Teleflex Incorporated (TFX) Q4 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter 2019 Teleflex Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. Jake Elguicze, Treasurer and Vice President of Investor Relations. Please go ahead, sir.

Good morning, everyone, and welcome to the Teleflex Incorporated Fourth Quarter 2019 Earnings Conference Call. The press release and slides to accompany this call are available on our website at www.teleflex.com. 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 5857007. 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. With that said, I'd like to now turn the call over to Liam.

Thank you, Jake. And good morning, everyone. It's a pleasure to speak with you today. The fourth quarter 2019 capped an excellent year for Teleflex as, during Q4, we once again generated upper-single digits constant currency revenue growth, but also achieving the highest adjusted gross and operating margins since becoming a pure-play medical device company. During the fourth quarter, revenues grew 7.1% on a constant currency basis. And like the first nine months of the year, during Q4, the strength in our top line performance was once again broad based and included 54.4% growth in Interventional Urology, 6% growth in Interventional Access and 4.6% growth in Vascular Access, while from a geographic perspective, we achieved particularly strong growth within the Americas where constant currency revenue growth was 11.7%. Fourth quarter constant currency revenue growth also included the benefit from one additional selling day. However, this was offset by a headwind resulting from the shutdown of a facility of one of our third-party sterilization providers during the quarter. From a full-year perspective, 2019 was the first year of our three year long range plan. And I am pleased that we were able to exceed our LRP constant current revenue growth expectations as our Interventional Urology business grew approximately 48%, our Interventional Access business grew approximately 10%, our OEM business grew approximately 8%, while both our Vascular Access and Surgical businesses each grew approximately 6%. Additionally, during 2019, we were able to proactively pull forward investment spending that we expect will pay benefits in future years. Finally, we ended the year with an adjusted gross and operating margin profile that provides us confidence in our ability to achieve our previously provided long range targets. As we transition into the second year of our LRP, we remain confident in our ability to generate significant constant currency revenue growth, margin expansion and adjusted earnings per share growth. And last, I am pleased to announce that, on February the 18th, we completed the acquisition of privately-held IWG High Performance Conductors, Inc., or HPC, an industry-leading manufacturer of highly engineered, minimally invasive medical solutions. HPC is expected to be accretive to our constant current revenue growth rate and our adjusted operating margins. Importantly, we also expect this acquisition to be accretive to our full-year 2020 adjusted earnings per share. With that as an overview, let's now review quarter four revenue in more detail. I will begin with a review of our reportable segment revenues. And unless otherwise noted, the growth rates I will refer to are on a constant currency basis. The Americas delivered revenues of $400 million in the fourth quarter, which represents an increase of 11.7%. This was driven by our Interventional Urology, Surgical, Interventional Access and Vascular Access product categories. But on a full-year basis, the Americas grew 10.6%. Moving to EMEA. It reported revenues of $145.9 million in the fourth quarter, which represents a decrease in 0.6%. The decline in EMEA revenue was in part due to the timing and phasing of certain distributor orders. On a full-year basis, EMEA grew 2.7%. Turning to Asia, revenues totaled $80.5 million in the fourth quarter, which represents an increase of 2.7%. From a product standpoint, growth was strongest within our Interventional Access and Anesthesia categories, while from a geographic perspective, our business in China grew 8.5%. This was somewhat offset by weakness in Australia, New Zealand and India. On a full-year basis, Asia grew 6.8%, led by growth within China of 11.5%. And lastly, our OEM business reported revenues of $54.6 million in the fourth quarter, which represents an increase of 4.3%. On a full-year basis, our OEM business grew 8.2%. Now, let me move to a discussion of our revenue by global product category. Like my comments regarding our reportable segments, my comments regarding our global product category growth will also be on a constant currency basis. Starting with Vascular Access. Quarter four revenues increased 4.6% to $154.6 million. This was driven by growth in PICCs and EZ-IO. Now to Interventional Access. Fourth quarter revenue was $112.7 million, which is an increase of approximately 6%. Growth was broad based and was driven by increased sales in complex catheters, biologics, OnControl and MANTA. It was somewhat offset by the divestiture of our catheter reprocessing product line, which had a very strong fourth quarter of 2018. Turning to Anesthesia, quarter four revenue was $85.3 million, which represents a decrease of 1.3%. It was primarily driven by a slight reduction in the buying patterns of US-based distributors. Shifting to our Surgical business, revenue increased 3.9% to $95.2 million. The increased revenue was driven by sales ligation clips. Moving to Interventional Urology, quarter four revenue increased a robust 54.4% to $89.1 million. This was a fantastic performance during the quarter, particularly considering it was up against a very difficult comparable. Our sales force continues to make excellent progress, driving physician adoption of the UroLift System as we ended the year having trained in excess of 500 new urologists, exceeding our goal of training 450 new urologists. Given that since the inception, we have trained over 20% of the 12,000 US-based urologists, coupled with an expectation that we will train at least 500 new urologists during 2020, we plan to begin a piloted national direct-to-consumer campaign as we move throughout the year. It is our belief that this campaign will further aid in creating awareness of the UroLift System and will help make UroLift the standard of care for the treatment of BPH. Transitioning to your UroLift 2. We continue to expect to begin the rollout of the UL2 during the first half of this year. And finally, since OEM was covered in [Technical Difficulty] summarize fourth quarter revenue for the businesses within our other category, which consists of our respiratory and urology care products. Revenues here were down 4.2%, totaling $89.4 million. Despite a rather robust flu season, these product categories declined as compared to the prior year primarily due to the sterilization issue that I referred to earlier. That completes my comments on quarter four revenue performance. Next, I would like to briefly discuss our recently received label expansion for the UroLift product. During January, the FDA granted the UroLift System an expanded indication for use to treat larger prostates, between 80 grams and 100 grams (sic) [80 cc and 100 cc]. The collection of data presented to the FDA demonstrated that the UroLift System treatment is safe and effective in men with larger prostates with outcomes similar to the pivotal L.I.F.T. randomized control trial. This new indication marks another exciting milestone, and is an opportunity for hundreds of thousands of more men to benefit from the UroLift system and the durable and long-lasting relief it can provide without any risk of sexual dysfunction. And finally, before I turn the call over to Tom, I'd like to take a moment to update you on the acquisition we announced this morning. On February 18, we acquired HPC for $260 million. HPC is a market leader in insulated ultra-fine wires and polyimide micro diameter tubing components and will become part of our OEM segment. This acquisition provides two highly complementary, differentiated capability platforms, including ultra-fine wired tubing components for therapeutic applications in fast-growing markets such as electrophysiology, peripheral management and pain management. The acquisition also gives our OEM business a platform with ultra-fine wire components for conducting electricity in healthcare applications. We are pleased to have been able to make this acquisition and it is expected to be accretive to our constant currency revenue growth rate and adjusted operating margin profile, both in the immediate and long term. It is also expected to be accretive to our adjusted earnings per share beginning in 2020. In closing, I would like to reiterate how pleased we were with our performance during the first year of our long-range plan. Revenue growth exceeded our initial expectations, driven by a broad spectrum of products and geographies. But on the bottom line, we were able to grow our adjusted earnings per share more than twice our as-reported revenue growth. After having completed the first year of our three-year LRP, we feel confident in our ability to achieve the goals laid out in May of 2018. I would like to thank our employees and management teams for their excellent execution and for their continued focus on reaching our goals. That completes my prepared remarks. I would now like to turn the call over to Tom for a more detailed review of our fourth quarter financial results and full-year 2020 financial guidance. Tom?

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 $403.2 million versus $369.3 million in the prior-year quarter for an increase of approximately 9.2%. Adjusted gross margin increased 160 basis points versus the prior-year period, reaching an all-time high of 59.2%. The expansion in adjusted gross margin primarily reflects increase sales volumes, a favorable sales mix of higher margin products including UroLift, Vascular and Interventional Access, benefits from footprint restructuring programs and net positive pricing. Adjusted operating profit was $184.5 million as compared to $169.9 million in the prior year, or an increase of approximately 8.5%. Adjusted operating margin increased 60 basis points versus the prior-year period, reaching 27.1%, also an all-time high. Continuing down the income statement, net interest expense decreased to $16.8 million, and this compares to 23.1 million in the prior-year quarter. The decrease of interest expense primarily reflects the impact of our cross currency swap agreements. Moving to taxes, for the fourth quarter, our GAAP effective tax rate was negative 6.4% and reflects a discrete tax benefit resulting from remeasuring the relevant deferred tax assets and liabilities following our non-US legal entity restructuring undertaken as a result of a foreign tax law change that became effective on January 1, 2020. On an adjusted basis, our fourth quarter tax rate was 7.7% as compared to 11.7% in the prior-year period. That takes me to our fourth quarter 2019 adjusted earnings per share, which was $3.28 cents, or an increase of 18.4% as compared to prior year. Turning now to select balance sheet and cash flow highlights. During 2019, cash flow from operations totaled $437.1 million, up $2 million as compared to the prior year. The increase in cash flow from operations is primarily attributable to favorable operating results, partially offset by net unfavorable impact of changes in working capital and contingent consideration payments of $26.1 million. When normalizing for the contingent consideration payments, cash flow from operations would have increased approximately 6.5%. Turning to debt and leverage, during the fourth quarter, we reduced debt outstanding by approximately $90 million and our net leverage was approximately 2.4 times at year-end. Following the completion of the acquisition of HPC, our pro forma net leverage would be approximately 2.7 times. Lastly, during the fourth quarter, the company completed the redemption of its previously outstanding $250 million, 5.25% senior notes due in 2024. While this transaction is leverage neutral, it will benefit 2020 in the form of reduced interest expense. The transaction was completed through borrowings on the revolver. In summary, 2019 was a very successful year for Teleflex. We were able to raise our constant currency revenue growth expectations twice, ultimately achieving revenue growth of 8.1%. From an earnings standpoint, adjusted earnings per share increased 12.6% to $11.15. We are pleased to have been able to raise guidance during the year and then deliver full-year earnings in excess of our upwardly revised guidance. The earnings beat was particularly rewarding as to do so required us to offset a foreign exchange headwind that was approximately twice that of our initial expectation, plus greater-than-expected tariffs in China and an unforeseen issue with one of our third-party sterilization providers. And this completes my comments on fourth quarter and full-year 2019 results. Now I'll move to 2020 guidance. In 2020, we project constant currency revenue growth of between 7.2% and 8.2%. This range includes approximately 1.2% of revenue growth coming from the acquisition of HPC. Excluding the acquisition, we project constant currency revenue growth of between 6% and 7%, with Interventional Urology, Interventional Access and Vascular Access being key contributors to growth. As it relates to UroLift, we expect the revenue to increase at least 25% over 2019 levels. For 2020, our guidance assumes a 70 basis point headwind from foreign exchange, with the greatest impact being in the first and second quarters of the year. As a result, we expect our as-reported revenue to increase between 6.5% and 7.5% during 2020. And this would equate to a dollar 1 range of between $2.764 billion and $2.790 billion. Our guidance also assumes sterilization disruption will adversely affect our first half of 2020 revenues by between $5 million and $7 million. Lastly, our guidance assumes a regular headwind in China from the coronavirus of $5 million to $10 million, or approximately 5% to 10% of our full-year China business. This projection assumes that life in China returns to normal at the beginning of April. However, given the fluidity of the situation, this estimate may change as we learn more. Turning next to gross margin. During 2020, we anticipate that adjusted gross margin will increase between 65 basis points and 115 basis points to a range of between 58.75% and 59.25%. We expect gross margin expansion to be driven primarily by favorable mix of high growth, high margin products, including Interventional Urology, Interventional Access and Vascular Access, as well from continued benefits from previously announced footprint restructuring programs. Moving now to adjusted operating margin. During 2020, we anticipate that adjusted operating margin will increase between 145 basis points and 195 basis points to a range of between 27.5% 27.75%. The increase in adjusted gross margin will largely come from gross margin line, coupled with greater OpEx leverage as compared to last year. As previously communicated, we pulled forward certain OpEx spending into 2019. And as we move forward into 2020, we expect to better leverage our cost structure from both a UroLift perspective as well as from our base business. Finally, the acquisition of HPC is expected to be a minor tailwind at the adjusted operating margin line. And that takes me to our adjusted earnings per share outlook for 2020. And this slide serves as a bridge from our full-year 2019 adjusted EPS result to our full-year 2020 EPS outlook, beginning with 2019 adjusted EPS of $11.15. From an operating standpoint, in 2020, we project additional earnings of between $1.92 and $1.99 per share, or an increase of between 17% and 18%. Included in this range is a $0.06 adverse impact from sterilization. We expect to generate the significant level of operating leverage to revenue growth, favorable mix and manufacturing cost reduction initiatives. In 2020, we expect interest expense to range between $70 million and $73.5 million. And this includes an assumption that we will initially fund the acquisition of HPC to borrowing under our revolver and then term out those revolver borrowings later in 2020. The year-over-year reduction in interest expense is expected to contribute between $0.09 and $0.16 of earnings accretion Moving to taxes. During 2020, we project that our adjusted tax rate will be in the range of 13% and 14% and will result in adjusted earnings per share headwind of between $0.27 and $0.42. The projected year-over-year increase in the adjusted tax rate is the result of a greater expected mix of US taxable income, principally resulting from UroLift growth. Additionally, our assumption is that the 2020 windfall benefit from stock-based compensation is at a more normalized level versus the atypically high level realized in 2019. Turning to share count. We estimate that weighted average shares will increase to 47.5 million for full-year 2020, which is dilutive by approximately $0.11. Moving to FX, assuming a full year euro to dollar exchange rate of $1.11, FX is expected to be a headwind of approximately $0.10. And finally, we are factoring in between a $0.05 and $0.10 cent headwind associated with the coronavirus. Despite several headwinds, our adjusted earnings per share outlook of $12.50 to $12.70 is robust, representing growth of between 12.1% and 13.9% versus 2019 or a growth rate approximately double that of our expected as-reported revenue growth. And while it is not our practice to provide specific quarterly financial guidance, it has been our practice at the outset of each year to highlight some considerations regarding variability between our quarterly expectations. Beginning with selling days, 2020 has one additional day as compared to 2019 as there's one less day in the first quarter and two more days in the fourth quarter. Similar to 2019, our guidance assumes that we will realize approximately 22.5% of full-year reported revenue and approximately 19.5% of full-year adjusted earnings per share during the first quarter of 2020. These estimates reflect our expectation that Q1 will be adversely impacted by $5 million to $7 million as a result of sterilization, plus $5 million to $10 million as a result of the coronavirus, plus our expectation that FX impacts will be the greatest in the first quarter. For the adjusted EPS perspective, the combination of the sterilization item and the coronavirus are expected to negatively impact Q1 results by $0.11 to $0.16. Finally, our revenue and profitability in the first quarter will be negatively impacted by one fewer selling day, which we estimate will have a $9 million impact on revenue. So, offsetting these Q1 headwinds will be the partial quarter benefit coming from the acquisition of HPC. And that concludes my prepared remarks. I'd like to now turn the call back over to Liam for closing commentary.

Thanks, Tom. In closing, we're excited for what 2020 holds for Teleflex. We expect as-reported revenue growth of between 6.5% and 7.5% and constant currency revenue growth of between 7.2% and 8.2%, including approximately 1.2% from the acquisition of HPC. And despite certain headwinds, we expect another year of strong adjusted earnings growth that is about double the rate of our forecasted as-reported revenue growth. Looking out to 2021, we remain confident in our ability to grow our constant currency revenue growth between 6% and 7% and our adjusted gross and operating margins to reach ranges of between 60% and 61% and 30% and 31%, respectively. That concludes my prepared remarks. Now, I would like to turn the call back to the operator for Q&A.

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

Good morning. Liam, I want to start with growth and maybe have a quick question on China to follow-up. But just thinking about 2020 guidance and some of the key contributors, so I noticed your NeoTract contributed half of corporate growth in 2019. You're guiding 2020 at 25%. That's meaningfully down from the 50% exit rate. And given the difference between 25% and 35% growth for you this year is a full point of growth, I guess just sort of walk us through the investments in 2020 and why be realistic for growth to decelerate that sharply? And then, related to that, just on MANTA, just give us any sense of what you're thinking MANTA market share could be in 2020? Then I have a quick follow-up on China.

Yeah, absolutely, David. So, let me start with the growth profile of Teleflex with UroLift and ex-UroLift in 2019. So, our total growth – constant currency growth was 8.1%. The UroLift contributed approximately 4% to that and the rest of the business approximately 4.2%. now, do bear in mind please, David, that we did have that sterilization impact of about 30 basis points. So, if you were to normalize for that, the rest of the business would have grown at 4.5%. We've all always been reasonably cautious when we enter a year. As I've said many times, we are moving from the early adopter to the fast follower with regards to the UroLift product. And as such, we've always thought it should take a little bit longer to bring those new category of docs on board. Having said that, we have executed to an incredibly high level through 2019. The end market conditions doesn't change. And as we announced on the call today, we are going to do a nationwide direct-to-consumer pilot during 2020 that we think could actually help that product as we make more and more men aware of the possibility that there is a long-term, long-lasting solution with no sexual dysfunction for the impact that they have. So, we'll see how we go through the year, but it had a barnstormer of a 2019. The UroLift product, as you're aware, even accelerated as we went through the year and, quite honestly, beat all of our expectations as it ramped, and especially important to hit 54.4% when they were really up against their toughest comparable of any of the years. So, excellent execution. And I think, if nothing else, it does validate our decision not to launch the UL2 into that sales force in the fourth quarter to keep them focused on accelerating the top line The other part of your question was I think around MANTA. And I think that we completed the limited market release in Q4, and we're in full launch as of January 1. We continue to get really positive feedback and high reorder rate from the customers. And with the combination of our limited market release and continued growth in EMEA, we actually penetrated 4% of our target market of $200 million to $300 million in 2019. And we actually expect to penetrate 8% of that market in 2020. Great clinical data, as you know. 70% reduction in vascular complications. And taking the mean time to hemostasis down from 6 to 10 minutes to 23 seconds. So, we're very excited about that product as well. I think I answered all your questions, David. Did I?

You did, Liam. And just quick one on China. I appreciate the commentary on China coronavirus impact for first quarter. Just more broadly, Liam, there would be multiple competitors and some loose competitors talking about China pricing developments in 2020 and beyond. One of your competitor is in the peripheral catheter segment. Just maybe talk about your China portfolio and how you're feeling about China tenders and pricing impact on your business as we look out this year and next year. Thanks so much.

Yeah. Sure, David. So, really, when we decided on what – when we decided on what products we're going to sell into China, we're very, very selective. So, if you think back to our Analyst Day, some investors were a little surprised that our highest gross margin of any of our regions was in Asia Pacific. A key part of that is because of the products we actually sell in China. We sell the highest end of our surgical products, we sell our coated CBCs, we sell our intra-aortic balloon pumps and we sell our portfolio of laryngeal masks. All products are highly differentiated, incredibly hard to copy. And that's why I believe that our portfolio in that regard at least is a little bit unique, and we have not seen that same price pressure that we know other companies have been talking about. And I think it's down to the portfolio we sell. We sell very few of our Foley catheters, for example, because in every region that you'd be selling in, there'd be 50 competitors. Whereas if you're selling coated CBCs with antithrombogenic and anti-infectious protection, there is no competitor in that space. So, therefore, you're not under the same price pressure. So, our selectiveness in the portfolio that we sell in China, David, is really standing to us in regard to that price pressure that others are seeing.

Great. Thanks so much.

Thank you.

Our next question comes from Larry Keusch with Raymond James. Your line is open.

Thanks. Good morning, everyone. I guess, to start out, and maybe directed towards Tom, and I think, Liam, you may have said this in your prepared comments, but the punch line is that you guys still remain confident in your ability to hit the margin targets in the LRP. If I look at kind of what you have assumed for 2019, I think on the midpoint of the range, it's around 170 basis points, so that would imply an acceleration above 200 basis points of expansion in 2021. So, again, just remind us how you're thinking about that 30% to 31% range and what gets you there from where we currently are.

Okay. Well, I think as we look at the key drivers of our margin expansion, it will come primarily from the mix of high growth, high margin products, including Interventional Urology, Interventional Access, Vascular Access, MANTA, as well as benefits from the previously announced footprint restructuring program. So, those are the key drivers of gross margin, and that's going to drop down to the operating margin. When we also take a look at the op margin, what we're seeing is really, despite the investment behind the UroLift, we continue to see their op margin accelerating dramatically as we are better able to leverage cost structure, but we'll see even more of that as that business continues to grow. And perhaps the level of investment, it wasn't as high as what we saw in 2019. So, essentially, what we're going to expect for 2021 is a continuation of these factors that are driving 2020, which is essentially mixed in the high growth, high margin products, benefits from restructuring programs, leverage of our cost structure on both the base business as well as UroLift. And so those are the key components. I would say that, as we look at this, UroLift product will be a major driver of our margin expansion.

Okay, perfect. And then, maybe just on that point for UroLift and for Liam, Liam, maybe just give us – sort of a multi-part question here. But talk a little bit about the sales force adds that you've been able to make as you come into 2020 in the US. Where do you stand right now with building the infrastructure for Japan? And again, from the time you get reimbursement to when you really get things up and going in Japan, what has to happen? I think there's actually a post approval, post reimbursement study that has to be done. Thank you.

So, Larry, thank you very much. So, let's start with sales force in the US. So, we added approximately 20 sales reps in the fourth quarter of 2019. Our original thinking was we would be adding them right about now. We pulled that forward, so that we would begin the year with a stable sales force with all the territories aligned and the team executing at a high level as they have been since we bought it. This business just continues to exceed our expectations, Larry. For Japan, we still expect to be generating revenue in 2021. We do anticipate that we will get the reimbursement approval at the latter half of this year, and therefore, generate revenue in 2021. We have pre-invested and we have feet on the street, Larry, doing market development work in Japan as I speak and we had them in 2019. Once we get the latter end of 2020, there will be some modest additional investment in order to ensure that we start generating revenue in 2021. But really, model revenue in Japan in 2021, Larry, I would ask you, rather than in 2020. And that's what we've been consistently trying to tell the investment community. With regard to the post reimbursement, yeah, there is a requirement to gather some information and we have the infrastructure in place to do that in order to submit that to the government. That shouldn't stop the revenue ramp, Larry. It's a database that we continue to actually collect data in North America as we grow as much as we did in 2019.

All right, perfect. Thank you very much. Thank you.

Thank you. Our next question comes from Richard Newitter with SVB Leerink. Your line is open.

Hi, thanks for taking the questions. I have two. One on UroLift and then one on the acquisition that you did and how that fits into your long-range plan. Maybe just on UroLift, Liam, is the right message here – because it sounds like, all of the indicators are – things only feel like they're set to get better from a momentum standpoint. Yet, as David had asked earlier, your guidance implies pretty significant deceleration. Is that basically just predicated on an assumption that this kind of transition to middle adopter, you've quite frankly been anticipating and braced for for a number of quarters in a row that hasn't quite happened and stifled growth, that that's your kind of running assumption that it's going to hit in 2020? But if it doesn't, presumably, there should be a faster growth trajectory there? I guess, am I thinking about kind of your – what's driving that deceleration versus what you're actually seeing in reality and that discrepancy there? Is that the right way to think about it?

Yeah, Rich. That's a good question. Rich, nothing has changed in our end markets and there's no big pull here. Let me start by saying that. There's nothing that worries Liam Kelly about that business. Secondly, let me just say. At the beginning of every year, we're always pretty cautious about moving from the early adopter to the fast follower. Now, we've tried offset that by adding more sales reps and that seems to have done the trick for us the last couple of years. But as you would have asked us to be from time to time, we're trying to be a little bit cautious out of the gate in case there's an impact from moving – the early adopters to the fast followers. But there's no big worry out there from the Teleflex team's perspective with regard to the end markets. I actually spent a full week on the road in this quarter, visiting with urologists, talking to them about the DTC that we were anticipating bringing and asking them to be ready because the one thing that we need as we do this test at national DTC is the catcher's mitt. And I've got to tell you, there was a lot of excitement from neurologists that I met. I think I must have met about 15 neurologists over a week, and there was a lot of excitement about what we were doing in the DTC campaign. And I think the onus is on Teleflex to inform men about the UroLift product being a solution to the treatment of BPH. Our research tells us that, of the men that have BPH and are under the care of a urologist, only about 5% or 6% of them are aware of the UroLift being available, and that's something that we feel that we have to address and we have to raise the knowledge of men out there about the treatment option with no sexual dysfunction. So, I think that's the way we're looking at it right now, Richard. As we go through the year, obviously, we'll update as we go.

Okay. Thanks for the color there, Liam. And then, maybe just a follow-up here on the acquisition and as it relates to your long-range plan, what's the growth profile of HPC on the top line? And I'm assuming it's growth accretive. With the context of the 6% to 7 long-range plan, which does not contemplate any acquisitions, nor does the 30% to 31% operating margin target by 2021. Does this deal potentially put you towards the mid to upper end? Or does this kind of – how does this factor into your ex-acquisition long-range plan guidance metrics? Thanks.

Yeah, I think you're right. Acquisitions were not contemplated in our long-range plan. I think to be balanced, Rich, neither were tariffs, neither was FX, neither was the coronavirus, neither was sterilization. And we've overcome all of those obstacles as we've exceeded on our long-range plan in delivering better top line growth and better earnings per share than we anticipated. So, like any long-range plan, there's headwinds and tailwinds. This was not in our long-range plan. You're absolutely correct. It is accretive to our top line growth. It's actually accretive to OEM's top line growth and it is also accretive to our op margins. And that's obviously why we were keen to get this. But more importantly, I think for our OEM business, it gets us into a really nice space. It gets us into this thin-walled, wire reinforced catheter space that is growing rapidly because the catheter space is moving, catheters have to get smaller and they have to have more torque. And if you're going into neuro procedures, interventional radiology, interventional cardiology, structural heart, peripheral and EP procedures, this is the type of technology that you must have and it was a gap within our OEM business. And we couldn't be happier to have closed it just a couple of days ago.

Thank you.

Thanks, Rich.

Thank you. Our next question comes from Shagun Singh with Wells Fargo. Your line is open.

Thank you so much for taking the question. I wanted to touch on UroLift's strong performance in Q4. Can you share some metrics with us such as the utilization rates you're seeing within your current customer base, growth in new customer onboarding, as well as the DTC initiative? And then, specifically on the DTC initiative, Liam, I believe you had indicated that you were looking for a critical mass of physicians trained, about 6,000 or so. So, the news comes kind of ahead of expectations. Can you elaborate on the national – on the going national with the DTC initiative? How expensive is it going to be? And if it goes well, would you plan a full launch in 2021? Typically, it's associated with an uptick in – meaningful uptake and growth, so any color that would be helpful.

Okay. There's a lot there, Shagun. So, I'll try and do as many as I can. So, on your first point, about 60% of our growth continues to come from existing customers, with 40% coming from new existing customers that we bring on. I can tell you that we have continued to see, since we bought this acquisition, same-store sales ramp quarter after quarter after quarter. And that's one of the indicators that we look for, is the same-store sales and how they ramp. Regarding your part of your question on DTC, we did want to have a catcher's mitt, Shagun, [indiscernible] competitors that we were thinking of doing this. So, that's why we were being a little bit more coy than normal as we were talking about this. As we sat back and done the analysis of our geographic coverage, we believe we have sufficient urologists trained out there, so that patients will be able to find the urologists in every part of America following the DTC campaign. If you go back to 2018, we did six DTCs, six regional DTCs. Then, last year, we did 16 DTCs. So, we've actually got a good base of knowledge on the direct to consumer campaigns. It will be a mixture of television campaign, focusing on some of the cable channels, CNN, Fox News, the Golf Channel, and so on, so forth. But a bigger part of it will be on the complementary digital Facebook ads, Google, PPC, web med, and all of those type of areas. We're very excited to launch this pilot. It will kick off in Q2 and we will monitor the results. The experience that we got from our regional campaigns was we got a nice uplift in men seeking treatment for BPH in those areas. So, if that is the same result we see with the national campaign, then we will consider our options, Shagun, to roll it out more broadly in later 2020 and into 2021. But that would be supported by the revenue growth that the campaign would bring.

I got it. Thank you. And if I could just follow-up, there's about 400 basis points of gross margin expansion opportunity with UroLift 2.0. But it won't be launched, I believe, until May 1 because you're making some visualization changes. So, Liam, could you elaborate on what the changes are? And, Tom, how much of the positive impact from this transition to gross margin should we expect in the second half of 2020? Thank you for taking the question.

Absolutely, yes. So, we did make some modest changes to the product based on feedback from our urologists and we believe – we just want this product to be perfect. The UL1 has such a massive reputation out there with urologists, we want the UL2 to be perfect in every way and we believe that this modest change will actually even help the adoption move even quicker. So, we're confident in getting that product launched, getting the 510(k) in Q2 and beginning to do some procedures. It's one of the reasons why some of our margin expansion is a little bit back-end loaded into 2021 because that's when the [indiscernible] of the conversion will take place. So, I'll let Tom go into the details on that.

Right. I think that's the right way to think about it, is that we expect to get the UL2 out midway through this year, but the real benefit we expect to be realized in 2021. So, we're modeling just modest benefits as a result of the beginning of that conversion in 2020.

Thank you so much.

Thanks, Shagun.

Thank you. Our next question comes from Matt Taylor with UBS. Your line is open.

Hi. Thanks for taking the question. I wanted to dig into the sterilization issue a little bit. When we talked a month or two ago, I thought that most of that was going to be resolved. So, just wanted to understand the new things that have popped up here. And in terms of your forecast for the headwind from sterilization, what are the factors that could cause that to be better or worse than expected this year?

Yes. So, first of all, let me begin by saying, Matt, that the impact of the sterilization capacity issue is contemplated in our 2020 guidance that we communicated today. So, that's the first thing. As we said in our prepared remarks, we expect the revenue impact to be $5 million to $7 million and approximately $0.06 in EPS impact. And the product categories impacted are Surgical, OEM and the other category for our urology products. What we discovered as we went into the – early in the first quarter was that it took, though, a little bit longer than anticipated to re-validate some of the cycles. So, we do get this bit of an overhang into the first quarter. Now, $5 million to $7 million, it's not that significant an impact for a company of our size anymore. I think that negating factors are we still have one cycle to finish that should finish the revalidation in early March and we fully anticipate that to happen. And we feel pretty good about our current estimate that we have in our plan and baked in. It does hit the first quarter. And I think the broader point, I think I'd like to make too, Matt, if you give me a second is, we've got two impacts in the first quarter and one less billing day. And then, as you go through the year, what one would expect to see is once corona, sterilization and the day is behind us, what you'd expect to see during the year, you'd expect to see MANTA ramp, you'd expect UroLift to continue to demonstrate strong growth as well as Vascular, APAC and OEM. We'll, obviously, have the acquisition booked into the OEM business there. And then, as you get through the year and head into quarter four, you pick up that one billing day and then an additional billing day in the fourth quarter, which would have a revenue impact. So, thanks for allowing me to expand on that there, Matt.

Thanks, Liam. And then, I guess I was hoping you could spend another minute on the acquisition for an OEM business. It's not an insignificant multiple. I was just curious if you could talk about the capabilities that you're bringing online. Is that just something that you're going to be able to grow with some growing categories in OEM with or can actually use the capabilities and products that you make with that acquisition to come out with your own products? Can you talk about the outlook for that business a little bit more?

Yes, absolutely. And first on the multiple, Matt, you're obviously calculating the multiple on revenue. I'll tell you it's a very attractive multiple on adjusted EBITDA. So, I think that we look at this as an OEM acquisition to put capability into that OEM business. We bought a small OEM business few years ago called CarTika and what we discovered following that acquisition was it was a win-win. We were able to leverage their customer base in order to accelerate some of our growth and vice versa then, take our customer base and leverage their product portfolio. And it's the same play here again. As I said earlier, the smaller thin-walled reinforced catheters are the fastest growing space in the catheter business in the OEM space. So, therefore, we expect this business to be a accretive to even OEM's growth [indiscernible] Teleflex.

Great. Thank, Liam.

Thanks, Matt.

Our next question comes from Anthony Petrone with Jefferies. Your line is open.

Thanks. Maybe two quick ones for me here. Just on UroLift, I'm wondering what percent of the market the larger prostate indication actually opens up, and so how much of a benefit that indication specifically will have as you move forward? And then, the second will be on MANTA. The outlook there, Liam, I'm kind of wondering what's baked in for the low risk TAVR indication as well as the new TAVR centers coming online, following the [Technical Difficulty] not contemplated in the long-term guidance. Thanks.

You broke up a little bit at the end.

When we last spoke, the low risk TAVR was not necessarily considered in our market size for long-range plan.

Okay. Thanks, Anthony. So, first of all, the UroLift, let's go there. That's about 3% to 5% of the patient population would be covered by that. I think that would expand the market to that level. Also, the way to look at it is, in the past, the urologists, if they scoped a patient and they saw a larger prostate, they may have decided to go for a TURP or another option, whereas this just expands that market and it just makes it easier for the fast followers. It just removes one other objection for our sales force. With regard to MANTA, we're still working on the basis that the market is about $200 million to $300 million. We didn't expand it for those lower risk TAVRs, which might add another 10% to the bottom and the top end, Anthony. But what we know today, the 690 TAVR centers in the US, in our fact finding and our limited launch, we know it's going to take us 10 cases to train an interventionalist, five proctored and five observed, and a busy center does around 300 cases. So, we think we've been thoughtful in the way we've laid it out. We've got 4% – let's take the midpoint of that – let's take $250 million. We've penetrated about 4% of the global market and our plan is to penetrate 8% by the end of this year. So, that's our goal. And, obviously, again, we'll update it as we go on our progress. But we couldn't be more excited about that MANTA product. It's doing really well out there and very positive feedback from the customers.

That's helpful. Thanks.

Thank you.

Our next question comes from Matthew Mishan with KeyBanc. Your line is open.

Good morning and thank you for taking the questions. Liam, you saw UroLift sequentially accelerate, but what I consider to be the two other sustained growth drivers for Teleflex, which is Interventional and Asia, both sequentially decelerated through the year. And I'm just trying to understand what drove the deceleration there. Is the GuideLiner portfolio slowing down some in Interventional and are you just like an in between period where MANTA is ramping and a RePlas approval?

Yeah. So, first of all, on our complex catheters, which is the segment that we book the GuideLiner, we have not seen any slowdown in that segment. It actually had a very robust year. I wouldn't worry too much about the interventional area, Matt. There's a couple of things going on there. We book our intra-aortic balloon pumps in that business. So, the intra-aortic balloon pumps had a really good Q1, Q2, solid Q3, capital spending was a bit light in the fourth quarter. So, even though that business grew in the mid-teens, in the fourth quarter, it was in the low singles. So, there is a dynamic. And the other big dynamic that's going on in that business is the business that we sold had a really good Q4 last year. I think they did about $3.5 million. So, you're on a top comparable with that business year-over-year. So, those are the two businesses. I couldn't be happier with that business. That interventional business grew 10%. And we've been saying all year that it will either do the high-singles or sneak into the doubles and really happy with the performance there. Regarding Asia, Asia was pretty much in line with what we wanted as well. Grew 7% on a full-year basis. In the fourth quarter, we did see a little bit of softness in Australia, New Zealand and in India. Just end-of-year stuff that didn't come in as fully as anticipated, but not in a big way. It was a very modest surprise in those two areas, is the way I'd characterize it.

Okay. And I apologize if I missed it, but what was the operating cash flow and CapEx guidance for 2020 and how does that compare to where you thought it was coming in in the 2019 to 2021 plan?

So, as we think about cash flow from ops for 2020, we would expect that to be in the range of $485 million with CapEx of about $110 million. If we look back versus what we expected during the LRP timeframe and the guidance we provided, we're below that for a couple reasons. The largest factor is contingent consideration. So, as a result of the performance of NeoTract, in 2020, we will pay approximately $80 million in contingent consideration above what was previously expected. Or I should say, the cash flow from operations impact is about $80 million from that. In addition, we put in a couple of new restructuring programs in 2019. And the restructuring expense, the cash expense as well as some of the CapEx is about $27 million related to that. And then, finally FX has impacted us by almost $40 million as well as the LRP expectation. So, we've had a couple large factors that are causing us to be underneath where we'd expect it to be. I'll say that obviously the contingent consideration winds down as we get into 2021. It will be down significantly from about $80 million this year and that will benefit us as we look at our free cash flow as we go into next year.

All right. Thank you very much.

Yeah.

Thank you. Our next question comes from Matthew O'Brien with Piper Sandler. Your line is open.

Thank you. Good morning. And thanks for taking the questions. Tom, I'm not real good at math, but can you help me on the accretion side from the acquisition. I'm getting just over a dime accretion. And within that question, what I'm trying to ask a little bit more about is on the DTC side with the spend that you're going to be doing this year because the guidance range, if you did get about a dime of a benefit from the deal, is a little bit below what the Street is modeling. You have a big tax headwind and then you've also got this DTC headwind that I don't think people were expecting. So, I'm trying to get a sense for when you kind of net out some of the puts and the takes on the spending side of things, what EPS growth will look like?

As I think about Iceman, did you say that you're getting $0.10 of accretion?

Little more than that, yeah.

Okay. So, as we look at Iceman, I would say that that's probably above our expectation. We're expecting some modest accretion. And relative to that, it's really dependent on the financing, how quickly we term out that revolver borrowing and what rate we're able to achieve. So, I would say that that's probably a little bit of a difference. And then, help me to understand, are you trying to factor out some of the one-off items and do an adjusted EPS or…?

– :

Okay. So, as we think about the spend on UroLift in 2020, if we look at the total digital spend excluding DTC and then layer in DTC, that spend would be up about $2 million relative to what we had spent in 2019.

And I think, Matt, the way you should look at it really is the only unforeseen headwinds to EPS are the ones that we spoke out. All the others were contemplated as we're building our plan. So, you've got the coronavirus that we weren't anticipating, you've got the sterilization that we weren't anticipating. So, if you just add those two together and take the midpoint, you're talking about $0.10 or $0.12 or something like that in those two. And they're both going to hasten [ph] in the first quarter. With regard to DTC, we're spending more money on the DTC to do a national campaign, but that's baked into our plan already and that was in our thought process. Now, you're right, on a year-over-year, there is an increase in spend to invest behind that. It should have an impact on revenue and I think making more men aware of this condition would actually help us in the longer term. As you look at the HPC acquisition, the internal nickname for it was Iceman. So, that's what Tom was referring to a little earlier. That was the project name of the acquisition. So, the HPC is modestly accretive and dependent on what sort of financing we've put in place on that. But we're really excited about that acquisition because of the technology that it brings to us So, all in all, we feel that if we take a step back, the type of company we're trying to build here and we have built and are building is a company that if we grow, let's call it, 6% on the top, we're trying to double down in the income statement as you earnings to give you, our investors, a 12% return on the bottom. So, that's what we're trying to achieve as we lay out our plans over the next number of years.

Fair enough. And then, just quickly on the follow-up, UroLift 2, Liam, I totally appreciate you want to roll this thing out slowly to get it perfect. Given how many clinicians that you have to roll that out to, should we really think about the – I'm sure you'll go slow at the back half of this year with the roll out and then a little bit more so in 2021, but the real financial impact really coming the back half of next year into 2022.

I would expect to see an impact in 2021, Matt. The reason we want to get this perfect is to make it easier for the clinicians to actually adopt it. And the way it works out there in the marketplace with our sales reps, though not in every case, obviously, but they do a milk run once a month to revisit a urology practice and make sure that the patient outcomes are sufficient, to make sure that they don't have any issues with the product and to make sure that they're touching base with the key customer. And on that milk run, an average urologist, they'll need five cases to be trained. And that's one day's work for a urologist because they tend to stack cases. So, I think that the adoption should be facilitated by the changes that we've made. It also reduces their clinical waste, which helps improve the margins within the office or the ASC. And also, it reduces our carbon footprint. So, I would counter and say, you should expect to see a pickup in margin from that UroLift 2 in the back half of this year and then more to come in 2021, Matt.

And then, just going back to the first question you had asked just about the earnings power, I think page 14 probably highlights nicely some of the factors that you could use if you were trying to adjust for some of these headwinds. Now, in addition to that, you'd want to consider certainly the sterilization impact, which I think we call out at about $0.06. And then, again, on the HPC acquisition, depending on when and how we turn that out will impact its accretion, but its – to Liam's point, it's modestly accretive in 2020, but I think page 14 gives you the highlights of what to consider.

Appreciate the color. Thanks.

Cheers, Matt.

Thank you. Our next question comes from Chris Cooley with Stephens. Your line is open.

Good morning. And appreciate you taking the questions. Maybe just a couple of quick housekeeping ones from me and then a clarification. Just on a housekeeping perspective, with leverage now on a pro forma basis at approximately 2.7 times, up a little bit here, just curious how you're thinking about the use of the cash flow going forward and your coverage ratio there. And then, similarly, on EZPlaz, I think in the past you'd hoped to have a dialog with the agency prior to this call. Can you maybe just give us an update on that point as well? Thanks so much.

Absolutely, Chris. So, it would be remiss of me not to say that our collaboration with the FDA has been very constructive. We are all very excited about the product because we all know we can have a positive impact for the military and for civilians alike. We have actually completed all of the testing that the FDA required. You're right, Chris. We were hoping to meet with the FDA before this meeting. The FDA have actually asked us to submit all the data in March and now we're going to be meeting with them in April. That's the current schedule. And we continue to sail these unchartered waters, but I'm really happy with the progress we're making on this product. And I think that the meeting with the FDA in April should really shed some light on at least our thinking around timelines around the BLA submission. So, we're looking forward to that meeting. Your other question with regard to our leverage and use of capital, as you saw from the announcement today at HPC, we continued to use our capital to do really good strategic long-term M&A at 2.7 times net leverage. We still have capacity on our balance sheet and we're still active. And there are still assets out there that we would be interested in. So, right now, that would be our preferred use of our capital to continue to do really good M&A.

And if I could, just maybe one other quick one, just wanted to clarify, I think in a prior question, you stated that there was only 5% to 6% of patients under treatment by urologists that were aware of UroLift. I'm curious, is that for the whole urology community or are those for the actual implanters right now? So, it would seem relatively low for the implanting community that would be active users of UroLift. If it's the latter, can you maybe talk to us about why that message isn't getting communicated within those practices?

So, I was talking about patients, Chris. The men that have the condition.

Okay. Thank you. That clarifies it.

All right. Thanks.

Thank you.

Thank you. Our next question comes from Kristen Stewart with Barclays. Your line is open.

Hi. Thanks for taking the question. I just wanted to, I guess, return a little bit back to cash flows and then also just kind of talk through some of the puts and takes there. I guess when do you guys expect to kind of see a little bit more strength with cash flows? I guess, just looking through, it seems like you guys have – understand the contingent consideration accounting and how that works. But it seems like there's also a lot just kind of coming through it, some of the one-time costs with acquisition integration and restructuring. And it also looks like you guys have some estimated cost in for MDR as well that seems to be higher than I would have anticipated in the 2020 numbers too. Can you maybe just shed a little more light on cash flow improvement going forward and expectations there? And then I have a follow-up. Thanks.

Sure. And, Kristen, I think you've touched on the key point, is the contingent consideration as well as FX and some of the new restructuring programs that we've put in place. As we look at some of these the restructuring programs, our use of cash now, obviously, we put them in place because we see that as a longer-term capability to drive margin expansion as well as future cash flow. As we look to where we'll start to see an acceleration, we believe that 2021 will show marked improvement in some of the factors that will cause that. It's just the level of contingent consideration will go down from about $80 million in 2020 to 25-or-so-million in 2021. We'll also see an increase, obviously, in our net income. And then, we will have – as we continue to build the business, we've put more inventory into the channel right now in order to help with back orders. As we go into the next couple of years, we actually see inventory coming down a bit for two reasons. One is a lot of the footprint moves are going to be starting to be behind us and so the strategic builds to transition from one facility to another will start to go down and we also have some programs in place to greater improve our S&OP processes and otherwise to help take down those inventory levels. I'd also say, another area we'll see some improvement is just in CapEx. So, our CapEx has been elevated in 2019 and 2020 in part due to the manufacturing footprint moves in having to fit out those new locations. So, those are the key areas that we'll look to see driving future cash flow growth. But really 2021 is a year where you should see some nice acceleration relative to what we see in 2019 and 2020.

And then, what about the MDR costs, those seem to be pretty high for 2020. Is that just kind of a one-time measure, getting in compliance with those new regulations?

Well, that's actually a multi-year program. So, we do have a considerable amount of expense in 2020 relative to 2019, but that will even carry out for a couple of years beyond that as we fully implement.

Okay, thank you very much.

Yeah.

Thank you. Our next question comes from Dave Turkaly with JMP Securities. Your line is open.

Thanks. I've got two quick ones here. First, you highlighted a reduction in buying patterns of US distributors in Anesthesia. I just wondered if you could give us color on what that is and when it reverses. And then, secondly, I'll just fire it out there now. I think, in Asia, you highlighted price increases is driving the majority of the 2.7% CC increase. I was just wondering if you could give us some color on why you're able to do that and where exactly you're gaining that net price. Thanks.

So, I'll start with the pricing. So, the pricing in – or the growth in Asia-Pacific, within the quarter, was, you're right, 2.7%, but I don't think we said that was all – that's mostly volume. So, that's really volume of our Interventional Access, our Vascular Access products, it's where the growth is coming from there. From an enterprise-wide, from a company, on a full-year basis, you are correct, we did get about 30 basis points of positive pricing as an organization. That's really coming from a few areas. Our Surgical business took a one-time pricing opportunity, and that was able to drive some pricing. In our Vascular business, in our Interventional business and in Asia Pac, there was positive pricing. The negative pricing normally occurs in respiratory and in EMEA. But if you add it all up, it was positive this year to around 30 basis points, Dave. The other part of your question is around the buying patterns. So, what we saw there in Anesthesia was $2 million to $3 million of destocking in the fourth quarter. That normally comes back. I think that, on a full year basis, we did see some destocking as an enterprise from these distributors, but it's a smaller impact for Teleflex anymore, Dave. It's just because, in the past, half our business used to go through these distributors and now only one-third and it's a modest impact to Teleflex as a whole and in the fourth quarter and with the bulk of it sitting within Anesthesia.

No, thank you. It was the buying pattern comment versus the timing. So, thank you for that.

All right, no worries.

Thank you. Our next question comes from Mike Matson with Needham. Your line is open.

Thanks for taking my questions. Most of them have been answered, but I just had a couple more on the DTC campaign for UroLift. So, one, I guess, just from a timing perspective, when you've done the trials with the ads, how long does it take from when the ads run to when it reflects in your revenue? And I'm just wondering if you're going to potentially see some front-end increase in spending before it starts translating through to growth. And then two, you mentioned that it drives just awareness of BPH in general, which obviously will drive more patients to get UroLift, but it might bring in more patients to the competitors as well. So, do you think you can kind of steer them more to UroLift as opposed to some of the other things that are out there? Thanks.

So, let's start with the last one. So, our goal, Mike, is not to run DTC to help our competitors. Let me start by saying that. The ads will be very focused on some of the uniqueness of the UroLift product and it really comes back to all of the clinical evidences out there. There is no other product that you can offer to a patient that has zero new onset of sexual dysfunction and that's going to be a key message that's going to be communicated out there. For sure, what will happen in real life is, as a patient comes into the urologists and as the urologists scopes that patients, if they have issues with their bladder more so than with their prostate insofar that a TURP is required, then that could be an occurrence. And actually, Mike, that won't be a problem for us in Teleflex. As long as the man gets the best treatment option for him to have the best possible outcome, that will be fine. But we've seen with our regional DTCs that the majority of patients are applicable for the UroLift product and I don't think it's going to be any different when we go nationally. With regard to how long it normally takes, it really depends on the urology practice. Once a man engages with the urology practice, you would expect them to schedule that procedure within the timeframe of about four to six weeks. Once it goes beyond six weeks, I think that – our feedback has been, you tend to get a bigger drop off, but we are communicating with the urology community to make sure that they are prepared and ready for this campaign, and that's what we've been doing since the beginning of the year.

Great, thank you.

Thank you. And that's all the questions we have for today. I'd like to turn the call back to Jake Elguicze for any further remarks.

Thanks. Thanks, operator. And thank you to everyone that joined us on the call today. This concludes the Teleflex Incorporated fourth quarter 2019 earnings conference call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.