Teleflex Incorporated (NYSE:TFX) Q1 2018 Earnings Conference Call - Final Transcript

May 03, 2018 • 08:00 am ET


Teleflex Incorporated (NYSE:TFX) Q1 2018 Earnings Conference Call - Final Transcript


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Liam J. Kelly

our as-reported revenue growth guidance by 1% on both the low and high end of the range. I would also like to point out that we expect the percentage of revenue generated in quarters two and three to mirror the quarterly percentages achieved in 2017 when we achieved approximately 25% in both quarter two and quarter three, with the remainder generated in quarter four.

Turning now to the first quarter, and beginning with revenue. During quarter one, we generated as-reported revenue growth of approximately 20% and constant-currency revenue growth of approximately 15%. The constant-currency revenue growth increase was broad-based and represents a mixture of both improvement in the Company's organic growth rate as well as the contribution received from the acquisitions of NeoTract and Vascular Solutions.

Starting with the organic revenue growth drivers. During quarter one, we saw a recovery in distributor purchasing pattern that negatively impacted us during the fourth quarter of 2017. You may recall that on our last earnings call, we stated that distributor buying can at times be uneven and that we expected inventory levels held at certain US-based distributors to normalize during the first half of the year. Well, that is what happened in quarter one, and this has accelerated our organic shipping-day-adjusted constant-currency revenue growth rate to 3.1%.

Other areas in which we saw good organic revenue growth were in the segments of Interventional North America, Vascular North America, and Asia Pacific. One segment, however, that experienced a decline in constant-currency revenue growth was our Surgical business, and this was largely attributable to our exit of certain low-growth, low-margin products beginning in the third quarter of 2017. Had we remained in these categories and revenues simply remained flat versus the year-ago period, our organic revenue growth would have been higher by approximately 60 basis points. That said, we know that our exit from these products will have a positive long-term effect on our business.

Turning to M&A. NeoTract continues its strong momentum as global revenue during the quarter totaled $42.3 million, which is an increase of approximately 87% versus the prior-year period. We continue to see an increase in the adoption of the UroLift product and we also continued to expand the number of covered lives from an insurance perspective as we are now up to approximately 240 million, thanks to the positive decision issued recently by the Blue Cross Blue Shield Association. And lastly, as it relates to NeoTract, we recently published the results from a retrospective study which confirms the clinical results from our previously-published five-year LIFT study.

Moving to Vascular Solutions. During quarter one, revenues reached $47.7 million. It is important to understand that we completed this acquisition in mid-February of last year, and as such, only half a quarter of VSI revenue appeared within Teleflex's financial statements during the first quarter of 2017. If you were to compare the full three months of VSI revenue from the first quarter of 2017 to the first quarter of 2018, VSI revenue increased