And in the supply on look APAC shipping we the then of business will Other that and I the X.X% and latter All X.X% the you latter have are The and we order

Regarding well. for The superb impact with confidence exceptionally NeoTract, into the mean quarter. a will quarter in It modest most three. issue your million a Teleflex. of question I had about NeoTract supply continues on our simply was re-phased $X to That perform likely acquisition be

invest investment decisions not within We makes so actually more the within continue as that will upped continue NeoTract XX% confident us growth we're be to to result And that. very much day, the behind that is to the growth to we and of And a get least behind NeoTract XX% of guidance it'll believe based from it. increased every heads about spoke that Teleflex to The is free. The put resources so previously. that. we've XX%. investments at deliver able And sales on are performance that the we the do the assets, that

were to to marketing. confidence our in all we also of leading these direct-to-consumer We've one, lot heads a that and to sales rate seven initiatives, quarter going in that of investing organization. an said done we additional we to NeoTract. the We're XX% are As will add within growth get

Jake Elguicze

Operator, next the we question. can take

Operator

And Keusch question line the next James. from from our Raymond of comes Larry

open. now is line Your

Lawrence Keusch

everyone. morning, Good hi. Oh,

Liam J. Kelly

Good morning.

Lawrence Keusch

become the Liam, stocking/destocking to visible. than it's in seen think least to at become event This a come I a issue. has back I want we've frequent bit of more more past, the distributor

as you A, B, the by really your to and time on wanted I caught at seems that end quite why So, surprise that then, you you often. to that's second it's visibility of the it you really this happening think understand, and the look catch forward quarter, like since now sounds

Liam J. Kelly

that the earlier a simple Wednesday was on we bit that in of Xth in The this the last well that Xth Yes. on anticipated them anticipated those as June. end Monday little rather distributors anomaly the million was in instance. And first we would placed a of received in the July has of the placing a here we $X the fact Larry. orders at always you orders of orders and in week on can in placed week, week the of issue It the had July tell than excess in rather They're of think, ahead become land Those traditionally July. unpredictable, I July. we of the our than June for that Xth Friday fell

group. sites is is the work. place unpredictable to sites, understand think understand can hub a orders. and individual their these XX There if distribution it distributors to to they – I how take, the is to It you central of up one ordering nature have not

Our quarter orders, that in are expectation of good end would the if good always it's timing any well above has I million first unfortunately. we confidence of a we'll expectation happened of I $X happened this those the it of excess was in June. It's fact because our quarter, order week subsequent The out in in recovered in simply orders of a Larry, have quarter. in sell is news, second the they high the level that right. July. of make that if news Anytime that in Larry, can we've ever the a issue,

Lawrence Keusch

address the Other as then, two half what you me And strikes growth helpful. them was the All of most back second to let them. again just ones. category David That's the off picking is rattle and some I'll Coming other that unpredictable. Okay. and at, the

should pretty I well. The obviously do VSI exit think explainable. surgical do will is NeoTract well,

mentioned a times EZ-IO couple You and have Asia.

do that NeoTract, the that confidence revenues second specific this I issue the you then, manufacturing drive around the you come to Thank make and way, you volume gives with your mold how again manufacturing forward? those increased And the have said issue sure just another you do understand volume, targets? one forward that you going what had. is on not how that can achieve So, can But or you. side

Liam J. Kelly

Larry. Okay,

from half All moves I'll component into the So, volume start latter Obviously, X.X%. that ordering is a of QX that the of the the with Other, the year.

The Vidacare, million $X supplier a XX%, to latter of it's had into also another growth half going to issue. happens though caused a half volume our the which the Vidacare move was in year, a of and around and non-days adjusted our is intraosseous one second that supplier had our currency business suppliers – about The year. of and business for late the fire, within that's surgical the the We the even and Vidacare – Larry. about surgical growing constant breaking from QX on by total municipalities. through around this intraosseous at orders X%, quarter, due had

budgets. that's of because of timing orders municipality just So

begin have we anticipate expect half. We a to much to In start indeed control And that come we'll in stronger channel third over that we APAC, to see back. And would within the now quarter. second our China.

a much frankly would but we prior We will we growth this year. over see Japan China, space help also to that pretty opportunity continue robust to China quite see as that's is and as quarter within So we Vascular we that growth saw us won't an going that to within given. strong anticipate within within have augment the

We into that. have line excellent of sight

lot Other confidence. of a Larry, that building again, that what confidence around level based high X.X% of That's blocks. me gives those on All So

and question ongoing mold Your have NeoTract why and the issue we're an that about other won't was confident impact.

I'm of I eliminate got mold, to period have product we're that how mold that product were impact the It of with enough And Physicians change that to that getting mold a we'll now. And with currently change a right made definitely back proud manufacturing now we manufacturing and old out and with manufacturing patients. And of to make So time. excellent we We very to now acted. handled in old was were issue very on the decision mold changed customers. very, it. that I've able very you, had end improvement. by We to comfortable the the progress we Larry, the to QX making part as short think, are mold. tell at all the zero company very how time. we're quick of backorders quickly

Lawrence Keusch

much. Thank Perfect. you very Okay.

Liam J. Kelly

Larry. Thanks,

Operator

from the of from Richard Newitter comes question line next Leerink our And Partners.

Your line open. is now

Richard Newitter

that your growth taking something the XQ. comments XXXX. I XQ little off directional Thanks. be My I from kind main going really, be it's you XQ takeaway it's your important, know range could that you X% weighted. XQ thinking really Improvement just X%-plus give said four on comments, But half Or to to close get of acceleration balanced a year. about correct? follow XQ and to on the questions. that occur of very fact us cadence I Am the for is for kind guide, bridge of you I Thanks think you I two how the steep in from more the appreciate any back the the of of to components bit that levels wanted big Hi. quarter. if can on the the in up just to directionally XQ? into organic it performance XQ? And color kind steep the then a the to fourth how between and bridge

Liam J. Kelly

then. identify Rich, be what's obviously QX in So that'll you, I'll going specifically to what I'll try of drivers. to drivers main And for do the QX. help is and those And the impact

drivers QX that are just quarter, two billing are elements two within the In drive NeoTract biggest of hit the QX that and growth the of X.X% in days. So in over not obviously those quarter. will that

those in help that that core getting our will bridge X% business ballpark And in So should come the we QX. you then building a be in QX. other in of blocks should

you'll have Of course, and both QX the exit in QX. surgical

Richard Newitter

helpful. That's Okay.

Liam J. Kelly

Okay Does good. that help?

Richard Newitter

going But pattern. you to unpredictable. a point Thank inventory impossible you. ask potential X predict I'm and so the this be to Yeah, the Liam, it and then, July does, And do does. ordering unpredictability of to for it seemed

the there two – quarter And within and XQ guess I you can times experience, X% when kind respective inventory are on upcoming ordering year, is just any the that to years the an how potential you the think potential what's kind could slip times disruption? you past as is this on pattern in of it based that? ordering de-risk any there inventory that the of disruption seen do late look from past past. up? in XQ And you two an – contingent anything – to then for a potential inventory happened you XQ over of that the You've said vicinity quarters

Liam J. Kelly

appreciate question. So, I the Rich,

in in end right to somewhat coming that of difficult it were did the excess visibility. that But rate see, days have I June. will this, our orders is of as the we now company. in as run of back July, a $X we few the That's tell million So first which very I said, you anticipating is obviously

remainder to In in confident last late of year. going very to not I'm the distributors year, did through that's the QX December. carry So order

So we reasonably light a have comparable.

normal December. So if positive anything, distributor I returning ahead flu QX to the to previous buy a into year would late in orders from expect patterns based of season on

Richard Newitter

Thank you Okay. very much.

Liam J. Kelly

Rich. Thanks,

Operator

Brian comes William question And our line the next of Blair. from from Weinstein

line is now open. Your

Andrew Brackmann

Liam, on to This also ask guys. Andrew is actually Hi, you Brackmann Brian might for predict the this morning. impossible.

up that quarter. notice that You was China impact? you here in Any on Thanks. provide can XX% the commentary tariff

Liam J. Kelly

the seen. of so of On highly in the scope into tariff, discussions I devices yeah, on China. not going medical placed been will it's unlikely we any believe have tariffs that that be They have that

large we the about of which from business. import China, in a China million tariffs and to very exposure China very, would in have the overall U.S. that Now, product exposure into be from part region – is is $XX the and we our product don't have we a manufacture small that that leaving coming of

have us. that of volume on that, years, that fact, part biggest of moving significant will out the $XX the that couple next it not there tariffs geography were if a And over in placed be it. of So, million, impact on actual would of portion of

a would to you don't that Tom, having major I like So, see add? impact.

Thomas E. Powell

can little probably I a detail. give you more

exposure about And may total placed tariffs that coming products of coming any include doesn't $XXX,XXX of goods, China. China could pricing, year. of our be product for impact out the estimate those purchased future So, it's assessments currently this but finished the of on which is out absolutely a

of makeup first for all to the exposure an on the third There's the that But have being exposure Given achieve $XXX,XXX be and of result products, products, products. really tariffs on the steel our aluminum part as China the forecasting we'll much also and list. be about to on of origin largest at a as our we of impact that. able exposure absorb our we year or list is from currently that again and don't still guidance that again, quantify of some

Andrew Brackmann

headwind you constraints Thanks. some Any QX. additional made question Great. comment second in there color was Thanks. And that the then were a my as supplier acting there?

Liam J. Kelly

supply a by resolved in quarter. urology had had for or issue Yeah. us late issue fire. The The will impacted $X supplier And about early business a EMEA. The QX in was EMEA surgical urology within in our this a million the main either QX. be issue of in will overseas impact quarter. that we surgical resolved be That the

Andrew Brackmann

Thank you.

Operator

comes from And our Raj Jefferies. Denhoy from line question next the of

is Your open. now line

Anthony Petrone

Thanks. restructuring. versus and here. specifically ahead I'll follow-ups. of in too restructuring? just the Analyst Anthony a expectations real in drivers Obviously, mix of in Can margins couple a have touched number on the quick, for Raj. how much quarter. quarter, mix was there, Maybe of was you that And the It's walk through to was Thanks. our Day at you uptick just there jump haven't

Thomas E. Powell

Sure.

contributor I it from provided on the look largest quarter also focusing probably gross impacted the VSI benefit. positive that we was very some and I we during as exchange. Pricing will a and of XX out modest then think manufacturing the benefit at was point the provided UroLift quarter NeoTract. expenditures. benefit So, heard, foreign bps margin, pricing a was as by

are big margin. So, gross quarter the the second those drivers in

leverage gross operating the a provide so operating VSI get actually cost the is little breakeven although NeoTract on margin we and operating on in probably Now, drivers, benefit don't from It's SG&A higher an the from at structure, operating obviously same is then And operating benefiting margin. about margin more margin. it margin, a standpoint. an

are component in as NeoTract is margin. So, that the the come no those a pretty surprise drivers of key big gross should so quarter,

Anthony Petrone

as just on to Restructuring, secondly first on line? follow-up. can bottom you And plays terms on then then temporary drivers stay relates how account the can sort penetration you again. sense growth NeoTract, the versus it then in you of the the to back look for topic device are give year to as That of the maybe be Thanks deeper remind just withdrawal will end and the reentry? account expectations new and of us of of Yeah. a again, sort at all the year this then. openings the And us this just incremental of of what the margin

Thomas E. Powell

Sure.

going In contribute full a point little the to expansion. less of year a of margin terms of bit the restructuring we're programs, impact than

that goes say seeing. to have into Now, a some of that to offset pluses helps the I of we're frankly and that and large minuses inflation component

And projects project. million realized outlined In $XX the savings million. through cadence that. $XXX XXXX term, announced, XXXX. total, the programs we at as that that OEM all currently longer programs those was About will the restructuring over are we've well out and and got and $XXX end of of XXXX, there million we and manufacturing the the savings the VSI generate XXXX As of of the of programs look as integration of footprint

$XX XXXX, to expect million the XXXX. balance We and $XX to another XXXX million over XXXX to the then period

is project. those programs transitions which then involve more schedule really footprint and of to some alignment notice a take the law have workforce period. then German And to labor also machinery that internal reasons time leverage And candidly recent develop we're some de-risk we'll stagger replacement out the for and lengthy and the our requirements drawing the design, through we'll that working of savings

savings the it's year, of years. And whole have forthcoming gets margin that of So, we savings gross the of over next target. part number again package to this that

Liam J. Kelly

your I'll on question UroLift. cover

make good to our rep So, continue with we hires. progress

rather to follow deep going wide. of than continue our strategy We

remarks. urology prepared I we're million buoyed that by We continue AUA lives covered. my spoke XXX We within during the Guidelines practices on building and, now have champions progress see the to excellent obviously, about

the (XX:XX:XX). cases We the have and trained XX% X,XXX coming ASC from of office are urologists. the still approximately

bolster obviously, to And continues this. behind invest that we continue So, it. to

As call, to XX I the the year. we're going on another said within add QX reps

Analyst line had growth going above us of a stand-alone or we're is XX% that during the to reach year. top our least, outlined expectations as to revenue all helping we NeoTract expectations next to three least And from well on a still original XX% to an very go CAGR this And in update from to within Day. profile. and bullish years over our it the we're the, XX% company So, augment position as the that at to investment exceed NeoTract be put at

Anthony Petrone

Thanks.

Operator

[Mike And Matson] our Matson of line Needham (sic) next question comes & Matt Company. from the (XX:XX:XX) from

now is line Your open.

Mike Matson

issue. Hi. I my know go but an just quantify you impact mold back to I on sales Good morning. did and margin Thanks for can taking have to I that? had want questions. the guess it UroLift it impact, a

Liam J. Kelly

QX. Yeah. Mike, as from $X moved I that million said, there sales was of about

fact the into almost procedure, demographics, but just Given from does repositioned an QX. this be that will emergent those, is all product benefit them the not not of of if all

a And now, this any our or end resolved a have see we'll we medium short, have that QX. having see don't but the by of impact. don't we long-term backorder the impact So, we it on growth aspirations for of also see And company. significant modest we

Mike Matson

there, And businesses is bit then than just positive know you're can Thanks. us and sustainable volatility little pricing at it where you products higher but had remind I there's seemed XX quarter-to-quarter probably which generally? some trending and points Okay. that the pricing, been basis or a where getting

Liam J. Kelly

as year is last the pricing part The that see that is of pricing result normally in of go-direct. our pretty there most you flat. did go-direct VSI the of So, core as we a Europe

Mike Matson

there raw oil, a then question costs. And know that, well labor costs like as going resin, for tariffs, we've materials, up also as was finally, but I the things seen about Thanks. Okay.

that. just comment So, maybe you Thanks. could on

Thomas E. Powell

Okay.

Republic, we've some and in inflation on labor Mexico and materials wages. impact in some put of Where markets. the we as at your which point in is don't yet. labor tight supply to raw a are seen So, In looked pressure the we've inflation see seeing meaningful Czech has particular,

year. responses actually additional we've led the that some those So, our to in has maintain competitiveness during to and cost markets made

Mike Matson

a Thanks right. lot. All

Jake Elguicze

Michael. Thanks,

Operator

from question our of from And line comes Chris Cooley next Stephens. the

now line open. Your is

Chris Cooley

the Good questions. for Thanks taking morning.

you as look the my portfolio look volume closer help with existing step-up. kind about maybe averages underlying credit terms basically would kind just higher at approximately. me for capacity follow-on, of in at to pretty why And facilities? think two us of back and in confidence has line that more Just maybe maybe historically again this we X-ish-plus come X% when forward just surgery? growth see wouldn't of the of then Could what's that around general from Thank this significantly, on in appreciating you Tom, we available percent, point. Tom number changed that mind we you. why and be Liam, that reminding us XXXX kind Give us or can back volume out mix to

Liam J. Kelly

Hey, Chris. the take one. volume I'll

think at include look when I you you So, to got new volume, products.

the I two X.X% of new the together products, think, add and was you So, quarter. our to for those got

think almost So, American that as do should North tracings that market X%. even was you our volume try in look the quarter to in the I I'd expectations, really an though line to in and at is customer with important that was demand how regards is key it's Teleflex. with volume point that like end in the make our

disconnect volume gives volume the return third I That the from question July And itself quarter. other see that first – coming orders the take itself, the based within we've of it's core have us that week second we that growth – between helps in should you improvement the Tom the will think recognized already a confidence and the revenue again, on right righted a distributor in that around fact in function that seen of us step tracings these from already the it So, and organic tracings. strong market would will that quarter, had. lot the just our comfort that and actually

Thomas E. Powell

credit So, on looking availability for were facility. our you

We at the quarter. have end the of of about availability million $XXX

Chris Cooley

you. Thank

Jake Elguicze

Thanks, Chris.

Operator

comes next of from Matthew And our question from KeyBanc. the Mishan line

now Your line is open.

Matthew Mishan

questions, for guys. you taking Thank Great. the

a a I week you're it all think talking of bad. just and with sure Are this second doesn't that I the there's already then first pieces, moving make The seem resolved. piece want have of So, to lot pieces (XX:XX:XX) Urotrack I right from two are of about the because distributor issue into July, is end order pieces? that product those but June that's a the two pushed that supply got the

Liam J. Kelly

close. Pretty

of first So, the North the excess July, the suppliers are from $X The week EMEA the of in end related in a actual into issues million. were of a supplier distributor America had of supply and orders extent, June fire our that in about moved within was product and they business a lesser in And late urology the because one million. to that surgical quarter. our total to $X

Matthew Mishan

resolved? been those have And

Liam J. Kelly

resolved be will the end will but resolved or late year. before supply the will of supply into QX urology within The QX, resolved the early it quarter. be surgical in either be The

Matthew Mishan

results initial the Okay. the missed morning. and from And I'm just so – many far? you if can was update can And any give on Any It patients clinical you early trial you the enrolled then you update sorry a I us And Percuvance? on some can of RePlas? give How just busy then patients? us it. give for have lastly, an

Liam J. Kelly

Okay.

quarter I can if XXX(k). three. you (sic) quarter, don't happened Chris [Matt] this on there That So Percuvance, start submitted mind, our early in we've (XX:XX:XX),

And Chris XXXX. and still trial. With Phase a is regard will (sic) of the the we're final on reports plan have completed it, the So [Matt] BLA report clinical you clinical should infusion on have get XX we submission study. QX by right the don't preliminary all QX X RePlas, to schedule in there. on of for And of enrollment of we subjects XXXX. in Unfortunately, (XX:XX:XX),

There completed get I But point plasma – (sic) of for leads BLA not. patients moment Pittsburgh this who those a units was when they out plasma to becomes And submission without. of or, there out this freeze-dried until have encouraged two but coming they we're got with XX% showed is to target track by it to wait on some for still that to survival the XXXX. units a on My not. those of on And that cohort Medicine infused our study patients to plasma who coincidental Of versus them, the of marketplace. sorry. got Study QX of RePlas the where is of we're apologies. a actually QX that was is did up XX% it And rate did survival some [Pittsburgh this You rate our available. others trauma would and one that School got in Medicine] as (XX:XX:XX) them, – take Matt, XXX that some markets approval patients and two study the

Matthew Mishan

All you much, right. Liam. Thank very

Liam J. Kelly

Matt. Thanks,

Operator

Jaffray. next our the from question O'Brien And line Piper Matthew comes of from

now open. is line Your

Matthew O'Brien

Thanks good morning. so much and

a me. Just questions couple for

issues, this Liam where the out think is past On occasionally for hey, in of back. demand the and mentioned, happened. then distributor now quarter I But a then the you've two and happens has quarters the this three this last comes

kind gaming way, of versus internally now? two causing a of if or quarters Teleflex phenomenon that's kind quarter distributors some this said that So six will year the out Or has comfort from different that's every anything than every more be your wondering another of the been past? just just of there's in just doing once kind of that three

Liam J. Kelly

differently that I that Yeah. doing there's distributors. think our changed nothing are we with Matt, and have we that

get do distributors. organic rolls already – we those product volume distributors. VSI go In not into through previous XX% of our distributor, into box-moving went rolled traditionally NeoTract categories the As organic, years, the has two and through as

down business that our move into go these one-third through will XXXX, of As distributors. we going box-moving to

them, you, day that as is a within frankly, Matt, it I to it look So because we'll forward within to much got volatility I've be our Teleflex less and as to frustration for exposed is, quite tell investors.

Matthew O'Brien

AUA fast sense. QX timing? little sales And then dealing as in the bit to just And that curious any why the a here change, little the just of as with a Guidelines the that any little is I'm process there is there product terms as That bit of to update Okay. the a growth And decided you business the a far force in as change molding the then be growing. of ton Gen given is business? UroLift make there with to goes, makes how risk slowdown a could molding of new then to that a backlog, of is X

Liam J. Kelly

product timing. process to So no The impact I'll product. the one There's take Gen the we last a Matt, was change, the change manufacturing that first. X mold the improve on made of

trying validation things. So frankly. improve to its quite we were manufacturability all we engineered And did We testing. tested the

where a market, release of The the in impact implant continues would order ramp we up just manufacturing reputation on decision the NeoTract. to resolved took volume, ramped to very robust and incidence protect quarter. the pull not after we the rate the having small quickly. back accelerated I fired. the up the And from put end it see old of As this we And and will to the the saw product the the be for molds product. growth backorder by very an of it And don't be the product,

about in million or having have. of and So don't or the half QX QX will during in I the back I backorder see to just of impact it That modest ramp a last significant heavier a into the impact we $X But any QX, for roll end impact it having – than QX. a except year. normally see QX it had probably of the an

Matthew O'Brien

Very helpful. Thank you.

Operator

And Sachs. question from the Isaac our next comes from Ro line Goldman of

line Your is open. now

Isaac Ro

Good morning, guys. Thank you.

been of that's there not the to question the your an behavior to whether us that levels is just effectively or with in sense going ongoing we on basis? here we're distributor extent happening, went sense actually whether part there distributors a distributors. your give what's where lower Just something change on the And the on of dynamic call. inventory of figure a from Can that's best as to trying out here? Just one running are your more over earlier you in

Liam J. Kelly

of for to us what our fact didn't normally instance, the bridge the didn't Wednesday. a distributors' hard simply Monday, bridged capital this you, fact that the are. the Thursday, X a on that off. couple fell it's people just fell Friday. days the Tuesday. It it people assessments Wednesday, see take timing. can working was They in July And tell this on was They bridge Isaac, So – I that that given holiday the

was on So regard. as vacation. And they are have just product to it order in place the on orders this simply in people the normally Friday issue in a timing

we in week just expectation million As our well $X timing, and I've third we the saw above in said, see July. it first excess expectations of It of our was reflect in itself the in a one-week quarter. expected to

Isaac Ro

but about, prolonged? curious this it's our part to of or a as if be we dynamic UroLift. Thank follow-up And gross smaller either will about models. the transient be talked a molding should you. you on Okay. impact there business, The more any something there, maybe we noticeable update And it's I thinking appreciate margin is

Liam J. Kelly

his ask So Tom mention did because Tom, that remarks. in I'll

Thomas E. Powell

Yeah.

of in if the quarter by If that the quarter. be the of not, be XX resolution inventory, incurred some million how would reworkable basis in about in product the Depending is about was margins during charges easy which on it would the third there costs. that and cost points impacted end it $X.X the quarter. of rework additional So, we is to

Isaac Ro

you. Thank Okay.

Thomas E. Powell

Again, we expectations into forecast. our have rolled those

Isaac Ro

Got it.

Operator

over turn to at And time, further call closing any to questions. back I'm Elguicze remarks. this I'd you. the for Jake showing like Thank no

Jake Elguicze

operator, call the second Thanks, call. earnings concludes the on This us today. thanks, conference quarter everyone, joining for and XXXX

Operator

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

Teleflex (TFX) 2 Aug 182018 Q2 Earnings call transcript