Teleflex(TFX) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2021, Teleflex achieved 7.9% constant currency revenue growth year-over-year and 10.4% growth compared to Q4 2019, with an adjusted earnings per share increase of 10.8% year-over-year [10][14][43] - For the full year 2021, constant currency sales growth was 8.8%, adjusted operating margin expanded by 310 basis points, and adjusted earnings per share reached $13.33, a 24.9% increase year-over-year [14][43] Business Line Data and Key Metrics Changes - Americas revenue was$ 451.7 million in Q4, representing 7.6% year-over-year growth, driven by Surgical, Vascular, and Interventional segments [17] - EMEA revenues increased 4.8% year-over-year to $164.5 million, with Interventional, Surgical, and Vascular Access products leading the growth [17] - Asia revenues were$ 78.5 million, a 0.5% year-over-year increase, with a 6.7% rise when excluding the respiratory divestiture [18] - Vascular Access revenue grew 6.4% to $193 million, with notable growth in the PICC portfolio [19] - Interventional revenue was$ 114.9 million, up 8.2% year-over-year, with strong demand for complex catheters [20] - Anesthesia and Emergency Medicine revenue increased 20.5% to $102.8 million, driven by Hemostat products [22] - Surgical revenue was$ 106.4 million, representing 16.1% growth year-over-year [22] - Interventional Urology revenue decreased 1% year-over-year to $92.9 million, impacted by COVID-19 [23] - OEM revenues increased 3.9% year-over-year to$ 67.2 million [23] - Other category revenues declined 12.2% to $84.7 million due to the respiratory divestiture [24] Market Data and Key Metrics Changes - The Americas, EMEA, Asia, and OEM segments all demonstrated constant currency revenue growth over 2020, despite COVID-19 headwinds [16] - The company noted that COVID-19 significantly impacted elective surgical procedures, particularly in December [12][13] Company Strategy and Development Direction - Teleflex is focused on driving durable growth, expanding margins, and optimizing its portfolio through acquisitions and divestitures [14][40] - The company plans to enhance its UroLift product line and expand into international markets, with significant opportunities in Japan and Brazil [30][32] - The strategy includes maintaining financial discipline while pursuing M&A opportunities in the$ 60 million to $300 million revenue range [68][76] Management's Comments on Operating Environment and Future Outlook - Management expects the impact of COVID-19 to be lower in 2022 compared to 2021, with improvements in elective surgical procedures anticipated [37][38] - The company is prepared to adjust spending based on the level of COVID disruption while continuing to invest in growth drivers [39] - For 2022, constant currency revenue growth is expected to be between 4% and 5.5%, with UroLift projected to grow approximately 15% [48][49] Other Important Information - Adjusted gross margin for Q4 was 58.8%, an 80 basis point increase year-over-year, while adjusted operating margin was 27.6%, a 100 basis point increase [42] - Cash flow from operations for 2021 totaled$ 652.1 million, a significant increase from $437.1 million in 2020 [44] - The company has a solid balance sheet with a cash balance of$ 445.1 million and net leverage of approximately 1.7x [45] Q&A Session Summary Question: Current environment compared to a month ago - Management noted that parts of the business perform differently during COVID outbreaks, with expectations for improvement in February and March as hospitals reopen [64][66] Question: Portfolio optimization in the current environment - Management expressed confidence in their financial position and ability to pursue acquisitions, noting improved valuation expectations [68][69] Question: UroLift growth and reimbursement changes - UroLift is expected to grow 15% in 2022, with contributions primarily from the U.S. market, while international markets will ramp up in subsequent years [71][73] Question: M&A criteria and areas of interest - The company is looking for assets in the $60 million to$ 300 million revenue range that fit strategic pillars and have strong IP [76] Question: UroLift growth cadence and international contributions - UroLift growth is expected to be lower in the first half of 2022 due to COVID, with stronger growth anticipated in the second half [81] Question: Impact of inflation and FX on margins - Inflation in Q4 was higher than expected, and management anticipates continued inflationary pressures in 2022, impacting margins [88][90]