Q1 2025 Teleflex Inc Earnings Call
Please standby.
Good morning, ladies and gentlemen, and welcome to the Teleflex first quarter 2025 earnings Conference call.
At this time, all participants have been placed in a listen only mode.
At the end of the company's prepared remarks, we will conduct a question and answer session. Please note that this conference call is being recorded and we will be available on the company's website for replay shortly.
Speaker Change: Now I will turn the call over to Mr. Lawrence Kirsch, Vice President of Investor Relations and strategy development.
Lawrence Kirsch: Good morning, everyone and welcome to the Teleflex incorporated first quarter 2025 earnings Conference call.
Lawrence Kirsch: Press release and slides to accompany this call are available on our website at Teleflex Dot com.
Lawrence Kirsch: As a reminder, a replay will be available on our website.
Lawrence Kirsch: Those wishing to access the replay can refer to our press release from this morning for details.
Lawrence Kirsch: Participating on today's call are Liam Kelly, Chairman, President and Chief Executive Officer.
John Darren: And John Darren Executive Vice President and Chief Financial Officer.
Speaker Change: Liam and John will provide prepared remarks, and then we will open the call to Q&A.
Speaker Change: Before we begin I'd like to remind you that some of the matters discussed in the conference call will contain forward looking statements regarding future events as outlined in the slides posted to the Investor Relations section of the Teleflex website.
Speaker Change: We wish to caution you that such statements arent back forward looking in nature and are subject to risks and uncertainties and actual events or results may differ materially.
Speaker Change: Factors that could cause actual results or events to differ materially include but are not limited to factors referenced in our press release today as well as our filings with the SEC.
Speaker Change: Our Form 10-K, which can be accessed on our website.
Liam Kelly: Now I'll turn the call over to Liam for his remarks.
Liam Kelly: Thank you Larry and good morning, everyone.
Liam Kelly: On this mornings call, we will discuss the first quarter results review strategic and commercial highlights and provide an update on our financial guidance for 2025.
Liam Kelly: For the first quarter Teleflex revenues were $707 million.
Liam Kelly: Down 5% year over year on a GAAP basis, and a decline of three 8% on adjusted constant currency basis, which was within the range of the minus 3% to minus 4% guidance provided during our quarter four earnings call.
Liam Kelly: Revenues were $2 million below the midpoint of the range due to some softness in orders in EMEA, which has since recovered in April.
Liam Kelly: First quarter adjusted earnings per share was $2 91 a.
Liam Kelly: Nine 3% decrease year over year.
Liam Kelly: Now, let's turn to a deeper dive into our first quarter revenue results.
I will begin with a review of our geographic segment revenues for the first quarter all.
Liam Kelly: All growth rates that I referred to are on an adjusted constant currency basis, unless otherwise noted.
Liam Kelly: America's revenues were $475 7 million.
Liam Kelly: Three 2% decrease year over year revenue growth in the quarter was in line with expectations and was impacted by OEM decline and continued challenges in the euro lift off the site of service.
Liam Kelly: EMEA revenues of $151 $2 million decreased two 8% year over year.
Liam Kelly: Strong performance in surgical and vascular access were primarily offset by anesthesia.
Liam Kelly: We experienced lower than expected orders during the latter portion of the first quarter, which have recovered in April.
Liam Kelly: Turning to Asia.
Liam Kelly: Revenues were $73 8 million, a nine 7% decrease year over year and in line with our expectations.
Revenue growth was impacted by the previously announced volume based procurement in our China business we.
Liam Kelly: We expect sequential quarterly revenue improvement in our China business through the remainder of 2025.
Liam Kelly: Let's now move to a discussion of our first quarter revenues by global product category.
Liam Kelly: Commentary on global product category growth for the first quarter will also be on a year over year adjusted constant currency basis.
Liam Kelly: Starting with vascular access revenue increased one 9% year over year to $182 4 million.
Liam Kelly: The quarter was led by year over year growth in peaks, which increased at a double digit rate and a solid performance and EZ Io.
Liam Kelly: We still expect our vascular access business to grow in the mid single digit range in 2025, driven by continued <unk> growth and the return of the endurance catheter to the markets.
Liam Kelly: Moving to intervention.
Liam Kelly: Revenue was $137 $5 million, an increase of three 2% year over year.
Liam Kelly: During the quarter performance was led by growth drivers such as uncontrolled in complex catheters.
Liam Kelly: In the quarter, we continued to see robust demand for intra aortic balloon pumps, which grew at a strong double digit rates in the Americas offset by a tough year over year comp in Asia Pacific.
Liam Kelly: Turning to anesthesia.
Liam Kelly: Revenue decreased eight 6% year over year to $86 6 million.
Liam Kelly: Among our largest product categories endotracheal tubes on hemostatic products showed growth in the quarter and were primarily offset by a tough comp in military orders and pressure on airway products.
Liam Kelly: In our surgical business revenue was $105 8 million.
Liam Kelly: An increase of 2% year over year.
Liam Kelly: Our underlying trends in our core surgical franchise continued to be solid.
Liam Kelly: Partially offset by the expected impact of volume based procurement in China.
Liam Kelly: Our interventional urology revenue was $71 million.
Liam Kelly: Representing a decrease of 10, 7% year over year.
While we saw strong double digit growth for Berry gel, we continued to experience pressure on euro lift, particularly in the office site of service.
Liam Kelly: OEM revenue decreased 26, 8% year over year to $63 $9 million.
Liam Kelly: Growth was in line with our expectations the performance in the quarter was driven by the impact of the lost customer contract discussed on our third quarter 2024 costs with the remainder attributed both to customer inventory management.
Liam Kelly: As expected the large customer contract impacted first quarter revenue by approximately $7 million with the balance from customer inventory management.
Liam Kelly: In particular as we progressed through the quarter, we began to see the expected improvement in order rates from our customers validating our assumption of growth improvements quarter over quarter as we progressed through the year and reached the anniversary of the lots of our customer contracts in the third quarter of 2000.
Liam Kelly: 25.
Liam Kelly: First quarter other revenue increased four 5% to $53 $5 million year over year.
Liam Kelly: That completes my comments on the first quarter revenue performance.
Liam Kelly: Turning to some commercial and clinical updates.
Liam Kelly: In our interventional portfolio, we are pleased to announce that the AC three range intra aortic balloon pump has received five 10-K clearance from the FDA.
Liam Kelly: The AC three range intra aortic balloon pump is a compact pump, which combines the simple interface and proprietary algorithms of our flagship <unk> III Optimus intra aortic balloon pump.
Liam Kelly: To provide the same precisely timed support.
Liam Kelly: The AC three range is designed to provide reliable ongoing <unk>.
Liam Kelly: Arctic balloon pumps support across various patient transport modes, including.
Liam Kelly: Commonly used ground and air ambulance vehicles.
Liam Kelly: The ASC three range features a full size helium tank.
Liam Kelly: <unk> power options and other features to support maneuverability.
Liam Kelly: With the FDA clearance the AC three range will enter Poland market release in the United States and begin shipping to customers in the second quarter of 2025.
Liam Kelly: Also in our interventional business.
Liam Kelly: We announced preliminary results for the Ringer perfusion balloon catheter, our PBC catheter <unk> study.
Liam Kelly: Bring our PBC is a rapid exchange percutaneous trend alumina coronary angioplasty catheter with a unique helical balloon when in places the balloon approximates a hollow cylinder with a large central profusion lumen, allowing for continuous coronary blood flow during prolonged in play.
Liam Kelly: <unk>.
Liam Kelly: The Ringer PBC study is a limited prospective multicenter single arm study.
Liam Kelly: Study undertaken at four sites in the United States.
Liam Kelly: The gating the ringer PBC for the management of emergent coronary preparations that developed during percutaneous coronary intervention procedures.
Liam Kelly: The study enrolled 30 participants and analysis was performed based upon intention to trees.
Liam Kelly: The preliminary results were favorable.
Liam Kelly: With the primary efficacy endpoint observed in 73% of participants.
Liam Kelly: Which required successful ringer delivery and inflation at the preparation site control of blood leakage into surrounding tissue and preservation of anti grade coronary flow.
Liam Kelly: The results also showed successful delivery of ringer in approximately 87% of participants and of those participants control of blood leakage into surrounding tissue with perfusion was achieved in nearly 85% of cases.
Liam Kelly: These results are intended to support a pre market application for our coronary perforation indication, which was recently submitted to the FDA.
Liam Kelly: Ringer, PBT, which was granted FDA breakthrough device designation is currently indicators for balloon dilation of coronary artery or coronary bypass grafts to notice for the physician desired distilled blood perfusion.
Liam Kelly: <unk> balloon inflation for the purpose of improving myocardial perfusion.
Liam Kelly: Finally.
Liam Kelly: And our emergency Medicine business quick class control plus has received FDA clearance for an expanded indication to include all grades of internal and external leading.
Combined with its existing indications.
Liam Kelly: For severe and life threatening bleeding. This expanded indication allows us to target more procedures for fast effective control of bleeding could benefit patients clinicians and health systems.
Liam Kelly: Additionally, while our primary focus for this portfolio remains on trauma. The expanded indication will also support procedures in general surgery, gynecologic surgery orthopedic surgery and other areas we.
Liam Kelly: We estimate that these additional clinical spaces at more than $150 million to our serviceable addressable market in the United States.
Liam Kelly: Moving to strategic updates.
Liam Kelly: On February 27, we announced the intention to separate teleflex into two independent publicly traded companies.
Liam Kelly: The separation is intended to enhance value for all teleflex shareholders by separating each business will benefit from a more tailored strategic direction, a simplified operating model, a streamlined manufacturing footprint and our capital allocation strategy aligned with the growth.
Liam Kelly: Philosophy and objectives for each of the companies.
Liam Kelly: We believe the proposed separation will offer investors more targeted and uniquely compelling long term investment opportunities.
Liam Kelly: We are confident that this separation will enable both companies to pursue their strategic objectives, more effectively and create meaningful long term value for our shareholders.
Liam Kelly: As expected following the announcement of the separation we have received significant inbound third party interest in acquiring new coal.
Liam Kelly: We will continue to be guided by the objective of maximizing shareholder value creation.
Liam Kelly: Consistent with this objective and with full support and oversight of the board management is continuing to actively explore all options, including the potential sale of newco in parallel with the potential spin.
Liam Kelly: We will provide updates to the investment community on our progress as appropriate as we explore these parallel paths.
Liam Kelly: We will remain focused on execution and continue to operate the remain co a new core businesses consistent with our long term strategy, including investments in commercial growth and innovation.
Liam Kelly: Moving to the acquisition of substantially all of Biotron ex vascular intervention business, which was also announced on February 27.
Liam Kelly: We remain on track to close the acquisition by the end of the third quarter of 2025 subject to customary closing conditions, including receipt of certain regulatory approvals.
Liam Kelly: We continue to see a strong fit for the vascular intervention business with the legacy Teleflex interventional business.
Liam Kelly: The acquisition will add a broad portfolio of therapeutic products to teleflex portfolio of interventional access products driving an enhanced global presence in the Cath lab.
Liam Kelly: The buyer tronic vascular intervention product portfolio complements the current teleflex offering in the Cath lab.
Liam Kelly: Our existing complex PCI portfolio as products that are utilized in difficult coronary interventions and by adding the innovative products that we expect to acquire we will be able to advance our technology offering with relevant coronary and peripheral interventions.
Liam Kelly: We see significant opportunity to carve out niche markets in the coronary intervention space.
Liam Kelly: For example, the combination of the recently launched Teleflex ring, our catheter and the PK for pirates in the vascular interventional portfolio up by a chronic will provide a complete and unique solution for the acute and long term treatment of vessels perforations during coronary procedures.
Liam Kelly: The total addressable global market for treating coronary vessel preparation is estimated.
Liam Kelly: To be in excess of $80 million.
We are also excited about the emerging potential for resorbable scaffold with technology and the ability to expand our current available procedure base.
Liam Kelly: The vascular intervention business will also establish our global footprint in the fast growing peripheral intervention markets and provide a channel for teleflex products that currently have a peripheral indication.
Liam Kelly: The acquired business is rooted in a robust research and development clinical expertise and global manufacturing capability, which we believe will further bolster teleflex is innovation pipeline and positioning the company to participate in the emerging potential for resolve.
Liam Kelly: <unk> scaffolds technologies.
Liam Kelly: That completes my prepared remarks, now I would like to turn the call over to John for a more detailed review of our first quarter financial results.
Liam Kelly: John.
John Darren: Thanks, Liam and good morning, everyone given the previous discussion of the company's revenue performance I'll begin with margins for the quarter. Adjusted gross margin was 64% a 70 basis point decrease versus the prior year period. The year over year decrease was primarily due to continued cost inflation of macroeconomic factors.
John Darren: Specifically with respect to labor and raw materials, and unfavorable product mix, partially offset by cost improvement programs.
John Darren: Adjusted operating margin was 24, 7% in the first quarter to 190 basis point year over year decline was primarily driven by the flow through of the year over year decrease in gross margin and <unk> related expenses and investments to grow the business net interest expense totaled $16 6 million in the first quarter a decrease.
John Darren: $21 million in the prior year period.
John Darren: Year over year decrease in net interest expense reflects lower interest rates and lower debt outstanding.
John Darren: Our adjusted tax rate for the first quarter of 2025 was 14, 5% compared to 13, 2% in the prior year period, the year over year increase in our adjusted tax rate was primarily due to additional costs arising from the enactment of the European pillars to tax reform.
John Darren: At the bottom line first quarter adjusted earnings per share was $2 91.
John Darren: A decrease of nine 3% versus the prior year the year over year decrease in EPS reflects lower revenue lower operating margins as previously outlined.
John Darren: Aaron exchange and a higher tax rate year over year, partially offset by a lower interest expense and share count.
John Darren: Turning now to select balance sheet and cash flow highlights cash flow from operations for the first quarter was $73 3 million compared to $112 8 million in the prior year period to $39 5 million decrease was primarily attributable to operating results and unfavorable changes in working cap.
John Darren: <unk>, which were largely driven by inventory purchases and outflows related to cloud computing arrangements expenditures as part of our ongoing ERP system upgrade.
John Darren: Moving to the balance sheet at the end of the first quarter, our cash and cash equivalents and restricted cash equivalents balance was $317 5 million as compared to $327 7 million as of year end 2024 net leverage at quarter end was approximately one eight times.
John Darren: Anything up on the quarter I will provide an update on the $300 million accelerated share repurchase program, which we entered into on February 28, 2025. The program was completed on April nine 2025, and we received just over $2 2 million shares of common stock at an average price per share of <unk>.
John Darren: $135 23.
John Darren: Now turning to financial guidance.
John Darren: We continue to expect 2025, adjusted constant currency revenue growth of 1% to 2%.
John Darren: We now assume a negative impact from foreign exchange of $5 million, representing an approximately 17 basis point headwind to GAAP revenue growth in 2025.
John Darren: This compares to our prior guidance of approximately $55 million or a 180 basis point headwind for 2025, the updated foreign exchange guidance assumes approximately $8 10 average euro exchange rate for 2025.
John Darren: As a result of the foreign exchange outlook, we have increased the guidance range for 2025% reported revenue growth from a range of negative three 5% to positive six 5% to positive one 3% to positive two 3% implying $1 range.
John Darren: $3 6 billion to $3, one $1 7 billion.
John Darren: On the topic of tariffs the situation remains highly dynamic and is likely to change over the coming months. There remains significant uncertainty on the positioning timing and magnitude of the administration's tariff policy as well as retaliatory impacts from other countries.
John Darren: Of note were it not for the impact of tariffs enacted since the issuance of our previous guidance. We project full year results for 2025 would fall within our previously stated guidance ranges.
John Darren: Our current outlook includes tariffs as currently enacted including the country specific reciprocal tariff rates that were delayed for 90 days, but does not contemplate potential future tariffs that are not yet proposed Conversely, the 2025 outlook does not assume that tariffs may be paused further or reduced.
John Darren: Any future changes could change the anticipated impact on adjusted EPS in 2025.
John Darren: We expect an impact from tariffs of approximately $55 million in 2025, which will be recorded in cost of goods sold and is before any future initiatives to mitigate the exposure on the business.
John Darren: Approximately 50% of the total tariff impact is associated with China.
Speaker Change: The 50% approximately 80% is associated with products sold into China, and the remaining 20% on imports into the U S.
Speaker Change: In addition, approximately 35% of the total tariff impact is associated with Mexico on products that are currently not U S. MCA compliant at a rate of 25%.
Speaker Change: We now expect 2025 adjusted earnings per share to be in the range of $13 20.
Speaker Change: To $13 60.
Speaker Change: $13 95.
Speaker Change: To $14 35 previously.
Speaker Change: Typically the changes in our 2025 adjusted earnings per share range was driven by an estimated $1 five headwinds from tariffs enacted since the issuance of our previous guidance, partially offset by a <unk> <unk> benefit.
Speaker Change: Which 20 is due to lower share count, including the result of the recently completed accelerated share repurchase program with the balance from expense control and a small benefit from foreign exchange we.
Speaker Change: We are actively exploring strategies to mitigate our exposure to tariffs in 2025, but these efforts will take some time to implement specifically we are focused on optimizing our supply chain, including chain of custody changes increasing our mix of U S. MCA compliant products, which provides tariff waivers for products.
Speaker Change: Symbols in Mexico, and Canada, using U S components and continued and diligent control of our spending we will also begin to implement increased customer pricing as contracts come up for renewal.
Speaker Change: Additionally for modeling purposes, you should consider the following we now expect 2025 gross margin to be in the range of 50, 825% to 59% approximately 180 basis points of the total 200 basis point reduction in gross margin guidance is related to tariffs with the balance coming from impacts relate.
Speaker Change: The foreign exchange, we now expect operating margins to be in the range of 24, 6% and 25% from 2025, our revised guidance reflects the flow through of our updated gross margin expectations.
Speaker Change: Moving to items below the line.
Speaker Change: Net interest expense is expected to be approximately $75 million for 2025, our tax rate guidance remains unchanged at approximately 13, 5% for 2025.
Speaker Change: For the full year, we expect shares outstanding to approximate $44 9 million.
Speaker Change: For the second quarter adjusted constant currency growth is expected to be in the range of 5% to one 5%, excluding a foreign exchange benefit of approximately $2 million.
Liam Kelly: That concludes my prepared remarks, I would now like to turn the call back to Liam for closing commentary.
Liam Kelly: Thank you John in closing I will highlight our key takeaways from the first quarter of 2025.
Liam Kelly: Aside from currency impacts the quarter evolved largely as expected.
Liam Kelly: We entered the quarter expecting the following <unk>.
Liam Kelly: Pressure on the OEM business due to loss of customer contracts and customer inventory management, a decline in the euro Lyft business due to the final year of reimbursement basin.
Liam Kelly: And China volume based procurement headwinds.
Liam Kelly: We continue to expect these headwinds to be transitory although.
Liam Kelly: As we have previously indicated they would represent an approximate $100 million headwind to revenues in 2025.
Liam Kelly: While the business is working through the impacts of these idiosyncratic factors. We did see barrier gel continued to deliver strong growth with revenue increasing strong double digits in the quarter, our EZ Io in the uncontrolled franchise executed well with strong growth are complex catheter business grew high single.
Digits, and our <unk> business achieved double digit growth.
Liam Kelly: If it were not for the impact of tariffs enacted since the issuance of our previous guidance. We project full year results for 2025 would fall within our previously stated guidance ranges.
Liam Kelly: We delivered on our commitment to return capital to shareholders through our accelerated share repurchase program and continue to pursue long term value creation through a proposed separation of our business into two publicly traded companies.
Liam Kelly: While pursuing a potential sale of newco in parallel.
Liam Kelly: Consistent with the performance of Teleflex in the first quarter and the outlook for 2025 remain core constant currency revenue growth was in line with our expectations.
Liam Kelly: It is our expectation that a number of the specific headwinds facing the business this quarter will resolve in the coming quarters.
Liam Kelly: And we remain hyper focused on returning the business to growth and creating shareholder value.
Liam Kelly: That concludes my prepared remarks, now I would like to turn the call back to the operator for Q&A.
Liam Kelly: Thank you.
Speaker Change: If you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: If you are using a speaker phone and make sure that your mute function is turned off to allow your signal to reach our equipment.
Speaker Change: We ask that you limit yourself to one question and one follow up if you would like to ask additional questions. We invite you to add yourself to the queue again by pressing star and the number one.
Patrick Wood: Our first question comes from the line of Patrick Wood.
Speaker Change: From Morgan Stanley. Your line is now open.
Speaker Change: Beautiful thanks, so much and morning guys.
Speaker Change: Maybe I'll just quickly often both upfront if that works.
Speaker Change: One a bit random, but given all the supply chain noise and things like that have you seen any.
Speaker Change: I guess incremental demand on the OEM side of the business. Even just some initial discussions with people think about onshoring moving supply chains. It seems like you guys could be a solution provider on that side and then just very quickly second secondarily ticket buyer tronic in closing that the vascular side.
Speaker Change: Is this something that you feel like you'd like to keep building on longer term potentially with some other assets I mean, I feel like vascular was an area that gets taken towards quite a bit by some of the other larger strategics.
Speaker Change: So it feels like an opportunity potentially to kind of keep growing on that side how much of this is a.
Speaker Change: Beyond just biomarker sort of sustainable area of focus for you guys. Thanks.
Speaker Change: Thank you Patrick and good morning to you as well.
Speaker Change: Let me start with your first part of your question on the supply chain, we have seen demand and OEM pick up.
Speaker Change: We have seen the order rates continue to improve as we went through the quarter.
Speaker Change: And.
Speaker Change: I'm not sure if that is attributable to what's going on in the supply chain because that would it would be too early for that to happen. I think this is based demand we did see as we expected.
Speaker Change: The impact of approximately 7 million to the vertical integration and OEM.
Speaker Change: We did also see.
Speaker Change: The destocking in the first couple of months of the quarter, but as we went through the quarter. We saw a pickup in demand within the OEM business. So that was very encouraging and it gives us confidence.
Speaker Change: <unk> ability to deliver to plan for the full year rigor.
Speaker Change: Regarding.
Speaker Change: To your question regarding <unk> and investing in particular in that Cath lab call point that is for sure going to be an area of focus I'll focus for teleflex and remain coal I will say in this interim period of time, we will be focused on bringing in.
Speaker Change: Biotron against Teleflex, and we will be focused on the parallel path that we just announced up spinning.
Speaker Change: And also at the same time doing a sale process based on the inbound interest.
Speaker Change: The bigger footprint and presence in the Cath lab, we're going to have approximately $1 billion of revenue in the Cath lab and that is going to be a strategic call point for teleflex.
Speaker Change: Just a broader comment on the quarter, Patrick I will say, we were pleased with how the quarter played out it played out very much in line with our expectations, we executed pretty well revenue came in where we thought it was going to come in and obviously, we were tracking really well to our margin profile our earnings profile.
Speaker Change: The ASR outperformed so we feel that.
Speaker Change: A solid start to the year for teleflex. Thank you.
Speaker Change: Thank you. Your next question comes from the line of Mark <unk>.
Speaker Change: Michael Sarcone with Jefferies. Your line is now open.
Michael Sarcone: Good morning, guys and Mike on for Matt. This morning, Thanks for taking the questions.
Speaker Change: I guess just to just to start on the tariffs you mentioned $55 million.
Michael Sarcone: Prior to any mitigation strategies.
Michael Sarcone: Can you just give us a little bit more color I know you mentioned a few on on how quickly you could actually implement.
Michael Sarcone: Near term mitigation strategies, and what type of EPS headwind that could offset if you were able to execute on inefficiently.
Michael Sarcone: So.
I think.
Michael Sarcone: I'll take that question.
Michael Sarcone: Question. So obviously the current tariff environment is obviously disappointing.
Michael Sarcone: The 55 is based on what's enacted today again and does not include any mitigation strategies as noted, but I will tell you. What we have done a number of things ahead of the tariffs. So we did move inventory ahead of the tariffs we move.
Michael Sarcone: Supply into China ahead of the step up in tariffs.
Michael Sarcone: Our currently making sure that inventories are in the regions by by shipping into bonded warehouses, where we don't incur tariffs so that hopefully when things get alleviated, we can quickly move it into country.
Michael Sarcone: On terms of the other mitigation strategies and there are a number of them and some of them will take longer than others, but I think the number one thing we're doing right. Now is we're looking very carefully at the U S. MCA exemptions in Mexico, So about 50% of our inventory is exempted under U S. MCA today and there are some.
Michael Sarcone: Real opportunities to bring in much more of that inventory under that exemption now it'll be.
Michael Sarcone: <unk>.
Michael Sarcone: Some different timing.
Speaker Change: So you basically have to have 90% of your components coming from the U S.
Speaker Change: It will vary but we believe we can substantially increase that I don't think we are in a position to give you a target yet that would help you get to a new EPS number but.
Speaker Change: That's the first thing that we're doing we're also looking at opportunities in the supply chain to improve.
Speaker Change: Improve.
Speaker Change: We source product to avoid the tariffs and so that is currently underway and that may take a little longer. So there are a number of strategies to mitigate and last but not least we are.
Speaker Change: Looking at opportunities to increase price should the tariffs stay in place opportunistically as contracts renew.
Speaker Change: And where were not contracted more immediately so we set up a tariff council, where we're looking at the supply chain opportunities very closely and we also have a commercial meeting that's a regular on pricing so.
Speaker Change: Lot of things a lot of strategies to mitigate the tariffs again 55 does not include that is that is fully the calculation of what is in today.
Speaker Change: The view is worst case, hopefully there won't be more negative changes on the policy side and again there'll be opportunities for us to mitigate these further.
Mike: Mike I would just add one comment to Johns.
Mike: We've already implemented and it's in our guidance, but we have taken some thoughtful spending controls and that is a part of the Turkey offset that John mentioned in his prepared remarks that is offsetting the impact of tariff so multiple.
Mike: Litigation some already in place.
Mike: And others that we will enact as we go through the remainder of the year.
Speaker Change: Got it. Thank you that's really helpful. And then just a follow up since you mentioned pricing.
Mike: I was just wondering how you feel.
Mike: Teleflex is positioned today to maybe take more aggressive pricing and then just on that re contracting can you give us any sense for <unk>.
Mike: There is a particular business areas or segments, where that's more impactful just trying to get a sense for maybe how many of these contracts are able to be renegotiated in the near term.
Mike: Yes, well.
Mike: In the U S. If you take into account, our Gpus and our big Ibms.
Mike: More than half of our business is contracted.
Mike: That area so.
Mike: We will be doing over the next.
A couple of quarters and we've already begun to do some work on this as we're beginning at the non contracted business.
Mike: <unk> products within the non contracted business that are impacted by tariffs.
Mike: We will if the tariffs stay in place we will be implementing pricing changes on that on those products.
Mike: This year in the first quarter or in the full year of 2025.
Mike: We have.
Mike: Lance to increase pricing between 30, and 50 basis points.
Mike: It will be our plan to accelerate that if these tariffs stay in place.
Mike: And we will give more updates as we go from quarter to quarter.
Speaker Change: Thank you. Your next question comes from the line of Jayson Bedford with Raymond James Your line is now open.
Jayson Bedford: Good morning, guys. Thanks for all the detail here just on the comment around significant interest from other parties on Newco is there a consideration or maybe a willingness to sell pieces of newco or is the intention here to spin slash sell the entire nucor portfolio.
Speaker Change: As you've as you've laid it out.
Speaker Change: Yes, good morning, Jason So first of all I would say we are very encouraged by the number and quality of inbound interest that we've received in newco.
Speaker Change: Our guiding principle is going to be.
Speaker Change: Shareholder value creation.
Speaker Change: And based on the level of interest we believe that the process will be competitive and therefore, we feel pretty bullish on our ability to drive shareholder value through this parallel process of spin on sale and it is a parallel process. Jason we are continuing with the activities around the spend but we are engaging with.
Speaker Change: With companies in relation to the sale as well.
Speaker Change: In relation to the prior to your question is would we sell patch we will do whatever creates the most value for our shareholders.
Speaker Change: We are clearly open to exploring all options with the goal of unlocking shareholder value.
Speaker Change: Okay.
John Darren: That's helpful and then maybe for John.
John Darren: The $55 million in tariffs is that two quarters worth of impact.
John Darren: Yes so.
John Darren: Obviously.
John Darren: This is a subject to capitalized variances and we wont be first go into inventory. So we will not have an impact in Q2 to the P&L the impact will start in Q3 and Q4.
John Darren: I won't get into the individual came to the quarters right now, but you shouldn't expect it to be a little heavier in Q4, where most of the impact will hit.
Speaker Change: Thank you and your next question comes from the line of Larry Pete Wilson with Wells Fargo. Your line is now open.
Speaker Change: Hey, Good morning. This is Nick in for Larry. Thanks, So much for taking the questions. So two for me.
Speaker Change: Your comments around the potential sale of a significant interest in new coal.
Speaker Change: We'd just love to get your thoughts on it.
Speaker Change: Preference of a sale versus a spin.
Speaker Change: And if it were to be a sale of any.
Speaker Change: Potential update on timing and then I had a follow up please.
Speaker Change: Okay. So.
Victor: Victor Thanks for the question good morning to you as well.
Victor: Tell you im agnostic as to whether it's a sale or a spin.
Victor: Our guiding principle as I said earlier will be.
Victor: On creating and unlocking shareholder shareholder value.
Victor: Honestly in many ways, we see this as a validation of the quality and the value of the spin co assets given the amount of inbound interest for us.
Victor: Is what we expected.
Victor: We announced the spin we did expect to get inbound interest I will tell you that.
Victor: In all transparency the level and the quality of the inbound interest is actually better than we were expecting and thats very encouraging. So we are definitively on a parallel path of both spin and sales and our guiding principle going to be maximizing shareholder value as we go through that parallel pathway.
Victor: It's a little bit premature baked in all honesty.
Victor: To speak about timing.
Victor: We will engage with both parallel paths and will update the investment community as we have updates.
Speaker Change: Got it that's helpful. Thank you my follow up question Liam the market did not react favorably to the.
Victor: Deal as well as the separation looking.
Victor: Back on the Q4 earnings call, maybe just talk about what the street is missing. Thank you.
Victor: Yes, so I think on the <unk> deal, we see this as a as a very attractive.
Victor: And we are planning to complete the acquisition at the end of the third quarter, we still anticipate that it will deliver approximately 91 million euros in the fourth quarter.
Speaker Change: I think Thats I don't think the street is missing anything about by <unk>, but I don't truly believed that they understand what assets are within the <unk> portfolio.
Victor: And if you in our prepared remarks today.
Victor: One Little example of the combination of PK papyrus under Ringer catheter.
Victor: Actually carve out a niche within the Cath lab for perforations that these combination products will actually dominate that space. It's a great fit for Teleflex This company.
Victor: 50% of their revenues in EMEA. So the combination of the Teleflex channel in the Americas and the <unk> channel in EMEA will actually drive better access to the Cath labs, they have excellent R&D capabilities and that presence in the Cath labs as I said and of course, we have the optionality.
Victor: Our free solve the resorbable scaffold opportunity.
Victor: Is very aligned to the current trend in interventional cardiology procedures to leave nothing behind.
Victor: Allows the cardiologist flexibility for further procedures with that patient with a fully <unk> scaffolds that can that can address the patient issues. So I think theres a lot of attractive elements within the buyer tronic assets and as it comes into the Teleflex family will be able to speak more about the components of the product categories that are there.
Victor: Within the <unk> portfolio, but there are some really significant ones such as drug coated balloons.
Victor: Peripheral <unk> drug coated.
Victor: Balloon.
Victor: These growing at a CAGR of double digits over the last number of years and I think that the margin profile and growth profile of this fits incredibly well into teleflex and establishes our footprint more solidly within that Cath lab.
Speaker Change: Thank you. Our next question comes from the line of Matthew O'brien with Piper Sandler. Your line is now open.
Matthew O'brien: Alright, thanks, so much and I appreciate you taking the questions.
Matthew O'brien: A couple on.
Speaker Change: On the <unk>.
Speaker Change: Late this morning about significant interest in the spin or newco. The first one and then I'll ask the second one in a minute, but the on the first one.
Speaker Change: You don't want to give away too much but just in the current environment I can't imagine a lot of strategics are willing to go out and do deals right. Now. So is it fair to think that a majority of the inbound interest. So far has been from the financial sponsor side of things or.
Speaker Change: Is it a better mix of strategics than you would've thought and then I do have that follow up thanks.
Speaker Change: Yes, good question actually.
Speaker Change: It is a healthy mix of both strategics and private equity inbound interest that we received.
Speaker Change: Like I said.
Speaker Change: <unk> earlier.
Speaker Change: It was greater interest than we had anticipated.
Speaker Change: I think a solid validation of the quality of the assets that are in newco.
Speaker Change: And.
Speaker Change: Both is the simple answer to your question.
Speaker Change: Got it Okay. Appreciate that and then when I look at what's being being.
Speaker Change: Spun off.
Speaker Change: You pay just over $1 billion for Neil attract and then.
Speaker Change: 600 million for Colette, So you put those together with.
Speaker Change: With OEM plus acute care.
Speaker Change: I'm thinking the evaluation is somewhere.
Speaker Change: All of those assets together would be something like $2 billion I mean, how do we think about the valuation from here are those how much you paid for those two assets are good jumping off point or are not.
Speaker Change: So again, thanks for the question I am not going to go into value evaluations on the call.
Speaker Change: I think that this is something that we will go through as we assess the inbound interest.
Speaker Change: I think what we will be doing from a valuation perspective is doing a comparable as to what these new coal would be valued on the stock market was taken into account the tax leakage and we will do whatever is in the best interest of our shareholders. Our whole goal. When we started this is maximizing.
Speaker Change: Our value and shareholder returns that guiding principle will be what will determine whether we.
Leg of the parallel path, we go down and that would be our north star.
Speaker Change: Thank you. The next question comes from the line of Anthony Petrone with Mizuho Financial Group. Your line is now open.
Anthony Petrone: Thanks for fitting us in here.
Anthony Petrone: Going back to tariffs just wondering how the 55 million split between.
Anthony Petrone: Remain co and and spin co or the sale here.
Anthony Petrone: And how you're going to just sort of navigate mitigation between the two.
Anthony Petrone: Entities as we move into the second half of the year and all of the quick follow up.
Speaker Change: So Anthony I'll, let John answer that but I will tell you. We're running teleflex is one teleflex today and the separation doesn't occur until mid 2026, but John.
Speaker Change: I think you said it Lee.
John Darren: We're not getting into anything beyond 2025 for tower space far too speculative with the policy changes that happen so quickly and as we work through these mitigation strategies.
John Darren: At both companies to be sure. So I think we'll talk a little more about what the two companies look like as we get closer to a spin in totality and what the impacts of tariffs are at that time.
John Darren: And then maybe just a follow up on Bayou tronic.
John Darren: Pushed a little bit on the details if you.
John Darren: If you can on early views on on cost synergy, but also revenue synergy either by product category or geography. Thanks.
John Darren: Thanks, again and great to catch up with everyone. Thanks, Yeah. Thanks Anthony.
John Darren: As I said earlier Anthony.
Speaker Change: This is all about the channel and I think that.
Speaker Change: If you look at the opportunity there is to leverage the buyer tronic channel in Europe to have more teleflex products flow through that and then leverage the teleflex, China and the Americas too.
Speaker Change: In order to leverage to buy <unk> portfolio I think that that is the key metric.
Speaker Change: Obviously be looking in the <unk> areas.
Speaker Change: At opportunities for go directs.
Speaker Change: And this is a very nice asset that we will bring into the company, 70% of the revenues in the coronary space, which as we know and love incredibly well.
Speaker Change: And as I said earlier, they have some really really excellent products.
Speaker Change: And we will fund.
Speaker Change: R&D at <unk> to continue to advance these innovative products and we will continue with the clinical study on free solve to bring back to the market that is a nice option that comes with the buyer chronic to drive revenue growth in the future.
Speaker Change: So.
Speaker Change: That's a good stuff about <unk> in our view.
Speaker Change: Thank you. Your next question comes from <unk> Singh with RBC. Your line is now open.
Speaker Change: Great. Thank you for taking the question just on interest.
Speaker Change: No.
Speaker Change: Could you maybe share is it for select businesses on the entire business.
Speaker Change: And then with respect to the separation it sounds like mid 2026 is still a target maybe can you give us an update on the progress you are making around that.
Speaker Change: Do you.
Speaker Change: Please share more details with us there.
Speaker Change: Then.
Speaker Change: And then I have a follow up.
Speaker Change: Okay. So again, so the majority of the interest is for the entirety of Newco.
Speaker Change: It is early days, we only announced the spin two months ago and as I said, a couple of times I'm really encouraged.
Speaker Change: Alone by the quantity, but the quality of.
Speaker Change: Inbound we have regarding the spin we have started the executive management search.
Speaker Change: Will it be our intent to file our form 10.
Speaker Change: In 2026.
Speaker Change: And nothing from the timing has changed in our view and we continue to work towards these dates.
Speaker Change: And I'm wondering if you can share with you our updated view on growth for newco versus remain call as I look at the quarter. It does seem a little mixed to me and especially the new coal assets and they are delivering negative growth.
Speaker Change: That's some of the headwinds.
Speaker Change: On the call that's helpful but.
Speaker Change: How do you think about that low single digit ex FX growth for Newco and then do you expect the main goal could get to that six plus percent growth. Thank you for taking the question.
Speaker Change: Thanks, Juergen and so in the same way as things came in in line for total Teleflex kick things came in line for both remain co and Newco and everything was in line with our expectations. Obviously, the first quarter would be the largest negative growth for OEM, which is a significant part of newco.
Speaker Change: That will improve as you get to the back half of the year. Obviously, you have the impact of the lost customer $7 million a quarter for Q1 and Q2 that has anniversaried as you go into Q3 as I said in the prepared remarks and in an earlier answer the order rate for OEM has picked up nicely as we went through the.
Speaker Change: Quarter, So that's very encouraging but everything is as we expected shogun for newco.
Speaker Change: Our remain co for Teleflex call.
Speaker Change: And we're executing against that plan for the year and again, just remind everybody. The separation is in mid two.
Speaker Change: 2026, we are now on a parallel path and we will continue to update you on our guiding principle I have got a restate. This again pardon me for the fifth time, our guiding principle is releasing the maximum shareholder value as we go through this parallel process.
Speaker Change: Yes.
Speaker Change: Thank you. Your next question comes from the line of Richard <unk> with Truest Securities. Your line is now open.
Richard: Hi, Thanks for taking the question just.
Speaker Change: Just a couple of follow ups on the tariff.
Speaker Change: So I think you had mentioned that you expect China to get better and moving through the year and my question here is a little bit more just on the underlying kind of growth trend.
Speaker Change: And the fallout of.
Speaker Change: Trade War here, what gives you that confidence if I heard that correctly that China is going to get better moving through the year and then.
Speaker Change: The $100 million.
Speaker Change: Underlying China headwind are there any products on the potential exempted devices list that.
Speaker Change: Have been speculated on that that you would be able to be included in and I also wanted to know if bio tronic.
Speaker Change: Any EU manufacturing and the 10% baseline is that included in the $55 million that you called out for tariffs as well. Thank you all.
Speaker Change: Alright, rich there's a lot there so let me start with China.
Speaker Change: So the reason that we anticipate an improving revenue environment for China is volume based procurement.
Speaker Change: We would anticipate that the law.
Speaker Change: Just impact.
Speaker Change: That you would see for any volume based procurement is when you see the destocking.
Speaker Change: Also had some tough comps on the balloon pump business in Q1 in China. So we would see this as the low point for APAC from a growth perspective, and we would see.
Speaker Change: C J.
Speaker Change: APAC picking up from here on in and China also as a result of that regarding the exempt devices. We are hopeful.
Speaker Change: That's that medical devices will be excluded.
Speaker Change: Even if we don't manufacture in China, an important to the United States.
Speaker Change: But.
Speaker Change: I don't need a new iPhone, what if youre lying in a hospital bed you need medical devices. So I think we need to be thoughtful here on exemptions for particular products in medical devices for me what seemed like a category that's needed to keep people alive in both China and in the United States. So we're hopeful that common sense will.
Speaker Change: Prevail as we go through this regarding by a <unk> question.
Speaker Change: The impact of tariffs on <unk>, just because of their revenue profile is de minimis.
Speaker Change: So.
Speaker Change: I think thats all aspects of the the areas of your question rich.
Speaker Change: Thank you. The next question comes from the line of Craig Bijou with Bank of America. Your line is now open.
Craig Bijou: Good morning, guys. Thanks for taking the questions I wanted to start with the urology business interventional urology.
Speaker Change: <unk>.
Speaker Change: It came in a little bit ahead of expectations.
Speaker Change: And I know you called out still some headwinds for euro lift specifically in the in office site, but I wanted to see if you leave if maybe you could talk about how <unk> is doing in music tracking to that 20% ish growth that you guys had expected and then.
Speaker Change: Just is there is there.
Speaker Change: Is there any improvement in your lift in in office, recognizing theres still likely a headwind, but is there an improvement there.
Speaker Change: Yes, thanks, Craig so for US interventional urology came in in line with our expectations.
Speaker Change: It was they were on plan.
Speaker Change: The other part of your question <unk> continues to perform exceptionally well.
Speaker Change: Growing strong double digits in maintaining the growth momentum that we saw last year.
Speaker Change: For your lift we saw solid double digit growth in APAC. So we continue to penetrate that Americas. The office in the United States, Greg is still very challenged.
Speaker Change: We did see a little bit of pressure.
Speaker Change: In the hospital side of service. So again this is the last year the reimbursement change so.
Speaker Change: We're hopeful that once we get through this final year of reimbursement that we will then begin to see some improvements in euro lift and the various sites of service.
Speaker Change: The meeting was on just said last weekend I was actually assets.
Speaker Change: There was a lot of enthusiasm for both the <unk> business.
Speaker Change: For your lift.
Speaker Change: The team did a nice job.
Speaker Change: Conference.
Speaker Change: Great. Thanks, Liam and just a follow up on the <unk>.
Speaker Change: Balloon pump environment, and if theres any update as to what youre seeing or hearing from from hospitals.
Speaker Change: Given the.
Speaker Change: The competitor quality issues.
Speaker Change: Yes. It has it was and as it was expected Craig.
Speaker Change: As we said in our prepared remarks, we saw strong double digit growth in North America, APAC had a tougher comp.
Speaker Change: The quotations in Q1, where were solid again, so thats encouraging that people are still coming out looking for getting more and more quotations for the product and we nothing has changed in our expectation for our balloon pump business.
Speaker Change: Yes.
Speaker Change: Thank you. Your next question comes from the line of Mark <unk>.
Speaker Change: Michael Peller with Wolfe Research your line is now open.
Michael Peller: Good morning, I have a question second quarter I heard the guidance for 50 to 150 bps of CF X revenue growth I didn't hear anything on earnings and just with all the moving parts.
Michael Peller: If you might be willing to frame kind of <unk>, EPS expectation or puts and takes to consider there.
Speaker Change: So Mike we don't guide to EPS in the quarters, We do guide to revenue and just for to help you with your modeling.
Michael Peller: The guide.
Michael Peller: Indicate a range in revenue of 769% to $777 million.
Michael Peller: Wood represents.
Michael Peller: The percentages that you outlined.
Michael Peller: For the follow up on OEM I heard all the commentary I guess, even excluding the contract loss of $7 million $17 million down year on year, just felt like a big number.
Michael Peller: For inventory management and so.
Michael Peller: I also heard that orders are improving throughout the quarter, but anything else you can spike out there I mean, I guess I don't.
Michael Peller: Appreciate customer concentration of this business type of product concentration inventory management headwinds I think that's something that would phase in over a longer period of time for them to all flaring <unk> just surprised me. So what else can you help me with there to digest. Thank you, yes, Mike. So I will tell you is in line with expectations. This is exactly what we expected for the.
Michael Peller: OEM business and this will be the low point for the OEM business Youll see sequential improvement as we go through the year.
Michael Peller: Youre right order rates did begin to pick up as we went through the latter part of the quarter to quarter. So thats encouraging.
Michael Peller: And I think that you're correct also there's a $7 million impact.
Michael Peller: The impact of that vertical integration that was in Q1 that will be again in Q2, we still expect a little bit of inventory management in Q2.
Michael Peller: And thereafter that is the worst of the inventory management behind us.
Michael Peller: And I know it looks it properly.
Michael Peller: Heavier in Q1 from an external point of view, but from an internal point of view. This is exactly what we were expecting and OEM hit hit their plan and as you get orders just remember you take an order, but that order then it starts to get roll through the income statement in the second half of the year and into 2026, So I think the team.
Michael Peller: <unk> is executing well and Oems I think they have a nice robust platform of new business that they're working on and I think we're in good shape with OEM and it will be evident to the investment community as we go through the year may begin to see that sequential improvement.
Michael Peller: Yes.
Speaker Change: Thank you and our final question comes from the line of Mike Matson with Needham. Your line is now open.
Michael Peller: Yes.
Mike Matson: Just wanted to ask one on a couple of the product that I don't think you mentioned so far so very.
Michael Peller: Very accurate maybe you can just give us some quick updates there or is it.
Mike Matson: Safe to assume those are still accretive to your growth.
Mike Matson: Yes, so manta continues to penetrate the large bore markers.
Mike Matson: On standard Bariatrics standard bariatrics.
Mike Matson: Because of the deductible impacted normally has a very heavy Q4 and a little lighter Q1, and then ramps as you go through the year, but both are in line with what we would've expected.
Mike Matson: Both executing well.
Speaker Change: Of note on the high growth portfolio, Mike what I'd call out is interosseous interosseous had a really good solid quarter one.
Mike Matson: Hemostatic portfolio performed well as well within within that group so yes.
Mike Matson: We didn't go into a lot of details on them because they are doing as one would expect but thanks for the question.
Mike Matson: Okay. Thanks, and then just the tariff impact I mean, the $55 million just to get to an annualized number it sounds like it's probably a little more than double that or is that fair just because it's hitting harder.
Mike Matson: Latter part of the year.
Mike Matson: Dan.
Mike Matson: Zinc, where we'd be getting ahead of ourselves to try to.
Mike Matson: Give you an annualized number and I would caution against trying to figure that out given the changing environment and our ability we believe to continue to mitigate this.
Mike Matson: Okay.
Speaker Change: Thank you that does conclude the question and answer session I would like to turn it back over to Mr. Kirsch.
Mr. Kirsch: Thank you Amy and thank you to everyone that joined US on the call. Today. This concludes the Teleflex incorporated first quarter 2025 earnings conference call.
Speaker Change: You may now disconnect your lines.
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.