Teleflex Incorporated

Good morning, ladies and gentlemen, and welcome to the Teleflex third quarter 2022 earnings conference call. At this time, all participants have been placed in a listen-only mode. At the end of the company's prepared remarks, we will conduct a question and answer session. Please note that this conference call is being recorded and will be available on the company's website for replay shortly. And now I will turn the call over to Mr. Lawrence Kirsch, Vice President of Investor Relations and Strategy Development.

Good morning, everyone, and welcome to the Teleflex Incorporated third quarter 2022 earnings conference call. The press release and slides to accompany this call are available on our website at teleflex.com. As a reminder, this call will be available on our website, and a replay will also be available. Please refer to our press release from this morning for details on how to access the replay. 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 will open 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 SEC, 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 this commentary to provide the investment community with additional insights concerning trends, and these disclosures may not occur in subsequent quarters. With that said, I will now turn the call over to Liam for his remarks.

Thank you, Larry, and good morning, everyone. For the third quarter, Telesex revenues were $686.8 million, a year-over-year decline of 1.9% on a reported basis and an increase of 2.4% on a constant currency basis. Compared to the prior year period, revenue under the manufacturing and supply transition agreement associated with our prior divestiture of the respiratory assets negatively impacted growth by 1.3% in the quarter, implying underlying constant currency growth of 3.7%. Adjusted earnings per share declined by 6.8% year-over-year to $3.27. In reviewing the quarter, the majority of our business units executed well. When excluding Euralyft, and adjusting for the respiratory divestiture, the remaining 88% of the business grew at an underlying rate of 4.3% in the third quarter. This solid performance continues to reflect the benefits of Teleflex's diversified portfolio that has been purposely built to target the care of critically ill patients. We saw improvement in revenues as the third quarter progressed, with September strengthening over July and August. Our OEM business unit drove double-digit constant currency year-over-year revenue growth, while the interventional business unit grew approximately 9%. Our surgical business turned in another solid performance with mid-single-digit constant currency growth year-over-year. From a geographic perspective, we saw strong results in Asia which continues to be an important growth driver for Teleflex. Conversely, interventional urology continues to be impacted by patient visits to urologists that remain down year over year and staffing shortages, with third quarter revenues modestly missing internal objectives. In the quarter, our high growth revenues, which includes Urolift, Manta, hemostatic products, EZIO, OnControl, and PICS, maintained momentum across the majority of growth drivers. For the nine months, Eurolift has declined 5.8% year over year, while the remainder of products in the high growth portfolio continues to show healthy gains with 14% growth. Moving over to durable core revenues, which accounted for more than 60% of revenues in 2021. In the first nine months of 2022, The durable core has generated 4.6% growth compared to the prior year period. Turning to inflation. There are elements of stabilization during the quarter with some areas of improvement. In particular, sea freight costs declined in line with our internal expectations. We continue to see elements of elevated supply chain disruption during the third quarter. Availability of select raw materials and components are not yet back to normal. This dynamic resulted in some greater than anticipated backorder levels during the third quarter, especially in our vascular and interventional businesses. Looking forward, we expect a portion of those unanticipated backorders to flush through by the end of 2022. Now let's turn to a deeper dive into our third quarter revenue results. I will begin with the review of our reportable segment revenues for the third quarter. All growth rates that I refer to are on a constant currency basis, unless otherwise noted. America's revenues were $405.1 million, which represents a 2.7% decline year over year. against a tough comp in the year-ago period. Lower revenue from the manufacturing supply and transition agreement associated with our prior divestiture of the respiratory assets negatively impacted America's growth by 2.1%, implying a flattish underlying performance for the quarter. Interventional recorded high single-digit growth offset by declines in vascular and interventional urology. In addition, we did experience some supply chain disruption during the third quarter. EMEA revenues of $128.4 million increased 3.4% year over year. We continue to see procedure volumes improve year over year. Now turning to Asia. Revenues were $82 million, increasing a robust 20.5% year over year. We saw strength across the region with all geographies posting growth during the third quarter. China had a very strong performance with growth exceeding 19%. Let's now move to a discussion of our third quarter revenues by global product category. Consistent with my prior comments regarding our reportable segments, Commentary on global product category growth in the third quarter will also be on a constant currency basis and ranked by size of our business units. Starting with vascular access. Revenue decreased 0.8% to $167.1 million. The performance in the quarter, in part, reflects a tough comp due to the year-over-year reduction in COVID patients in the intensive care unit in the United States. As previously noted, there was some elevation in backorder during the quarter due to raw material shortages. Of note, the vascular business has the greatest exposure to Tyvek packaging for our kits and trays. We anticipate that Tyvek shortages will abate in 2023 as additional supply for the industry comes online. We remain confident that our category leadership in central venous catheters and midlines, along with our novel coated pig portfolio, continued to position us for dependable growth. Moving to interventional. Revenue was $108.7 million, up 8.9% year over year. We saw strong performances across our diversified portfolio during the third quarter, with balloon pumps, on-control, manta, and complex catheters all contributing to growth. we continue to see some elements of supply chain disruption during the quarter. Turning to anesthesia, revenue was $97.6 million, up 5.8% year over year. The business had a challenging comparison with 26.6% growth last year. Of our larger franchises, regional anesthesia, hemostatic products, endotracheal tubes, all contributed double-digit growth in the third quarter. In our surgical business, revenue was $93.1 million, representing another solid performance with 6.2% growth year over year. Among our largest product categories, skin stapling led the growth for the quarter, while metal and polymer ligation clip growth accelerated sequentially following COVID-related lockdowns in China during the second quarter. Of note, there are no revenues in the third quarter surgical results from the standard bariatrics acquisition. For interventional urology, revenue was $79 million, representing a flattish performance sequentially and a decrease of 4.6% year over year and slightly below our internal expectations. The overall environment for elective BPH procedures has not yet returned to normal. Third-party data indicates that overall patient visits to urologists were down high single digits year over year in the quarter, which has impacted the funnel for BPH procedures. In addition, staffing shortages remain a constraint. In a Talaflex survey of U.S.-based urologists conducted in August of this year, 52% of the 125 respondents reported having experienced staffing issues. The survey also indicated that office-based urologists are experiencing significantly more patient cancellations per week than hospital-based urologists. OEM revenues increased 14.4% year over year to $71.3 million, despite a tough comparison to last year. Our order book remains well-positioned as customers recognize our broad competencies with competitive capabilities, including fast growth markets for thin wall interventional micro catheters to assess small vessels and fine wire for sensing and ablation technology. Third quarter other revenue declined 9.9% to $69.9 million year over year. the majority of the decline reflects lower manufacturing and supply transition agreement revenues year over year. We continue to expect all MSA revenues to cease at the end of 2023. That completes my comments on the third quarter revenue performance. Turning to some commercial and clinical updates. On September 28th, we closed on our acquisition of Standard Bariatrics for an upfront cash payment of $170 million with additional consideration of up to $130 million payable upon the achievement of certain commercial milestones. Standard Bariatrics has commercialized the Titan SGS stapler, which is an innovative powered stapling technology specifically designed for sleeve gastrectomy. we estimate that there were 120,000 sleeve gastrectomy procedures in 2020. We are very excited about the acquisition of standard bariatrics for a number of reasons. First, the Titan stapler addresses unmet needs in sleeve gastrectomy by offering surgeons the longest continuous cut and staple line of 23 centimeters. It is designed to help surgeons achieve more consistent and symmetrical sleeve pouch anatomy, setting their patients up for optimized outcomes. While every patient's anatomy is different, the Titan's long staple line enables surgeons to plan and place staples in one firing, minimizing variations sometimes associated with the use of multiple overlapping short cartridge staple firings. Additionally, The design may result in a more secure staple line and fewer chances of leaks, as evidenced with higher burst pressures. Second, we believe that we can compete effectively and gain stapling share in the sleeve gastrectomy market. Following a third quarter 2021 US launch, we expect Titan stapler revenues to be approximately $15 million in 2022. With the Titan stapler now part of the Teleflex surgical portfolio, we expect continued momentum going forward. The Titan stapler product slots into our existing bariatric surgery call point in our surgical business and complements our ligation clip portfolio, mini lap percutaneous surgical system, and Weck EFX facial closure portfolio. In addition, the inclusion of the standard bariatric sales team doubles our commercial team addressing the sleeve gastrectomy market. We have the capability to flex higher with existing Teleflex reps as demand grows, which would more than triple the standalone sales force of standard bariatrics. Finally, we see a pathway through value analysis committees with a carve-out due to the differentiation of the stapler, which gives us confidence in our ability to expand our user base over the coming years. Third, the acquisition of the Titan stapler reflects Teleflex's strategy to invest in innovative products and technologies that can meaningfully enhance clinical efficacy, patient safety and comfort, reduce complications, and lower the overall cost of care. From a financial perspective, the acquisition is immediately accretive to Teleflex's long-term revenue growth profile and will enhance our gross and operating margin over time. Moving over to interventional, we relaunched the Langston dual-lumen catheter and expect sales to ramp up in the fourth quarter and into 2023. In addition, at the mid-September TCT conference, we highlighted the Karolinska 1000-consecutive Manta device study. This study, which was not sponsored by Teleflex, represents the largest real-world evaluation of the Manta device in patients undergoing TAVI. The study demonstrated low complication rates and a short learning curve. Specifically, Manta device-related major vascular complications occurred in 4.2% of patients, which was consistent with the SAFE Manta IDE study and the MARVEL prospective registry. With respect to our market development objectives for UroLift, we were again pleased with our progress during the quarter. Training of new physicians continued in the third quarter, and we are on track to reach our target for the year. With access to surgeons improving, we recently hosted a live BPH Summit training session in the United States as we continue to tap into surgeons not yet trained on NeuroLift. We are also excited to host an upcoming BPH Summit in Japan during the fourth quarter. We continue to receive excellent feedback from surgeons regarding Urolift 2, while Urolift Advanced Tissue Control for use in obstructive median lobes saw increased momentum in the third quarter. New data published in the peer-reviewed Journal of Endourology revealed that in a controlled clinical trial of the Urolift system for obstructive median lobes, men experienced better symptom improvement within the first three months of treatment compared to those treated with placebo and TURP in other controlled studies. Encouragingly, those patients did not endure high-grade serious adverse events. The data further revealed that symptoms and uroflow outcomes were largely consistent for obstructive median low patients treated in both controlled and real-world settings. We believe that the launch of the Urolift 2 and advanced tissue control will enable us to further engage with surgeons and drive utilization deeper into our label's indication. Based on our progress at the end of the third quarter, we remain on track to convert the vast majority of our U.S. customers to Eurolift 2 by the end of 2022. Now, turning to an update on our international expansion strategy for Eurolift. We are in the early stages of a multi-year, multi-geography international market expansion, which is expected to be a meaningful driver of growth in the coming years. The launch of Eurolift in Japan, which began on April 1st, continues to gain momentum, and is tracking to our plan. Cases are continuing to ramp up, and we are very encouraged with the results thus far. Looking forward, we are excited to implement our virtual reality capabilities to enhance our physician training and Salesforce interactivity. Given our results to date, we expect to be well positioned to increase traction in 2023 as we expand our reach into key regions within the country. Shifting to other international geographies, we remain on track with our expected Eurolift commercial milestones. In China, we will commence our initial launch activities in the fourth quarter with a focus on key cities and engagement with the Eurological Society to build acceptance. In addition, we still expect updated reimbursement in France and launches in select regions in Italy and Spain during the fourth quarter. Finally, investors familiar with Teleflex will recall that in July of 2020, we informed the investment community that the Department of Justice had opened an investigation under the Civil False Claims Act with respect to one of our subsidiaries, Neotract Inc. I am glad to share that In August of 2022, the U.S. Department of Justice advised us that it had closed the investigation. We are pleased to have this investigation behind us and look forward to continuing our focus on the patients we serve across the world every day. That completes my prepared remarks. Now I would like to turn the call over to Tom for a more detailed review of our third quarter financial results. Tom.