Teleflex Incorporated

Good day and thank you for standing by. I would like to welcome you to the Teleflex Incorporated 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone keypad. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Jake Elgoes, Treasurer and Vice President of Investor Relations. Please go ahead, sir.

Good morning, everyone, and welcome to the Teleflex Incorporated First Quarter 2021 Earnings Conference Call. The press release and slides to accompany this call are available on our website at www.teleflex.com. As a reminder, this call will be available on our website and a replay will be available by dialing 800-585-8367 or for international calls, 416-621-4642, passcode 6194708. Participating on today's call are Liam Kelly, Chairman, President and Chief Executive Officer, and Thomas Powell, Executive Vice President and Chief Financial Officer. Liam and Tom will provide prepared remarks and then we'll open up the call to Q&A. Before we begin, I'd like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides. We wish to caution you that such statements are in fact forward-looking in nature and are subject to risks and uncertainties and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include but are not limited to, factors referenced in our press release today, as well as our filings with the FTC, including our Form 10-K, which can be accessed on our website. During this conference call, you will hear management make statements regarding intra-quarter business performance. Management is providing the commentary to provide the investment community with additional insights concerning trends, and these disclosures may not occur in subsequent quarters. With that, I'd like to now turn the call over to Liam. Thank you, Jake, and good morning, everyone.

It's a pleasure to speak with you today. We are delighted with our first quarter performance, which exceeded the expectations we provided to the investment community on our Q4 call in February and reflected improvements in underlying revenue trends for the product categories most impacted by the postponement of deferrable procedures, most notably interventional urology, interventional access, and surgical. Quarter one revenue was $633.9 million, which was down 2.6% as compared to the prior year period on a constant currency basis, driven by continued COVID-19 headwinds. Adjusting for the two less selling days we had during the first quarter of 2021 as compared to the first quarter of 2020, quarter one constant currency growth was modestly positive at approximately 0.1%. which marks the third consecutive quarter of improving growth rates and a return to days adjusted constant currency growth for the first time since the beginning of the COVID pandemic in the second quarter of 2020. From an earnings per share perspective, our adjusted earnings per share of $2.87 also significantly exceeded the expectations we provided to the street. This reflects the recovery we saw in monthly procedures as we moved throughout the quarter, coupled with prudent operating expense management. Lastly, during the first quarter of 2021, we committed to a new restructuring plan designed to streamline various business functions. At Teleflex, we value continuous improvement and continue to execute on new opportunities to improve the efficiency and cost effectiveness of our business. Turning now to a more detailed review of our first quarter results. As I mentioned, quarter one revenue declined 2.6% on a constant currency basis. The decline in revenue was primarily due to lingering COVID-19 headwinds coupled with the impact of two fewer selling days in the quarter compared to the prior year period. When adjusting for selling days, we have experienced positive day sales adjusted contributions from vascular, anesthesia, surgical, and interventional urology, offset by declines in interventional OEM and our other segment. From a margin perspective, we generated adjusted gross and operating margins of 59.4% and 27.5% respectively. This translated into a year-over-year increase of 210 basis points at the gross margin line and 190 basis points at the operating margin line. We were encouraged by our gross and operating margin performance, which demonstrated the ability of our business to generate significant leverage despite the impacts of lingering COVID headwinds on our revenue line. In fact, we continue to show significant leverage across the P&L, as we generated the highest adjusted gross and operating margins since becoming a pure play medical device company. Quarter one adjusted earnings per share was $2.87, up 5.5% year over year, and well ahead of the expectations we provided the streets on our quarter four call. Overall, I am very happy with our first quarter financial performance. which demonstrates the resiliency of the diversified global product portfolio that we have built, while also reflecting progress towards our longer-term margin aspirations. Turning now to a deeper look at revenue results. I will begin with a review of our reportable segment revenues, and unless otherwise noted, the growth rates I will refer to are on a constant currency basis. The Americas delivered revenues of $375.5 million in the first quarter, which represents growth of 4.7% or 8.3% on a day sales adjusted basis. Growth in the quarter was driven by strength in vascular, anesthesia, surgical, and interventional urology on a day's adjusted basis. EMEA reported revenues of $141.2 million. representing a 16.9% decline or 14.4% on a day's adjusted basis. EMEA was impacted by a difficult year-over-year comparable, as the prior year period saw a bolus of ordering ahead of the initial COVID surge, as well as a higher level of COVID-related restrictions and elective procedure deferrals that occurred during the first quarter of 2021. Turning to Asia, revenues totaled $63.7 million, which represents 10.3% growth, with no selling day impact in this region. Importantly, we saw solid double-digit recovery in China, along with double-digit growth in India and Korea. This more than offset declines in Japan and Australia. As we anticipated, the Americas and Asia continue to recover more quickly than Europe. And lastly, our OEM business reported revenues of $53.5 million, which represents a 17.1% decline on a constant currency basis or 16.3% decline adjusted for selling days. As anticipated, our OEM business continues to see a lagged impact related to COVID recovery. Investors familiar with Teleflex would be aware that our OEM business supplies device companies with complex catheters and surgical sutures. And the first quarter impact reflects reduced orders from these customers whose business is tied to non-emergent procedures. As it relates to the acquisition of HPC, we are pleased that the integration has been completed and we have additional capacity coming online over the next two months, which should help drive growth in the second half of the year. Let's now move to a discussion of our revenues by global product category. Consistent with my prior comments regarding our reportable segments, commentary on global product category growth will also be on a constant currency basis, with color provided for selling day adjustments as well. starting with vascular access. Quarter one revenue increased by 5.8% to $164 million, or 9.3% adjusted for selling days, as we had strong contributions from central venous catheters, EZIO, and PIC product lines. Moving to interventional access. First quarter revenue was $96.2 million, which is lower than the prior year by 6.4%. When adjusting for selling days, the year-over-year decline was 3.8%. The decrease was largely due to the delay in the recovery of certain non-emergent procedures due to COVID. The decline was somewhat offset by increases in Manta large bore closure revenue, which grew approximately 30% globally adjusted for selling days. Turning to anesthesia. Quarter 1 revenue was $84.9 million, which represents growth of 7% or 9.9% adjusted for selling days. The revenue growth was due to solid performance of ZMedica, which performed better than anticipated, partly offset by lower sales of laryngeal masks and regional anesthesia products. Shifting to surgical, revenue was $80.4 million, representing 2.3% growth or 4.7% adjusted for selling days, driven by sales of our polymer ligation clips and instruments, partly offset by chest drainage and metal ligation decline. Now to interventional urology. Quarter one revenue was $73.4 million, which was a decline of 1.3%. When adjusting for selling days, the Urolip product grew approximately 1.9%. During the quarter, we continued to see cancelled procedures negatively impact growth as COVID case counts surged in January and February. However, as the quarter progressed, we were very encouraged by the strong double-digit growth that occurred in March. The strong growth trends that occurred for Eurolift in March continued during April as we continued to see improvements in our average daily sales trends. Importantly, Our average daily sales in April were, for the first time, back to pre-COVID daily rates on a consistent basis. We continue to view UroLift as one of the first procedures to be performed as the environment is starting to improve again. We also trained 115 new urologists in quarter one and are well on track to achieving our annual target of training between 450 and 500 new urologists during 2021. And finally, our other category, which consists of our respiratory and neurology care products, declined by 15.3% or 12.6% adjusted for selling days, totaling $81.7 million. The decline reflects headwinds to elective procedures as well as difficult comps from the prior year related to COVID ordering in EMEA. That completes my comments on quarter one revenue performance. turning to some clinical and commercial updates. I wanted to provide an update on our direct-to-consumer efforts for Eurolift. On the strength of a successful 2020 campaign, where we doubled awareness for Eurolift in the targeted population of men with BPH, and, as planned, we have decided to increase our investment in 2021 and run a national campaign for the full year. For this year's campaign, we are optimizing our network selection, refreshing the ads, and working in conjunction with social media campaigns to augment the overall impact. We continue to view DTC as a multi-year catalyst for Eurolift in the United States, as we are still in the early innings of market adoption and patient awareness. Indeed, UroLift is leading the way in BPH and this is the first time in recent years that a BPH brand is reaching patients directly in a meaningful way. Turning to UroLift 2, we continue to make progress with our controlled launch and we remain on track for a more fulsome rollout beginning in the second half of 2021. We remain confident that conversions to the UroLift 2 will continue over time, and we continue to expect to generate significant margin expansion as the revenue base is fully converted. As it relates to the Urolift ATC device, the launch continues to go very well, as we've completed multiple case days, and urologists find the use of the device to be intuitive, and they seem to appreciate that the device makes it easier to perform procedures with obstructive median loads. Regarding Japan, we remain on track for reimbursement decision in 2021 and view the approximate $2 billion addressable market as an incremental growth driver that will be a positive catalyst for the foreseeable future. And we continue to work towards commercialization in France. We anticipate performing our first cases during the second quarter. With multiple catalysts in place across key geographies, including the US and Japan, we remain confident that Duralift will become a robust global franchise addressing a significant multi-billion dollar opportunity. Lastly, before turning the call over to Tom, I would like to provide clinical updates highlighting two recent published studies with our Interventional Access Business Unit. The MARVEL Real-World Study was recently published in December of 2020. This study tracked 500 patients across 10 centers globally who underwent transferable large-bore percutaneous procedures. Primary endpoints of time to hemostasis was a median of 50 seconds, while the primary endpoint of the major vascular complication rate related to the manta axis site was in line with the safe manta IDE pivotal trial. the study concluded that Manta was a safe and effective device for large-bore access closure under real-world conditions. In addition to the registry study I just highlighted, a separate meta-analysis was published in February of 2021. This pooled analysis examined data for nearly 900 patients, drawing from the CE-MARC and SAFE pivotal trial, as well as the MARVEL registry study, Key findings included a high technical success rate, rapid hemostasis, and low complication rates. In this study, median time to hemostasis was 31 seconds. Overall, we continue to invest in clinical and commercial catalysts that will help to sustain our upper single-digit revenue growth aspirations for this strategic business unit in a normalized environment. That completes my prepared remarks. Now I would like to turn the call over to Tom for a more detailed review of our first quarter financial results. Tom?