00:04 Good morning, ladies and gentlemen, and welcome to the Teleflex First Quarter 2022 Earnings Conference Call. At this time, all participants have been placed in 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 will be available on the company's website for replay shortly. 00:25 And now I will turn the call over to Ms. Lawrence Keusch, Vice President of Investor Relations and Strategy Development.

00:32 Good morning, everyone and welcome to the Teleflex Incorporated first quarter 2022 earnings conference call. The press release and slides to accompany this call are available on our website at teleflex.com. As a reminder, this call will be available on our website, and a replay will be available. Please refer to our press release from this morning for details on how to access the replay. 00:59 Participating on today's call are Liam Kelly, Chairman, President and Chief Executive Officer and Thomas Powell, Executive Vice President and Chief Financial Officer. Liam and Tom will provide prepared remarks and then we'll open the call to Q&A. 01:16 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 our slides. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties and actual events or results may differ materially. 01:40 The 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, including our Form 10-K, which can be accessed on our website. During this conference call, you will hear management make statements regarding intra-quarter business performance. Management is providing this commentary to provide the investment community with additional insights concerning trends and these disclosures may not occur in subsequent quarters. 02:17 With that said, I'll now turn the call over to Liam for his remarks.

02:22 Thank you, Larry, and good morning, everyone. It's a pleasure to speak with you today. Teleflex continues to execute well despite a challenging environment. For the first quarter, Teleflex generated 3.2% constant currency revenue growth year-over-year. When adjusting for the estimated 1% impact of one less selling day in the quarter, compared to the prior year period and the impact of our 2021 respiratory business divestiture, the underlying growth in the quarter was 5.8% year-over-year, despite some disruption from COVID in January and early February. 03:02 Adjusted earnings per share increased 0.3% 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, offset by the impact of COVID-19 and the divestiture of the respiratory assets. 03:35 Although the surge in COVID 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 COVID, which negatively impacted procedure volumes. However, as COVID infections declined, we saw a notable uptick in our business as we exited February. 04:08 In the quarter, our high growth portfolio, which accounted for approximately 25% of revenues in 2021 and includes UroLift, MANTA, hemostatic products, EZ-IO, OnControl and PICCs performed well. When excluding UroLift, 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. 04:37 We continue to expect our high growth portfolio to grow in…

17:55 Thanks, Liam, and good morning. Given the previous discussion of 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 in freight, raw materials and labor, partially offset by favorable pricing. 18:27 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. 18:44 Adjusted operating margin was 25.7% in the first quarter, 180 basis point year-over-year decline as a result of the lower gross margin and planned investment in the business for our growth drivers, partially offset by disciplined expense management. 19:01 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 2026 senior notes and the impact of reductions to outstanding debt using the proceeds of the respiratory divestiture and operating cash flows. 19:24 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 in 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 was $2.88, which was relatively flat year-over-year. 19:59 Turning to select balance sheet and cash flow highlights. Cash flow from operations in the first…

22:12 Thanks, Tom. In closing, I will highlight our three key takeaways from the first quarter and our 2022 outlook. First, our diversified product portfolio enables Teleflex to deliver constant currency growth of 3.2% in the first quarter, despite another wave of COVID. When adjusting for one less selling day and the headwind from the respiratory divestiture, the underlying business growth approached 6%. 22:41 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. 23:00 Third, we continue to execute against our long-range growth strategy. We will continue to incrementally impacting 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 1.7 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, clinicians, communities and shareholders. 23:40 That concludes my prepared remarks. Now, I would like to turn the call back to the operator for Q&A.

23:48 Thank you. [Operator Instructions] Our first question today comes from Jayson Bedford from Raymond James. Your line is open.

24:17 Hi, good morning, and thanks for taking the questions guys. Maybe just to start – hi, you reiterated the UroLift guide of 15% for the year. I'm just wondering has the cadence 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? Is COVID truly in the rear view mirror? Are you still having -- facing some staffing concerns that are -- that puts slowing growth?

24:55 So, Jayson, thanks for the question. So first of all, I would say that we feel really confident in our full year UroLift 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 -- or 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, Jayson. 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 part of your question. We will be out the other side of COVID, patient confidence we see recovering and we definitely see procedure volume start to come back into the fold. 25:53 During quarter one, I was out on the road and I met with 32 urologists, Jayson. 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 realized that urology procedures are beginning to come back. Patient confidence is beginning to come back. And so I think I'll finish by saying on your question by saying, yes, feel really good about 15% in the back half of the year. 26:22 And you know that if you go into Q3, Jayson, it's simply a question of math. If you remember Q2 last year, we did $94 million -- $92 million and Q3 last year was $83 million. 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, I think Q4, you normally get an uptick in Q4. And as people use their deductibles that fuels that and you would also expect existing dock utilization to pick up as we see DTC start to flush through as well. So all of the metrics tell us the 15% is good, Jayson, and we feel really confident on it.

27:03 Okay. Very, very clear. Thanks, Liam. And just as a quick follow-up. It's obviously been a volatile market, both private and public here, less than 2 times levered of the stated intention to deploy capital. So my question is, has the environment impacted your capital allocation decisions at all?

27:24 No the market has not. If anything I feel good, I feel a lot better than I did last year about the markets. You're right, our leverage is now low now to 1.7 times. So in order to do M&A, the most important thing you need is firepower. We are chasing assets, I can't tell you when we get efficient to both, but we've got a lot of -- got lines out there, with very attractive hooks on them. We will maintain our financial discipline, Jayson. 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'll continue to fund R&D, we will continue to fund our restructuring programs as well, but our main focus right now is out there looking for a nice -- a good M&A opportunity, scale tuck-in, dealer to direct and also late-stage technologies.

28:27 Our next question comes from Cecilia Furlong from Morgan Stanley. Please go ahead.

28:33 Hey, good morning and thank you for taking the questions. Liam, I wanted to continue a bit just your near-term outlook as you think one about trying to impact on staffing shortages. If you could just talk about the puts and takes specifically for 2Q as we think about it, and also for UroLift, just the potential for staffing shortages to impact that market near-term and then looking beyond 2Q as well?

29:01 Yes, I mean, I think the first thing Cecilia is that we reiterated our full-year guidance, so that will tell you the confidence level we have and the numbers we have out there. With regard to China, I'll start there and then I'll come to UroLift, but with regard to China, as we said in our prepared remarks, China 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. 29:33 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. 29:53 Regarding the UroLift question and staffing shortages, again when I met with those 32 urologists, two things really resonated with me from those conversations. Number one, they have all seen 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 out in the road. So they were beginning to see an improving environment as they came out the back side of COVID and they felt confident that they would be able to address their staffing charges. 30:36 Much more acute in the office then in the ASC and the office was my observation in those conversations as well. So I still think there's going to be a little bit of a staffing issue as you get into Q2. I think if you get better as you go back to the back end of the year, which is actually quite good because I also anticipate patient confidence improving as you go through Q2, into Q3 and Q4.

31:00 Thank you. And if I could follow-up as well on MANTA just off of the investment in the back half of last year. How are you thinking about growth to that profile of that business unit for 2022? And thank you.

31:15 Thanks, Cecilia. 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 in acute focus on a greater adoption. We now believe we'll be able to train more docs 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, MANTA had a good solid first quarter even with the impact of COVID in January and early February.

31:52 Our next question comes from Shagun Singh from RBC Capital Markets. Please go ahead.

31:58 Thank you so much for taking the question. Liam and Tom, your guidance then reflects a wide range for EPS and is unchanged despite the Q1 beat. So can you just walk us through what the offsets are given the Q1 beat, what are you now assuming at the top versus the bottom end. And given the incremental headwinds 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 FX? I think the euro spot rate included in your initial guidance was for 1.12 and it seems to be tracking now at 1.05. So, by my math, that could be a meaningful headwind. So what are the offsets there? Thank you.

32:42 Well, I would first of all say that with respect to the EPS, we're really pleased with the first quarter results despite the challenging environment from COVID, constant currency revenue growth was at 5.8% after adjusting for the sales of the respiratory assets in one less shipping day. Also say expenses were fairly well aligned with expectations. Now 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. 33:19 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 $1.12. We had mentioned that at that point, it would be 170 basis point headwind to revenue and 20 basis point headwind to EPS. The rule of thumb that we've given in the past is as the euro moves and this obviously can be offset or somewhat offset or further impacted by other currencies as well, but the rule of thumb on the euro is that for every penny move, it's about $0.05 impact full-year to earnings. 34:00 Now given that we've already passed through one quarter, I'd say it's probably $0.035 to $0.04 per penny of euro. And again, this amount may be partially offset by some other currency moves throughout the world. But I'd say that as we think about the guidance that we just gave and reaffirmed, we're reflecting what we're seeing 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 factored into our guidance.

34:40 Our next question comes from Larry Biegelsen from Wells Fargo. Your line is open.

34:46 Good morning, thanks for taking the question. Just one for me, Liam, you've got an Analyst Meeting coming up here next month. Just at a high level, any thoughts on how you're feeling about kind of the 6% to 7% LLP growth algorithm and street models right now are assuming about 100 basis points leverage per year after 2022. Any thoughts you can provide as we head into that meeting would be appreciated. Thanks so much.

35:22 Yes, Larry, 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 top line 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 unveiling on that. We want to show margin expansion within Teleflex. We still have restructuring programs in place. We still have mix that's going to work in our favor. We will obviously have conversations on cash flow generation, capital deployment. Our main focus of capital deployment, as I said earlier, is M&A, R&D and part of the restructuring programs. 36:02 And obviously, you'll 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 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. UroLift is clearly included there, but there is a lot more to Teleflex than UroLift and we want the investment community to see that. 36:29 With MANTA is very exciting, our hemostatic portfolio is very exciting, our Intraosseous portfolio and our PICC portfolio, all had really solid growth drivers. And actually UroLift is in the middle of the pack from a margin perspective. So it is broad appeal to Teleflex and that's what we want to communicate also.

36:47 All right. Thanks so much for taking the question.

36:50 Thanks, Larry.

36:52 We now turn to Matt O'Brien from Piper Sandler. Your line is open.

36:58 Hi 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 UroLift, what do you actually see on the ground from a volume perspective. I think the Street's volume mid single-digit growth here in Q2. Is that consistent with what you're seeing right now? And then just -- are you seeing any meaningful transitions in site of care so far this year?

37:26 Can you just repeat the last part of your question? Meaningful transitions --

37:31 In site of care --

37:33 Yes, thank you very much. So really what we saw with, as I said earlier, in my commentary, we still expect UroLift in the first half of the year to grow low single-digit growth and then to accelerate in the back half and we're very confident on the 15% for the full-year. And it's really playing out as we anticipate as a company. Obviously, Q1 was impacted by COVID in January and early February. We were encouraged by what we saw in March. March did show the green shoots of recovery. Also 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 showing some early green shoots and we're encouraged by what we're seeing there. 38:25 We're driving doc utilization on UL 2 and ATZ. And obviously our DTC campaign is adding to our confidence in the growth for UroLift. I'm really pleased to report that we have seen no shift in site of care and we do not anticipate seeing any shift in site of care. The vast majority of our office based urologists have signed up to 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 in site of care for the remainder of the year. And again I'll reiterate feel good about 15%.

39:10 Okay, very helpful. And then just quick follow-up here on your commentary on the positive pricing, how do we think about those 50 bps of price -- positive price in comparison to the inflationary pressures you're seeing. And when -- based on what you think those inflationary pressures may subside, is there room to push that price even higher if those pressures are more persistent? Thank you.

39:38 So my father used to say that a good start is half the battle. And we've had a good start to our pricing and the rollout of our pricing and I feel really encouraged by that. In 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 it's already baked in 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.

40:22 We move on to Matthew Mishan from KeyBanc. Please go ahead.

40:28 Good morning and thanks for your questions. Liam, could you talk to us some of the dynamics of the Interventional segment and how we should be thinking about growth in that segment for 2022?

40:41 Absolutely, Matt, thanks for the question. So as we look, nothing has changed from our guidance at the beginning of the year. We still expect our Interventional portfolio to grow high single-digits, low double-digits with good execution. I think that the quarter, the first quarter came in right as we expected it. We had some impact as one would expect from COVID in January and early February, but the recovery looks quite encouraging for interventional access. 41:15 Just on a broader comment, I think hospitals are probably managing the recovery out of the other side of COVID probably better than ASCs and offices. And that's what we're seeing across the board. So feel really good about the trajectory of that business and feel really good about the trajectory of MANTA and the rest of the portfolio. So high-single, low-double digits with good execution matters is what I would expect for the year.

41:39 Okay. Excellent. And then on Anesthesia, can you talk about Z-Medica versus the broader Anesthesia portfolio and how that did in the quarter?

41:49 Yes, I just said in our prepared remarks, Z-Medica was right in line with our expectation. We still expect the Z-Medica portfolio, the hemostatic portfolio to grow high-single low double-digit with good execution. So very encouraged again by how that hemostaticportfolio 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.

42:37 Our next question comes from Richard Newitter from Truist. Please go ahead.

42:43 Excuse me. Hi, thanks for taking the questions.

42:46 Welcome back, Rich.

42:48 Yes, I know, thank you. Thank you. It's great to be back. Thank you very much, Liam. Maybe just to start on UroLift, just this is such a strange year from a growth rate standpoint. Obviously, growth is being understated in the first half due to comps and COVID and in the back half, as you pointed out, from a math standpoint, it's the same thing to get your guidance for 15% [Technical Difficulty] well over 20%. So I appreciate the 15% is the growth in the growth rate outlook for this year. But Liam, 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? Is 15% the right way to think about the U.S. UroLift business for now?

43:41 So the way I look at it Rich is, we're very confident on 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 year and we'll go into that market. And the way I look at it is we'll finish this year. We believe we'll get 15% growth, hopefully we'll be inside of COVID and it will be in the rearview mirror. You head into the following year, you'll have an easier comp in the U.S. in the first year and then you should see some contributions begin to ramp up in the international markets. 44:27 And Rich, it's great to have you back, but if you would just be a little patient for another couple of weeks and I'll tell you what UroLift is going to do over the next three years at the Analyst Day when we all get together in New York.

44:42 Excellent. Looking forward to that, Liam. And maybe just one more follow-up. I might have missed it earlier, but your surgical performance this quarter, it came in well above our thinking, right? Just what was driving that again and 14% constant currency rate? Is that sustainable or was there something in there that we should be thinking about? And if you could also just comment on 2Q? Any guidance or color you can give to speed for modeling in the quarter ahead on revenue and earnings? Thanks, Liam.

45:16 Yes, we began the year, Rich, by expecting our Surgical business to be low-single digit growth. The first quarter came out little bit ahead of our expectations and it was really driven by strong growth in APAC and the U.S. as procedures continue 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 and again back to my earlier comment on pricing, if we can sustain it 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. 45:56 So, again a good start as half the battle, as my father says, and Surgical definitely had a good start, but we still expect low singles maybe get to mid with good execution as we go through the year. And on the 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.

46:24 Our next question comes from Mike Matson from Needham and Company. Your line is open.

46:30 Yes, thanks for taking my questions. I guess I'll ask another one on UroLift. So you've ramped up the DTC advertising. It seems like there is a little bit of a conundrum here, because that the timing of when -- I think of when you kind of ramp that up was coincided with a lot of these COVID impacts and a slowdown in the growth. And I understand what's happening there and the sensitivity to the infection rates and whatnot. But I guess what gives you confidence that the DTC ads are actually proving effective and you're getting adequate return on the investment?

47:09 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% the number of impressions. We actually ended up at almost 200% right across all of the metrics, we look at the number of impressions, we look at the response from the patients, we measure the total estimated appointments and procedures. And we know based on all of that, Mike, that this is a good return on our investment. 47:42 Anecdotally, when I was out with those 32 urologists in the first quarter, everyone of them had mentioned that patients had come in and ask them about UroLift as a direct result of the DTC campaign. So anecdotally and measurably, we know that it is working. And we are seeing -- and 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 and the vast majority of urologist that are champions, only offer UroLift. So therefore it's very focused. That's the one thing I will say about our DTC, it is very focused on docs put patients arriving with doctors that use UroLift almost exclusively.

48:41 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 be modeling. I think -- 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 top and bottom line consensus estimates for that -- for the second quarter?

49:02 Yes, you're 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 on our yearly guidance on all lines.

49:19 That's all the time we have for questions this morning. I'll now hand back to Mr. Lawrence Keusch for closing remarks.

49:26 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.

49:39 Our conference call for today is now concluded. Thank you all for your participation.