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Teleflex (TFX) Q2 Earnings Surpass Estimates, Margins Up

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Teleflex Incorporated’s (TFX - Free Report) adjusted earnings per share (EPS) from continuing operations of $3.35 for the second quarter of 2021 rose 73.6% year over year. The bottom line surpassed the Zacks Consensus Estimate by 17.1%.

GAAP EPS of $1.76 for the second quarter was a huge improvement from the year-ago figure of 24 cents.

Revenues in Detail

Net revenues in the second quarter improved 25.8% year over year to $713.5 million and 21% on a constant exchange rate or CER. The top line surpassed the Zacks Consensus Estimate by 4.8%.

Americas’ net revenues of $414.8 million increased 32.7% from the year-ago period and 31.8% at CER. A rebound in procedures following the disruption earlier in the year, with particular strength in Interventional Urology, Surgical, and Interventional, contributed to the revenue growth.

EMEA net revenues of $157.1 million rose 19.4% year over year and 8.4% at CER on the year-over-year improvement in procedures as countries continued to open up.

Teleflex Incorporated Price, Consensus and EPS Surprise

Teleflex Incorporated Price, Consensus and EPS Surprise

Teleflex Incorporated price-consensus-eps-surprise-chart | Teleflex Incorporated Quote

Revenues in Asia rose 20.1% reportedly and 10.3% rise on a CER basis year over year to $80.6 million. This growth was consistent with the performance observed in the first quarter of 2021. Notably, solid double-digit growth in China and high single-digit growth in Japan more than offset the decline witnessed in Southeast Asia.

Segmental Revenues

In the second quarter, the Vascular Access segment reported net revenues of $167.7 million, up 1.7% year over year and down 2.1% at CER. The Interventional business registered net revenues of $112.1 million, up 35.7% year over year and 30.9% at CER.

Within the Anesthesia segment, net revenues improved 46.9% year over year and 38.8% at CER to $95.4 million. The Surgical segment recorded net revenues of $98.2 million, reflecting an increase of 45.9% year over year and 39% increase at CER. Revenues of $92.2 million in the Interventional Urology segment rose 129.9% year over year and 129.4% at CER.

Meanwhile, OEM recorded revenue growth of $61 million, up 9.3% year over year and 6.9% at CER. The Other product segment’s (consisting of the company’s respiratory and urology care products) net revenues of $86.9 million declined 4.9% decline year over year and 9.9% at CER.

Margins

In the reported quarter, gross profit totaled $397.6 million, up 42.8% year over year. Gross margin expanded 663 basis points (bps) to 55.7%.

Overall, adjusted operating profit was $140.1 million, up 142.4% year over year. Adjusted operating margin saw a 944-bp expansion year over year to 19.6%.

Liquidity Position

Teleflex exited the second quarter of 2021 with cash and cash equivalents of $361.8, up from $324.6 million at the end of first-quarter 2021.

Cumulative cash flow provided by operating activities from continuing operations at the end of the second quarter was $265.1 million compared with operating cash flow of $134 million in the year-ago period.

2021 View

Teleflex has updated its 2021 financial guidance.

The company maintained its April-announced full-year revenue growth projection at the range of 10.5-11.75% year-over-year (up 8.5-9.75% at CER). However, the expected revenue growth now includes a $28-$32 million headwind in the second half of 2021 from the respiratory divestiture on Jun 28, 2021. This was not contemplated in the prior announcement. The current Zacks Consensus Estimate is pegged at $2.82 billion.

The company currently projects adjusted EPS from continuing operations for 2021 between $12.9 and $13.1 (an improvement from the earlier-expected band of $12.65-$12.85). This reflects 10 cents to 15 cents dilution in the second half of 2021 from the respiratory divestiture that was not taken into account in the prior guidance. The Zacks Consensus Estimate for the same is currently pegged at $12.76.

Our Take

Teleflex exited the second quarter of 2021 with better-than-expected results. The year-over-year growth in earnings and revenues looks impressive as well. Geographically, the company’s performance was strong in the Americas, EMEA and Asia (driven by double-digit growth in China and high single-digit growth in Japan). Strong performance in the Vascular Access, Interventional, Anesthesia, Surgical, Interventional Urology and OEM segments too contributed to the top-line growth. Expansion of both margins is another upside. The raised EPS guidance for 2021 buoys optimism.

However, a year-over-year decline in the company’s Other product segment (consisting of the company’s respiratory and urology care products) is concerning. Rise in operating costs does not bode well.

Zacks Rank and Key Picks

Teleflex currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced their quarterly results are Boston Scientific Corporation (BSX - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Laboratory Corporation of America Holdings (LH - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific reported second-quarter 2021 adjusted EPS of 40 cents, which beat the Zacks Consensus Estimate by 8.1%. Second-quarter revenues of $3.08 billion outpaced the consensus mark by 4.4%.

West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.

LabCorp reported second-quarter 2021 adjusted EPS of $6.13, surpassing the Zacks Consensus Estimate by 8.7%. Revenues of $3.84 billion exceeded the Zacks Consensus Estimate by 6.9%.