Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2017 Teleflex Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the call over to Mr. Jake Elguicze, Treasurer and Vice President of Investor Relations. Sir, you may begin.

Good morning, everyone, and welcome to the Teleflex Incorporated fourth quarter 2017 earnings conference call. The press release and slides to accompany this call are available on our website at www.teleflex.com. And as a reminder, this call will be available on our website and a replay will be available by dialing 855-859-2056 or for international calls, 404-537-3406; passcode 6373419. Participating on today's call are Liam Kelly, President and Chief Executive Officer; and Thomas Powell, Executive Vice President and Chief Financial Officer. Liam and Tom will provide prepared remarks and then we'll open up the call to Q&A. Before we begin, I'd like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today, as well as our filings with the SEC, including our Form 10-K, which can be accessed on our website. I would also like to point out that following the Company’s acquisition of Vascular Solutions, the Company commenced an integration program under which it is combining the Vascular Solutions business with some of its legacy businesses. Specifically, the Company is combining the Vascular Solutions North American business with the Company's interventional access business, which formerly was part of the Vascular North America operating segment, and the Company's cardiac business, which formerly was a separate operating segment included in the all other category for purposes of segment reporting. These businesses are now in the Company's Interventional North America operating segment. Additionally, the Company is combining the Vascular Solutions businesses in Europe, Asia and Latin America with the Company's legacy businesses in the respective locations, and these Vascular Solutions businesses are now part of the EMEA, Asia and Latin America operating segments, respectively. As a result of the operating segment changes, the Company has the following seven reportable segments: Vascular North America, Interventional North America, Anesthesia North America, Surgical North America, Europe, Middle East and Africa, Asia and Original Equipment and Development Services or OEM. In connection with the presentation of segment information, we will continue to present certain operating segments, which now include Interventional Urology North America and Respiratory North America as well as Latin America, in the all other category because they are not material. All prior comparative periods presented in this presentation have been restated to reflect these changes. In addition, we have also included restated quarterly and annual 2016 and 2017 revenue information, as well as restated annual 2015 revenue information on our website under Investor Relations. With that said, I would like to turn the call over to Liam.

Thank you and good morning everyone. In beginning, I would like to start by saying that during 2017 Teleflex achieved very positive results. These include driving additional operating leverage from our various restructuring initiatives; increasing our adjusted earnings per share guidance range on three occasions, ultimately achieving adjusted earnings per share at the very top-end of our most recently provided range; and completing two large acquisitions that help transform the Company’s constant currency revenue growth profile. And speaking of these acquisitions, our most recent acquisition, NeoTract, exceeded our prior expectations, reaching $39 million of revenue for the fourth quarter and $125.5 million for full year 2017. This translates into revenue growth of 121% for the quarter and 149% for the year. And as we look forward, we as a management team are enthusiastic about what we have accomplished over the past few years, and that the Company is well-positioned for success in 2018 and beyond. Turning to an overview of the fourth quarter, we saw strength from revenue growth associated with new products, which is a continuation of the trend we saw all year. In addition, during Q4 we saw strong shipping-day adjusted constant currency revenue growth within our higher-margin Vascular North America and Interventional North America segments. However, due to some temporary softness, our consolidated revenues in the fourth quarter were modestly lower than what we expected when we last provided guidance in early November. The delta versus our expectations primarily occurred due to two items and it is our belief that they are both transitory in nature. First, within EMEA, we saw lower than normal revenue growth, in part due to distributor conversions associated with our Vascular Solutions product lines. During the fourth quarter, we completed several distributor conversions, and in advance of completing these distributor acquisitions, the…

Thanks, Liam, and good morning everyone. Given the previous discussion of the Company’s revenue performance, I’ll begin at the gross profit line. For the quarter, adjusted gross profit was $336.3 million versus $276.7 million in the prior year quarter. Adjusted gross margin was 56.5%, a 270-basis point increase when compared to the prior year period. The expansion in adjusted gross margin was largely due to an increase in sales of higher margin products and the acquisitions of Vascular Solutions and NeoTract which are accretive to gross margin. Adjusted operating margin improved 40 basis points to 25.4%. The improvement was related to the gross margin flow through, somewhat offset by the addition of NeoTract, which operates at a higher OpEx cost structure. Adjusted net interest expense increased to $23.5 million from $11.7 million in the prior year quarter. The increase reflects the impact of the additional borrowings to finance the acquisitions of Vascular Solutions and NeoTract. Turning to our adjusted tax rate, for the quarter it was 10.9%, which compares to the prior year period rate of 16.5%. On a GAAP basis, the 4th quarter tax rate was 163.6%, reflecting $107.9 million of tax expense recorded in connection with the Tax Cuts and Jobs Act. $107.9 million tax expense reflects both a $46.1 million net tax benefit resulting from the reassessment and revaluation of deferred tax balances and a tax expense of $154.0 million for the one-time toll charge on the deemed repatriation of undistributed foreign earnings. We intend to pay the one-time toll charge over the eight-year period prescribed by the TCJA. I do want to point out that the net $107.9 million charge has been provisionally calculated and will be subject to further confirmation. Moving to the bottom line, fourth quarter adjusted earnings per share increased 14.6% to $2.44.…

Thank you, Tom. In closing, while we had some transitory issues that impacted our fourth quarter results, we feel very good about our full year 2017 performance and remain confident about what Teleflex can accomplish in 2018. Let me briefly recap some of the drivers in 2018 as we see them. First, our two scale acquisitions are transforming our organic growth profile. NeoTract is poised to continue driving adoption of UroLift and delivering rapid revenue growth. And Vascular Solutions is poised to accelerate momentum in the business with tailwinds from our go-directs in Europe. Next, we see double digit growth in our Interventional North America segment and accelerated growth over 2017 growth rates in both our Asia and EMEA segments. And lastly, new products are expected to continue building leadership positions in key niche markets and taking share in others. Overall, we believe we are in a great position to deliver a meaningful improvement to our organic constant currency revenue growth rate, demonstrated by our guidance of 5% to 5.5% for the full year. When you combine that with our adjusted EPS guidance of approximately 15% at the midpoint, we believe that makes for a very compelling 2018. That completes my remarks. I would now like to turn the call over to the operator to begin the Q&A session.

[Operator Instructions] Thank you, and our first question comes from the line of David Lewis with Morgan Stanley. Your line is open.

Liam, I want to start on organic growth for a second and the Company had a lot of successes, but organic growth progression has not been one of them. So, as new CEO two part question. What can you do to break this cycle? And as I think about 2018 expectations, our sense is 5% to 5.5% underlying maybe that's 3.5% to 4% in the core, one point from BSI, maybe 0.5 point from NeoTract, but why should investors believe those are appropriately risk adjusted here to start to year? And then I've a quick follow-up for Tom.

Let me start with first part of your question. How do we address this? I think David what happened in the fourth quarter, we see it as predominantly transitory, really our full year guidance calls for a total constant-currency growth of 14.25, 14.75. Within our full year performance for sure, there're puts and takes, NeoTract performed better than expectation as did our smaller M&A and new products continue to show progress, BSI and the core business underperformed modestly, due to two -- and I again say they're transitory events, in all in all our final results were 14.1% constant-currency growth, which was approximately 7.5 million of the shortfall in the middle of our guidance range. In this entirety Dave, we're talking about 30 to 40 basis points on a full year basis and really the drivers of the shortfall are continued destocking by the BSI distributors and also despite a really strong flu season, we see distributors in the United States file less inventory. Both of these, as I said are one-time transitory in nature, and we have seen in the past when U.S. distributors destock, they normally normalize their stocking levels in subsequent quarters. So it's a factor of having 50% of your North American business going through distributor. Now to address your question on the full year and bridging to 2018, the components of our organic constant-currency growth are as follows. We're guiding to 12% to 13%, so if we remove M&A of 7% to 7.5%, on organic, true organic growth of 5% to 5.5%. Vascular Solutions and NeoTract contribute 4.5% to that organic growth resulting in an organic growth of 3.5% to 4% from our core business. Now our growth in 2017 Dave was 3.2%, we have an additional billing day in 2018, which should add 40 basis points, and that gets me to the lower end of my range. Headwinds and tailwind combined like Surgical as the China go-direct and positive pricing from our go-direct really make me feel very comfortable with the guidance range and our ability to achieve it. I would also like to point out that the one-time impacted quarter or revenue have not hold our thinking on 2018 revenue and I really remain very positive on that and a real highlight for me I think was the over performance of NeoTract and I've often said this, that none all of rules is equal. And I continue with that hypothesis the growth that we delivered and areas of our performance, where our higher margin categories such as NeoTrack, our Vascular business unit invest in North America with Vidacare including intra-aortic delivering again over $20 million. So, I think that the future for 2018 looks relatively bright when you feel back the other elements of our organic growth, I would feel it's quite deliverable.

Okay, Liam, thank you, that's very clear. And then, Tom, just thinking about 2018, the real surprise obviously is tax, and there's all the maturation these last two months. So, if I think about the tasks, a couple of questions. One, I feel like on the margin with the tax guidance, the 2018 earnings guidance seems conservative. So could you talk about, the level of reinvestment of some of these tax savings given how late in the year they occurred? And then this rate you've talked about, for 2018, is that the rate we can think about for this business for the foreseeable future?

Okay, so David, as you point out, we do see a tax reform being a nice benefit for us versus NeoTrat expectations as we think about 2018 as Teleflex has become a more complex organization as a result of our recent acquisitions and growth, you know, there are some investment areas that we want to put some money towards to continue to build out our capabilities. We think the numbers of these are investments that will serve us well into the future. So we are reinvesting some of that tax savings. As far as the rate going forward, we've got a couple of things going on. First of all, as more and more of our income is generated from some of the recent acquisitions that could put some unfavorable mix in our tax rate as a result of having more US based income. Now with that being said, we're in early stages of assessing the recent tax reform regulations and it's, our expectation that we'll continue to work through those regulations in the coming months, to try and identify additional areas for planning. So as we think about the rate, I think it's a good baseline to start with, with the expectation that, that mix will be unfavorable in the coming years given more income in the US, but you know, we'll, we'll look to find opportunities to offset that with the future tax planning ideas.

Thank you. And our next question comes from the line of Larry Keusch with Raymond James. Your line is open.

Liam, I just wanted to circle back on, on the distributor side. I think, the one thing that's going to be bothersome them to, to folks today is obviously the 90 basis point decline in the core volume. So, again, as you, as you look at your businesses that were impacted by the distributor ordering patterns. I guess the question is why do you really think that occurred? And do you have any insight as we see here on February 22nd as to kind of what those distributors are now doing?

Thanks Larry. So, why it occurred given that we had such a strong flu season. It just the timing of as when these distributors would stock up for that flu season. Encouraging thing for me Larry is that we do have a very strong flu season. It's predominantly impacted in our Anesthesia and Respiratory businesses in the fourth quarter. And our expectation is that as it did previously it will come back in 2018. We do see positivity in the first month of 2018 early in the quarter. So I'm poised by that quite frankly, Larry. And the other thing that we did look at in quarter four was to fix our end customer volumes to ensure that there was no -- lots of share in any of these segments. So what we found was there our end customer volumes with trades being demonstrated a solid 5% end customer demand. So in my mind Larry, it almost an elderly has to normalize through the early part of 2018.

Okay, very good thank you for that. And then just two other questions. So on NeoTract, I guess they have when do you expect to launch the second generation device? And really why do not anticipate any real revenue generation from removal of the median lobe communication? And then the other question is on RePlas. I understand that you meet with the FDA now in January and they said that you're trial can come post approval. So what happens as you understand today, what's the sort of pathway to getting this on the market and would it only be available for military use until you complete that other trial? Thank you.

Okay, so I will start with RePlas, Larry. So, we did meet with the FDA in early January, they meaning was very positive I would say first of all, secondly we're still wining for absolute, as to what the recruitment is to get approval and what that approval would mean. So our anticipation is that the first clinical study would be provisioned with additional bench testing to get approval and that should accelerate having RePlas in the markets from late 2020 to area of that. We’re still waiting more clarity from the FDA that will mean jus military approval or general approval. Personally, Larry, I think it's only likely that they would go for a specific approval for military because it would be hard to a put a wall around this and to stop linkage of the product into other areas in view, but I still for the FDAs going back. We will have the update on this and we should have more clarity by the time we get to our investors day in March. Your second question was around the median lobe and around the median lobe. I think that clinicians as the use the euro products can make their own determination as to whether this is used for a median lobe. Obviously, we cannot promote this for that application. And secondly there is a significant amount of training that we need to do in order to prepare our sales force to be prepared to promote this product for the median lobe. That’s going to take a number of quarters and that’s why we expect, the revenue pick up from this to be a little bit later. In my mind, Larry, one thing that it does remove is an advantaged system of our competitors kind of that they can talk to the physicians and say, our buyers is applicable to median lobe and lateral lobes. So I think that will help our sales force out there in the market place. Your last -- I am taking in reverse order, Larry, I apologize. Your first but I'm addressing last is the launch of UroLift 2. And we're still in pre-market study with that Larry and we will update as soon as we have that completed. And we may once consider given that we've got the train -- sales force in the median lobe, just deleting that a little bit, but will assess that as we go through. We don’t want to overburden this sales force. I want to have them selling this product because it's such a rapidly growing product and we have as we said, plus 40% growth planned in -- at least 40% growth planned for 2018 for NeoTract.

Thank you. And our next question comes from the line of Richard Newitter with Leerink Partners. Your line is open.

Liam, just going back to the timing of the kind of the U.S. distributor orders that you said, your confidence is coming back. In a follow-up, you said that the flu and the impact of having on the ordering that was one of the kind of the main reasons that gives you confidence, it's going to come back early in the 2018. I guess compared to the situation that you've experienced when this has occurred in the past, was it also the flu or was it something else? And I'm just trying to make sure I understand what's path for Urologic. Thanks.

Yes, they are linked but not absolutely. So a strong flu facilitates the burn off of the inventory that they preorder. What happens in quarter four, Rich was we anticipated the normal buying that happens for the flu. We experienced it in our Vascular business, but in our Respiratory and Anesthesia business, it didn’t happened. The flu is very strong so that is why I'm pretty confident that buying will happen in 2018, and we firmed off because the flu season is actually at a its more prevalent than last year it's a strong flu than last year, and therefore I would anticipate that we would see this recovery in 2018 as distributors restock the in customer demand as I've said that we've seen in quarter four with substance being at that and the early signs in January would also defend to yourself.

Okay, and just to be clear though you think that will come back in the early part of the year like I said this is first half phenomena and or is this it's something that kind of that get spread out through '18. I'm just trying to make sure we get our models right here as we think of the quarter?

So, you would anticipate seeing the recovery in the first half and what we'll be watching closely as the normal a destocking in quarter three. So the normally destocking quarter three for inventory department through, so it may have as it may take it's through three quarters to materialize Richard.

Just another one on Percuvance, I think you made some comments. What if anything is contemplated in 2018 guidance and can you highlight some of the vascular new product releases that is that you are looking forward to.

Okay, so again I'll start with Percuvance, as I said in my remarks Rich, we anticipate -- we will be these back in the Americas following in the 510k in quarter four so therefore as we don’t have a revenue plans in 2018. We were looking forward to getting back in the markets, resurgent, enthusiasm is still very-very strong, for the products. And we're running the Vascular new products, we're still very encouraged by our new PICC portfolio with our positioning system. Our Medline catheter that has obviously got our folding technology on it to help prevent infection and those and our endurance products, so we have a good bowl of the new products coming through our vascular business that has been to buoy the solid revenues that we've seen within vascular in quarter four and that we anticipate in 2018, and beyond and vascular is one of our stronger margin business units, so having solid growth there, back to my hypothesis not all growth is equal, I think will be very encouraging for us.

And one just last one, UroLift, I appreciate that you're not committing to when precisely that UroLift is due -- is going to come out. What is key feature that you're going to think this is going to add? And then anything we should be thinking about on the gross margin side, when it does launch?

So, I've starting and then gross margin and then I'll go back to the features Rich. So the gross margin we anticipate -- the current gross margin in the low 70s. We think that once we have fully cannibalized that this has potential to move it into the high 70. Then regarding the features, I feel the features are really around ease of use. So, the new product is ease of use, there's also less waste. And when you consider that the amount of the procedures that are done in the doctors' offices, and DACs with the doctors' offices are on roughly around 60%, having a large volume of waste, is a problem for them, and this will make it a lot of easier for them. For Teleflex, it will help us comply with some of our green initiatives, but also for the customer it will mean less waste in the procedure and less products we held on the shelf, and the product that is actually easier for them to use and it should help them in positioning the system easier when they're delivering the implant.

Thank you. And our next question comes from the line of Matt Taylor with Barclays. Your line is open.

So want to follow-up on some of the components of organic growth you've been talking about here. If we look at the five to 5.5 and consider that you're getting 1.5 from Vascular in NeoTract. Can you talk about the shift from headwind to tailwind of distributor conversions? How much that adds? And then in terms of the come back on easy comps with the distributors in the U.S. how much does that add, and we kind of have base with 3.5 to four?

So, as I said earlier when I was talking about our guidance, our total mix versus the mid range of our guidance was approximately 2.5 million, less than half of that came from the North American distributors, more than half came from the EMEA destocking, so that would probably help you. As I look to choosing guidance, and the headwinds and the tailwinds, the tailwinds we had said that the headwinds for the China go direct was approximately 20 basis points in the year 2017, so that we would expect that to come back in 2018. The exit of the surgical business is approximately $8 million to $9 million in the first half of the year, so that's why you see Surgical come back quite stronger in the second half of the year. And then the distributor go-direct, which would be seen in pricing and that would have a better return for than the Surgical destocking and from the best way from the appointment. So you can see why I'm fairly comfortable with the guidance range that I've put out there today.

And I want to follow up on Percuvance, you made some comments there, but generally before you would talk about that is the biggest organic opportunity for the Company. Is that still your view given some of the delays that we've had here? Or do you think that the ultimate contribution could de=lever?

So first of all, I clearly made those comments before we acquired NeoTract, regarding the biggest organic growth opportunities. We still see the macro potential for that in the $300 million and the lot of pent up demand for the product, a lot of enthusiasm for surgeons and we look forward to getting back into the marketplace and what we do get back, we'll reassess the growth trajectory for it. Quite frankly, I think that we were still early in the adoption call for surgeon. I don't see this having a longer term impact on Percuvance and are percutaneous offering in the longer term. The important thing for me is to get back with a very solid product that works and then do the market a little bit like what we did, -- what we're doing with NeoTract today. I'm going to say that the strongest growth opportunities for Teleflex in the next number of years is really NeoTract give them that the growth profile about that asset and given them the fact that it closed much stronger than we expected in quarter four and even with that strong close, obviously that has the jump off point. We haven't changed our, our hypothesis that it should grow by 40% in 2018. So therefore I think in 2018, 2019 and 2020 and beyond, that will be one of the fastest growing organic acids in the Teleflex portfolio for a number of years to come. And based that on the fact that just exclusively when the United States, we've done $125.5 million in 2017 in the addressable market of about $6 billion. We've only begun to penetrate the urologists, we're at the very early stages of that and we've just now got 220 million lives covered. We're almost at the stage where we have full coverage across the United States.

Thank you. And our next question comes from the line of Matthew O'Brien with Piper Jaffray. Your line is open.

Liam, not to push too hard here, but the two year stack growth of NeoTract actually accelerate in Q4. So. clearly there's a lot of momentum here. Love to hear exactly what drove some of that acceleration you saw in Q4, again on a two year stack. So adjusting for the seasonality already. But then, the 40% outlook for the business, it's a pretty meaningful deceleration given what you're doing, I get bigger numbers. So why would it just be 40 against, given how much momentum that we're seeing?

Yes, we see we see that momentum as well and we're very encouraging by it Matt. The way we look at this is, we have now trained and converted many of the area the doctors, for this technology. We are now moving into the early majority. We believe, perhaps we're being conservative in our view, but we believe that going deep rather than going wide, and we moved to this area majority meaning potentially take a little bit longer to convert that part of the market, but it’s the most bigger segment of the market and once we do begin to convert it. We see the potential that we accelerate that within the future. So that the view that we have today, that’s the view of the new attractive management team and it's consistent with what they would have pursued themselves the price company before the acquisition, and that has a reason we left that stand along business unit to bring that expertise to bear. And we believe that perhaps it may be somewhat conservative given what we see in the growth rate but right now, we start to see trajectory on that really majority we think that’s an appropriate guidance of at least 40% for 2018.

It's the follow up question. Just on the gross margin range, it's kind of a broad range 170 to 220 basis points of improvement. So, can you just give us a sense for what gets you to the low end of that range versus what get's you to the high end of that range?

I'm going to actually ask Thomas to cover that.

So, with any given year makes certainly the factor and in this area we got a pretty high growth profile going on with NeoTract. I'd say that pushes the upper end of the range and you’re looking for stronger growth in some of the higher margin products about frame level. I wouldn’t say that necessarily there is anything that we envision right now that’s going to cause us to not the headed right towards the middle of that range. So nothing extraordinary that would need to occur this to get there. And again you get the upper end of the range its more growth in the higher mix products, on margin products excuse me.

Thank you. Our next question comes from the line of Anthony Petrone with Jefferies. Your line is open.

Maybe a couple of questions just on a quarter again distributor as it relates to flu and then few on NeoTract. Just on looking ahead to second quarter, third quarter when you do actually get a restocking from distributors, just given that extent of food this year, you think that restocking event will be up year-over-year. And then on NeoTract, I know the strategy here is to go deeper. Can you us a sense of average utilization today of urologist that are users UroList usres maybe on a monthly basis and no where potentially that can go over time. Thanks.

I will start with the distributors and what we would anticipate is to see in the first half given the strong blue, some think of within our Anesthesia and potentially Vascular and respiratory businesses. The really, the cutting point for it will be quarter three where there is normally a destocking. If it burns off the inventory which would be flu season that we’re having, I would anticipate that, that would occur. We would anticipate being a smaller destocking in quarter three. And then again, you're right back into the flu season for the restocking and order forth, so would be depended on what the blue looks like in quarter four. Regarding the customer, the NeoTract question, pardon me. What we see is that coming from existing customers in 2017, 63% of the revenue growth it came from existing customers in 2017 and in order to support this business we have continued to invest within the sales channels. And I know as we were anticipating in having a food sales organization of consultants and associates of approximately 70, we actually went above that in at the end of the year for that group of people. So that we will see so we continue to invest behind it to drawing and accelerate that top line growth, but then to your specific question 63% of the growth was coming from existing customers who in 2017.

Our next question comes from the line of Kristen Stewart with Deutsche Bank.

I was wondering if you can give us, what exactly you are expecting from NeoTract in terms of the sales because I'm a bit surprise that given the strong momentum that you are seeing. In the fourth quarter, why you are not seeing any level of accretion on the bottom line? I would have expected maybe a little bit more like maybe $0.05 to $0.10 or $0.10 to $0.15 just given the higher numbers I guess you are seeing in fourth quarter and it would have struck me as a little bit higher than you would have expected at the time in the acquisition as well. Why isn’t NeoTract at least modestly attractive for 2018? Is it just reinvestments that you are doing?

So, I would start and then I'll pass it over Tom who can give you much more detail on the components of the NeoTract. But in essence, the OpEx is much higher in this business to drive the revenue growth. The leverage for NeoTract really start to kick in 2019 and beyond, and as we have said in the past that we expect $0.35 to $0.40 of ESP accretion in 2019. And Kristen, that's a function of the continued top line growth and then you try to get leverage within the P&L based on the top line growth and the percent of OpEx required to run this business, as a percent of decreases that's why you try to get the leverage. So, the growth that we expect on the top line at least 40%, if we took at 40% we'd be approximately $50 million of growth, but we are investing behind this asset. We are doing registrations in Japan. We're gaining more clinical data. We are recruiting educators were trending on the median lobe, we're adding to the sales force in order to continue the hyper growth that we've seen. And I'll ask Tom to add any other color that he would like.

Well, Kristen, as we think about it, initially our expectation was growth of approximately 40% for 2018 and now based on the strength, so I think it's at least 40%. For the extent that we do see those revenues growing at a higher level and initially expecting, we should expect to see a little bit of the EPS accretion coming through. But right now again we're not modeling that higher level of growth, so our guidance is based on that 40% level.

And I guess just with all of the potential growth opportunities is it your view that if NeoTract continues to be better than expected, would be likely to reinvested in all of these opportunities or would you like that flow to the bottom line? How should we think about that?

So we've already actually even in quarter four accelerated investments within the sales organization to drive to top line growth. We're still early in the adoption curve. We would obviously at the time making assessment, but I am inclined to continue to invest in a productive state of channel driving a low 70s gross margin products. But we'd be thoughtful on that and take a balanced approach to delivering shareholder return and securing the long-term growth of the NeoTract portfolio.

Thank you. And our next question comes from the line of Dave Turkaly with JMP Securities. Your line is open.

I just wanted to talk Percuvance just quickly again. Is this the same issue like the -- I know you said 510k you expect it 4Q '18 but did something additional happen in the quarter, any product reworking or is this still the same initial thing that happened late last year?

Nothing, new David, this is ongoing. When I spoke in quarter three, I was not anticipating having to re-file the 510k, and that directly what's changed our thinking is the fact that we have to re-file our 510k, which means putting together significant dossiers and doing a filing to the FDA.

And then on NeoTract, I wondered if you could just give us an update on sort of the sales force size there, and maybe if there's sort of a plan in terms of how many you plan to -- how many new folks you plan to hire and sort of what you think they can do from a productivity standpoint when they're fully ramped?

So, I'll go back to the history in 2016 there were approximately 50 sales reps, at the end of the year between neurology consultants and associates, we actually thought we'd end up with 70, we went modestly over 70, we continue to see that cadence of as in reps and associates in 2018 to drive the growth.

Thank you. And our next question comes from the line of Matthew Mishan with KeyBanc. Your line is open.

First off just on Vascular Solutions. If you have the numbers the year-over-year, what was the growth in Vascular Solutions for the quarter and for 2017? And then why would there be a -- why would a shortfall from distributed conversions be a surprise to you, I mean you've kind of done this before?

We have done it before and when we have done it before, Matt, we've been dealing with Teleflex contracts. In this instance, we were dealing with Vascular contracts, which added some additional complexity unfortunately and calls a bigger impact then we were expecting. Turning to the VSI growth and almost all of the headwinds in VSI had been in the EMEA because of these go direct, so I am going to give you a number without the EMEA with the global growth on a full year basis Matt which is probably a better indicator then doing that, and that is 10%. And the other comment I would make is that the Interventional North American business that we have merged with VSI also grew about 12% organically in 2017. And that is being sold by the same sales organization to sell VSI. So that’s why we are reasonably confident on the double-digit growth, we've got the go-direct in 2018, we've got the go-direct become a tailwind, we got a motivated sales force, our excluding EMEA, the overall business is growing in that double-digit range. And once we have the EMEA, transitory issues behind us, we think that we are setup for success in 2018 and beyond.

Okay, great that’s helpful. And just two more, first on the freeze-dried plasma, with the accelerated approval pathway, how quickly can you manufacturing of RePlas? And last on the tax rate, what have you accounted for with stock options starting to shift?

Okay, with freeze-dried, we have enough capacity, we believe to supply the military demand all with the next four five years. So, as we bring on commercial demand and this is dependent on the FDA clearance, we should have enough capacity to carry through 2.5 to 3 years in the ballpark. We are moving constantly has said that, as we roll the product out, but I think we have enough capacity Matt, and it's not something we are concerned about, in the near to near to medium term. And on the tax rate, I let Tom, sorry Tom.

And then with regards to the windfall in the tax rate, so certainly last year, annuity in terms of the change in the accounting, so we monitored how that went throughout the year and we pushing it in our plan for this year, we included in the estimated, both for the restricted shares that are vesting or the restriction lapsing, as well as an estimate for stock options and that’s based on historical exercise as well as just looking at the number of options out there and available. So, in 2018 the level is slightly elevated from what we saw in 2017 and that’s been included into our tax rate.

Thank you, [Operator instructions]. And our next question comes from the line of Mike Matson with Needham and Company. Your line is open.

Tom, I think you said you expect mid to high single-digit EPS growth in the first quarter, did I hear that correctly and buyback lower that kind of the guidance for the full year, if I did hear it correctly?

Well first of all, you did hear it correctly and I think that with given any quarter, there is variability and that’s why we managed to a full year number. Now as we specifically look at the first quarter, couple of things going on, first of all, there is one pure shipping day in the quarter and then as you start to look at the seasonalization of both near track and after solutions operating profit, you start to see some good acceleration sequentially, quarter in quarter out, so we are seeing as more and more growth as the year progresses, so obviously Q1, having a least. Additionally, when you look at the interest expense headwinds for the year, there is a $0.55 headwind and if you look by quarter, the greatest headwind is in the first quarter, about $0.27, so that $0.55 just given how we put debt in the last year to finance the acquisitions, we have got more of a headwinds until we start to anniversary those debt issuances. Now I will say that the first quarter it's been benefited by having a full quarter faster solutions where last year it had have. So those are some of the big moving pieces, in addition last year was a pretty busy year and as a result were distracted from a number of projects, they are studying out the year with a lot of enthusiasm and getting a lot of projects up and running. So those were be the key factors that I would point too.

Okay thanks and just one more on with regards to RePlas, a senior member with Vascular Solutions said, it was somewhat expected to be somewhat dilutive to the gross margin, but there wasn't really expected a lot of sales and marketing expense or the drop there or the incremental operating margin on that. The sales were expected to be pretty high. I think your gross margin for lower than vascular solution was in standalone, but just curious. Is that still the case that incremental OpEx on this particular product is pretty low and there is the drop there of if the sales would be pretty high?

So, Mike, it's Liam here. Normally, we would expect a lower OpEx on any sales that you sell in respecting to a military call points just because of their structure. And we already had a channel in the EMS sector because our Vidacare portfolio. So that should also help. We haven't finalized pricing for the product yet, so it's really hard for me to comment and gross margins. We're very focused on getting the accelerated pathway and the approval and then we will -- once we have that we will enter into negotiations on what the price points of this product will get.

Thank you. And I'm showing no further questions at this time. I'd now like to turn the call back over to Mr. Jake Elguicze for any closing remarks.

Thanks, operator, and thanks to everyone for joining us on the call today. This concludes the Teleflex Incorporated fourth quarter 2017 earnings conference call. Have a nice day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.