Teleflex(TFX) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Teleflex reported Q1 2025 revenues of $700.7 million, a 5% decrease year over year on a GAAP basis, and a decline of 3.8% on an adjusted constant currency basis, which was within the guidance range of -3% to -4% [6][24] - Adjusted earnings per share (EPS) for the first quarter was $2.91, reflecting a 9.3% decrease year over year [6][24] - Adjusted gross margin was 60.4%, a 70 basis point decrease compared to the prior year, primarily due to cost inflation and unfavorable product mix [22] - Adjusted operating margin was 24.7%, a 190 basis point decline year over year [22] Business Line Data and Key Metrics Changes - Americas: Revenues were $475.7 million, a 3.2% decrease year over year, impacted by OEM declines and challenges in the UroLift service [7] - EMEA: Revenues decreased 2.8% year over year to $151.2 million, with strong performance in Surgical and Vascular Access offset by anesthesia [8] - Asia: Revenues were $73.8 million, a 9.7% decrease year over year, in line with expectations due to volume-based procurement impacts [8] - Vascular Access: Revenue increased 1.9% year over year to $182.4 million, driven by growth in PICCs [9] - Interventional: Revenue was $137.5 million, an increase of 3.2% year over year, led by strong demand for intra-aortic balloon pumps [10] - Anesthesia: Revenue decreased 8.6% year over year to $86.6 million, with growth in endotracheal tubes offset by declines in military orders [11] - Surgical: Revenue increased 2% year over year to $105.8 million, with solid underlying trends [11] - Interventional Urology: Revenue decreased 10.7% year over year to $71 million, with strong growth in BarriGel but pressure on UroLift [12] - OEM: Revenue decreased 26.8% year over year to $63.9 million, impacted by a lost customer contract [12] Market Data and Key Metrics Changes - The company experienced softness in orders in EMEA during Q1, which has since recovered in April [6] - The China business is expected to see sequential quarterly revenue improvement through the remainder of 2025 [9] Company Strategy and Development Direction - Teleflex announced plans to separate into two independent publicly traded companies to enhance shareholder value, with significant inbound interest in acquiring NewCo [17][18] - The acquisition of BioTronix Vascular Intervention business is on track to close by the end of Q3 2025, expected to enhance Teleflex's portfolio in the cath lab [19][20] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter evolved largely as expected, with specific headwinds anticipated to be transitory [33] - The company expects 2025 adjusted constant currency revenue growth of 1% to 2%, with an updated guidance range for reported revenue growth [26] - Tariffs are expected to impact 2025 results, with an estimated $55 million headwind, primarily associated with China and Mexico [28][29] Other Important Information - The company is actively exploring strategies to mitigate tariff exposure, including optimizing the supply chain and increasing the mix of USMCA compliant products [29][30] - The company has implemented thoughtful spending controls to offset tariff impacts [53] Q&A Session Summary Question: Has there been any incremental demand on the OEM side due to supply chain issues? - Management noted a pickup in demand within the OEM business, indicating base demand rather than supply chain issues [41] Question: Can you provide more details on the $55 million tariff impact and mitigation strategies? - Management explained that the $55 million is based on current tariffs and does not include mitigation strategies, which are being explored [46][52] Question: What is the interest level in NewCo, and is there a preference for a sale versus a spin? - Management indicated significant interest in NewCo, with a parallel process for both spin and sale being pursued [59][64] Question: How does the tariff impact split between RemainCo and SpinCo? - Management stated that the impact of tariffs will affect both entities, but specifics will be discussed closer to the separation date [81] Question: What are the early views on cost and revenue synergies from the BioTronix acquisition? - Management highlighted the opportunity to leverage BioTronix's channel in Europe and Teleflex's channel in the Americas for revenue growth [84]