Teleflex Incorporated

Please stand by. Good morning, ladies and gentlemen. Welcome to the Teleflex first quarter 2023 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 Teleplex Incorporated first quarter 2023 earnings conference call. The press release and slides to accompany this call are available on our website at teleplex.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'll 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. Now, I will turn the call over to Liam for his remarks.

Thank you, Larry, and good morning, everyone. It is a pleasure to speak with you today. For the first quarter, Celeflex revenues were $710.9 million, a year over year increase of 10.8% on a reported basis and an increase of 13.2% on a constant currency basis. First quarter adjusted earnings per share was $3.09, a 7.3% increase year over year. We had a strong start to 2023 as momentum exiting last year continued into the first quarter. Even when excluding the impact of five extra shipping days in the first quarter, our underlying growth was robust at 7.1%. As a reminder to investors, a day is typically worth approximately 1% revenue growth in a quarter. For the first quarter of 2023, each extra day was in actuality slightly in excess of 1% growth. And when strung together, the five extra shipping days added approximately 6% to our constant currency growth. In the quarter, both the high growth portfolio excluding Eurolift and the durable core grew in the low double digits year over year, excluding the five extra shipping days in the quarter. Behind an improving procedure environment, we executed well during the quarter, with all global product categories driving growth. The balanced performance in the quarter continues to demonstrate the benefit of Teleflex's diversified product portfolio and broad geographic footprint. In the quarter, we saw strong contributions from our interventional, surgical, and OEM product categories. From a geographic perspective, Europe was in line with expectations, while Asia remains a key growth driver. From a macro perspective, we are seeing a stabilization in inflation and supply chain as expected. Of note, we have seen some easing in supply constraints for Tyvek during the first quarter and continue to expect the situation to further improve in the second half of the year as additional industry capacity comes online. We are also seeing a continued improvement in staffing challenges in the hospital setting. This was evident in our first quarter revenue growth as the majority of Teleflex products are exposed to the hospital setting. Conversely, we are still experiencing geographic pockets that are encountering more persistent staffing disruption in the ASC and office site of service. Let's turn to a deeper dive into our first quarter revenue results. I will begin with a review of our geographic segment revenues for the first quarter. All growth rates that I refer to are on a constant currency basis unless otherwise noted. America's revenues were $411.9 million, which represents 9.2% growth year over year. we saw growth across the majority of our businesses, including double digit increases in interventional and surgical revenues. In addition, the results included the impact of the five extra shipping days. EMEA revenues of $143.3 million increased 10.5% year over year. The year over year growth includes the benefit of the five extra shipping days in the quarter. while the underlying performance reflects continued improvement in the year-over-year procedure volumes that fueled broad-based revenue growth across our product portfolio. Now turning to Asia. Revenues were $78.7 million, increasing 22.8% year-over-year. We saw strength across the region with all geographies posting solid growth during the first quarter. China remained a solid contributor with very high single-digit growth in the quarter. Although surgical procedure activity in China has not yet returned to normal levels following the termination of the zero COVID policy in late 2022, we saw improvements as we progressed through the quarter. Looking forward, we would expect growth in China to accelerate during the remainder of 2023. Let's now move to a discussion on our first quarter revenues by global product category. Commentary on global product category growth for the first quarter will also be on a constant currency basis, starting with vascular access. Revenue increased 9.2% to $177.7 million. The performance was solid across the portfolio, and we are now past the tough COVID comparison experience during 2022. As I noted earlier in the call, we saw some improvement in Tyvek supply in the first quarter and expect further availability in the second half of the year as additional manufacturing capacity for the industry comes online. Of note, our PIC portfolio returned to double digit growth in the quarter. Over the long term, we remain positioned for dependable growth with category leadership in central venous catheters and midlines, anticipated share gains from our novel coded pig portfolio, and new product introductions. Moving to interventional access. Revenue was $116.9 million, up 23.3% year over year. We continued to benefit from our diversified portfolio and saw strength across our largest product categories, including complex catheters, balloon pumps, and on control. Manta continues to penetrate the large foreclosure market globally. Turning to anesthesia, revenue was $93.3 million, up 9.9% year over year. Of our larger franchises, hemostatic products, regional anesthesia, and endotracheal tubes all had strong performances in the first quarter, partly offset by LMA single-use mass. In our surgical business, revenue was $99 million, up 14.3% year over year. Among our largest product categories, metal ligation clips and instrument revenue increased double digit year over year. In the border, we advanced our integration of standard bariatrics and trained new surgeons on the use of the Titan SGS stapler in sleeve gastrectomy procedures. We showcased Titan at the recent SAGES medical conference, and the surgeon's feedback was overwhelmingly positive. For interventional urology, revenue was $75.4 million, representing an increase of 0.9% year over year. We witnessed growth for Urolift in the hospital setting, but the office side of service continues to be impacted by staffing shortages. We continue to expect the US end market for Eurolift to continue to improve as we progress through 2023. The overseas launch activity in Japan and China are progressing in line with expectations. OEM revenues increased 34.5% year-over-year to $77 million. The strength in the quarter was broad-based across our portfolio with double-digit growth in all product categories. We continue to have good visibility into the business and see solid demand dynamics throughout 2023. First quarter other revenue increased 6.4% to $71.6 million year over year. We continue to expect all MSA revenues to cease at the end of 2023, implying no MSA revenue in 2024. That completes my comments on the first quarter revenue performance. turning to some commercial and clinical updates. We continue to execute in our commercial strategy for the Titan SGS powered stapling device for use in sleeve gastrectomy procedures to treat obesity. We recently announced a supply agreement with WL Gore and Associates to use the company's Gore SeamGuard Biosorbival Staple Line Reinforcement Material in a staple line reinforcement device designed by Teleflex for use with the Titan SGS stapler. Boutrous material is commonly used by surgeons to reduce leaks and bleeding and strengthen the staple line by redistributing the pressure exerted by an individual staple over a wider area, as well as provide reinforcement for friable tissue. The ability to offer synthetic bootressing materials alongside the unique features of the Titan stapler should enable Teleflex to further address surgeon clinical needs and preference in the sleeve gastrectomy market. We anticipate launching the Teleflex applicator with Gore bootress materials by year end 2023. Moving to our hemostatic product portfolio. We have received FDA 510 clearance for the quick clock control pulse for mild to moderate bleeding in cardiac procedures and bone bleeding following sternotomy. This new indication expands upon the prior indication for temporary control of internal organ space bleeding for patients displaying severe bleeding. The expanded indication follows the completion and analysis of an IDE study that examined the rate at which subjects achieved hemostasis through 10 minutes of hemostatic application and compression at the bleeding site. The study concluded that the quick clot control plus hemostatic device was superior in achieving clinical hemostasis in cardiac surgery for mild and moderate bleeding. The expanded indications enable QuickClock Control Plus utilization across a wider patient population and breadth of surgical procedures and expand our global market opportunity for our portfolio of hemostatic products. We will begin promoting our new indication in the coming months. Now, moving to an update on the interventional access business. We are excited about our building momentum for 2023 with a focus on complex PCI and structural heart. Of note, we continue to focus on driving our innovation engine, and we'll be launching a number of new products over the coming years. Augmenting our channel presence in complex PCI, we recently commenced a limited market release for the guideline or cost with positive initial feedback from physician users. Guideliner Coat builds upon our successful Guideliner Extension catheter franchise with the addition of a hydrophilic coating to improve deliverability. In addition, we will initiate a limited launch for the Triumph microcatheter during the second quarter. The Triumph is a unique catheter design that will be supported by a chronic total occlusion clinical study, which is planned to enroll patients in 2023. We also continue to advance our ringer perfusion balloon catheter with two clinical studies currently enrolling patients. Separately, we continue to expand our structural heart presence. Our dedicated sales force is currently selling Manta and the Langston dual lumen catheter. Looking forward, we are actively engaged in expanding our product portfolio with the Watson, representing the next product anticipated to launch. The Watson is a unique dual delivery guide wire and pacing wire for use in TABAR procedures. Lastly, I will provide an update on our vascular access business. We are excited to announce that we have launched two new devices designed to enhance PIC insertion procedures and reduce the chance of complications. First, we have launched the next generation Arrow VPS Rhythm DLX device which provides real-time PIC catheter tip location information using a patient's cardiac electrical activity. The device also features an optional integrated ultrasound module to assist with vascular access. Coupled with our tip tracker technology, use of the DLX eliminates the need for confirmatory x-ray, which reduces time to therapy and cost. In addition, we have launched a new arrow pick preloaded with the NaviCurve stylet. The NaviCurve stylet features an anatomical curve and flexible tip that are designed to self-orientate to patient anatomy for enhanced pick advancement into the superior vena cava for successful insertion. 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?