Teleflex Incorporated (TFX)

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Teleflex Incorporated (TFX)

30th Annual JPMorgan Healthcare Conference Call

January 12, 2012 12:30 pm ET


Benson F. Smith – Chairman, President and Chief Executive Officer


Unidentified Analyst

Ready to get started with the next presentation. Coming to the stage now, we have Teleflex. And presenting for them is their Chairman, President and Chief Executive Officer, Benson Smith. Ben, go ahead.

Benson F. Smith

Thank you. Well, good morning, everyone, and thank you for joining us today. Let me begin by reminding you that some of the comments we make today may be forward-looking and include certain non-GAAP measures. It’s important to refer to our company’s SEC filings. In addition, given this conference is close proximity toward December 31 fiscal year and, we’re not going to be discussing 2011 results, as we are currently in the process of finalizing those results.

With that out of the way, let’s begin. Teleflex is a leading provider of specialty medical devices, focused on diagnostic and therapeutic procedures, for critical care and surgery. We operate in the critical care, surgical care, cardiac care, and OEM product categories. And our mission is to provide solutions that enable healthcare providers to improve outcomes and enhance patient and provide safety.

We have a rich history of growth in innovation, and are headquartered in the Western suburbs of Philadelphia, Pennsylvania. We employee approximately 11,006 and people and serve healthcare providers in more than 130 different countries.

This slide depicts the products breadth and diversity of our product line and whether it’s centrally or peripherally inserted central catheters, intravenous infusion ports, intra-aortic balloon pumps or catheter navigation and conformation products. Teleflex is focused on meeting clinicians and patient’s needs. Our products are used in a variety of applications and we have leading market shares in several product areas.

Turning to slide five, as many of you are aware during 2011, Teleflex completed the transformation of its portfolio from a diversified industrial conglomerate to a pure play medical device company. We have a well-balanced revenue footprint with about half of our sales being generated within North America, approximately 36% within Europe and the remainder in the Asia-Pacific and Latin America regions.

This slide depicts the addressable markets that we serve and some of its key market drivers. The addressable markets based on external estimates is approximately $10 billion and the main drivers influencing these markets are the changing global demographics, the rapidly evolving global healthcare markets and the continued introduction of technology advanced and innovative products.

The significant takeaway from this slide is that our current product portfolio and the areas that we are focusing our R&D efforts on provides us with an opportunity to gain significant market share over the next several years.

I’d like to briefly now take you through some of our business in a bit more detail. Teleflex is uniquely positioned to win the continually changing healthcare marketplace; our revenues are balanced not only geographically, but in terms of our product procedures.

Over our history, we have both acquired and built organically, well-recognized brand names in the medical device industry. And if you compare Teleflex versus some of our peers, you will notice that we have significant growth in operating margin expansion opportunities that we expect to realize over the course of the next few years.

On the last 12-month basis as of September 2011, our revenue was approximately $1.5 billion. And as I stated earlier, we are organized under the following broad product categories. Critical Care, which represents about 66% of our business, Surgical Care, which represents 18%, Cardiac Care which represents 5% and OEM which represents 11% of our sales.

Critical Care represented approximately $1 billion of our September 2011 revenue, last 12 months revenue that is. This segment of sales are well balanced, excuse me, this segment of our sales are well balanced both geographically and in terms of our products where future growth is being driven by innovative technologies.

The segment contains some of our most clinical product offerings. Today, we are the market leader in central venous catheters, are gaining market share in PICC and have we believe to be the most AVR catheter navigation and Confirmation Technology within the vascular access space.

In Surgical Care, this represented $276 million of our last 12-month revenue, similar to our critical care procedures, our surgical care sales are also well balanced with future growth driven by minimally invasive surgical technologies, innovative technology and product advances in emerging markets.

Turning to Cardiac Care, these products represents $74 million of our last 12-month revenue with a vast majority of sales being generated outside North America. This particular space offers Teleflex some intriguing opportunities. Technologies and therapies are changing and based on some investments we are making in the Transradial Access area, we believe that we are in a position to gain market share in this category over the next several years.

Finally, that takes us to our OEM business. Approximately, 11% of medical sales or a $159 million came from this area with the last 12 months ending in September 2011. This is predominantly a North American focused business with over 75% of its revenue coming from specialty product sales and little less of 25% coming from a variety of orthopedic product sales. Future growth in this area will come from technology innovations, speed to market, ageing demographics and continued regulatory scrutiny on suppliers. The continued pushdown of the 510(k) process to the OEM manufacturer, which Teleflex is well positioned to meet.

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