Teleflex(TFX) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Teleflex generated third quarter revenue of $700.3 million, an increase of 10.3% year-over-year on a constant currency basis, reflecting the benefits of a diversified portfolio [17] - Adjusted earnings per share (EPS) for the third quarter was $3.51, representing a 26.7% increase year-over-year, exceeding internal expectations [19][53] - The company reduced its constant currency revenue growth outlook for the year to a range of 8% to 9% from a previous range of 8.5% to 9.75% [16][57] Business Line Data and Key Metrics Changes - Americas revenues were $417.3 million, up 10.9% year-over-year, driven by Surgical, Vascular, and Interventional products [22] - EMEA revenues increased 3.6% year-over-year to $143.9 million, with growth led by Interventional and Vascular products [23] - Asia revenues grew 6.3% year-over-year to $75 million, with Japan showing strong growth of over 30% [24] Market Data and Key Metrics Changes - All regions (Americas, EMEA, Asia, and OEM) demonstrated constant currency revenue growth over 2020, despite headwinds from the Delta variant [14] - The OEM business accounted for approximately 9% of total sales, increasing 29.4% year-over-year to $64.1 million [34] Company Strategy and Development Direction - The company continues to execute its strategy focused on durable growth through investments in organic growth opportunities, product innovation, and margin expansion [20][65] - Teleflex is committed to maintaining its leadership position in the UroLift market, targeting patients suffering from BPH [32][81] Management Comments on Operating Environment and Future Outlook - Management acknowledged ongoing uncertainty around COVID-19 infections and the impact on elective surgical procedures, expecting a more normalized environment in 2022 [15][66] - The company anticipates modest improvement in the fourth quarter compared to the third quarter, but remains cautious about the macro environment [15][16] Other Important Information - The adjusted gross margin for the third quarter was 59.5%, a 230 basis point increase year-over-year, driven by product mix and cost improvement initiatives [52] - The company is experiencing increased cost pressures in raw materials and logistics, with an estimated $3 million higher inflationary costs expected in the fourth quarter [60][61] Q&A Session Summary Question: What are the assumptions for Q4 and recent trends? - Management indicated that Q4 assumptions are based on stability, with some subdued trends observed in late Q3, and noted improvements in procedure volumes in September [70] Question: How is the company preparing for different reimbursement scenarios? - Management emphasized the importance of engaging with CMS regarding the proposed ruling and expressed confidence in the UroLift procedure's profitability across various care settings [73][76] Question: What impact have staffing shortages had on operations? - Management noted that staffing shortages are expected to improve as government assistance ends, leading to a return of ancillary workers to the workforce [85][91] Question: How substantial is the impact of nursing shortages? - Management acknowledged that nursing shortages are significant, particularly in hospitals, and may take longer to resolve compared to office settings [90][92] Question: What is the outlook for UroLift amidst reimbursement uncertainties? - Management expressed confidence that the headwinds faced in Q3 were primarily due to COVID-19 and not related to reimbursement issues, anticipating a recovery in procedures [95][99]