Teleflex(TFX) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Teleflex reported revenues of $686.8 million for Q3 2022, a year-over-year decline of 1.9$3.27 [6][36] - Adjusted gross margin was 58.7%, an 80-basis point decrease compared to the prior year [33] - Adjusted operating margin was 26.9%, reflecting a 160-basis point decline year-over-year [34] Business Line Data and Key Metrics Changes - The OEM business unit achieved double-digit constant currency year-over-year revenue growth [7] - Interventional business unit grew approximately 9% [7] - Surgical business reported mid-single-digit constant currency growth year-over-year [7] - UroLift revenue declined 5.8% year-over-year, while the remainder of the high-growth portfolio showed healthy gains with 14% growth [8] Market Data and Key Metrics Changes - Americas revenues were $405.1 million, a 2.7$128.4 million [13] - Asia revenues grew robustly by 20.5% year-over-year to $82 million, with China exceeding 19$170 million aims to enhance Teleflex's surgical portfolio and is expected to be accretive to long-term revenue growth [22][24] - The company continues to focus on investing in high-growth portfolios while managing costs [48] - Teleflex is committed to expanding its UroLift product internationally, with ongoing training for new physicians and market development in Japan and China [29][31] Management's Comments on Operating Environment and Future Outlook - Management noted that patient visits to urologists were down high single digits year-over-year, impacting UroLift sales [19] - There is optimism regarding the recovery of patient flow and staffing levels, which are expected to improve in the future [55][68] - The company maintains its 2022 constant currency revenue growth guidance of 3.25% to 4.25% [39] Other Important Information - The company experienced elevated supply chain disruptions, particularly affecting Vascular and Interventional businesses [10] - The U.S. Department of Justice closed its investigation into NeoTract Inc., a subsidiary of Teleflex, in August 2022 [32] Q&A Session Summary Question: Trends in UroLift patient flow compared to pre-COVID - Management indicated that patient flow was down approximately 12% in Q2 and high single digits in Q3, with staffing shortages impacting the situation [53][55] Question: Outlook for Japan and international expansion - Management expressed confidence in the adoption of UroLift in Japan and noted that the market recovery is essential for future growth [56][58] Question: Impact of revenue slowdown on margin expansion - Management acknowledged that revenue slowdown affects margin leverage but emphasized ongoing restructuring programs and growth in high-margin portfolios [60][62] Question: UroLift sales dynamics and patient cancellations - Management confirmed that there is a lag in patient visits to procedures and noted that staffing shortages in urology offices remain a challenge [86] Question: Confidence in achieving future growth targets - Management remains confident in achieving a 6% to 7% CAGR, supported by the addition of Standard Bariatrics and the potential recovery in UroLift sales [68]