Teleflex (TFX) Q3 Earnings Top Estimates, 2023 Outlook Up
Teleflex Incorporated TFX posted adjusted earnings per share (EPS) from continuing operations of $3.64 in the third quarter of 2023, up 11.3% from the year-ago quarter’s figure. The metric topped the Zacks Consensus Estimate by 11.3%.
GAAP EPS of $2.91 in the third quarter was up 34.7% from the year-ago quarter’s figure of $2.16.
Revenues in Detail
Net revenues in the third quarter rose 8.7% year over year to $746.4 million, up 7.4% on a constant exchange rate or CER. The top line surpassed the Zacks Consensus Estimate by 1.6%.
Quarter in Detail
Americas’ net revenues of $428.2 million rose 5.7% from the year-ago period’s levels and were up 5.5% 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 $426.9 million for the third quarter.
EMEA net revenues of $142.7 million rose 11.1% year over year and increased 4% at CER. The company continued to see procedure volumes improvement on a year-over-year basis. This compares with our model’s projection of $143.2 million for the third quarter.
Revenues from Asia rose 17.1% at CER to $ 93.2 million, backed by stable regional demand, including growth of over 20% in China. This compares with our model’s projection of $90 million for the third quarter.
Segmental Revenues
In the third quarter, the Vascular Access segment recorded net revenues of $169.9 million, up 0.3% at CER. This compares with our model’s projection of $178.6 million for the third quarter.
The Interventional business registered net revenues of $134.1 million, up 22.4% at CER. This compares with our model’s projection of $122.4 million for the third quarter.
Within the Anesthesia segment, net revenues fell 1.3% at CER to $97.6 million. This compares with our model’s projection of $103.7 million for the third quarter.
The Surgical segment recorded net revenues of $112.8 million, up 20.6% year over year at CER. This compares with our model’s projection of $104.4 million for the third quarter.
Teleflex Incorporated Price, Consensus and EPS Surprise
Teleflex Incorporated price-consensus-eps-surprise-chart | Teleflex Incorporated Quote
Revenues of $73.6 million in the Interventional Urology segment fell 6.8% at CER. This compares with our model’s projection of $82.4 million for the third quarter.
OEM recorded revenue growth of $82.3 million, up 14% at CER. This compares with our model’s projection of $78.1 million for the third 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 $76.1 million registered growth of 5.3% year over year at CER. This compares with our model’s projection of $61 million for the third quarter.
Margins
In the reported quarter, gross profit totaled $416.3 million, up 11.3% year over year. The gross margin contracted 134 basis points (bps) to 55.8%.
Overall, adjusted operating profit was $165.5 million, up 30.8% year over year.
Adjusted operating margin saw a 375-bp expansion year over year to 22.2%.
Liquidity Position
Teleflex exited third-quarter 2023 with cash and cash equivalents of $881.5 million, up from $250.8 million at the end of second-quarter 2023.
Cumulative cash flow provided by operating activities from continuing operations at the end of the third quarter of 2023 was $372.4 million compared with $244.4 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 expected in the range of 6.25-6.45% (up from the previous guidance of 5.80-6.55%). The company’s constant-currency revenue growth expectation for 2023 lies in the 6.40-6.60% (the previous range was 5.50-6.25%). The current Zacks Consensus Estimate for total revenues is pegged at $2.96 billion.
The company raised 2023 adjusted EPS from continuing operations in the $13.30-$13.50 range (up from $13.00-$13.50). The Zacks Consensus Estimate for the same is currently pegged at $13.27.
Our Take
Teleflex exited the third 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. The company witnessed stability in surgical procedures, continued strength in the Asia Pacific market and healthy increases in our Interventional and OEM businesses. 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 from the broader medical space are Inari Medical NARI, Insulet PODD and Cencora, Inc. COR.
Inari Medical, carrying a Zacks Rank #2 (Buy), reported adjusted EPS of 4 cents in second-quarter 2023, beating the Zacks Consensus Estimate by a staggering 128.6%. Revenues of $119 million outpaced the consensus estimate by 2.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inari Medical has an estimated earnings growth rate of 725% for the next year. Inari Medical’s earnings surpassed estimates in all the trailing four quarters, the average being 66.8%.
Insulet, carrying a Zacks Rank #2, reported adjusted EPS of 38 cents in second-quarter 2023, beating the Zacks Consensus Estimate by 58.3%. Revenues of $396.5 million outpaced the consensus estimate by 3.3%.
Insulet has an estimated long-term earnings growth rate of 41.5% compared with the industry’s 14.4% growth. PODD’s earnings surpassed estimates in all the trailing four quarters, the average being 126.9%.
Cencora reported adjusted earnings of $2.92 in third-quarter fiscal 2023, beating the Zacks Consensus Estimate by 3.2%. Revenues of $66.9 billion surpassed the Zacks Consensus Estimate by 5.6%. It currently has a Zacks Rank #2.
Cencora has an earnings yield of 6.8% compared with the industry’s -1.1%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.5%.
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