Teleflex Reports 2.4% Revenue Growth, Decline in Profitability in Q3 2024

Teleflex Incorporated reported its financial results for the third quarter and the first nine months of 2024, showing a modest increase in net revenues but a decline in profitability compared to the previous fiscal period. For the three months ended September 29, 2024, net revenues reached $764.4 million, a 2.4% increase from $746.4 million in the same period of 2023. For the nine months, revenues totaled $2,251.9 million, up 2.3% from $2,200.6 million year-over-year. The growth in revenue was primarily driven by a $12.3 million increase in sales of new products and price increases, although this was partially offset by decreased sales volumes of existing products, particularly the UroLift product line.

Gross profit for the third quarter increased to $430.2 million from $416.3 million, while gross profit for the nine months rose to $1,262.8 million from $1,215.5 million. The gross margin improved by 50 basis points for the quarter and 90 basis points for the nine months, attributed to price increases and efficiencies from acquired businesses, despite challenges from manufacturing inefficiencies and cost inflation.

However, Teleflex's profitability faced significant pressure, with income from continuing operations before interest and taxes for the third quarter declining to $149.3 million from $165.3 million, and for the nine months dropping to $261.4 million from $423.8 million. Net income for the third quarter was $111.0 million, down from $137.1 million, and for the nine months, it fell to $206.3 million from $325.2 million. This decline in net income was influenced by increased selling, general, and administrative expenses, which rose to $247.3 million for the third quarter and $740.7 million for the nine months, largely due to higher operating costs from the recently acquired Palette Life Sciences and increased IT expenses.

Teleflex initiated a restructuring plan in 2024, known as the Footprint realignment plan, aimed at optimizing operations and reducing costs. The plan is expected to incur pre-tax restructuring charges of $37 million to $46 million, with a significant portion attributed to employee termination benefits. The company also reported a pension settlement charge of $132.7 million for the nine months, following the termination of its retirement income plan.

In terms of cash flow, net cash provided by operating activities increased to $435.6 million for the nine months, up from $372.4 million in the prior year, reflecting improved operating results and reduced cash outflows. Teleflex also executed a share repurchase program, authorizing up to $500 million, with $200 million allocated to an accelerated share repurchase agreement in August 2024.

Overall, while Teleflex experienced revenue growth, its profitability was adversely affected by increased expenses and restructuring efforts, alongside challenges in specific product lines.