Q1 2022 Teleflex Inc Earnings Call
Increased <unk>, 3% year over year to $2 88.
Reflecting growth in the business offset by the impact of incremental inflation and investments for our growth drivers.
Once again, our steady performance in the quarter was driven by the company's balance of growth drivers broad portfolio of medically necessary products and category leadership.
Asset by the impact of COVID-19, and the divestiture of the respiratory assets.
Although the surge in COVID-19 infections disrupted the business during the first half of the quarter, we had a better than expected performance in March.
Specifically, we saw a notable impact in January and early February driven by deferrals of procedures patient reluctance and patients and caregivers contracting Colbert, which negatively impacted procedure volumes. However, as COVID-19 infections declined we saw a notable uptick in our business.
As we exited February .
In the quarter, our high growth portfolio, which accounted for approximately 25% of revenues in 2021 and includes unit Manta hemostatic products.
Uncontrolled and picks performed well when excluding your lift which was anticipated to build momentum through the year. The remainder of products in the high growth portfolio increased in the low double digits when adjusting for one less selling day in the quarter. We continue to expect our high growth portfolio.
To grow in the mid teens for 2022, as the environment normalizes and euro lift growth improves over first quarter levels.
Our durable core remains on track for 4% growth in 2022 as assumed in our guidance.
Overall, we are pleased with our first quarter performance. Despite the COVID-19 related disruptions and year over year inflationary pressures from freight raw materials and labor.
I am also pleased to report that our pricing strategy has gained traction early in the year and I feel very confident in delivering our plan of 50 basis points and positive pricing in 2022.
We continue to assume a more normalized operating environment as we progress through 2022 due to a decrease in coal the disruptions and an increase in elective surgical procedures.
Given that it is still early in the year, we are maintaining our constant currency and adjusted earnings per share guidance for 2022.
I would once again like to thank the entire teleflex team the resilience of the organization continues to hold fast.
Although the disruptions from the pandemic have been longer than anticipated I believe the teleflex team is managing through this exceptionally well.
The hard work and dedication of our employees continues to be felt throughout the organization and with our customers patients and in our communities.
With that let's turn to a deeper look at our first quarter revenue results.
I will begin with a review of our reportable segment revenues for the first quarter.
All growth rates that I referred to are on a constant currency basis, unless otherwise noted.
During the first quarter, our Americas, EMEA Asia, and OEM segments demonstrated resilience with all regions showing constant currency revenue growth year over year again, we continue to see the benefits of our diversified product portfolio in this challenging environment.
America's revenues were $378 million, which represents <unk>, 8% growth year over year in the quarter surgical was the biggest contributor to growth, partially offset by the impact of COVID-19, and one less selling day.
Excluding the impact of the selling day, the Americas region grew approximately two 3% year over year.
The headwind associated with the respiratory divestiture to the Americas growth was minimal in the quarter.
EMEA revenues of $136 9 million.
<unk> increased three 4% year over year.
With interventional vascular access and anesthesia products, leading the growth.
EMEA continues to face a headwind from COVID-19 in early January and subsequently saw procedure volumes improve as countries across the region continued to open up <unk>.
Excluding the impact of the respiratory divestiture revenues rose, 7% year over year.
Turning to Asia.
Revenues were $69 2 million increase.
Increasing 12, 5% year over year.
China revenues increased at a strong double digit rate led by growth in vascular and surgical but southeast Asia and Japan also contributed to the performance in the quarter.
Excluding the impact of the respiratory divestiture Asia revenues Rose 18, 5% year over year.
Let's now move to a discussion on our first quarter revenues by global product category.
Consistent with my prior comments regarding our reportable segments commentary on global product category growth for the first quarter will also be on a constant currency basis and ranked by size of our business units.
Starting with vascular access revenue increased three 2% to $166 1 million.
Our category leadership in central venous catheters, and mid lines, along with our novel coded pick portfolio continues to position us for dependable growth.
<unk> growth was in line with internal expectations for the quarter.
We expect <unk> to grow faster than the market with double digit growth for 2022, as we invest behind our differentiated portfolio.
Moving to interventional revenue was $96 9 million up two 3% year over year.
We executed well during the quarter with growth across our broad portfolio.
We continue to invest behind our interventional portfolio.
Including complex catheters, and manta large bore closure device.
Medical revenues were as expected in the quarter with usage continuing to expand both in the U S and in international markets.
In turn we remain on track for our 2022 revenue objectives.
Now I'm trying to stadia revs.
Revenue was $86 9 million.
Up 5% year over year.
LMA single use masks hemostatic products atomization and airway all contributed to growth in the first quarter.
Partly offset by lower sales of <unk> products.
<unk> product revenues were in line with our expectations for the quarter.
In our surgical business revenue was $89 7 million.
Representing 14, 4% growth year over year.
Among our largest product categories, we continued to witness robust growth in sales of metal and polymer ligation clips offset by timing of orders in our instrument business.
For intervention in urology revenue was $74 9 million.
Representing an increase of two 2% year over year and slightly above our internal expectations.
As expected the performance in the quarter was negatively impact by the meaningful acceleration in Covid cases in January and February .
Which not only impacted patients, but also resulted in staffing shortages.
However, we saw improvement in the operating environment sequentially as Covid related disruptions began to ease.
OEM revenue increased nine 2% year over year.
To $57 7 million.
Once again, our order book remains strong as customers recognize our broad competencies.
We remain well positioned with competitive capabilities across our markets include.
Including faster growth opportunities in 10 malls.
<unk> intervention micro catheters used in neurovascular and other applications.
And finally, our other category.
Which incorporate sales of respiratory products not included in the divestiture to Medline urology care and manufacturing and supply transitioned agreement revenues related to our respiratory business divestiture declined by 11, 7% to $69 $5 million year over year.
The decline reflects the loss of revenue due to the divestiture of the respiratory products.
We offset by manufacturing and supply transition agreement revenues.
We continue to expect manufacturing and supply transition agreement revenues.
Partially offset the impact on our revenue growth related to the divested respiratory assets over the first half of 2022 and that all MSA revenues with phase out at the end of 2023.
That completes my comments on the first quarter revenue performance turning.
Turning to some commercial update and starting with Europe , we continue to see your positioned for accelerating growth in the second half of 2022 at pandemic headwinds abate through the year and as elective surgical procedures become less disruptive accordingly, there is no change to our 15% year over year growth.
Outlook for the year.
Euro lift remains differentiated from other outpatient BPH treatments with strong clinical results.
<unk>, showing rapid symptom relief and recovery no new sustained sexual dysfunction and durable results.
Investors familiar with Teleflex will be aware that you're being positioned for patients that are suffering from BPH and have failed or are not satisfied with drug therapy or.
Our DTC program remains an important element in our market building activities and is poised for another successful year with internal metrics tracking to our above plan in the first quarter.
As discussed previously we are laser focused on improving utilization for existing users and driving increased productivity of the roughly 900 surgeons that were trained in the midst of the pandemic.
Our sales force is fully engaged.
To advance the rollout of unit two with conversion of the vast majority of our U S. Users anticipated by the end of 2022.
Importantly, we are getting very good feedback from surgeons that have now converted to the new device.
In addition, you'll have two remains an important margin driver and we remain positioned to generate approximately 400 basis points of union of gross margin expansion once the U S user base is fully converted.
We believe that a tactical approach to moving our existing <unk> users back towards pre pandemic procedure level is the most effective way.
To improve growth in 2022.
Even though it is early days, we are encouraged by the improvement we're seeing in the growth from existing <unk> users.
Now turning to an update on our international expansion strategy for Europe .
We have initiated our launch of Europe , and Japan on time and consistent with the April one implementation of reimbursement.
We have now completed initial cases with key opinion leaders and we are methodically ramping up volumes.
The feedback from the first cases has been overwhelmingly positive which reflects the clinical benefits of the euro system and our field clinical capabilities.
Though we consider 2022 was a building year for Japan. The country remains an important long term opportunity for unit with a 2 billion Tam.
And we are excited to bring this clinical beneficial treatment to those suffering from BPH.
We continue to expect our sales in the region to ramp in a similar fashion to the United States in a market that is one third the size as we look into the second half of 2022, we expect revised reimbursement in France, and we anticipate launch activities in select regions in Italy and Spain.
We still expect to obtain clearance for euro lift in China in 2023, turning to the vascular business. We recently received an award of a sole source group purchasing agreement with <unk> for the supply of central venous access products the.
The group purchasing agreement includes access to Teleflex, a leading portfolio of CVC with Differentiators antimicrobial technology as well as the recently launched <unk> complete system.
The agreement goes into effect in August and should generate incremental revenue for teleflex over the next several years that said the impact of the agreement was already contemplated in our annual guidance for 2022 rigs.
Regarding potential label expansion opportunities for the hemostatic product portfolio as we indicated previously we have completed patient enrollment in a 231 patient <unk> study evaluating the performance of quick cloud control plus hemostatic devices for mild to moderate bleeding and cardiac procedure.
As compared to standard goes.
We remain on track with our regulatory milestones and.
In our recently filed 10-K for expanded use of quick cloud control plus.
That completes my prepared remarks, now I would like to turn the call over to Tom for a more detailed review of our first quarter financial results Tom.
Thanks, Paul and good morning.
Given the previous especially at the company's revenue performance I'll begin with margins.
As anticipated gross and operating margins declined year over year in the first quarter.
For the first quarter adjusted gross margin totaled 58, 4%.
100 basis point decrease versus the prior year period.
The year over year decrease was the result of incremental inflation and freight raw materials and labor, partially offset by favorable pricing.
As expected inflation was the largest contributor to the year over year decline in gross margin for the first quarter.
As previously mentioned, our 2022 guidance contemplates a 70 basis point impact to gross margin from incremental inflation.
Adjusted operating margin was 25, 7% in the first quarter.
180 basis points year over year decline was a result of the lower gross margin and planned investments in the business for our growth drivers, partially offset by disciplined expense management.
Net interest expense totaled $10 2 million in the first quarter, a decrease from $16 1 million in the prior year period.
The year over year decrease in net interest expense reflects savings from the early redemption of the 2000 2016 year notes and the impact of reductions to outstanding debt using the proceeds of the respiratory divestiture and operating cash flows.
Our adjusted tax rate for the first quarter of 2022 was 11, 9% compared to 13, 9% in the prior year period.
The year over year decrease in our adjusted tax rate is primarily due to further enhancements and tax efficiencies of our global structure.
Partly offset by costs arising from the new provision of the U S tax law, requiring the capitalization of certain R&D expenses.
At the bottom line first quarter adjusted earnings per share is $2 88.
Which was relatively flat year over year.
Turning to select balance sheet and cash flow highlights.
Cash flow from operations in the first quarter was $62 1 million compared to $110 8 million in the prior year period.
The decline was primarily attributable to unfavorable changes in working capital.
Given by higher bonus payments in the first quarter due to improved performance in 2021 versus 2020.
Also impacting cash flow was increase to our inventory levels provide support for future growth and to minimize potential impact from supply chain disruptions.
Moving to the balance sheet.
Our financial position remains healthy at the end of the first quarter, our cash balance was $466 7 million as compared to $445 1 million at year end 2021.
Net leverage at quarter end was approximately one seven times, which remains well below our four five times covenant.
Now moving onto our 2022 guidance.
We are reaffirming our expectation for constant currency revenue growth of 4% to five 5% in 2022 in.
In addition, we still expect reported revenue growth of two 3% to three 8% in 2022, implying a dollar range of $2 $87 4 billion to $2 970 billion.
When excluding the year over year headwind from the respiratory divestiture, our underlying constant currency revenue growth is still expected to be five 5% to 7%.
Moving to earnings we.
We are reaffirming our adjusted earnings per share guidance of $13 70.
To $14 30 for 2022 or.
Two 8% to seven 3% year over year increase.
Our guidance continues to include headwinds from the respiratory divestiture and inflation.
That together represent roughly <unk> 50 and.
2022.
Earnings per share growth, excluding the respiratory divestiture and the internal inflation.
It would be approximately 7% to 11%.
That concludes my prepared remarks, I would now like to turn it back to Liam for closing commentary.
Thanks, Tom.
In closing I will highlight our three key takeaways from the first quarter on our 2022 outlook.
First our diversified product portfolio enabled teleflex to deliver constant currency growth of three 2% in the first quarter. Despite another wave of Covid when.
When adjusting for one less selling day and the headwinds from the respiratory divestiture the underlying business growth approached 6%.
Second we will continue to effectively manage the business and look for ways to minimize incremental headwinds from inflation and supply chain challenges.
Although foreign exchange remains out of our control we remain confident in our ability to deliver against our 2022 financial guidance.
Third we continue to execute against our long range growth strategy, we will continue to incrementally invest in our high growth portfolio and drive dependable expansion in our durable core portfolio.
We have levers in place to drive further expansion in our margins and our balance sheet is in a solid position with leverage at one seven times, providing ample financial flexibility for our capital allocation priorities, including M&A.
We remain confident in our future and our ability to continue to meet our commitments to patients physicians communities and shareholders.
That concludes my prepared remarks, now I would like to turn the call back to the operator for Q&A.
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Our first question today comes from Jayson Bedford from Raymond James Your line is open.
Hi, good morning, and thanks for taking the questions guys.
Maybe to start.
Hi.
You reiterated the airlift guide of 15% for the year I'm just wondering is the key.
<unk> changed at all with respect to the gating in second quarter versus second half.
And then just more broadly I'm curious in your view, what's the gating factor right now to broader use.
<unk> truly in the rearview mirror you are still having.
Facing some.
Staffing concerns.
Slowing growth.
So Jason Thanks for the question. So first of all I would say that we feel really confident in our full year guidance I think the year is playing out pretty much as we expected.
Year to date.
January was impacted by Covid over the first two months two weeks of February .
But we still ended up with a positive growth slightly ahead of our expectations.
Due to the strength that we saw as we went into March.
Nothing has changed in our outlook, Jason we still expect.
The first half of the year to be low single digits, and we expect to see an improvement in the second half.
Culminating in the full year growth of 15% the acceleration in the second half is really due to the second prior to your question.
We buy out the other side of Covid patient confidence, we see recovering and we definitely see procedure volumes start to come back into the fold.
During quarter, one I was out on the road and I met with 32, urologist, Jason and it's hard not to feel enthusiastic for the recovery in the back half of the year, given what I heard from those urologists. They realize that urology procedures are beginning to come back patient confidence is beginning to come back.
And so.
I think I'll finish by say on your question by saying GAAP feel really good about 15%.
In the back half of the year.
If you go into Q3, Jason It's simply a question on that if you remember Q2 last year. We did 90 $492 million in Q3 last year was 83. So the majority of the growth just comes from run rate as you go from Q2 into Q3, and then you will see in the back half and Q4 do you normally get an uptick.
In Q4, and as people use their deductibles that view of that and you would also expect existing dock utilization to pick up.
As we see DTC started flush through as well so all of the metrics tell us the 15% is good Jason then we feel really confident.
Okay.
Clear thanks Liam.
Quick follow up.
<unk> been a volatile market.
Public you are less than two times levered.
Stated intention to deploy capital. So my question is has the environment impacting your capital allocation decisions at all.
No the market has not if anything.
Good I feel a lot better than I did last year about the markets and you are right. Our leverages no low note of one seven times. So in order to do M&A. The most important thing you need is firepower, we are chasing assets.
I can tell you when we get efficient to both.
But we've got a lot of lines out there with very attractive hooks on them.
We will maintain our financial discipline, Jason and I think that the heady nature of the IPO market that we saw in 2021 has moderated. So therefore, we think.
It's a good environment for teleflex with the firepower, we have to continue to do M&A. Obviously, we continue to fund R&D will continue to fund our restructuring programs as well, but our main focus right now is out there looking for a nice.
Good M&A opportunity scale tuck in dealer to direct and also late stage technologies.
Our next question comes from seeking a furlong from Morgan Stanley . Please go ahead.
Good morning, and thank you for taking the question.
Wanted to continue a bit.
Your near term outlook as you think about China impact Barclays mortgages. If you could just talk about the puts and takes specifically for Q2 as you think about it and also for your airlift.
The potential for staffing shortages too.
And part of that.
Near term and then looking beyond Q2.
Yes, I mean, I think first thing to say is that we reiterated our full year guidance. So that will tell you the confidence level. We have in the numbers we have out there with regard to China I'll start there and then I'll come to Europe , but with regard to China.
As we said in our prepared remarks.
Ana produced really strong double digit growth in Q1 with APAC growing 18, 5% ex the respiratory divestiture, obviously lockdowns are in place in Shanghai and with some port closures. We normally have a couple of months of inventory in the channel. So as long as the Lockdowns do not become prolonged and widespread.
I believe the situation is very manageable for teleflex and just to level set everybody China is approximately 4% of our global revenues and we do not manufacture any products within China.
Regarding the euro lift.
Question and staffing charges.
Again, when I met with those 32 urologists two things really resonated with me from those conversations number one they are all seeing patients come in as a result of our DTC. So that's a real positive for us, it's having an impact out there and the other thing that I heard from them is yes. They were impacted and are currently being impacted by staffing shortages, but it.
Is getting better they are seeing an improving environment.
And then this was in February I was out on the road. So there we're beginning to see an improving environment as they came out the backside of Covid.
And they felt confident that they would be able to address their staffing charges much more acute in the office than in the ASC and the office was my observation from those conversations as well. So I still think there is going to be a little bit of a staffing issue as you get into Q2, and I think it will get better as you go back to the back end of the year, which is actually quite good.
I also anticipate patient confidence improving as you go through Q2 into Q3 and Q4.
Okay. Thank you and if I could follow up with you all on Manta just awesome.
The investment in the back half of last year, how youre thinking about growth.
That business unit.
Thank you and thank you.
Thank you Janet as we've said.
Since the beginning of the year, we anticipate that manta will grow in excess of 50% for the year.
Pretty much due to that investment at an acute focus on our greater adoption. We now believe we will be able to train more docks and we also think that the international growth in particular in EMEA is going to be quite robust. So we still feel confident and as I said in my prepared remarks remarks manta at a good solid first quarter even.
With the impact of Covid in January and early February .
Our next question comes from Sharon sang from RBC capital markets. Please go ahead.
Alright. Thank you so much for taking the question Liam and Tom guidance and reflect a wide range for EPS unchanged. Despite the Q1 beat so can you just walk us through what the offsets are and given the Q1 beat what are you now assuming EBITDA posted at the bottom end and given the incremental headwind from FX and inflation.
Are you more comfortable at the top or the bottom end and then just as a follow up can you just talk about the FX.
I think the euro spot rate included in your initial guidance was for one <unk> and it seems to be tracking now at one point or so by my math.
That could be a meaningful headwind so what are the offsets there. Thank you.
Well first of all say that window with respect to the EPS. We're we're really pleased with our first quarter results. Despite the challenging environment from Covid costs.
Constant currency revenue growth was at five 8% after adjusting for the sales of the respiratory assets and one less shipping day.
Also say expenses were fairly well aligned with expectations.
With that being said foreign exchange and interest rates have been fairly volatile of late to your point.
And as a result, we'd like to give ourselves another quarter to see how things are playing out before we would make any adjustment to earnings as we think about.
Foreign exchange, we had given guidance at the beginning of the year and that was set when the euro was at 112.
We had mentioned that at that point, it would be 170 basis point headwind to.
Revenue in 20 basis point headwind to EPS.
The rule of thumb that we've given in the past is as as the euro moves and this obviously can be offset or.
Were somewhat offset or further.
Impacted by other currencies as well, but the rule of thumb on the Euro is that for every penny move.
About a <unk> <unk> impact full year to earnings now given that we've already passed through one quarter I'd say, it's probably $3 five to four.
Per penny of Euro.
And again this amount may be partially offset by some some other currency moves throughout the year throughout the world.
But I would say that you know as we think about the guidance that we just gave and reaffirmed we're reflecting what we're seeing from a.
From an inflationary environment and that assumption is that the inflationary environment that we experienced in the first quarter of the year will largely remain throughout the balance of the year and that's that's factored into our guidance.
Our next question comes from Larry Nicholson from Wells Fargo. Your line is open.
Good morning, Thanks for taking the question.
Just one for me.
Got a an analyst meeting coming up here next month, just at a high level.
Any any thoughts on how youre feeling about kind of the.
The 6% to 7%.
Growth algorithm in Street models right now are assuming about 100 basis points leverage per year.
After 2022.
Any any thoughts you can provide as we head into that meeting would be appreciated. Thanks. So much.
Yes, Laurie. Thank you very much for the question look we're really looking forward to engaging with the investment community in late May I think what we'll be communicating is durable sustainable topline growth.
I don't want to really put a number on it right now, but if you wait for another few weeks Larry will be we'll be unveiling.
We wanted to show margin expansion.
And teleflex, we still have restructuring programs in place, we still have mix, that's going to work in our favor.
We'll obviously have conversations on cash flow generation capital deployment. Our main focuses of capital deployment as I said earlier is M&A R&D and a further restructuring programs and obviously youll see us continue to focus on ESG. So I think those would be the broad themes that we'll be discussing with the investment community and obviously, we will invest behind.
And our high growth portfolio and communicate on the expectations for that aspect of our business as well I think that 25% of our portfolio is very exciting to us even if it is clearly included there, but theres a lot more to teleflex in Europe , and we want the investment community to see that Matt.
Manta is very exciting our hemostat portfolio.
Exciting our interactive portfolio and our Pic portfolio, all really solid growth drivers and actually cumulated in the middle of the pack from a margin from a margin perspective. So it has broad appeal to teleflex and Thats, what we want to communicate also.
Alright, thanks, so much for taking the question.
Thanks, Alright.
We now plan to Matthew O'brien from Piper Sandler Your line is open.
Hey, guys. Good morning. This is drew on for Matt and thanks for taking the questions.
Maybe if you could just speak to the very near term.
For Europe .
What do you actually see on the ground from a volume perspective, I think the street's modeling okay.
Single digit growth guaranteed.
Consistent with what Youre seeing right now and then just are you seeing any meaningful transition in <unk>. So far this year.
Can you just repeat the last part of your question meaningful transitions.
And sorry to Kevin Kim.
Okay.
Yes, thank you very much so really.
What we saw with with as I said earlier in my commentary, we still expect your lift in the first half of the year to grow.
Single digit growth and then to accelerate in the back half and we're very confident in the 15% for the full year.
And it's really playing out as we anticipated as a company.
Q1 was impacted by Covid in January and early February we were encouraged by what we saw in March.
At March digital grew.
Green shoots of recovery.
So our strategy that we've implemented on focusing on existing users and training. Those 900 docs that were brought on during the pandemic is also saw showing some early green shoots and we're encouraged by what we're seeing we're seeing there.
We're driving doctor utilization on UL, two in ATC and obviously, our DTC campaign is adding to our confidence in the growth for euro lift I'm really pleased to report that we have seen no shift inside of care and we do not anticipate seeing any shift in site of care.
Mass majority of our office based neurologists.
I've signed up.
Our new pricing strategy and that is now implemented and being rolled out to its full so no shift in site of care don't expect any.
Shift inside of care for the remainder of the year and again I'll reiterate feel good about 15%.
Okay very helpful. And then just one quick follow up here on <unk>.
Your commentary on the positive pricing, how do we think about those 50 bps.
Positive price in comparison to the bank.
Placing any pressures you saw.
And.
Based on what you think those.
Those inflationary pressures may subside.
Is there room to push that even higher.
Those pressures are more play system. Thank you.
So.
My father used to say that a good start is half the battle.
We've had a good start to our pricing and the rollout of our pricing and I feel really encouraged by that.
And with regard to your question about how it impacts inflation. So we're expecting 50 basis points of positive pricing and we're expecting 70 basis points of inflation and its already baked in to our to our forecast.
I think that there is teleflex has always been a company that's been able to deliver positive pricing and I think if inflation gets worse I do believe that there is some flexibility for us to increase our pricing in the future.
We move on to Matthew mission from Keybanc. Please go ahead.
Good morning, and thanks for taking the questions.
Could you talk to some of the dynamics of the interventional segment.
And how we should be thinking about growth in that segment for.
2020.
Absolutely Matt.
Thanks for the question so as as we look at.
Nothing has changed from our guidance at the beginning of the year.
Still expect our interventional portfolio to grow a high single digit low double digits with good execution.
I think that the key.
Quarter to first quarter came in right as we expected.
We had some impact as one would expect from Covid in January and early February .
But the recovery looks quite encouraging for interventional access, but we're seeing across the board so feel.
Feel really good about the trajectory of that business and feel really good about the trajectory of mantech.
And the rest of the portfolio so execution matches, what I would expect for the year.
Okay excellent.
And then.
Yes.
Can you talk about <unk> versus the broader anesthesia portfolio and how that did in the quarter.
Yes, as we said in our prepared remarks, the Medicare was right in line with our expectation.
Still expect the Zee medical portfolio, the hemostatic portfolio to grow.
High single low double digit with good execution.
Very encouraged again by the buyer.
<unk>.
Static portfolio is generating and you could see it in the numbers Matt.
It's been a while since the anesthesia portfolio has put up a 5% growth number as an organic growth number. So I think we're quite encouraged by that performance in the first quarter.
Our next question comes from Richard <unk> from <unk>. Please go ahead.
Hi, Thanks for taking the questions.
Welcome back.
Alright. Thank you. Thank you it's great to be back.
Thank you very much Tim.
Maybe just to start on your list.
Such a strange year from a growth rate standpoint, obviously growth is being understated in the first half due to comps in COVID-19 .
And then the back half as you pointed out from a map standpoint, it's the same thing.
To get to your guidance for 50%.
You have to do well over 20% so I appreciate the 50%.
Is the growth the.
The growth rate outlook for this year can you just maybe help us think through what the right normalized growth rate is once we have kind of come out on the other side of recovery and Anniversaried hopefully.
All of these different variables.
50% the right way to think about the U S.
Business for now.
So the way I look at it rich as you know we're very confident on.
<unk> growing at 15% this year and this year, it's all about the U S. You will get a small contribution for overseas with Japan will ramp a little bit this year, you'll see France in the back half of the year, a little bit from Brazil, Italy, and Spain, and then you'll see China get the registration next.
Next year and will go into that market and the way I look at it is we will finish this year, we believe we'll get to 15% growth hopefully we'll be out there outside of Covid and that would be in the rearview mirror you head into the following year, you will have an easier comp in the U S. In the first year and then you should see some contributions begin to ramp ups in the international.
From a market and a rich it's great to have you have you back, but if you would just be a little patient for another couple of weeks and I'll tell you about your list is going to do over the next three years at the analyst day, when we all get together in New York.
Excellent looking forward to that and maybe just one more follow up I might have missed it earlier, but your surgical performance this quarter.
Kevin.
Well above our RFA.
What was what was driving that again in <unk>.
14% constant currency rate.
Matt.
Is that sustainable or was there something in there that we should be thinking about and if you could also just comment on.
<unk> any guidance or or or color you can give the street for modeling in the quarter ahead on revenue and earnings. Thanks Lynn.
Yes, we began the year rich by expecting our surgical business to be low single digit growth.
The first quarter.
Came out a little bit ahead of our expectations.
And it was really driven by strong growth in APAC and the U S. As procedures continued to recover and also we saw some pricing benefit. This is one of the areas. We always start to take pricing, we still expect lower single digits in the full year, but maybe a good execution.
Again back to my earlier comment on pricing, if we can sustain it a little bit better for the remainder of the year, we may get to the mid single digits with good execution in our surgical business, which would be a really good performance for that business. Overall, so again a good start is half the battle as my father says and surgical definitely had a good start but we still.
Low singles, maybe get to mid <unk>.
Execution as we go through the year and on a full year basis again as I said earlier, we feel really good about our the broad based recovery and we feel really good about our full year guidance and surgical is no different than the total of teleflex.
Our next question comes from Mike Matson from Needham <unk> Company. Your line is open.
Yes, thanks for taking my question.
I guess I'll ask another one on Bureau lift.
So you've ramped up the DTC advertising it seems like there is a little bit of a conundrum here because the timing of when I think of when you kind of ramp that up whats coincided with a lot of these COVID-19 impacts and a slowdown in the growth and I understand what's happening there, but sensitivity to the infection.
Rates and whatnot, but I guess, what gives you confidence that the DTC ads are actually proving effective and youre getting a adequate return on that investment.
Well.
Obviously, we measure the effectiveness of our DTC campaign.
At the end of last year, we know that the our expectation at the beginning of the year was to get 150% of the response from the from the patients.
Measured the total.
Estimated.
Appointments and procedures and we know based on all of that Mike that this is a good return on our investment anecdotally when I was out with those 32 urologists in the first quarter every one of them had mentioned that patients had come in and ask them about your lift as a direct result of the DTC campaign.
So anecdotally and measurably, we know that it is working.
And.
We are seeing.
We do see the value of priming the pump in order to put patients in the care of urologists.
In all transparency, Mike we don't care when the procedure gets done as long as we are pushing these patients to our urologist to end up.
That's the one thing I will say about our DTC. It is very focused.
On docks put patients.
Arriving with doctors that use your lift almost exclusively.
Okay got it and then just wanted to ask about consensus for the second quarter I didn't really hear any kind of commentary around.
Where we should model I know you don't give any kind of quarterly guidance, but you do have a bit of a tougher comp for the second quarter are you okay with.
And Bottomline consensus estimates.
For the second quarter.
Yes.
Youre right, Mike, we don't give quarterly guidance, but we have reaffirmed our yearly guidance and.
I guess I'll leave it at that.
That's.
We feel really confident that our yearly guidance on all lines.
That's all the time, we have questions. This morning, I'll now hand back to Mr. Lawrence <unk> for closing remarks.
Thank you Elliot and thank you to everyone that joined us on the call. This morning.
This concludes the Teleflex incorporated first quarter 2022 earnings conference call.
Our conference call for today is now concluded. Thank you all for your participation.
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