Good morning, ladies and gentlemen and welcome to the Teleflex Third Quarter 2022 Earnings Conference Call. Please note that this conference call is being recorded and will be available on the company's website for replay shortly. And now, I will turn the call over to Mr. Lawrence Keusch, Vice President of Investor Relations and Strategy Development.

Good morning, everyone and welcome to the Teleflex Incorporated Third 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 also be available. Please refer to our press release from this morning for details on how to access the replay. Participating on today's call are Liam Kelly, Chairman, President and Chief Executive Officer; and Thomas Powell, Vice President and Chief Financial Officer. Liam and Tom will provide prepared remarks and then we will open the call to Q&A. 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. 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. With that said, I will now turn the call over to Liam for his remarks.

Thank you, Larry and good morning, everyone. For the third quarter, Teleflex revenues were $686.8 million, a year-over-year decline of 1.9% on a reported basis and an increase of 2.4% on a constant currency basis. Compared to the prior year period, revenue under the manufacturing and supply transition agreement associated with our prior divestiture of the Respiratory assets negatively impacted growth by 1.3% in the quarter, implying underlying constant currency growth of 3.7%. Adjusted earnings per share declined by 6.8% year-over-year to $3.27. In reviewing the quarter, the majority of our business units executed well. When excluding UroLift and adjusting for the Respiratory divestiture, the remaining 88% of the business grew at an underlying rate of 4.3% in the third quarter. This solid performance continues to reflect the benefit of Teleflex's diversified portfolio that has been purposely built to target the care of critically ill patients. We saw improvement in revenues as the third quarter progressed with September strengthening over July and August. Our OEM business unit drove double-digit constant currency year-over-year revenue growth. While the Interventional business unit grew approximately 9%. Our Surgical business turned in another solid performance with mid-single-digit constant currency growth year-over-year. From a geographic perspective, we saw strong results in Asia which continues to be an important growth driver for Teleflex. Conversely, Interventional Urology continues to be impacted by patient business to urologists that remain down year-over-year and staffing shortages, with third quarter revenues modestly missing internal objectives. In the quarter, our high-growth revenue which includes UroLift, MANTA, hemostatic products, EZ-IO, on controls and PIC maintained momentum across the majority of growth drivers. For the 9 months, UroLift has declined 5.8% year-over-year. While the remainder of products in the high-growth portfolio continues to show healthy gains with 14% growth. Moving over to durable core revenues which accounted for more than 60% of revenues in 2021. In the first 9 months of 2022, the durable core has generated 4.6% growth compared to the prior year period. Turning to inflation; there are elements of stabilization during the quarter with some areas of improvement. In particular, sea freight costs declined in line with our internal expectations. We continue to see elements of elevated supply chain disruption during the third quarter. Availability of select raw materials and components are not yet back to normal. This dynamic resulted in some greater-than-anticipated backorder levels during the third quarter, especially in our Vascular and Interventional businesses. Looking forward, we expect a portion of those unanticipated back orders to flush through by the end of 2022. Now, let's turn to a deeper dive into our third quarter revenue results. I will begin with a review of our reportable segment revenues for the third quarter. All growth rates that I referred to are on a constant currency basis unless otherwise noted. Americas revenues were $405.1 million which represents a 2.7% decline year-over-year against a tough comp in the year ago period. Lower revenue from the manufacturing supply-and-transition agreement associated with our prior divestiture of the Respiratory assets negatively impacted Americas growth by 2.1%, implying a flattish underlying performance for the quarter. Interventional recorded high single-digit growth, offset by declines in Vascular and Interventional Urology. In addition, we did experience some supply-chain disruption during the third quarter. EMEA revenues of $128.4 million increased 3.4% year-over-year. We continue to see procedure volumes improve year-over-year. Now turning to Asia; revenues were $82 million, increasing a robust 20.5% year-over-year. We saw strength across the region with all geographies posting growth during the third quarter. China had a very strong performance with growth exceeding 19%. Let's now move to a discussion of our third quarter revenues by global product category. Consistent with my prior comments regarding our reportable segments, commentary on global product category growth in the third quarter will also be on a constant currency basis and ranked by size of our business units. Starting with Vascular Access; revenue decreased 0.8% to $167.1 million. The performance in the quarter in part reflects a tough comp due to the year-over-year reduction in COVID patients in the intensive care unit in the United States. As previously noted, there was some elevation in backorder during the quarter due to raw material shortages. Of note, the vascular business has the greatest exposure to Tyvek packaging for our kits and trays. We anticipate that Tyvek shortages will abate in 2023 as additional supply for the industry comes online. We remain confident that our category leadership in central venous catheters and midlines, along with our novel coated PICC portfolio continues to position us for dependable growth. Moving to Interventional; revenue was $108.7 million, up 8.9% year-over-year. We saw strong performances across our diversified portfolio during the third quarter, with balloon pumps on control, MANTA and complex catheters all contributing to growth. We continue to see some elements of supply chain disruption during the quarter. Turning to anesthesia; revenue was $97.6 million, up 5.8% year-over-year. The business had a challenging comparison with 26.6% growth last year. Of our larger franchises, regional anesthesia, hemostatic products, endotracheal tubes, all contributed double-digit growth in the third quarter. In our Surgical business; revenue was $93.1 million, representing another solid performance with 6.2% growth year-over-year. Among our largest product categories, skin stapling led the growth for the quarter, while metal and polymer ligation clip growth accelerated sequentially, following COVID-related lockdowns in China during the second quarter. Of note, there are no revenues in the third quarter surgical results from the Standard Bariatrics acquisition. For Interventional Urology, revenue was $79 million, representing a flattish performance sequentially and a decrease of 4.6% year-over-year and slightly below our internal expectations. The overall environment for elective BPH procedures has not yet returned to normal. Third-party data indicates that overall patient visits to urologists were down high single digits year-over-year in the quarter which has impacted the funnel for BPH procedures. In addition, staffing shortages remain a constraint. In a Teleflex survey of U.S.-based urologists, conducted in August of this year, 52% of the 125 respondents reported having experienced staffing issues. The survey also indicated that office-based urologists are experiencing significantly more patient cancellations per week than hospital-based urologists. OEM revenues increased 14.4% year-over-year to $71.3 million despite a tough comparison to last year. Our order book remains well positioned as customers recognize our broad competencies with competitive capabilities, including fast growth markets for thin wall interventional microcatheters to assess small vessels and fine wire for sensing and ablation technology. Third quarter, other revenue declined 9.9% to $69.9 million year-over-year. The majority of the decline reflects lower manufacturing and supply transition agreement revenues year-over-year. We continue to expect all MSA revenues to cease at the end of 2023. That completes my comments on the third quarter revenue performance. Turning to some commercial and clinical updates. On September 28, we closed on our acquisition of Standard Bariatrics for an upfront cash payment of $170 million with additional consideration of up to $130 million payable upon the achievement of certain commercial milestones. Standard Bariatrics has commercialized the Titan SGS stapler which is an innovative powered stapling technology specifically designed for sleeve gastrectomy. We estimate that there were 120,000 sleeve gastrectomy procedures in 2020. We are very excited about the acquisition of Standard Bariatrics for a number of reasons. First, the Titan stapler addresses unmet needs in sleeve gastrectomy by offering surgeons the longest continuous push and staple line of 23 centimeters. It is designed to help surgeons achieve more consistent and symmetrical sleep pouch anatomy, setting their patients up for optimized outcomes. While every patient's anatomy is different, the Titan's long staple line enables surgeons to plan and place staples in one firing, minimizing variations sometimes associated with the use of multiple overlapping short cartridge staple firing. Additionally, the design may result in a more secure staple line and fewer chances of leaks, as evidenced with higher burst pressures. Second, we believe that we can compete effectively stapling share in the sleeve gastrectomy market. Following a third quarter 2020 U.S. launch, we expect Titan stapler revenues to be approximately $15 million in 2022. With the Titan stapler now part of the Teleflex surgical portfolio, we expect continued momentum going forward. The Titan Stapler products integrated into our existing bariatric surgery call point in our Surgical business and complements our ligation clip portfolio, MiniLap percutaneous surgical system and Weck EFx special closure portfolio. In addition, the inclusion of the Standard Bariatrics sales team doubled our commercial team addressing the sleeve gastrectomy market. We have the capability to flex higher with existing Teleflex reps as demand grows which would more than triple the stand-alone sales force of Standard Bariatrics. Finally, we see a pathway through value analysis committees with carve-out due to the differentiation of the stapler which gives us confidence in our ability to expand our user base over the coming years. Third, the acquisition of the Titan Stapler reflects Teleflex's strategy to invest in innovative products and technologies that can meaningfully enhance clinical efficacy, patient safety and comfort, reduce complications and lower the overall cost of care. From a financial perspective, the acquisition is immediately accretive to Teleflex's long-term revenue growth profile and will enhance our gross and operating margin over time. Moving over to Interventional; we relaunched the Langston Dual Lumen Catheter and expect sales to ramp up in the fourth quarter and into 2023. In addition, at the mid-September TCT conference, we highlighted the Karolinska 1000 consecutive MANTA device study. This study which was not sponsored by Teleflex, represents the largest real-world evaluation of the MANTA device in patients undergoing TAVI. The study demonstrated low complication rates and a short learning curve. Specifically, MANTA device-related major vascular complications occurred in 4.2% of patients which was consistent with the SAFE MANTA IDE study and the MARVEL prospective registry. With respect to our market development objectives for UroLift, we were again pleased with our progress during the quarter. Training of new physicians continued in the third quarter and we are on track to reach our target for the year. With access to surgeons improving, we recently hosted a live BPH Summit training session in the United States as we continue to tap into surgeons not yet trained on UroLift. We are also excited to host an upcoming BPH Summit in Japan during the fourth quarter. We continue to receive excellent feedback from surgeons regarding UroLift 2, while UroLift advanced tissue control for use in obstructive median lobes saw increased momentum in the third quarter. New data published in the peer-reviewed Journal of Endourology revealed that in a controlled clinical trial of the UroLift system for obstructive median lobes, men experienced better symptom improvement within the first three months of treatment compared to those treated with placebo and TURP in other controlled studies. Encouragingly, those patients did not endure high-grade serious adverse events. The data further reveals that symptoms and EuroFlow outcomes were largely consistent for obstructive median lobes patients treated in both controlled and real-world settings. We believe that the launch of the UroLift two in advanced tissue control will enable us to further engage with surgeons and drive utilization deeper into our label's indications. Based on our progress at the end of the third quarter, we remain on track to convert the vast majority of our U.S. customers to UroLift two by the end of 2022. Now, turning to an update on our international expansion strategy for UroLift. We are in the early stages of a multiyear, multigeography international market expansion which is expected to be a meaningful driver of growth in the coming years. The launch of UroLift in Japan which began on April 1, continues to gain momentum and is tracking to our plan. Cases are continuing to ramp up and we are very encouraged with the results thus far. Looking forward, we are excited to implement our virtual reality capabilities to enhance our physician training and sales force interactivity. Given our results to date, we expect to be well positioned to increase traction in 2023 as we expand our reach into key regions within the country. Shifting to other international geographies. We remain on track with our expected UroLift commercial milestones. In China, we will commence our initial launch activities in the fourth quarter with a focus on key cities and engagement with the urological society to build acceptance. In addition, we still expect updated reimbursement in France and launches in select regions in Italy and Spain during the fourth quarter. Finally, investors familiar with Teleflex will recall that, in July of 2020, we informed the investment community that the Department of Justice had opened an investigation under the Civil False Claims Act with respect to one of our subsidiaries, NeoTract Inc. I am glad to share that, in August of 2022, the U.S. Department of Justice advised us that it had closed the investigation. We are pleased to have this investigation behind us and look forward to continuing our focus on the patients we serve across the world every day. That completes my prepared remarks. Now, I would like to turn the call over to Tom for a more detailed review of our third quarter financial results.

Thanks, Liam and good morning. Given the previous discussion of the company's revenue performance, I'll begin with margins. For the quarter, adjusted gross margin totaled 58.7%, an 80-basis point decrease versus the prior year period. The year-over-year decrease was driven by the expected incremental inflation, partially offset by favorable pricing. As expected, we have seen an improvement in sea freight, although raw material and component availability have yet to normalize. Of note, our pricing strategy continued to maintain its traction through the third quarter. Adjusted operating margin was 26.9% in the third quarter. The 160-basis point year-over-year decline was the result of the lower gross margin, deleverage across our expense base from lower revenue year-over-year, inflation in our expense base such as wages and planned investment in the business for our growth drivers, partially offset by disciplined expense management of nonrevenue-generating expense. Net interest expense totaled $13.2 million in the third quarter, an increase from $11.8 million in the prior year period. The $1.4 million year-over-year increase in net interest expense reflects higher interest rates versus the prior year, partially offset by a reduction in average debt outstanding. Our adjusted tax rate for the third quarter of 2022 was 9.8% compared to 11.3% 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, partially offset by tax expense arising from the new provision of the U.S. tax law requiring the capitalization of certain R&D expenses. At the bottom line, third quarter adjusted earnings per share was $3.27, a decrease of 6.8% versus prior year. Turning to select balance sheet and cash flow highlights. Cash flow from operations for the 9 months was $244.4 million compared to $450.5 million in the prior year period. The decrease was primarily due to lower operating results, higher tax payments, higher payroll and benefit-related payments and unfavorable changes in working capital, driven by an increase in inventory purchases to maintain high customer service levels during a period of elevated global supply-chain volatility. Moving to the balance sheet. Our financial position remains healthy. At the end of the third quarter, our cash balance was $397.3 million as compared to $445.1 million as of year-end 2021. Reduction in cash on hand is due to $144 million of payments on our senior credit facility. At the end of the third quarter, our floating rate debt accounted for 42% of the total debt outstanding and net leverage at quarter end was approximately 1.7x. On a pro forma basis, including Standard Bariatrics, net leverage is 1.9x which remains well below our 4.5x covenant. Now turning to our 2022 guidance update. We are maintaining our 2022 constant currency revenue growth guidance of 3.25% to 4.25%. When excluding the impact of the Respiratory divestiture and normalizing for the one life shipping day, the underlying growth projection for the business remains over 5% year-over-year when considering the midpoint of our 2022 constant currency revenue growth guidance. Turning now to foreign exchange. The dollar has further strengthened across a broad number of currencies as compared to our prior guidance. We now expect that the impact of foreign exchange will be a headwind to revenue of approximately 4% in 2022 versus 3.7% expected previously. This equates to an approximately $110 million reported revenue headwind year-over-year as compared to approximately $100 million in the prior guidance. Considering the revised outlook for foreign exchange, we are reducing our reported revenue growth to negative 0.75% to positive 0.25% in 2022, implying a dollar range of $2.789 billion to $2.817 billion. Moving to additional comments regarding the revenue outlook for 2022. We expect incremental revenue from Standard Bariatrics to be in the range of $4 million to $5 million in the fourth quarter. For UroLift, we are now assuming that 2022 revenue will be roughly $320 million versus the prior guidance of $335 million. Our prior guidance had assumed an improving environment for UroLift during the second half of 2022 with a sequential revenue increase in the third quarter and a further sequential increase in the fourth quarter. Given the persistence of procedure environment headwinds, our revised guidance assumes no underlying improvement in the current environment for the remainder of the year. Turning to the middle of the income statement. We expect gross margin for 2022 to be 58.75% to 59.25% versus 59% to 59.5% previously. The slightly lower outlook for gross margin reflects the impact from unfavorable mix. Our gross margin guidance range continues to reflect the impact of incremental inflationary pressure which represents a year-over-year headwind of approximately 100 basis points. Importantly, we remain confident in our ability to achieve at least 50 basis points in price for the year which helps partially offset the inflationary pressures that we are experiencing in our cost of goods line this year. As a matter of course, we will continue to assess our global pricing and we'll continue to make adjustments as opportunities arise. Relative to operating margin, we now expect operating margin to fall within a range of 26.5% to 27% versus 26.75% to 27.25% previously. Our guidance reflects the impact of the gross margin and incremental operating expense from Standard Bariatrics which was not contemplated in prior guidance, partially offset by the better-than-expected operating expense in the third quarter. Turning to items below the line. We continue to expect an adjusted tax rate in the 11% to 11.5% range for 2022. We now expect net interest expense to approximately $54 million for 2022 as compared to $51 million previously. The majority of the increase in our net interest expense outlook reflects debt associated with the acquisition of Standard Bariatrics. Moving to earnings; we are reducing our adjusted earnings per share guidance for 2022 to $12.80 to $13.20 compared to $13 to $13.40 previously. The reduction in guidance reflects the earnings performance in Q3, offset by dilution from the Standard Bariatrics acquisition, the revised impact from foreign exchange and the margin impact from mix. Under the revised guidance, adjusted earnings per share of $12.80 to $13.20 amounts to a 4% year-over-year decline at the low end and a 1% decline at the high end. Normalizing for incremental inflation, foreign exchange, the Respiratory divestiture and dilution from the Standard Bariatrics acquisition implies underlying adjusted earnings per share growth at the midpoint of guidance in the high single-digit range year-over-year in 2022 and reflects the benefits of our diverse growth drivers and ability to grow earnings in a period of significant macro challenges. 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 third quarter and our 2022 outlook. First, our third quarter results reflect the diversification of the Teleflex portfolio through the combination of our growth drivers and stability of durable core revenues. Importantly, we will continue to focus on investment in our future growth drivers while managing overall costs for the business. Second, in the quarter, we augmented our growth drivers with the acquisition of the Standard Bariatrics Titan SGS powered stapler. We expect revenue growth and margin accretion over time as we effectively integrate Standard Bariatrics into the Teleflex Surgical business and expand the reach of this innovative stapling technology. Accordingly, we expect the Standard Bariatrics acquisition to enhance our long-term constant currency growth. Third, we continue to execute against our long-term 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 pro forma leverage of 1.9x, providing ample financial flexibility for our capital allocation priorities, including M&A. That concludes my prepared remarks. Now, I would like to turn the call back to the operator for Q&A.

Thank you. Our first question comes from Cecilia Furlong with Morgan Stanley. Cecilia, your line is open.

Good morning and thank you for taking the questions. Liam, I wanted to start on your commentary on UroLift and really just the site of care that you talked about in terms of where you're seeing patient flow offices versus inpatient. Can you just talk about how that's trended versus pre-COVID times? And then also just the role of DTC, you talked about surgeon training. How you're thinking about DTC going forward?

Hi, Cecilia, thank you for the question. With regard to pre-COVID patient flow and post-COVID patient flow: So we know that in Q2, patient flow was down approximately 12%. It was down high single digits in Q3 and we know that in 2021, patient visits were also below pre-COVID levels. So you add those together and we're seeing a significant drop in patient flow pre-COVID. The other impact is obviously staffing shortages. Now in the rest of our business and also within the UroLift portfolio included in that, we did see a modest improvement in staffing levels in the hospital side of service. So that was somewhat encouraging during the quarter. And if that continues, that will continue to be encouraging. With regard to our DTC, we believe that the DTC continues to add value. We're ahead of our targets with regard to patients that we're transferring to urologists. TV actually dominates the way men first learn about UroLift. So it is definitely a medium we want to continue. And our brand awareness for UroLift continues to rise. So it is now at 19%, well ahead of TURP in that regard and TURP is seen as the gold standard when it comes to brand awareness and that's why I'm comparing it to TURP. So we're very encouraged by the results that we have from DTC. And it is our expectation to continue that. We do believe that the market will eventually recover. We do believe the patient flow will improve. We do believe that staffing levels will improve. And when that does happen, we're well positioned to take advantage of it.

Great, thank you. And if I could follow up, just your comments on Japan as well, the initial launch there. Can you talk through either your contribution, what you're seeing to date, outlook for 4Q? And then as you think beyond '22, just to your confidence, especially just given the current macro environment with the 15% growth that you laid out at the Analyst Day earlier this year? And thank you for taking the questions.

No, absolutely. We are encouraged by the developments in Japan. I visited in Q2 and met with several urologists. The adoption in that region remains very strong. This quarter, we will perform our first UroLift procedures in China, presenting a valuable opportunity for us. Regarding the Long Range Plan (LRP), we need to see the market rebound. As for UroLift, I believe the LRP projected a compound annual growth rate of 15% over three years. Our LRP officially starts in a little over two months, using 2020 as the baseline, with 2022 marking the start and 2023 being the first full year. As I’ve mentioned, it is crucial for the end markets to recover, patient flow to resume, and staffing levels to improve. We are ready to respond when that occurs, as our sales force is fully staffed. Direct-to-consumer efforts are ongoing, the clinical data remains strong, and the market potential is enormous, with 12 million men in the United States affected by benign prostatic hyperplasia (BPH). Our recent patient survey indicates an increase in cancellations for BPH procedures. We anticipate improvements in cancellation rates as the environment gets better.

Thank you. And our next question comes from Jayson Bedford of Raymond James. Your line is open.

Good morning. Maybe for Tom or the group. Just in this environment, revenue has slowed a little bit in the business. Wondering if this has impacted your thoughts on the pace of margin expansion, specifically thinking about your LRP goals.

Well, I will say that as revenue slows, you do lose leverage in the P&L. And for us to continue to drive margin expansion, we want to see that top line moving. I think as Liam just touched on, the LRP doesn't start for another couple of months. And our expectation is to continue to grow the top line. We'll have to look and see how inflation impacts us but that certainly has been a drag as well. But if you think about the business, the key tenets of margin expansion remain with restructuring programs are still in place. We do have good growth in our high-growth portfolio which, as you know, has got higher than average margin. So as Liam mentioned, getting UroLift back and growing in North America at a solid pace will certainly help us assure that margin achievement over the longer-term horizon.

And Jayson, I would just add, you are correct that the revenue has slowed. But if you normalize for the days in the Respiratory divestiture and you take the midpoint of our guidance for the remainder of the year, it will tell you that our underlying growth is actually in excess of 5%. And that's even with the decline in the current environment with the UroLift revenue. Obviously, an improvement in that will help us. And we have got really good pricing discipline, as you know. And we feel that we will do well in excess of that 50 basis points that we laid out. And we also have the restructuring programs which through the LRP will deliver another $28 million of benefit dropping through the gross margin line through to operating margins. So lots of moving pieces and we're in an inflationary environment and we will potentially lose some leverage this year. But with an improving environment, we'll see what will happen over the LRP timeframe.

Okay. And just as a quick follow-up. Liam, you mentioned an elevated backlog during the quarter. Is there a dollar amount that you could attribute to this dynamic?

So I don't want to get into too many specifics of a dollar amount but it's in the millions of dollars and it was really impacting the Vascular Access business and the Interventional Access business. Those were the two that were most impacted. We have third-party providers in both of those businesses, one being Tyvek and the other being a third-party extrusion company that's causing us some difficulties at this moment in time. We would expect that to normalize in the fourth quarter and it's part of the reason we're able to maintain our constant currency guidance, that and the addition of Standard Bariatrics.

Thank you. We now have Shagun Singh from RBC. Please go ahead when you’re ready.

Thank you so much. Can you hear me, okay?

We can hear you, Shagun.

Okay, great. So, I was just wondering, Liam, if you can share any specific data points that might suggest that patients will return once the environment stabilizes. I'm a little surprised given the pace of cancellations for UroLift. So what makes you confident? And then your Q4 UroLift guidance now implied $86 million versus $101 million implied in the prior guidance. What gives you the confidence that you can achieve the 15% CAGR in '23 and beyond? And then can you just remind us of your confidence in the 6% to 7% LRP if UroLift does slow in 2023 and beyond. I know you made the acquisition of Surgical Bariatrics that adds about 60 basis points. So that should help offset some of that headwind. But if you can just talk about the 6% to 7% and how you're thinking about M&A as you think about the portfolio overall? Thank you for taking the questions.

Thank you, Shagun. There's a lot to discuss here. Let me start by saying that the long-range plan begins in a little over two months, and I am confident about the 6% to 7% growth we previously mentioned. The addition of Standard Bariatrics supports my confidence in achieving this CAGR during that period. It's also important to remember that the 15% growth for UroLift is based on CAGR. The first year of the three-year plan likely presents a more favorable comparison, which should aid in reaching that target. I believe patients will return because there is a substantial number of them. We have around 12 million potential patients, specifically the 1.5 million men with BPH who initially took the medication and no longer do. I am additionally encouraged by the improvements in staffing levels within hospitals. Our patient study indicates that some patients are struggling to schedule appointments with urologists. If the improved staffing in hospitals extends to offices and ambulatory surgery centers, it should facilitate patient access. As you mentioned, your calculations suggest an $86 million target for UroLift in Q4. This figure considers standard seasonal fluctuations related to the deductible impact we experience each year from Q3 to Q4, along with contributions from international markets as we expand. It's important to note that the $86 million does not account for an expected recovery. Should that occur, it would be beneficial, but it is not included in our current guidance.

Thank you. Your next question comes from the line of Matt Taylor of Jefferies. Please proceed with your questions.

Hi, good morning, guys. Can you hear me, okay?

We can hear you, Matt. Good morning.

Great. Hi, everyone. I have a couple of questions, and I will focus them on UroLift. You mentioned that you expect to exceed the 50 basis points. Can you provide any insights on how much better your performance is tracking? Additionally, do you think you can maintain this momentum next year? Is this a sustainable trend, or is it something more temporary?

So I think that Teleflex has always been a company that can carve out pricing even in a nonpricing environment. When none of our peer companies were getting pricing over the last number of years, we were always able to carve out 10 or 20 basis points. I think that we will do in excess of 50 basis points this year. We're tracking ahead of that, Matt, for the first three quarters. And I do think that we will be able to repeat that again next year at least. We are living in an inflationary environment. We're being impacted by it. Our customers are getting impacted by it. We're trying to walk that very fine line where we're being partners with our customers but at the same time, recognizing that we are seeing inflation. Inflation for us is costing us 100 basis points in gross margin this year as a result of what's being passed on to us from our customers. And therefore, there must be a recognition that we must pass some of that on to our customers and in a thoughtful way and in a way that maintains that business relationship with the customer.

Okay, I understand. I want to confirm some numbers. Looking at the reports for the high-growth portfolio excluding UroLift, it appears you achieved low double digits in Q1, over 20% in Q2, and then low double digits in Q3, is that accurate? Additionally, with a 14% year-to-date figure, what are your expectations for the high-growth portfolio moving forward? Are the quarterly fluctuations simply due to comparisons, or is there something else influencing those numbers?

The quarter-by-quarter figures are not comparable. What we are experiencing is some backorder clearance related to issues with Tyvek in certain areas of our business. This has impacted one quarter, and if you refer back to the Q2 transcript, we noted that we had resolved some backorders. Hence, the results are not really comparable; it’s primarily about the timing of these backorders clearing as we address supply-chain constraints. You are right in your calculations; we expect it to be just over 14% excluding UroLift for the first three quarters. We anticipate maintaining that level for the rest of the year. Our high-growth segment, excluding UroLift, is performing well and in line with our expectations. Once UroLift recovers, the overall high-growth segment should see an improvement. Furthermore, moving forward, Standard Bariatrics will be categorized within the high-growth portfolio.

We now have the next question on the line from Mike Polark of Wolfe Research. Please go ahead when you’re ready.

Good morning. Thank you for taking my question. I have one on UroLift and then one on Standard Bariatrics. On UroLift, just 3Q to 4Q and I know this was asked differently but what is the lift embedded from the OUS efforts ramping into 4Q? Can you frame kind of the $7 million sequential step up? How much of that do you view as kind of the core U.S. business versus some of the OUS stuff starting to contribute more meaningfully?

Yes. In terms of seasonality in the U.S., we typically observe an increase of about 7% to 10% due to the deductible phenomenon. Notably, outside the U.S., particularly in Japan, we've been seeing consistent growth. We've communicated to investors that Japan is about one-third the size of the U.S. market, and we anticipated its growth to reflect that scaling. In the initial year, the U.S. business achieved $5 million, followed by $15 million, then $50 million, and so on. Therefore, projecting one-third of those figures provides a reasonable expectation for Japan's performance. However, I want to be transparent that China's contribution in the fourth quarter is quite modest, so I wouldn't suggest factoring in much for that. While we're working on cases, it's challenging to facilitate movement in and out of the country. Nevertheless, we are optimistic about growth in 2023, with China showing potential for that year rather than having an impact in 2022.

Helpful. And then on Standard Bariatrics, $15 million for the product this year in its first full year, you're guiding, I believe, $30 million to $35 million next year, a very healthy ramp. It's a sizable market and you've structured in a sizable earnout. So I'm curious, what's the dream of the sellers here? How much kind of upside is implied? And if they achieve their earn-out, what does that mean for the revenue run rate and over what time horizon, is that framed up?

Yes, Mike, I think the way I'd frame that is that Teleflex pays out the full $130 million, no one will be happier than Liam Kelly because that will mean that the business will have done better than I would have anticipated. I think that when we look at this business, it's a unique technology. And I look at this and a lot of these technologies that gain share, they tend to be evolution rather than revolution. And this really fits into that category. It's right into the sleeve gastrectomy market that the surgeons conduct every day. It speeds up the procedure, you get less leaks, higher burst pressure when you complete it. And all in all, it's being adopted pretty rapidly out there. We have a number of the high-volume users that have already adopted the technology and a high-volume user for us will be someone that's doing 10 sleeves a month. And we're very encouraged by the way it's moving forward. But to your question, if we pay out the $130 million, Teleflex would be delighted.

Thank you. We now have Craig Bijou of Bank of America Merrill Lynch. Please go ahead, your line is open.

Good morning, everyone. Thank you for taking my questions. I have a couple regarding UroLift. I appreciate all the insights you provided, Liam, but I wanted to specifically ask about the fact that you mentioned doctor visits declined by 12% year-over-year in Q2, and now they are down by high single digits in Q3. However, your sales remained flat sequentially. I would like to understand this discrepancy. You mentioned that staffing is improving in hospitals, but did staffing in the office setting improve or worsen from Q2 to Q3? Additionally, is there a timing aspect regarding visits to procedures that might be reflected in these numbers as we examine them from Q2 to Q3?

Yes, I'll address the last part of your question first, Craig. There is definitely a lag. It typically takes about 6 to 8 weeks for a patient to navigate through the process and undergo a procedure. Patients need to visit the urologist, complete their IPSS score, undergo a cystoscope, and then get scheduled for a procedure. In our August survey of urologists, we found that 53% are experiencing staffing shortages, with those in the office setting facing more significant issues—61% reported staffing shortages. I did notice some improvement on the hospital side regarding staffing levels, but the office situation remains unchanged from Q2, with no notable improvement. However, as hospital staffing continues to improve, it will create additional capacity for the office and ambulatory surgery centers. I expect that there will be a delay in seeing improvements in those two areas because the hospitals, which rely on contract labor, are currently offering lower wages than they were a few quarters ago. These dynamics should eventually help alleviate some staffing pressures in the other service settings, but there will indeed be a lag. As I mentioned earlier, when that improvement occurs, Teleflex is well positioned to benefit from it.

Thank you. We now have Matthew O'Brien of Piper Sandler. Please go ahead when you’re ready, Matthew.

Hi, good morning. This is Phil on for Matt. Thanks for taking my questions. Can you guys hear me all right?

We can hear you, Phil. Thank you.

Just to touch on UroLift again. I mean, do you expect the strength of training to continue through fourth quarter and into 2023 here? And then additionally, I understand that the timeline of visit recovery is a bit up in the air but do you expect more of a step function in terms of visits once they do return? Or will it be a slower ramp as patients return a little bit more slowly?

Regarding the training, it proceeded as we anticipated in the third quarter. We are progressing towards the usual target of approximately 400 doctors that we train each year, which is promising because it indicates continued interest in the procedure. We're transitioning from early adopters to more rapid followers, which is a positive sign. As for visits, my first goal is to achieve stable year-over-year numbers. This year, we've seen declines of 15%, 12%, and high single digits, so we need to reach flat numbers before we can expect a typical increase. Even when we do stabilize year-over-year, the figures will still fall short of those in 2019 before COVID. There is still a considerable distance to cover regarding patient visits. You are right that once patient flow begins to recover, there will likely be a delay, but we should see increasing momentum as patients start returning to their urologists.

Great, thank you for that information. Shifting topics, congratulations on the Standard Bariatrics acquisition. Do you think you will need any additional components to support that asset, or do you believe it can stand alone as it is? Additionally, in a broader sense regarding mergers and acquisitions, what are your thoughts considering the decline in valuations and your own leverage ratios?

Yes, Standard Bariatrics is a significant acquisition for us. We already have a strong connection with the bariatric surgeons as we sell our mini lap, our percutaneous surgical system, the Weck EFx closure, and our cold ligation products. This acquisition allows us to double our sales force focused on that area, increasing the number of salespeople promoting the Titan SGS as well. In terms of mergers and acquisitions, we are currently at 1.9x levered, which puts us in a solid position. We are actively looking for assets in the marketplace. Our internal team evaluated the Standard Bariatrics acquisition in the context of whether a share buyback would be advisable given the current stock valuation. For short-term investors, a buyback in the first year might be better. However, for long-term investors, leveraging the balance sheet for M&A over the next several years offers a significantly higher return than a stock buyback, even with our current stock price. We have assessed this and believe we can deliver better returns to shareholders by pursuing attractive M&A opportunities, which will help expand Teleflex's reach into new and related procedures. This will be our guiding principle moving forward.

Thank you. Your next question comes from Lawrence Biegelsen of Wells Fargo. Please go ahead when you’re ready.

Hi, good morning. This is Vick in for Larry. Just a couple from us. Can you provide us with a framework for 2023, not asking for a specific guidance but any sort of items you're aware of now like FX or inflation running through the P&L that you can share your preliminary thoughts on? And any reason why you don't think you'll be at 6% to 7%? And then I have a follow-up. Thanks.

Regarding what we currently know, that will impact the profit and loss statement for next year. Clearly, foreign exchange will play a role. We had established our plan for this year, particularly adjusting the euro to the dollar rate, which represents our largest exposure. We brought that rate to parity in the second quarter for the remainder of the year. We have updated that, which was part of the reason for the $10 million reduction related to the euro and other currency adjustments because we aligned that rate. This would result in an average for the year of about 105 to the euro. If it remains at parity or below, it will present a notable challenge next year. We are experiencing increased inflation, but we factored in additional inflation into our long-range plan for the future. As for your 2023 question, we will address that in February when we provide guidance for the first year of the long-range plan. However, as previously mentioned, I remain confident in achieving the overall growth of 6% to 7%, and the acquisition of Standard Bariatrics further strengthens my confidence in that growth target over the long-range planning period.

Great. And just a follow-up. Can you talk about MANTA penetration in the quarter? And how are you thinking about the rest of this year and potentially, next year? Thanks so much.

Yes. So with MANTA, the penetration is really into the TAVR procedures, where about 75% to 80% of our procedures are done there and that continues to be a focus for us. As we head into next year, what we're really excited about, we've got a clinical study being done on top of the Karolinska one that I spoke about in the call and the Karolinska one was excellent because it basically shows, the adoption curve is really quick for MANTA. And even better, the complication rate is right in line with our original study that we did, the SAFE study. So that's really encouraging. Now we have another trial going on that's going to help with the positioning of MANTA and the use of ultrasound Doppler to position the product which should make it even easier for those surgeons to continue to use the product. With regard to penetration, we see that the penetration level obviously continuing to ramp. It's a $200 million to $300 million market and we're very early in the adoption curve. So we see no reason why that won't continue over a multiyear period.

Thank you. We now have Anthony Petrone of Mizuho. Your line is now open.

Thanks and hope everyone doing well. And will be after hearing the name. So maybe, Liam, just a little bit on Japan and China, just on the cadence of actually physician training, urologist training in those markets. How do you expect that to proceed? You're doing about 400 a quarter in the U.S.? Is it really the same cadence in those markets? And maybe your early thoughts on 2023 when you think about contribution from Japan and China in UroLift. And I'll have one follow-up. Thanks.

Yes, Anthony, it's great to have you back. Just to clarify, we'll be doing around 400 a year in the United States instead of per quarter. In Japan, we're just starting out, mainly in major metropolitan areas like Tokyo. We’ve added more sales representatives this quarter as we prepare for 2023. I’m quite confident about our growth potential, which I estimate to be about one-third the size of the U.S. market. Therefore, we can expect around one-third of approximately $15 million from Japan next year. In China, we’ll have our first case this quarter, starting with the private hospital sector in major cities such as Shanghai, Beijing, and Guangzhou, before expanding further. I’d like to complete the initial training in China before providing more details on how many doctors we can onboard. We have identified several key opinion leaders there, and that training will happen during Q4. I am excited about both markets as they have the potential to significantly impact UroLift. Japan has good reimbursement prospects, and we plan to pursue reimbursement to enter the regional tenders in China once we establish a presence in the private market, which will take a few years.

Great. And then the follow-up maybe for Tom. Just when we think about inflation for next year, I think previously, there was a dollar number that we should be thinking about that will roll into next year. Some companies have given that dollar amount. So just wondering if there's an updated view on how inflation rolls in, next year? And when we think about the restructuring programs and offsets, if you can provide some color on potential offsets? Thanks again.

Sure. As we mentioned in our prepared remarks, inflation is still a factor for us. While we are seeing some improvement in sea freight costs, which we expected this year, materials continue to be at elevated rates and have not yet stabilized or returned to normal levels. Therefore, we anticipate ongoing inflation in our numbers. Historically, we have always experienced some level of inflation, and this year it has been higher than usual. We expect some of this inflation to carry into next year due to how we manage our inventory and how it affects our balance sheet. However, we are not currently able to provide specific guidance on inflationary pressures for next year. That said, there are several offsets we can discuss. We successfully implemented pricing strategies this year to help mitigate some inflation pressures. Our announced restructuring programs will also provide benefits next year. Looking ahead, we anticipate about a 0.5 point margin expansion from restructuring next year, with a full point over the following couple of years. Additionally, our high-growth portfolio continues to generate a positive mix benefit because it grows at a faster rate and carries higher margins. As UroLift continues to recover, we expect to see increased contributions from that business unit as well in terms of margins. We will provide specific numbers related to inflation as we approach our guidance for 2023.

Thank you. Our next question comes from Richard Newitter of Truist. Please go ahead.

Hi, thank you for taking the questions. I have two regarding UroLift. I know there's a lot of focus on it, but it’s very important for investors. You mentioned the CAGR, which is based on a potentially lower starting point. I'm curious, to reach that 15%, what is the minimum level of growth needed from the U.S. portion? In other words, do you need to return to double-digit growth in the U.S. to achieve that CAGR, or is there enough potential so you don’t have to depend on that in the international market? I have a follow-up as well.

Well, Rich, clearly because international has such a lower base, the percentage growth in international is going to be significantly greater than the U.S. So by logic, you will tell you that to get to a 15% CAGR, that the U.S., just by definition, is going to be lower than that 15% in that regard. I still believe that with the number of men that are out there, the 12 million in the United States with BPH and the 1.5 that have BPH and are in the drug dropout category, I still think that growth within the U.S. is well within our reach as an organization. And as I've said a few times in the call, we're well positioned. We got our sales force fully staffed. We got DTC going. We just are back doing a BPH Summit. We did a live one. That's a nice inflection normally for us to get more interest. And we're going to have one in Japan in the fourth quarter and then we'll have a number of them next year again. So things seem to me like getting more towards normal, at least in that regard, regarding access. And to answer your question, so the U.S., for sure, doesn't have to grow at 15% for the CAGR to be 15%.

I was just asking because I need to return to double-digit growth, if you could address that. Additionally, regarding UroLift, I'd like to clarify the staffing challenges in the office environment. I understand that doctors often schedule their UroLift procedures on one or two operating days. Can you help me understand how that influences the mix of UroLift volume? Are the higher volume accounts struggling to meet demand because they are operating multiple days per week? What am I missing here, considering that scheduling and managing patients in the office should be relatively straightforward? Thank you.

Yes, you're correct, Rich. It is easier from a scheduling standpoint, which is why urologists prefer to perform the procedure in that setting because they maintain control over it. However, I think your analysis misses everything that occurs before the appointment is scheduled. The patient needs to visit the urologist, complete an IPSS scorecard, and possibly undergo additional diagnostics to assess their bladder health. They will certainly receive a cystoscopy, and all these steps require labor. Every part of this process demands labor. It's not only about the procedure itself but also about the patient flow leading up to the procedure, and that is what is causing the impact. As I mentioned, 61% of office-based urologists in our survey clearly indicated that they faced staffing challenges. When I visited urologists in the south just over a month ago, each one raised concerns about staffing shortages.

Thank you. We now have Michael Matson of Needham & Company. Your line is open.

Yes, thanks. I have two questions. First, regarding UroLift, have there been any changes or turnover in the sales force? Have you added any headcount this year? The second question is about Standard Bariatrics. I understand the opportunity in the sleeve gastrectomy market and bariatrics, but is this a platform technology that would allow you to offer a full range of stapling products over time to enter that duopoly market?

We already have a range of products in that area. It’s a rapidly growing market, and it will continue to expand as society consumes more unhealthy options. We view this as a chance to enhance our presence in the bariatric market, and there are some complementary technologies that may interest us as we delve deeper. Teleflex has always prioritized this area, and as previously mentioned, we have our cold ligation clips, facial closure products, and our mini lab sales force engaged in it. In terms of turnover, like many medical device companies, we faced increased turnover in 2021 across Teleflex and in UroLift. Currently, we have a stable sales force in UroLift, with about four or five open territories in our business units. We feel confident that we are well-prepared for the market recovery.

Okay, thanks. Just on the stapling question, I guess what I was getting at is, would you look at offering staples that can be used outside of bariatrics, like the broader kind of surgical staple market?

I'm sorry, Mike, I missed the question.

Yes, no problem.

We already sell staples in our general surgical portfolio, specifically skin staplers. Our Hemo-lok and Horizon are both cold and metal ligation clips. We don’t see ourselves competing with the larger companies in the broader stapling market. The reason we entered this particular area is due to its unique characteristics. It accelerates the procedure, improves outcomes for patients, and provides better results for the doctors. This is likely why we focused on this segment of stapling.

Thank you. You have no further questions. So I would like to hand it back to Lawrence Keusch for some final remarks.

Thank you, Abrika and thank you to everyone that joined us on the call today. This concludes the Teleflex Inc. third quarter 2022 earnings conference call.

Thank you for joining. This does conclude today's call. Thank you for joining and thank you for your participation. You may now disconnect your lines.