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Teleflex's (TFX) Q1 Earnings Top Estimates, Margins Down

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Teleflex Incorporated’s (TFX - Free Report) adjusted earnings per share (EPS) from continuing operations of $2.88 for the first quarter of 2022 rose 5.5% year over year. The bottom line beat the Zacks Consensus Estimate by a penny.

GAAP EPS of $1.63 in the first quarter showed a 3.2% improvement from the year-ago figure.

Revenues in Detail

Net revenues in the first quarter improved 1.2% year over year to $641.7 million and 3.2% on a constant exchange rate or CER. The top line surpassed the Zacks Consensus Estimate by 1.6%.

Americas’ net revenues of $378 million increased 0.7% from the year-ago period and 0.8% at CER. In the quarter, surgical was the biggest contributor to growth, partially offset by the impact of COVID-19 and one less selling day. Excluding the impact of the selling day, the Americas region grew approximately 2.3% year over year.

Teleflex Incorporated Price, Consensus and EPS Surprise

Teleflex Incorporated Price, Consensus and EPS Surprise

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

EMEA net revenues of $136.9 million declined 3.1% year over year and improved 3.4% at CER. Interventional, Vascular Access, and Anesthesia products witnessed growth. EMEA continued to face a headwind from COVID-19 in early January and subsequently saw procedure volumes improvement as countries across the region opened up.

Revenues from Asia grew 8.6% and rose 12.5% on a CER basis year over year to $69.2 million.

Segmental Revenues

In the first quarter, the Vascular Access segment reported net revenues of $166.1 million, up 3.2% at CER. The Interventional business registered net revenues of $96.9 million, up 2.3% at CER.

Within the Anesthesia segment, net revenues improved 5% at CER to $86.9 million. The Surgical segment recorded net revenues of $89.7 million, reflecting an increase of 14.4% year over year at CER. Revenues of $74.9 million in the Interventional Urology segment rose 2.2% at CER.

Meanwhile, OEM recorded revenue growth of $57.7 million, up 9.2% at CER. The Other product segment’s (consisting of the company’s respiratory products that were not included in the divestiture to Medline, manufacturing service agreement revenues and Urology Care products) net revenues of $69.5 million registered a decline of 11.7% year over year at CER.

Margins

In the reported quarter, gross profit totaled $346.2 million, up 0.5% year over year. The gross margin contracted 39 basis points (bps) to 53.9%.

Overall, the adjusted operating profit was $105.9 million, down 4.9% year over year. Adjusted operating margin saw a 107-bp contraction year over year to 16.5%.

Liquidity Position

Teleflex exited 2022 with cash and cash equivalents of $466.7 million, up from $445 million at the end of 2021.

Cumulative cash flow provided by operating activities from continuing operations at the end of the first quarter of 2022 was $62.1 million compared with $110.8 million in the year-ago period.

The company has a dividend payout ratio of 10% at present.

2022 View

Teleflex reiterated its 2022 non-GAAP financial guidance.

GAAP revenue growth for 2022 is reiterated in the range of 2.30-3.80% from the comparable figure in 2021. The company restated its constant currency revenue growth for 2022 in the band of 4.00-5.50% year over year. The current Zacks Consensus Estimate for total revenues is pegged at $2.90 billion.

The company reiterated its adjusted EPS from continuing operations projection for 2022 between $13.70 and $14.30, suggesting an increase of 2.8-7.3% from the comparable reported figure in 2020. The Zacks Consensus Estimate for the same is currently pegged at $14.01.

Our Take

Teleflex exited the first quarter of 2022 with better-than-expected results. The company exhibited year-over-year growth across the Americas, EMEA and Asia regions at CER. The company’s reiterated revenue and adjusted EPS outlook for 2022, reflecting promising results compared to 2021, instills investors’ confidence.

However, a year-over-year decline in the company’s Other product segment is concerning. The ongoing COVID-19 headwinds continue to hamper UroLift procedures, further raising apprehension. Escalating operating expenses are building pressure on margins.

Zacks Rank and Other Key Picks

Teleflex currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space that have announced quarterly results are Qiagen N.V. (QGEN - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Centene Corporation (CNC - Free Report) .

Qiagen, carrying a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of 80 cents, which beat the Zacks Consensus Estimate by 12.7%. Revenues of $628.4 million outpaced the consensus mark by 6.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Qiagen has an estimated long-term growth rate of 11.5%. QGEN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 11.7%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 14.2%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.

Centene reported first-quarter 2022 adjusted EPS of $1.83, which surpassed the Zacks Consensus Estimate by 8.9%. First-quarter revenues of $80.1 billion outpaced the Zacks Consensus Estimate by 1.9%. It currently has a Zacks Rank #2.

Centene has an estimated long-term growth rate of 14.2%. CNC has an earnings yield of 6.6% compared with the industry’s 5.6%.