Teleflex(TFX) - 2024 Q3 - Quarterly Results

Executive Summary Third Quarter Financial Performance Teleflex reported Q3 2024 revenue growth and sustained adjusted operating profit, with GAAP revenue increasing 2.4% and adjusted diluted EPS at $3.49 Q3 2024 Financial Summary (Millions of USD) | Metric | Q3 2024 | Prior Year Period | Change | | :-------------------------------- | :------------- | :--------- | :--- | | GAAP Revenue | $764.4 | - | 2.4% Growth (2.2% at Constant Currency) | | GAAP Diluted EPS from Continuing Operations | $2.36 | $2.91 | Decrease | | Adjusted Diluted EPS from Continuing Operations | $3.49 | $3.64 | Decrease | - The company achieved gross margin expansion and sustained adjusted operating income growth, driven by a diversified product portfolio with strong performance in Interventional and Vascular Access, offsetting unexpected OEM revenue softness[2] - Barrigel revenue maintained healthy growth momentum, and the integration of Palette Life Sciences AB proceeded as planned[2] - Cash flow remained strong, with a $500 million share repurchase authorization, including a $200 million accelerated share repurchase program in Q3[2] Full Year 2024 Outlook The company revised its FY 2024 outlook, lowering revenue growth guidance but raising the low end of its GAAP and adjusted diluted EPS FY 2024 Guidance Summary | Metric | Original Guidance | New Guidance | | :------------------------------------ | :-------------------- | :-------------------- | | GAAP Revenue Growth | 3.40% to 4.40% | 2.90% to 3.40% | | Adjusted Constant Currency Revenue Growth | 4.25% to 5.25% | 3.50% to 4.00% | | GAAP Diluted EPS from Continuing Operations | $6.43 to $6.83 | $6.65 to $6.95 | | Adjusted Diluted EPS from Continuing Operations (Low End) | $13.80 to $14.20 | $13.90 to $14.20 | Detailed Financial Results Net Revenue by Segment Net revenue is reported by geographic region and OEM segment, showing strong Q3 growth in EMEA and Asia, with moderate growth in Americas and OEM Q3 2024 Net Revenue by Segment (Millions of USD) | Segment | September 29, 2024 | October 1, 2023 | Reported Revenue Growth | Adjusted Constant Currency Revenue Growth | | :----------- | :------------- | :------------ | :----------- | :--------------------- | | Americas | $433.3 | $428.2 | 1.2% | 1.5% | | EMEA | 150.2 | 142.7 | 5.3% | 3.9% | | Asia | 98.3 | 93.2 | 5.5% | 5.0% | | OEM | 82.6 | 82.3 | 0.3% | 0.1% | | Consolidated | $764.4 | $746.4 | 2.4% | 2.2% | First Nine Months 2024 Net Revenue by Segment (Millions of USD) | Segment | September 29, 2024 | October 1, 2023 | Reported Revenue Growth | Adjusted Constant Currency Revenue Growth | | :----------- | :------------- | :------------ | :----------- | :--------------------- | | Americas | $1,266.4 | $1,264.7 | 0.1% | 0.2% | | EMEA | 456.9 | 433.9 | 5.3% | 7.8% | | Asia | 269.5 | 258.6 | 4.2% | 6.5% | | OEM | 259.1 | 243.4 | 6.4% | 6.3% | | Consolidated | $2,251.9 | $2,200.6 | 2.3% | 3.1% | Net Revenue by Global Product Category Interventional Urology and Interventional products saw strong double-digit growth in Q3 and the first nine months, while the 'Other' category revenue significantly declined Q3 2024 Net Revenue by Global Product Category (Millions of USD) | Product Category | September 29, 2024 | October 1, 2023 | Reported Revenue Growth | Adjusted Constant Currency Revenue Growth | | :--------------- | :------------- | :------------ | :----------- | :--------------------- | | Vascular Access | $180.9 | $169.9 | 6.5% | 6.3% | | Interventional | 149.9 | 134.1 | 11.8% | 11.4% | | Anesthesia | 101.1 | 97.6 | 3.6% | 3.4% | | Surgical | 111.7 | 112.8 | (0.9)% | (1.0)% | | Interventional Urology | 83.4 | 73.6 | 13.3% | 13.3% | | OEM | 82.6 | 82.3 | 0.3% | 0.1% | | Other | 54.8 | 76.1 | (28.0)% | (28.3)% | | Consolidated | $764.4 | $746.4 | 2.4% | 2.2% | First Nine Months 2024 Net Revenue by Global Product Category (Millions of USD) | Product Category | September 29, 2024 | October 1, 2023 | Reported Revenue Growth | Adjusted Constant Currency Revenue Growth | | :--------------- | :------------- | :------------ | :----------- | :--------------------- | | Vascular Access | $543.3 | $521.3 | 4.2% | 4.3% | | Interventional | 425.7 | 375.8 | 13.3% | 13.4% | | Anesthesia | 300.0 | 291.8 | 2.8% | 2.9% | | Surgical | 328.6 | 317.8 | 3.4% | 4.0% | | Interventional Urology | 246.2 | 226.8 | 8.6% | 8.8% | | OEM | 259.1 | 243.4 | 6.4% | 6.3% | | Other (1) | 149.0 | 223.7 | (33.4)% | (27.3)% | | Consolidated | $2,251.9 | $2,200.6 | 2.3% | 3.1% | Other Financial Highlights As of September 29, 2024, the company reported increased cash, accounts receivable, and inventory, with depreciation and intangible asset amortization expenses also rising Key Financial Data (As of September 29, 2024) (Millions of USD) | Metric | September 29, 2024 | December 31, 2023 | Change | | :------------------------------------ | :------------- | :------------- | :--- | | Cash, Cash Equivalents, and Restricted Cash Equivalents | $277.8 | $222.8 | Increase | | Net Accounts Receivable | $470.3 | $443.5 | Increase | | Inventory | $639.9 | $626.2 | Increase | - For the first nine months of 2024, depreciation, intangible asset amortization, and deferred financing costs totaled $205.4 million, up from $180.5 million in the prior year period[9] 2024 Outlook and Guidance Revenue Growth Outlook The company lowered its FY 2024 GAAP and adjusted constant currency revenue growth outlook, citing negative impacts from foreign exchange fluctuations and Italian clawback measures 2024 Revenue Growth Outlook | Metric | Original Guidance Range | New Guidance Range | | :------------------------------------ | :------------- | :------------- | | GAAP Revenue Growth | 3.40% to 4.40% | 2.90% to 3.40% | | Adjusted Constant Currency Revenue Growth | 4.25% to 5.25% | 3.50% to 4.00% | 2024 Adjusted Constant Currency Revenue Growth Forecast (Millions of USD) | Metric | Low End | High End | | :------------------------------------ | :--- | :--- | | Projected 2024 GAAP Revenue Growth | 2.90% | 3.40% | | Estimated Impact of Foreign Exchange Fluctuations | (0.15)% | (0.15)% | | Italian Clawback Measures | (0.45)% | (0.45)% | | Projected 2024 Adjusted Constant Currency Revenue Growth | 3.50% | 4.00% | Earnings Per Share Outlook The company raised the low end of its FY 2024 GAAP and adjusted diluted EPS guidance, reflecting positive profitability expectations 2024 Earnings Per Share Outlook | Metric | Original Guidance Range | New Guidance Range | Year-over-Year Change | | :------------------------------------ | :------------- | :------------- | :------- | | GAAP Diluted EPS from Continuing Operations | $6.43 to $6.83 | $6.65 to $6.95 | (12.0)% to (8.1)% | | Adjusted Diluted EPS from Continuing Operations (Low End) | $13.80 to $14.20 | $13.90 to $14.20 | 2.8% to 5.0% | 2024 Adjusted Diluted EPS from Continuing Operations Forecast (Millions of USD) | Metric | Low End | High End | | :------------------------------------------------ | :----- | :----- | | Projected GAAP Diluted EPS from Continuing Operations | $6.65 | $6.95 | | Restructuring, Restructuring-Related, and Impairment Items (After-Tax) | $0.60 | $0.60 | | Acquisition, Integration, and Divestiture-Related Items (After-Tax) | $0.30 | $0.30 | | Pension Termination and Related Costs (After-Tax) | $1.70 | $1.70 | | ERP Implementation (After-Tax) | $0.32 | $0.32 | | MDR (After-Tax) | $0.18 | $0.18 | | Italian Clawback Measures (After-Tax) | $0.29 | $0.29 | | Intangible Asset Amortization Expense (After-Tax) | $3.81 | $3.81 | | Tax Adjustments | $0.05 | $0.05 | | Projected Adjusted Diluted EPS from Continuing Operations (After-Tax) | $13.90 | $14.20 | Non-GAAP Financial Measures and Reconciliations Explanation of Non-GAAP Measures The company uses non-GAAP measures such as adjusted revenue and EPS to evaluate financial performance, excluding items not representative of core business trends - Adjusted Revenue: Excludes a $13.8 million impact from increased revenue reserves in prior years for the EMEA segment due to Italian clawback measures, as this amount does not represent a normal revenue adjustment and is non-recurring[22][23][28] - Adjusted Constant Currency Revenue Growth: Eliminates the impact of currency translation from international subsidiaries across different periods, building on adjusted revenue to better reflect underlying performance[24] - Adjusted Diluted Earnings Per Share: Excludes items such as restructuring, acquisition/integration/divestiture, Italian clawback measures, pension termination, European Medical Device Regulation (MDR) related costs, intangible asset amortization, ERP implementation, and tax adjustments from GAAP diluted EPS[25][26][27][28][29][30][31][32][33] Reconciliation of Net Revenue Detailed net revenue reconciliations are provided by business segment and global product category, illustrating GAAP revenue, adjustments, and adjusted constant currency growth Q3 2024 Net Revenue Reconciliation by Segment (Millions of USD) | Segment | Reported Revenue (Sep 29, 2024) | Adjustments | Adjusted Revenue | Reported Revenue (Oct 1, 2023) | Adjustments | Adjusted Revenue | Reported Revenue Growth | Currency Impact % | Adjustment Impact % | Adjusted Constant Currency Revenue Growth | | :----------- | :----------------------- | :--- | :--------- | :----------------------- | :--- | :--------- | :----------- | :-------- | :-------- | :--------------------- | | Americas | $433.3 | $— | $433.3 | $428.2 | $— | $428.2 | 1.2% | (0.3)% | —% | 1.5% | | EMEA | 150.2 | — | 150.2 | 142.7 | — | 142.7 | 5.3% | 1.4% | —% | 3.9% | | Asia | 98.3 | — | 98.3 | 93.2 | — | 93.2 | 5.5% | 0.5% | —% | 5.0% | | OEM | 82.6 | — | 82.6 | 82.3 | — | 82.3 | 0.3% | 0.2% | —% | 0.1% | | Consolidated | $764.4 | $— | $764.4 | $746.4 | $— | $746.4 | 2.4% | 0.2% | —% | 2.2% | First Nine Months 2024 Net Revenue Reconciliation by Segment (Millions of USD) | Segment | Reported Revenue (Sep 29, 2024) | Adjustments | Adjusted Revenue | Reported Revenue (Oct 1, 2023) | Adjustments | Adjusted Revenue | Reported Revenue Growth | Currency Impact % | Adjustment Impact % | Adjusted Constant Currency Revenue Growth | | :----------- | :----------------------- | :--- | :--------- | :----------------------- | :--- | :--------- | :----------- | :-------- | :-------- | :--------------------- | | Americas | $1,266.4 | $— | $1,266.4 | $1,264.7 | $— | $1,264.7 | 0.1% | (0.1)% | —% | 0.2% | | EMEA | 456.9 | (13.8) | 470.7 | 433.9 | — | 433.9 | 5.3% | 0.7% | (3.2)% | 7.8% | | Asia | 269.5 | — | 269.5 | 258.6 | — | 258.6 | 4.2% | (2.3)% | —% | 6.5% | | OEM | 259.1 | — | 259.1 | 243.4 | — | 243.4 | 6.4% | 0.1% | —% | 6.3% | | Consolidated | $2,251.9 | ($13.8) | $2,265.7 | $2,200.6 | $— | $2,200.6 | 2.3% | (0.2)% | (0.6)% | 3.1% | Q3 2024 Net Revenue Reconciliation by Global Product Category (Millions of USD) | Product Category | Reported Revenue (Sep 29, 2024) | Adjustments | Adjusted Revenue | Reported Revenue (Oct 1, 2023) | Adjustments | Adjusted Revenue | Reported Revenue Growth | Currency Impact % | Adjustment Impact % | Adjusted Constant Currency Revenue Growth | | :--------------- | :----------------------- | :--- | :--------- | :----------------------- | :--- | :--------- | :----------- | :-------- | :-------- | :--------------------- | | Vascular Access | $180.9 | $— | $180.9 | $169.9 | $— | $169.9 | 6.5% | 0.2% | —% | 6.3% | | Interventional | 149.9 | — | 149.9 | 134.1 | — | 134.1 | 11.8% | 0.4% | —% | 11.4% | | Anesthesia | 101.1 | — | 101.1 | 97.6 | — | 97.6 | 3.6% | 0.2% | —% | 3.4% | | Surgical | 111.7 | — | 111.7 | 112.8 | — | 112.8 | (0.9)% | 0.1% | —% | (1.0)% | | Interventional Urology | 83.4 | — | 83.4 | 73.6 | — | 73.6 | 13.3% | —% | —% | 13.3% | | OEM | 82.6 | — | 82.6 | 82.3 | — | 82.3 | 0.3% | 0.2% | —% | 0.1% | | Other (1) | 54.8 | — | 54.8 | 76.1 | — | 76.1 | (28.0)% | 0.3% | —% | (28.3)% | | Consolidated | $764.4 | $— | $764.4 | $746.4 | $— | $746.4 | 2.4% | 0.2% | —% | 2.2% | First Nine Months 2024 Net Revenue Reconciliation by Global Product Category (Millions of USD) | Product Category | Reported Revenue (Sep 29, 2024) | Adjustments | Adjusted Revenue | Reported Revenue (Oct 1, 2023) | Adjustments | Adjusted Revenue | Reported Revenue Growth | Currency Impact % | Adjustment Impact % | Adjusted Constant Currency Revenue Growth | | :--------------- | :----------------------- | :--- | :--------- | :----------------------- | :--- | :--------- | :----------- | :-------- | :-------- | :--------------------- | | Vascular Access | $543.3 | $— | $543.3 | $521.3 | $— | $521.3 | 4.2% | (0.1)% | —% | 4.3% | | Interventional | 425.7 | — | 425.7 | 375.8 | — | 375.8 | 13.3% | (0.1)% | —% | 13.4% | | Anesthesia | 300.0 | — | 300.0 | 291.8 | — | 291.8 | 2.8% | (0.1)% | —% | 2.9% | | Surgical | 328.6 | — | 328.6 | 317.8 | — | 317.8 | 3.4% | (0.6)% | —% | 4.0% | | Interventional Urology | 246.2 | — | 246.2 | 226.8 | — | 226.8 | 8.6% | (0.2)% | —% | 8.8% | | OEM | 259.1 | — | 259.1 | 243.4 | — | 243.4 | 6.4% | 0.1% | —% | 6.3% | | Other (1) | 149.0 | (13.8) | 162.8 | 223.7 | — | 223.7 | (33.4)% | —% | (6.1)% | (27.3)% | | Consolidated | $2,251.9 | ($13.8) | $2,265.7 | $2,200.6 | $— | $2,200.6 | 2.3% | (0.2)% | (0.6)% | 3.1% | Reconciliation of Consolidated Statement of Income Items Detailed reconciliations of GAAP and adjusted consolidated statement of income items are presented, covering gross margin, SG&A, R&D, operating margin, income before taxes, income tax expense, and diluted EPS Q3 2024 Reconciliation of Consolidated Statement of Income Items (Millions of USD, except per share data) | Metric | GAAP Basis | Total Adjustments | Adjusted Basis | | :------------------------------------ | :--------- | :--------- | :--------- | | Revenue | $764.4 | — | $764.4 | | Gross Margin | 56.3% | 4.5% | 60.8% | | Selling, General & Administrative Expenses | 31.6% | (3.0)% | 28.6% | | Research & Development Expenses | 5.1% | (0.2)% | 4.9% | | Operating Margin | 19.5% | 7.8% | 27.3% | | Income Before Taxes | $130.6 | $59.1 | $189.7 | | Income Tax Expense | $19.6 | $6.1 | $25.7 | | Diluted EPS from Continuing Operations | $2.36 | $1.13 | $3.49 | Q3 2023 Reconciliation of Consolidated Statement of Income Items (Millions of USD, except per share data) | Metric | GAAP Basis | Total Adjustments | Adjusted Basis | | :------------------------------------ | :--------- | :--------- | :--------- | | Gross Margin | 55.8% | 3.6% | 59.4% | | Selling, General & Administrative Expenses | 28.6% | (0.6)% | 28.0% | | Research & Development Expenses | 5.0% | (0.8)% | 4.2% | | Operating Margin | 22.1% | 5.1% | 27.2% | | Income Before Taxes | $149.6 | $37.5 | $187.1 | | Income Tax Expense | $11.9 | $3.1 | $15.0 | | Diluted EPS from Continuing Operations | $2.91 | $0.73 | $3.64 | First Nine Months 2024 Reconciliation of Consolidated Statement of Income Items (Millions of USD, except per share data) | Metric | GAAP Basis | Total Adjustments | Adjusted Basis | | :------------------------------------ | :--------- | :--------- | :--------- | | Revenue | $2,251.9 | $13.8 | $2,265.7 | | Gross Margin | 56.1% | 4.8% | 60.9% | | Selling, General & Administrative Expenses | 38.8% | (9.6)% | 29.2% | | Research & Development Expenses | 5.2% | (0.4)% | 4.8% | | Operating Margin | 11.6% | 15.3% | 26.9% | | Income Before Taxes | $202.2 | $347.6 | $549.8 | | Income Tax Expense | $(4.6) | $76.2 | $71.6 | | Diluted EPS from Continuing Operations | $4.38 | $5.74 | $10.12 | First Nine Months 2023 Reconciliation of Consolidated Statement of Income Items (Millions of USD, except per share data) | Metric | GAAP Basis | Total Adjustments | Adjusted Basis | | :------------------------------------ | :--------- | :--------- | :--------- | | Gross Margin | 55.2% | 4.1% | 59.3% | | Selling, General & Administrative Expenses | 30.4% | (1.8)% | 28.6% | | Research & Development Expenses | 5.4% | (1.2)% | 4.2% | | Operating Margin | 19.3% | 7.2% | 26.5% | | Income Before Taxes | $374.0 | $159.9 | $533.9 | | Income Tax Expense | $47.7 | $6.6 | $54.3 | | Diluted EPS from Continuing Operations | $6.90 | $3.24 | $10.14 | Tickmarks to Reconciliation Tables Detailed explanations for each adjustment in the reconciliation tables are provided, covering restructuring, acquisition/integration/divestiture-related items, and Italian clawback measures - Restructuring, Restructuring-Related, and Impairment Items: Q3 2024 pre-tax restructuring expenses were $0.3 million, and restructuring-related expenses were $6.5 million. For the first nine months of 2024, pre-tax restructuring expenses were $8.7 million, restructuring-related expenses were $14.0 million, and impairment expenses were $2.1 million[47] - Acquisition, Integration, and Divestiture-Related Items: These expenses relate to changes in the estimated fair value of contingent consideration liabilities and the acquisition of Palette Life Sciences AB[48] - Italian Clawback Measures: Adjustments reflect the impact of increased reserves in prior years due to Italian clawback measures[49] Company Information About Teleflex Incorporated Teleflex is a global medical technology provider dedicated to improving health and quality of life through its diversified product portfolio across various therapeutic areas - The company's vision is to be the most trusted partner in healthcare, shaping the future of medical care through purpose-driven innovation and world-class products[51] - It owns well-known brands including Arrow™, Barrigel™, Deknatel™, LMA™, Pilling™, QuikClot™ Rüsch™, UroLift™, and Weck™[52] Caution Concerning Forward-Looking Information This press release contains forward-looking statements, with actual results potentially differing materially due to factors like shipping delays, market demand, acquisition integration, healthcare reform, and global economic conditions - The company explicitly disclaims any obligation to update forward-looking statements, except as required by law or regulation[53] Consolidated Financial Statements (GAAP) Consolidated Statements of Income Consolidated statements of income for the three and nine months ended September 29, 2024, and October 1, 2023, present key GAAP financial data including revenue, gross profit, operating expenses, and EPS Consolidated Statements of Income (USD and shares in thousands, except per share data) | Metric | Sep 29, 2024 (Three Months) | Oct 1, 2023 (Three Months) | Sep 29, 2024 (Nine Months) | Oct 1, 2023 (Nine Months) | | :------------------------------------ | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Net Revenue | $764,375 | $746,389 | $2,251,915 | $2,200,580 | | Cost of Sales | 334,203 | 330,078 | 989,151 | 985,066 | | Gross Profit | 430,172 | 416,311 | 1,262,764 | 1,215,514 | | Selling, General & Administrative Expenses | 247,257 | 213,194 | 740,718 | 669,216 | | Research & Development Expenses | 38,726 | 37,576 | 117,119 | 118,493 | | Pension Settlement Expense | (5,407) | — | 132,732 | — | | Restructuring and Impairment Charges | 285 | 231 | 10,799 | 3,960 | | Income Before Taxes from Continuing Operations | 130,551 | 149,605 | 202,238 | 374,040 | | Income Tax (Benefit) Expense from Continuing Operations | 19,633 | 11,935 | (4,586) | 47,651 | | Net Income from Continuing Operations | 110,918 | 137,670 | 206,824 | 326,389 | | Diluted Earnings Per Share (Continuing Operations) | $2.36 | $2.91 | $4.38 | $6.90 | | Diluted Earnings Per Share (Net Income) | $2.36 | $2.90 | $4.37 | $6.88 | Consolidated Balance Sheets Consolidated balance sheets as of September 29, 2024, and December 31, 2023, list major components including cash, accounts receivable, inventory, fixed assets, intangible assets, liabilities, and equity Consolidated Balance Sheets (USD in thousands) | Metric | September 29, 2024 | December 31, 2023 | | :------------------------------------ | :------------- | :------------- | | ASSETS | | | | Cash and Cash Equivalents | $243,235 | $222,848 | | Net Accounts Receivable | 470,257 | 443,467 | | Inventory | 639,938 | 626,216 | | Total Current Assets | 1,499,303 | 1,407,406 | | Property, Plant and Equipment, Net | 512,224 | 479,913 | | Goodwill | 2,918,562 | 2,914,055 | | Intangible Assets, Net | 2,325,105 | 2,501,960 | | Total Assets | $7,486,291 | $7,532,546 | | LIABILITIES AND EQUITY | | | | Total Current Liabilities | $618,753 | $606,745 | | Long-Term Debt | 1,661,546 | 1,727,572 | | Deferred Tax Liabilities | 445,841 | 456,080 | | Total Liabilities | 3,004,574 | 3,091,558 | | Total Stockholders' Equity | 4,481,717 | 4,440,988 | | Total Liabilities and Stockholders' Equity | $7,486,291 | $7,532,546 | Consolidated Statements of Cash Flows Consolidated statements of cash flows for the nine months ended September 29, 2024, and October 1, 2023, cover operating, investing, and financing cash flows from continuing operations, and exchange rate impacts Consolidated Statements of Cash Flows (USD in thousands) | Metric | Sep 29, 2024 (Nine Months) | Oct 1, 2023 (Nine Months) | | :------------------------------------ | :----------------------- | :----------------------- | | Net Cash Provided by Operating Activities from Continuing Operations | $435,624 | $372,361 | | Net Cash Used in Investing Activities from Continuing Operations | (76,270) | (57,698) | | Net Cash (Used in)/Provided by Financing Activities from Continuing Operations | (302,810) | 276,041 | | Net Cash Used in Discontinued Operations | (2,355) | (579) | | Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash Equivalents | 728 | (660) | | Net Increase in Cash, Cash Equivalents, and Restricted Cash Equivalents | 54,917 | 589,465 | | Cash, Cash Equivalents, and Restricted Cash Equivalents at End of Period | $277,765 | $881,499 | Company Information Teleflex Incorporated Contacts Contact information for Lawrence Keusch, VP of Investor Relations at Teleflex, is provided for investors seeking additional company information - Investor Relations Contact: Lawrence Keusch, Vice President, Investor Relations and Strategic Development, Phone: 610-948-2836, Website: investors.teleflex.com[59]