Teleflex (TFX) Q2 Earnings Top Estimates, 2023 Sales View Up
Teleflex Incorporated TFX posted adjusted earnings per share (EPS) from continuing operations of $3.41 in the second quarter of 2023, up 0.6% from the year-ago quarter’s figure. The metric topped the Zacks Consensus Estimate by 6.2%.
GAAP EPS of $2.35 in the second quarter was up 5.4% from the year-ago quarter’s figure of $2.23.
Revenues in Detail
Net revenues in the second quarter rose 5.5% year over year to $743.3 million, up 5.9% on a constant exchange rate or CER. The top line surpassed the Zacks Consensus Estimate by 1.9%.
Quarter in Detail
Americas’ net revenues of $424.7 million rose 2.9% from the year-ago period’s levels and were up 3% at CER. The company saw growth across most of its businesses, including single-digit increases in interventional and surgical revenues. This compares with our model’s projection of $415.6 million for the second quarter.
EMEA net revenues of $147.8 million rose 1.8% year over year and increased 0.7% at CER. The company continued to see procedure volumes improvement on a year-over-year basis. This compares with our model’s projection of $152.3 million for the second quarter.
Revenues from Asia rose 13.1% at CER to $ 86.7 million, backed by stable regional demand, including growth of over 20% in China. This compares with our model’s projection of $81.8 million for the second quarter.
Segmental Revenues
In the second quarter, the Vascular Access segment recorded net revenues of $173.8 million, up 6.6% at CER. This compares with our model’s projection of $170.4 million for the second quarter.
The Interventional business registered net revenues of $124.8 million, up 9.6% at CER. This compares with our model’s projection of $120.3 million for the second quarter.
Teleflex Incorporated Price, Consensus and EPS Surprise
Teleflex Incorporated price-consensus-eps-surprise-chart | Teleflex Incorporated Quote
Within the Anesthesia segment, net revenues fell 3.6% at CER to $100.8 million. This compares with our model’s projection of $103.5 million for the second quarter.
The Surgical segment recorded net revenues of $106 million, reflecting an increase of 7.7% year over year at CER. This compares with our model’s projection of $107.1 million for the second quarter.
Revenues of $77.8 million in the Interventional Urology segment fell 2.3% at CER. This compares with our model’s projection of $78 million for the second quarter.
OEM recorded revenue growth of $84.1 million, up 19.8% at CER. This compares with our model’s projection of $75.1 million for the second quarter.
The Other product segment’s (consisting of the company’s respiratory products not included in the divestiture to Medline, manufacturing service agreement revenues and Urology Care products) net revenues of $76 million registered growth of 4.8% year over year at CER. This compares with our model’s projection of $71.2 million for the second quarter.
Margins
In the reported quarter, gross profit totaled $407.8 million, up 4.9% year over year. The gross margin contracted 32 basis points (bps) to 54.9%.
Overall, adjusted operating profit was $262.8 million, up 3.5% year over year.
Adjusted operating margin saw a 35-bp expansion year over year to 19.5%.
Liquidity Position
Teleflex exited second-quarter 2023 with cash and cash equivalents of $250.8 million, down from $264.1 million at the end of first-quarter 2023.
Cumulative cash flow provided by operating activities from continuing operations at the end of the second quarter of 2023 was $170.6 million compared with $101.9 million in the year-ago period.
The company has a dividend payout ratio of 10% at present.
2023 View
Teleflex updated its 2023 financial guidance.
GAAP revenue growth for 2023 is now expected in the range of 5.80-6.55% (up from the previous guidance of 4.65-5.90%). The company’s constant-currency revenue growth expectation for 2023 lies in the 5.50-6.25% (the previous range was 5.00-6.25%). The current Zacks Consensus Estimate for total revenues is pegged at $2.94 billion.
The company restated 2023 adjusted EPS from continuing operations in the $13.00-$13.60 range, reflecting estimated dilution from the acquisition of Palette Life Sciences AB. The Zacks Consensus Estimate for the same is currently pegged at $13.29.
Our Take
Teleflex exited the second quarter of 2023 on a bullish note with better-than-expected revenues and earnings. The year-over-year revenue growth was driven by all global product categories and expanded overall margins year-over-year. The company saw strong performances in its Vascular, Interventional and Surgical businesses. Teleflex’s OEM product categories generated double-digit constant currency revenue growth year over year during the second quarter. During the reported quarter, the company registered stable demand across the region, including growth of over 20% in China. The raised revenues 2023 outlook buoys optimism. Conversely, escalating expenses and foreign exchange headwinds remain a concern.
Zacks Rank and Key Picks
Teleflex currently carries Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Penumbra, Inc. PEN, Integer Holdings Corporation ITGR and Intuitive Surgical, Inc. ISRG.
Penumbra, carrying a Zacks Rank of 1 (Strong Buy), reported second-quarter 2023 adjusted EPS of 43 cents, beating the Zacks Consensus Estimate by 53.6%. Revenues of $261.5 million outpaced the consensus mark by 3.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Penumbra has an estimated 2024 growth rate of 57.9%. PEN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 94.2%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 4.2%.
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