Teleflex Incorporated

Good morning, ladies and gentlemen, and welcome to the Teleflex third quarter 2024 earnings conference call. At this time, all participants have been placed in a listen-only mode. At the end of company's report 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. Lauren Kirsch, Vice President of Investor Relations and Strategy Development. Lauren?

Good morning, everyone, and welcome to the Teleflex Incorporated third quarter 2024 earnings conference call. The press release and slides to accompany this call are available on our website at teleflex.com. 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 Lee and 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 would 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 Teleflex 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. On this morning's call, we will discuss the third quarter results, review some commercial highlights, and provide an update on our financial guidance for 2024. For the third quarter, Califlex revenues were $764.4 million, up 2.4% year over year on a GAAP basis and an increase of 2.2% on adjusted constant currency basis. Third quarter revenues were slightly below our $765 to $770 million guidance, which reflects unanticipated softness in our OEM business. Third quarter adjusted earnings per share was $3.49, a 4.1% decrease year over year, but notably higher than expectations, driven by strong margin performance, which Tom will discuss later on the call. Now, let's turn to a deeper dive into our third quarter revenue results. I will begin with a review of our geographic segment revenues for the third quarter. All growth rates that I refer to are on an adjusted constant currency basis, unless otherwise noticed. America's revenues were $433.3 million, a 1.5% increase year over year. Investors familiar with Teleflex will be aware that prior year MSA revenues were booked in the Americas, which impacted growth by approximately 510 basis points in the third quarter. EMEA revenues of $150.2 million increased 3.9% year over year. The growth continues to be driven by our targeted strategy to increase the geographic availability of Teleflex products and improving utilization in Europe. Now turning to Asia. Revenues were $98.3 million, a 5% increase year over year. The quarter was primarily impacted by the continued soft performance in South Korea due to the ongoing impact of the doctor's strike. We estimate that the doctor's strike impacted our APAC growth by approximately 2%. Looking forward, the doctor's strike remains ongoing, implying headwinds are likely to linger through the remainder of 2024. Now, let's move to a discussion of our third quarter revenues by global product category. Commentary on global product category growth for the third quarter will be on a year-over-year adjusted constant currency basis, starting with vascular access. Revenue increased 6.3% year-over-year to $180.9 million. In the quarter, our broad vascular access portfolio drove growth, including our peripheral and central access products. Of note, and as anticipated, global PIC revenue increased strong double digits as we continue to execute our strategy to expand usage of Teleflex products. Moving to interventional. Revenue was $149.9 million, an increase of 11.4% year over year. In the quarter, the broad portfolio performed well. We still expect an increasing contribution from inter-artic balloon pump revenues in the fourth quarter. Turning to anesthesia. Revenue increased 3.4% year over year to $101.1 million. Growth was led by intraosseous products, hemostatic products, and single-use laryngeal mass. In our surgical business, revenue was $111.7 million. a decrease of 1% year over year. Our underlying trends in our core surgical franchise continued to be solid with growth of our largest franchises led by instrumentation and chest drainage, but offset by a tough year over year comparison in our ligation portfolio. In the quarter, we were encouraged by Titan stapler growth trends, which improved on a quarter over quarter basis and strong double-digit growth year over year as expected. Consistent with our strategy, we continue to practice surgeons and roll out our buttress kit following the launch earlier in 2024. We are encouraged by the sequential growth and continue to see the product as a growth driver over the coming years. For interventional urology, revenue was $83.4 million. representing an increase of 13.3% year-over-year. As expected, growth was driven by Barragel revenue following the October 2023 acquisition of Palette Life Sciences. And, as anticipated, Eurolift growth was impacted by continued challenges in the office site of service. OEM revenue increased 0.1% year-over-year, to $82.6 million and was softer than expected. We were recently notified by a large customer that they have decided to vertically integrate a component that we have been supplying, which has resulted in a loss of this revenue stream. In addition, we have now started to see some customers delay orders as they increasingly focus on managing inventory. Looking forward, We are not aware of any market share loss and have purposefully added manufacturing capacity for our thin walls micro catheters, one of the fastest growing segments for OEM. Given the continued growth of the markets that we serve, we would anticipate that the softness seen in OEM revenue growth should be transitory, but unlikely to be resolved in 2024. Third quarter other revenue declined 28.3% year-over-year to $54.8 million. The decline in revenue on a year-over-year basis is primarily due to the planned December 2023 exit of the MSA by Medline. That completes my comments on the third quarter revenue performance. Turning to some commercial and clinical updates. Starting with an update on Palette, our most recent acquisition. We have now owned Philette Life Sciences for about one year, and I am pleased to report that the acquisition continues to track ahead of expectations. Barragel continues to gain traction in the US with strong sequential revenue momentum. We are seeing success in our marketing strategy and continue to convert urologists and radiation oncologists to the use of rectal spacing due to the compelling clinical data and Barragel's ease of use. Longer term, we see a number of potential opportunities to expand the indications for our NASHA product platform. For example, the first patient was recently enrolled in a study for Barragel in men with cancer following the surgical removal of the prostate. The trial will study rectal spacing with Barragel in patients undergoing hyperfractionated post-prospectomy radiation therapy across the United States and one site in Australia. The study endpoints are to demonstrate Barragel rectal spacer as a safe and effective option that reduces prostate radiation side effects for this patient population. Based on the segmentation of risk groups between low, medium, and high prostate cancer reoccurrence, after radical prostatectomy ranges from 16 to 46%. Due to the strong performance in the third quarter, we are increasing our 2024 revenue guidance for Palette to $73 to $75 million from $70 million to $72 million previously. The increasing guidance reflects the performance in the third quarter and updated assumptions for the fourth quarter. Although Pellet continues to exceed our expectations, UroLift has not yet stabilized in the United States. Given the continued pressure on UroLift, our fourth quarter assumptions reflects the third quarter performance, typical year-end seasonality, and the impact from the recent hurricanes and saline shortages experienced in early Q4. In turn, our full year 2024 interventional urology total revenue guidance now assumes approximately 5% growth versus 7.5% growth previously. Now moving to comments on the inter-Ortic balloon pump market. In the United States, we continue to experience code activity above our historic levels, following a May 8th letter from the FDA to healthcare providers regarding pump safety and quality in relation to our primary competitor in the inter-arctic balloon pump market. There is no change to our view that the biggest incremental opportunity for Teleflex will be in the United States market following the agency's recommendation that healthcare facilities transition away from the use of competitive devices and seek alternatives if possible. We also expect continued share gains in Asia based on solid execution from the team over the past couple of years. Regarding the European Union, the notified body for our primary competitor recently announced that the temporary suspension of the CE mark for its inter-Ortic balloon pumps will remain in place until July 1st, 2025. We continue to assume that there will not be any meaningful share shift in Europe. We will monitor the market closely and be in a position to respond to customer needs should they arise. Of note, we have successfully ramped our manufacturing capacity for pumps and catheters to help customers that are seeking an alternative vendor. We will continue to expand our manufacturing capacity through 2024 and will carefully modulate our capacity in accordance with demand signals. Taking the various global balloon pump market dynamics into account, there is no change to our outlook for the fourth quarter of 2024 as compared to the prior guidance. Finally, I will provide a clinical update. In our surgical business, we continue to expand our foundation of clinical data that supports the use of the Titan SGS stapler as safe and effective for patients undergoing laparoscopic sleeve gastrectomy. In August, we announced the publication of a propensity matching review of retrospective data. This single center study found that the Titan SGS stapler enables consistent gastric pouch formation with fewer variations, providing potential enhanced clinical outcomes and significant procedural efficiency compared with traditional surgical staplers. The study showed that the use of the Titan SGS stapler simplified and efficient stapling process was associated with fewer 30-day readmissions, especially those related to nausea and vomiting, which was statistically significant. The median operative time for the Titan SGS stapler was eight minutes less than multi-fire staplers, which was also statistically significant. This is an important efficiency data point as hospitals seek to optimize OR time. In addition, patients were more likely to be discharged within 24 hours after surgery in the Titan SGS stapler cohort as compared to multi-fire staplers. The Titan SGS stapler continues to be the first and only single-fire surgical stapler designed and indicated for sleeve gastrectomy pouch creation and the only surgical stapler cleared by the FDA for this specific indication. We will continue to focus on supporting the Titan SGS stapler with expanded clinical data. That completes my preferred remarks. Now I would like to turn the call over to Tom for a more detailed review of our third quarter financial results. Tom.