Teleflex Incorporated

Please stand by. Good morning, ladies and gentlemen, and welcome to the Teleflex fourth 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'll 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 fourth quarter 2022 earnings conference call. The press release and slides to accompany this call are available on our website at teleflex.com. Please note that webcast viewers have the ability to advance the presentation slides on their own. Simply follow along with the presentation as we proceed through the call. As a reminder, a replay will be available on our website. Those wishing to access the replay can refer to our press release from this morning for details. 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 the slides posted to the investor relations section of the Teleplex website. 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 fourth quarter, Telefex revenues were $758 million, a year-over-year decline of 0.5% on a reported basis and an increase of 3.7% 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 our respiratory assets negatively impacted growth by 0.6% in the quarter, implying underlying constant currency growth of 4.3%. Adjusted earnings per share declined by 2.2% year over year to $3.52. In reviewing the quarter, our fourth quarter constant currency revenue growth remained durable despite an unexpected subcomponent supply chain issue in our surgical business that resulted in an approximately $3.5 million headwind during the quarter. The solid performance in the quarter continues to demonstrate the benefits of Teleflex's diversified portfolio that has been purposely built to target the care of critically ill patients. Of note, Our interventional, surgical, and OEM product categories generated double-digit constant currency year-over-year revenue growth during the fourth quarter. Encouragingly, we witnessed improving monthly growth on a sequential basis with December representing the strongest month of the quarter as healthcare utilization continues to normalize. From a geographic perspective, Asia generated strong results and continues to be an important growth driver for Teleflex. Raw material inflation and supply chain challenges remained headwinds for the business during the fourth quarter. Tyvek continues to be in short supply and has primarily impacted our vascular and interventional businesses. Turning to the full year of 2022. When adjusting for the divestiture of the respiratory assets, and one less shipping day, constant currency revenue growth was 4.3% for 2022 as healthcare utilization improved through the year and demand for Teleflex products accelerated. Our high growth revenue portfolio maintained momentum across the majority of growth drivers. Although Eurolift constant currency revenue declined 5% year-over-year in 2022, The remainder of products in the high growth portfolio continued to show healthy gains with approximately 14% constant currency growth for the year. Moving over to durable core revenues. In 2022, durable core revenue grew approximately 5% on constant currency basis as compared to the prior year period, reflecting improvement in procedural volumes, strong global execution, new product introductions, and positive price. Our other category, which includes our respiratory and drainage catheter business, as well as revenue from the MSA we entered into with Medline in connection with the sale of our respiratory business, declined just under 10% year over year in 2022. Now, let's turn to a deeper dive into our fourth quarter revenue results. I will begin with a review of our geographic segment revenues for the fourth quarter. All growth rates that are referred to are on a constant currency basis unless otherwise noted. America's revenues were $458 million, which represents 1.7% growth year-over-year against a tough comp in the year-ago period. Excluding the impact of the year-over-year decline in MSA sales, America's revenue grew 2.7% in the quarter. Interventional and surgical recorded double digit growth offset by declines in other areas of the business, including interventional urology. EMEA revenues of $147.8 million increased 1.4% year over year. We continue to see procedure volumes improve year over year. Now turning to Asia. Revenues were $78.5 million. increasing 13.3% year over year. We saw strength across the region with all geographies posting solid growth during the fourth quarter. China growth approached 7% despite COVID associated disruptions towards the end of the quarter. Let's now move to a discussion of our fourth quarter revenues by global product category. Commentary on global product category growth for the fourth quarter will also be on a constant currency basis, starting with vascular access. Revenue increased 0.5% to $186.4 million. As we anticipated, the performance in the quarter demonstrated a return to growth for vascular access despite a tough comp for central venous catheters due to the year-over-year reductions in COVID patients in intensive care units in the United States. Although we made sequential progress on back orders, supply chain is still not yet back to normal. As previously discussed, the vascular business has the greatest exposure to Tyvek packaging for our kits and trays. Tyvek shortages are anticipated to improve in the second half of 2023 as additional supply for the industry comes online. Over the long term, we remain confident that our category leadership in central venous catheters and midlines, along with our novel quoted PIC portfolio, continue to position us for dependable growth. Moving to interventional access, revenue was $125.1 million, up 13.4% year over year. We saw sequential improvements in constant currency revenue growth through 2022 as procedures moved back to pre-pandemic levels. In the quarter, our diversified portfolio served us well with balloon pumps, OnControl, and Manta all contributing to growth. Turning to anesthesia, revenue was $99.6 million, up 2% year over year. Of our larger franchises, hemostatic products, LMA single-use masks, and endotracheal tubes, all had strong performances in the fourth quarter, partially offset by regional anesthesia. In our surgical business, revenue was $110.4 million, representing another solid performance with 10.4% growth year over year, despite the aforementioned supply chain disruption due to a specific subcomponent supplier. Among our largest product categories, skin stapling and our ligation portfolio contributed to growth. In other developments, we closed the acquisition of standard bariatrics early in the fourth quarter, and tightened stapler revenue drove a significant portion of the year-over-year growth in the surgical business. For interventional urology, revenue was $89.2 million, representing an increase of 13.1% sequentially and a decrease of 3.6% year-over-year. Interventional urology continued to be impacted by a year over year decline in patient visits to urologists and staffing shortages. Although the overall environment for elective BPH procedures has not yet returned to normal, there were signs of improvement during the fourth quarter. Third party data indicates that overall patient visits to urologists were down in the 3% to 4% range year-over-year in the fourth quarter, which marks a sequential improvement from the high single-digit year-over-year decline witnessed in the third quarter of 2022. OEM revenues increased 12% year-over-year to $73.7 million, despite a very difficult comparison to last year. Our order book remains well-positioned as customers recognize are broad competencies with competitive capabilities, including fast growth markets for thin-walled interventional micro catheters to access small vessels and fine wire for sensing and ablation technology. Fourth quarter other revenue declined 7.1% to $73.6 million year over year. We continue to expect all MSA revenues to cease at the end of 2023. That completes my comments on the fourth quarter revenue performance. Turning to some commercial and clinical updates. As mentioned earlier, we completed the acquisition of standard bariatrics early in the fourth quarter of 2022. Standard bariatrics commercialized the Titan SGS stapler for use in sleeve gastrectomy procedures to treat morbid obesity. and we are excited to have the product in the Teleflex surgical portfolio. We are proceeding with our integration activities and remain on track with our objectives. Of note, we have completed the training of the Teleflex sales force on the Titan stapler, enabling us to double the size of the selling organization as compared to standard bariatrics on a standalone basis. We also recently announced that Teleflex was rewarded a group purchasing agreement with Premier for the Titan stapler. The agreement will make the Titan stapler available to surgeons affiliated with Premier and provide access to this innovative technology for use in gastric sleeve surgeries. Turning to UroLift. We reached our objective to convert the vast majority of users to UroLift 2 during 2022. which will free up time for our sales organization to dedicate increased time to market development activities in 2023. Training of new physicians continued in the fourth quarter, and we reached our targets for the year. Of note, the number of physicians trained in 2022 remains largely consistent with historic levels, implying continued interest in adding UroLift to the BPH treatment paradigm. To support new tradition onboarding for Eurolift, we hosted live BPH summit training sessions in the US, Australia, and Japan during 2022. Our direct-to-consumer program remains an important investment and achieved its pre-specified performance metrics for 2022. We will continue to invest in DTC initiatives for Eurolift, including a refreshed television and digital campaign that launched in February of 2023. Now moving to an update of our international strategy for Eurolift. We made considerable progress in the geographic expansion for Eurolift with entry into several new markets during 2022, including Japan and China, starting with Japan. we had strong launch execution with Eurolift gaining sequential traction through 2022. Revenues exceeded our expectations for the year and we see continued momentum into 2023. Turning to China, we initiated Eurolift cases in the fourth quarter as anticipated. We will be methodical in our launch activities and follow a similar playbook to the one that has served us well in Japan. In turn, we will spend 2023 training surgeons, building our presence in key cities, and continuing to engage with the Chinese Urological Society to build acceptance. Now for an update on vascular business. The vascular business unit continues to align its portfolio and technical education offering with the evolving customer needs. Today, Teleflex is well-positioned to serve as a trusted partner with vascular access clinicians in their goal of zero catheter-related complications. We are helping to standardize outcomes by providing protection during and after vascular access procedures and establishing a predictable insertion process across the hospital. This approach continues to solidify our significant market share in CVCs and drive revenue growth through the highly successful launch of the CBC Ergopac Complete Portfolio, offering a complete vascular access insertion system designed to help clinicians comply with current guidelines and standards. We also continue to prioritize growth in the peak and midline categories with the most recent advancement being the launch of the new arrow pressure injectable midline portfolio in North America in the fourth quarter of 2022. The new offering is designed to help alleviate risk associated with line misidentification. Without quick and easy identification between midlines and PICs, medication may mistakenly be infused through midlines that should only be infused through a central venous access device, potentially causing complications and disruption in patient therapy. We are still in the early phase of the launch, but have seen a great level of interest from customers thus far. Additional innovation in PIC placement and positioning devices can be expected in 2023 as we continue to drive toward growth and share gain in this segment. Turning to the interventional access business. I am pleased that the relaunch of the Langston catheter has progressed through the fourth quarter with product availability in the US, Canada, Australia, and New Zealand. The Langston catheter is a unique diagnostic tool that helps clinicians determine the degree of aortic stenosis which might result in a subsequent TAVR procedure. Our clinical and medical affairs team worked to re-educate the market on this product, including through a panel discussion at TCT and a webinar held in December. The Langston catheter continues to build value for our customers, enhance our engagement with clinicians in TAVR, and demonstrates our relevance in the structural heart space. We expect further product launches in our interventional business over the coming years, including complex catheters in the structural part market. Finally, some comments on the outlook for 2023. We witnessed improving stabilization in healthcare utilization over the course of 2022 and would expect a further sequential stabilization in healthcare utilization in 2023. Indeed, the majority of the procedure markets that we serve are now back at or above 2019 levels. Conversely, some of the more deferable disease states reflect patient visits to physicians that remain below pre-pandemic levels, including urology. We anticipate that as COVID has become increasingly endemic and staffing shortage bottlenecks gradually ease, patients will increasingly seek medical interventions during 2023. Turning to the macro environment, 2022 had its share of operational challenges, including inflation and supply chain disruptions. For 2023, we are prepared for some level of continued volatility, although we would expect incremental inflation to be at levels lower than 2022 and supply chain challenges to improve through the year. We remain focused on our global operations and will look for ways to become more efficient as we work through the macro environment. That completes my prepared remarks. Now I would like to turn the call over to Tom for a more detailed review of our fourth quarter financial results. Tom?