tfx-20230402

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 02, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 1-5353

TELEFLEX INCORPORATED

(Exact name of registrant as specified in its charter)


Delaware						23-1147939
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification no.)

550 E. Swedesford Rd., Suite 400 Wayne, PA 19087

(Address of principal executive offices and zip code)

(610) 225-6800

(Registrant’s telephone number, including area code)

(None)

(Former Name, Former Address and Former Fiscal Year,

If Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $1.00 per share

TFX

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 46,971,703 shares of common stock, par value $1.00 per share, outstanding as of May 2, 2023 .

TELEFLEX INCORPORATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED APRIL 2, 2023

TABLE OF CONTENTS

Page

PART I — FINANCIAL INFORMATION

Item 1:

Financial Statements (Unaudited):

Condensed Consolidated Statements of Income

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Changes in Equity

Notes to Condensed Consolidated Financial Statements

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3:

Quantitative and Qualitative Disclosures About Market Risk

Item 4:

Controls and Procedures

PART II — OTHER INFORMATION

Item 1:

Legal Proceedings

Item 1A:

Risk Factors

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3:

Defaults Upon Senior Securities

Item 4:

Mine Safety Disclosures

Item 5:

Other Information

Item 6:

Exhibits

SIGNATURES

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended
	April 2, 2023		March 27, 2022
	(Dollars and shares in thousands, except per share)
Net revenues	$	710,932	$	641,715
Cost of goods sold	319,552		295,482
Gross profit	391,380		346,233
Selling, general and administrative expenses	232,716		203,932
Research and development expenses	41,469		36,360
Restructuring and impairment charges	2,221		2,405

Income from continuing operations before interest and taxes	114,974		103,536
Interest expense	18,337		10,418
Interest income	(843)		(222)

Income from continuing operations before taxes	97,480		93,340
Taxes on income from continuing operations	20,184		15,973
Income from continuing operations	77,296		77,367
Operating loss from discontinued operations	(711)		(294)
Tax benefit on operating loss from discontinued operations	(163)		(68)
Loss from discontinued operations	(548)		(226)
Net income	$	76,748	$	77,141
Earnings per share:
Basic:
Income from continuing operations	$	1.65	$	1.65
Loss from discontinued operations	(0.02)		—
Net income	$	1.63	$	1.65
Diluted:
Income from continuing operations	$	1.63	$	1.63
Loss from discontinued operations	(0.01)		—
Net income	$	1.62	$	1.63
Weighted average common shares outstanding
Basic	46,949		46,876
Diluted	47,285		47,402

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended
	April 2, 2023		March 27, 2022
	(Dollars in thousands)
Net income	$	76,748	$	77,141
Other comprehensive income (loss), net of tax:
Foreign currency translation, net of tax of $2,970 and $(1,136) for the three months periods, respectively	18,570		(23,329)
Pension and other postretirement benefit plans adjustment, net of tax of $(354) and $(499) for the three months periods, respectively	1,213		1,586
Derivatives qualifying as hedges, net of tax of $120 and $(30) for the three months periods, respectively	2,408		457
Other comprehensive income (loss), net of tax:	22,191		(21,286)
Comprehensive income	$	98,939	$	55,855

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	April 2, 2023		December 31, 2022
	(Dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	264,138	$	292,034
Accounts receivable, net	410,020		408,834
Inventories	614,106		578,507
Prepaid expenses and other current assets	134,948		125,084
Prepaid taxes	4,842		6,524

Total current assets	1,428,054		1,410,983
Property, plant and equipment, net	458,861		447,205
Operating lease assets	126,773		131,211
Goodwill	2,547,840		2,536,730
Intangible assets, net	2,269,535		2,306,165
Deferred tax assets	6,479		6,402
Other assets	80,380		89,367

Total assets	$	6,917,922	$	6,928,063
LIABILITIES AND EQUITY
Current liabilities
Current borrowings	$	87,500	$	87,500
Accounts payable	136,239		126,807
Accrued expenses	123,451		140,644

Payroll and benefit-related liabilities	102,081		133,092
Accrued interest	16,862		5,332
Income taxes payable	30,176		24,736
Other current liabilities	79,403		63,381

Total current liabilities	575,712		581,492
Long-term borrowings	1,549,474		1,624,023
Deferred tax liabilities	388,185		388,886
Pension and postretirement benefit liabilities	30,924		31,394
Noncurrent liability for uncertain tax positions	6,464		5,805

Noncurrent operating lease liabilities	115,838		120,437
Other liabilities	141,072		154,058
Total liabilities	2,807,669		2,906,095
Commitments and contingencies
Total shareholders' equity	4,110,253		4,021,968
Total liabilities and shareholders' equity	$	6,917,922	$	6,928,063

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended
	April 2, 2023		March 27, 2022
	(Dollars in thousands)
Cash flows from operating activities of continuing operations:
Net income	$	76,748	$	77,141
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations	548		226
Depreciation expense	18,287		17,317
Intangible asset amortization expense	41,540		40,597
Deferred financing costs and debt discount amortization expense	846		1,048



Changes in contingent consideration	2,447		(30)
Assets impairment charges	—		1,497
Stock-based compensation	7,015		5,302

Deferred income taxes, net	2,092		409

Interest benefit on swaps designated as net investment hedges	(5,108)		(4,848)
Other	(427)		(2,093)
Changes in assets and liabilities, net of effects of acquisitions and disposals:
Accounts receivable	1,339		(27,805)
Inventories	(30,099)		(19,852)
Prepaid expenses and other assets	2,752		4,830
Accounts payable, accrued expenses and other liabilities	(40,856)		(36,978)
Income taxes receivable and payable, net	7,225		5,341
Net cash provided by operating activities from continuing operations	84,349		62,102
Cash flows from investing activities of continuing operations:
Expenditures for property, plant and equipment	(21,835)		(13,078)
Proceeds from sale of business and assets	—		262
Payments for businesses and intangibles acquired, net of cash acquired	(64)		—




Net cash used in investing activities from continuing operations	(21,899)		(12,816)
Cash flows from financing activities of continuing operations:

Reduction in borrowings	(75,125)		—

Net payments from share based compensation plans and related tax impacts	(2,433)		(4,941)
Payments for contingent consideration	(64)		(73)
Dividends paid	(15,969)		(15,946)

Net cash used in financing activities from continuing operations	(93,591)		(20,960)
Cash flows from discontinued operations:
Net cash used in operating activities	(285)		(119)
Net cash used in discontinued operations	(285)		(119)
Effect of exchange rate changes on cash and cash equivalents	3,530		(6,635)
Net (decrease) increase in cash and cash equivalents	(27,896)		21,572
Cash and cash equivalents at the beginning of the period	292,034		445,084
Cash and cash equivalents at the end of the period	$	264,138	$	466,656

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


	Common Stock			Additional Paid In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Total
	Shares	Dollars								Shares	Dollars
	(Dollars and shares in thousands, except per share)
Balance at December 31, 2022	47,957	$	47,957	$	715,118	$	3,817,304	$	(403,522)	1,032	$	(154,889)	$	4,021,968

Net income						76,748							76,748
Cash dividends ($0.34 per share)						(15,969)							(15,969)
Other comprehensive income								22,191					22,191
Shares issued under compensation plans	18	18		2,333						(19)	2,639		4,990
Deferred compensation	—	—		324						(6)	1		325
Balance at April 2, 2023	47,975	$	47,975	$	717,775	$	3,878,083	$	(381,331)	1,007	$	(152,249)	$	4,110,253


	Common Stock			Additional Paid In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Total
	Shares	Dollars								Shares	Dollars
	(Dollars and shares in thousands, except per share)
Balance at December 31, 2021	47,929	$	47,929	$	693,090	$	3,517,954	$	(346,959)	1,069	$	(157,266)	$	3,754,748

Net income						77,141							77,141
Cash dividends ($0.34 per share)						(15,946)							(15,946)
Other comprehensive loss								(21,286)					(21,286)
Shares issued under compensation plans	5	5		(950)						(27)	894		(51)
Deferred compensation	—	—		100						(5)	828		928
Balance at March 27, 2022	47,934	$	47,934	$	692,240	$	3,579,149	$	(368,245)	1,037	$	(155,544)	$	3,795,534

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(all tabular amounts in thousands unless otherwise noted)

Note 1 — Basis of presentation

The accompanying unaudited condensed consolidated financial statements of Teleflex Incorporated and its subsidiaries (“we,” “us,” “our" and “Teleflex”) are prepared on the same basis as its annual consolidated financial statements.

In the opinion of management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for the fair statement of the financial statements for interim periods in accordance with accounting principles generally accepted in the United States of America ("GAAP") and Rule 10-01 of Securities and Exchange Commission ("SEC") Regulation S-X, which sets forth the instructions for the form and content of presentation of financial statements included in Form 10-Q. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the periods reported are not necessarily indicative of those that may be expected for a full year.

In accordance with applicable accounting standards and as permitted by Rule 10-01 of Regulation S-X, the accompanying condensed consolidated financial statements do not include all of the information and footnote disclosures that are required to be included in our annual consolidated financial statements. Therefore, our quarterly condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Note 2 — Recently issued accounting standards

From time to time, new accounting guidance is issued by the FASB or other standard setting bodies that is adopted by us as of the effective date or, in some cases where early adoption is permitted, in advance of the effective date. We have assessed the recently issued guidance that is not yet effective and believe the new guidance will not have a material impact on the consolidated results of operations, cash flows or financial position.

Note 3 — Net revenues

We primarily generate revenue from the sale of medical devices including single use disposable devices and, to a lesser extent, reusable devices, instruments and capital equipment. Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; this occurs upon the transfer of control of the products. Generally, transfer of control to the customer occurs at the point in time when our products are shipped from the manufacturing or distribution facility. For our Original Equipment and Development Services ("OEM") segment, most revenue is recognized over time because the OEM segment generates revenue from the sale of custom products that have no alternative use and we have an enforceable right to payment to the extent that performance has been completed. We market and sell products through our direct sales force and distributors to customers within the following end markets: (1) hospitals and healthcare providers; (2) other medical device manufacturers; and (3) home care providers, which constituted 87%, 11% and 2% of consolidated net revenues, respectively, for the three months ended April 2, 2023. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. With respect to the custom products sold in the OEM segment, revenue is measured using the units produced output method. Payment is generally due 30 days from the date of invoice.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table disaggregates revenue by global product category for the three months ended April 2, 2023 and March 27, 2022.


	Three Months Ended
	April 2, 2023		March 27, 2022
Vascular access	$	177,652	$	166,134
Anesthesia	93,332		86,957
Interventional	116,897		96,859
Surgical	99,023		89,702
Interventional urology	75,378		74,895
OEM	76,997		57,656
Other (1)	71,653		69,512
Net revenues (2)	$	710,932	$	641,715

(1) Includes revenues generated from sales of our respiratory and urology products (other than interventional urology products).

(2) The product categories listed above are presented on a global basis, while each of our reportable segments other than the OEM reportable segment are defined based on the geographic location of its operations; the OEM reportable segment operates globally. Each of the geographically based reportable segments includes net revenues from each of the non-OEM product categories listed above.

Note 4 — Acquisition and Divestiture

Acquisition

In the fourth quarter of 2022, we completed the acquisition of Standard Bariatrics, Inc. (“Standard Bariatrics”), a privately-held medical device company that commercialized a powered stapling technology for bariatric surgery that complements our surgical product portfolio. Under the terms of the agreement, we acquired Standard Bariatrics for cash payments of $173 million, with the potential to make three milestone payments up to $130 million in aggregate if certain commercial milestones are met.

Divestiture

On May 15, 2021, we entered into a definitive agreement to sell certain product lines within our global respiratory product portfolio (the "Divested respiratory business") to Medline Industries, Inc. (“Medline”) for consideration of $286.0 million, reduced by $12 million in working capital not transferring to Medline, which is subject to customary post close adjustments (the "Respiratory business divestiture"). In connection with the Respiratory business divestiture, we also entered into several ancillary agreements with Medline to help facilitate the transfer of the business, which provide for transition support, quality, supply and manufacturing services, including a manufacturing and supply transition agreement (the "MSTA").

On June 28, 2021, the first day of the third quarter of 2021, we completed the initial phase of the Respiratory business divestiture, pursuant to which we received cash proceeds of $259 million. The second phase of the Respiratory business divestiture will occur once we transfer certain additional manufacturing assets to Medline and is expected to occur prior to the end of 2023. We plan to recognize the remaining consideration, and any gain on sale resulting from the completion of the second phase of the divestiture, when it becomes realizable.

Net revenues attributed to services provided to Medline in accordance with the MSTA, which are presented within our Americas reporting segment, were $20.0 million and $21.1 million for the three months ended April 2, 2023 and March 27, 2022, respectively.

Note 5 — Restructuring and impairment charges

We have ongoing restructuring initiatives consisting of a strategic restructuring plan designed to improve operating performance and position the organization to deliver long-term durable growth by creating efficiencies that align with our high growth strategic objectives (the “2022 restructuring plan”) and a plan, initiated in connection with the Respiratory business divestiture designed to separate the manufacturing operations to be transferred to Medline

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

from those that will remain with Teleflex (the “Respiratory divestiture plan”). The following tables provide a summary of our cost estimates and other information associated with these plans:

2022 restructuring plan

Respiratory divestiture plan

Plan expense estimates:

(Dollars in millions)

Termination benefits

$18 to $22

$5 to $8

Other costs (1)

1 to 1

— to —

Restructuring charges

19 to 23

5 to 8

Restructuring related charges (2)

20 to 25

19 to 22

Total restructuring and restructuring related charges

$39 to $48

$24 to $30

Other plan estimates:

Expected cash outlays

$26 to $32

$24 to $30

Expected capital expenditures

$2 to $2

$22 to $28

Other plan information:

Period initiated

November 2022

May 2021

Estimated period of substantial completion

2023

Aggregate restructuring charges

$17.7

$3.4

Restructuring reserve:

Balance as of April 2, 2023

$12.6

$3.3

Restructuring related charges incurred:

Three Months Ended April 2, 2023

$4.4

$2.1

Aggregate restructuring related charges

$14.5

$14.3

(1)Includes facility closure, employee relocation, equipment relocation and outplacement costs.

(2)Restructuring related charges represent costs that are directly related to the plans and principally constitute costs to transfer manufacturing operations to the existing lower-cost locations, project management costs and accelerated depreciation. Substantially all of the restructuring related charges are expected to be recognized within cost of goods sold.

Restructuring and impairment charges recognized for the three months ended April 2, 2023 and March 27, 2022 consisted of the following:


Three Months Ended April 2, 2023
	Termination Benefits		Other Costs (1)		Total
2022 Restructuring plan	$	2,133	$	73	$	2,206
Respiratory divestiture plan	128		12		140


Other restructuring programs (2)	(314)		189		(125)
Restructuring charges	$	1,947	$	274	$	2,221


Three Months Ended March 27, 2022
	Termination Benefits		Other Costs (1)		Total
Respiratory divestiture plan	$	106	$	14	$	120

2019 Footprint realignment plan	(670)		24		(646)
2018 Footprint realignment plan	158		62		220
Other restructuring programs (3)	1,132		82		1,214
Restructuring charges	$	726	$	182	$	908
Asset impairment charges	—		1,497		1,497
Restructuring and impairment charges	$	726	$	1,679	$	2,405

(1) Other costs include facility closure, contract termination and other exit costs.

(2) Includes activity primarily related to our 2014, 2018, and 2019 Footprint realignment plans.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

(3) Includes activity primarily related to a restructuring plan initiated in the first quarter of 2022 that is designed to relocate manufacturing operations at certain of our facilities, the 2021 Restructuring plan and the 2014 Footprint realignment plan.

Note 6 — Inventories

Inventories as of April 2, 2023 and December 31, 2022 consisted of the following:


	April 2, 2023		December 31, 2022
Raw materials	$	195,962	$	186,641
Work-in-process	107,117		98,993
Finished goods	311,027		292,873
Inventories	$	614,106	$	578,507

Note 7 — Goodwill and other intangible assets

The following table provides information relating to changes in the carrying amount of goodwill by reportable operating segment for the three months ended April 2, 2023:


	Americas		EMEA		Asia		OEM		Total
December 31, 2022	$	1,731,093	$	468,524	$	225,103	$	112,010	$	2,536,730




Currency translation adjustment	1,592		7,540		1,978		—		11,110
April 2, 2023	$	1,732,685	$	476,064	$	227,081	$	112,010	$	2,547,840

The gross carrying amount of, and accumulated amortization relating to, intangible assets as of April 2, 2023 and December 31, 2022 were as follows:


	Gross Carrying Amount				Accumulated Amortization
	April 2, 2023		December 31, 2022		April 2, 2023		December 31, 2022
Customer relationships	$	1,330,674	$	1,328,539	$	(514,005)	$	(497,335)
In-process research and development	27,403		27,075		—		—
Intellectual property	1,602,097		1,599,355		(669,967)		(646,643)
Distribution rights	23,211		23,115		(21,378)		(21,090)
Trade names	565,938		564,023		(74,611)		(71,128)
Non-compete agreements	21,832		21,429		(21,659)		(21,175)
	$	3,571,155	$	3,563,536	$	(1,301,620)	$	(1,257,371)

Note 8 — Financial instruments

Foreign currency forward contracts

We use derivative instruments for risk management purposes. Foreign currency forward contracts designated as cash flow hedges are used to manage foreign currency transaction exposure. Foreign currency forward contracts not designated as hedges for accounting purposes are used to manage exposure related to near term foreign currency denominated monetary assets and liabilities. We enter into the non-designated foreign currency forward contracts for periods consistent with our currency translation exposures, which generally approximate one month. For the three months ended April 2, 2023, we recognized no gain or loss related to non-designated foreign currency forward contracts. For the three months ended March 27, 2022, we recognized a loss of $3.3 million related to non-designated foreign currency forward contracts.

The total notional amount for all open foreign currency forward contracts designated as cash flow hedges as of April 2, 2023 and December 31, 2022 was $239.8 million and $184.8 million, respectively. The total notional amount for all open non-designated foreign currency forward contracts as of April 2, 2023 and December 31, 2022 was $119.7 million and $152.9 million, respectively. All open foreign currency forward contracts as of April 2, 2023 have durations of 12 months or less.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Cross-currency interest rate swaps

During 2019, we entered into cross-currency swap agreements with five different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Under the terms of the cross-currency swap agreements, we have notionally exchanged $250 million at an annual interest rate of 4.875% for €219.2 million at an annual interest rate of 2.4595%. The swap agreements are designed as net investment hedges and expire on March 4, 2024.

During 2018, we entered into cross-currency swap agreements with six different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Under the terms of the cross-currency swap agreements, we have notionally exchanged $500 million at an annual interest rate of 4.625% for €433.9 million at an annual interest rate of 1.942%. The swap agreements are designed as net investment hedges and expire on October 4, 2023.

The swap agreements described above require an exchange of the notional amounts upon expiration or earlier termination of the agreements. We and the counterparties have agreed to effect the exchange through a net settlement.

The cross-currency swaps are marked to market at each reporting date and any changes in fair value are recognized as a component of accumulated other comprehensive income (loss) ("AOCI"). The following table summarizes the foreign exchange gains and losses recognized within AOCI and the interest benefit recognized within interest expense related to cross currency swap for the three months ended April 2, 2023 and March 27, 2022:


	Three Months Ended
	April 2, 2023		March 27, 2022
Foreign exchange (loss) gain	$	(10,031)	$	3,840
Interest benefit	5,108		4,848

Balance sheet presentation

The following table presents the locations in the condensed consolidated balance sheet and fair value of derivative financial instruments as of April 2, 2023 and December 31, 2022:


	April 2, 2023		December 31, 2022

Asset derivatives:
Designated foreign currency forward contracts	$	6,004	$	3,154
Non-designated foreign currency forward contracts	43		41
Cross-currency interest rate swaps	52,526		48,503
Prepaid expenses and other current assets	58,573		51,698
Cross-currency interest rate swaps	—		11,912
Other assets	—		11,912
Total asset derivatives	$	58,573	$	63,610
Liability derivatives:
Designated foreign currency forward contracts	$	967	$	983
Non-designated foreign currency forward contracts	292		477
Other current liabilities	1,259		1,460


Total liability derivatives	$	1,259	$	1,460

See Note 10 for information on the location and amount of gains and losses attributable to derivatives that were reclassified from AOCI to expense (income), net of tax. There was no ineffectiveness related to our cash flow hedges during the three months ended April 2, 2023 and March 27, 2022.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Trade receivables

The allowance for credit losses as of April 2, 2023 and December 31, 2022 was $9.1 million and $8.6 million, respectively. The current portion of the allowance for credit losses, which was $5.3 million and $4.9 million as of April 2, 2023 and December 31, 2022, respectively, was recognized as a reduction of accounts receivable, net.

Note 9 — Fair value measurement

The following tables provide information regarding our financial assets and liabilities measured at fair value on a recurring basis as of April 2, 2023 and December 31, 2022:


	Total carrying value at April 2, 2023		Quoted prices in active markets (Level 1)		Significant other observable Inputs (Level 2)		Significant unobservable Inputs (Level 3)
Investments in marketable securities	$	11,552	$	11,552	$	—	$	—
Derivative assets	58,573		—		58,573		—
Derivative liabilities	1,259		—		1,259		—
Contingent consideration liabilities	46,405		—		—		46,405


	Total carrying value at December 31, 2022		Quoted prices in active markets (Level 1)		Significant other observable Inputs (Level 2)		Significant unobservable Inputs (Level 3)
Investments in marketable securities	$	10,097	$	10,097	$	—	$	—
Derivative assets	63,610		—		63,610		—
Derivative liabilities	1,460		—		1,460		—
Contingent consideration liabilities	44,022		—		—		44,022

Valuation Techniques

Our financial assets valued based upon Level 1 inputs are comprised of investments in marketable securities held in trust, which are available to satisfy benefit obligations under our benefit plans and other arrangements. The investment assets of the trust are valued using quoted market prices.

Our financial assets and liabilities valued based upon Level 2 inputs are comprised of foreign currency forward contracts and cross-currency interest rate swap agreements. We use foreign currency forwards and cross-currency interest rate swaps to manage foreign currency transaction exposure, as well as exposure to foreign currency denominated monetary assets and liabilities. We measure the fair value of the foreign currency forwards and cross-currency swaps by calculating the amount required to enter into offsetting contracts with similar remaining maturities, based on quoted market prices, and taking into account the creditworthiness of the counterparties.

Our financial liabilities valued based upon Level 3 inputs (inputs that are not observable in the market) are comprised of contingent consideration arrangements pertaining to our acquisitions.

Contingent consideration

Contingent consideration liabilities, which primarily consist of payment obligations that are contingent upon the achievement of revenue-based goals, but also can be based on other milestones such as regulatory approvals, are remeasured to fair value each reporting period using assumptions including estimated revenues (based on internal operational budgets and long-range strategic plans), discount rates, probability of payment and projected payment dates.

We determine the fair value of certain contingent consideration liabilities using a Monte Carlo simulation (which involves a simulation of future revenues during the earn-out period using management's best estimates) or discounted cash flow analysis. Increases in projected revenues, estimated cash flows and probabilities of payment may result in significantly higher fair value measurements; decreases in these items may have the opposite effect. Increases in the discount rates in periods prior to payment may result in significantly lower fair value measurements and decreases in the discount rates may have the opposite effect.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The table below provides additional information regarding the valuation technique and inputs used in determining the fair value of our significant contingent consideration liabilities.

Contingent Consideration Liability

Valuation Technique

Unobservable Input

Revenue-based

Monte Carlo simulation

Revenue volatility

31.3

Risk free rate

Cost of debt structure

Projected year of payment

2024 - 2026

The following table provides information regarding changes in our contingent consideration liabilities for the three months ended April 2, 2023:



	Contingent consideration
Balance – December 31, 2022	$	44,022
Payments	(64)
Revaluations	2,447

Balance – April 2, 2023	$	46,405

Note 10 — Shareholders' equity

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in the same manner except that the weighted average number of shares is increased to include dilutive securities. The following table provides a reconciliation of basic to diluted weighted average number of common shares outstanding:


	Three Months Ended
	April 2, 2023	March 27, 2022
Basic	46,949	46,876
Dilutive effect of share-based awards	336	526

Diluted	47,285	47,402

The weighted average number of shares that were antidilutive and therefore excluded from the calculation of earnings per share were 0.6 million and 0.3 million for the three months ended April 2, 2023 and March 27, 2022, respectively.

The following tables provide information relating to the changes in accumulated other comprehensive loss, net of tax, for the three months ended April 2, 2023 and March 27, 2022:


	Cash Flow Hedges		Pension and Other Postretirement Benefit Plans		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2022	$	4,931	$	(135,799)	$	(272,654)	$	(403,522)
Other comprehensive income (loss) before reclassifications	5,260		(184)		18,570		23,646
Amounts reclassified from accumulated other comprehensive income	(2,852)		1,397		—		(1,455)
Net current-period other comprehensive income	2,408		1,213		18,570		22,191

Balance as of April 2, 2023	$	7,339	$	(134,586)	$	(254,084)	$	(381,331)

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)


	Cash Flow Hedges		Pension and Other Postretirement Benefit Plans		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2021	$	1,081	$	(138,290)	$	(209,750)	$	(346,959)
Other comprehensive income (loss) before reclassifications	57		246		(23,329)		(23,026)
Amounts reclassified from accumulated other comprehensive income	400		1,340		—		1,740
Net current-period other comprehensive income (loss)	457		1,586		(23,329)		(21,286)

Balance as of March 27, 2022	$	1,538	$	(136,704)	$	(233,079)	$	(368,245)

The following table provides information relating to the location in the statements of operations and amount of reclassifications of losses/(gains) in accumulated other comprehensive (loss) income into expense/(income), net of tax, for the three months ended April 2, 2023 and March 27, 2022:


	Three Months Ended
	April 2, 2023		March 27, 2022
(Gains) Loss on foreign exchange contracts:
Cost of goods sold	$	(3,054)	$	398
Total before tax	(3,054)		398
Taxes	202		2
Net of tax	(2,852)		400
Amortization of pension and other postretirement benefit items (1):
Actuarial losses	2,066		2,000
Prior-service costs	(252)		(252)

Total before tax	1,814		1,748
Tax benefit	(417)		(408)
Net of tax	1,397		1,340
Total reclassifications, net of tax	$	(1,455)	$	1,740

(1) These accumulated other comprehensive (loss) income components are included in the computation of net benefit expense for pension and other postretirement benefit plans.

Note 11 — Taxes on income from continuing operations


	Three Months Ended
	April 2, 2023	March 27, 2022
Effective income tax rate	20.7%	17.1%

The effective income tax rates for the three months ended April 2, 2023 and March 27, 2022 were 20.7% and 17.1%, respectively. The effective income tax rate for the three months ended April 2, 2023 reflects an increase in tax expense related to the revaluation of certain U.S. state operating losses and credit carryforwards. The effective income tax rates for both periods reflect a tax benefit from research and development tax credits. The effective income tax rate for the three months ended March 27, 2022 reflects a net tax benefit related to excess share-based compensation.

Note 12 — Commitments and contingent liabilities

Environmental: We are subject to contingencies as a result of environmental laws and regulations that in the future may require us to take further action to correct the effects on the environment of prior disposal practices or releases of chemical or petroleum substances by us or other parties. Much of this liability results from the U.S. Comprehensive Environmental Response, Compensation and Liability Act, often referred to as Superfund, the U.S. Resource Conservation and Recovery Act and similar state laws. These laws require us to undertake certain

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

investigative and remedial activities at sites where we conduct or once conducted operations or at sites where Company-generated waste was disposed.

Remediation activities vary substantially in duration and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, the regulatory agencies involved and their enforcement policies, as well as the presence or absence of other potentially responsible parties. At April 2, 2023, we have recorded $2.5 million and $3.6 million in accrued liabilities and other liabilities, respectively, relating to these matters. Considerable uncertainty exists with respect to these liabilities and, if adverse changes in circumstances occur, the potential liability may exceed the amount accrued as of April 2, 2023. The time frame over which the accrued amounts may be paid out, based on past history, is estimated to be 10-15 years.

Legal matters: We are a party to various lawsuits and claims arising in the normal course of business. These lawsuits and claims include actions involving product liability, product warranty, commercial disputes, intellectual property, contract, employment, environmental and other matters. As of April 2, 2023, we have recorded accrued liabilities of $0.4 million in connection with such contingencies, representing our best estimate of the cost within the range of estimated possible losses that will be incurred to resolve these matters.

Based on information currently available, advice of counsel, established reserves and other resources, we do not believe that the outcome of any outstanding litigation and claims is likely to be, individually or in the aggregate, material to our business, financial condition, results of operations or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our business, financial condition, results of operations or liquidity. Legal costs such as outside counsel fees and expenses are charged to selling, general and administrative expenses in the period incurred.

Other: In 2015, the Italian parliament enacted legislation that, among other things, imposed a “payback” measure on medical device companies that supply goods and services to the Italian National Healthcare System. Under the measure, companies are required to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year. The payment amounts are calculated based on the amount by which the regional ceilings for the given year were exceeded. Considerable uncertainty exists related to the enforceability of and implementation process for the payback law. In response to decrees issued by the Italian Ministry of Health, the various Italian regions issued invoices to medical device companies, including Teleflex, under the payback measure in the fourth quarter of 2022 seeking payment with respect to excess expenditures for the years 2015 through 2018. Following the issuance of the invoices, we and numerous other medical device companies filed appeals with the Italian administrative courts challenging the enforceability of the payback measure, which appeals remain pending. As of April 2, 2023, our reserve for this matter is $11.9 million, of which, $0.8 million was recorded as a reduction of revenue in 2023. If the payback was to ultimately be enforced in its existing form, we estimate that we would be required to remit payments in excess of our current reserve of up to $18.4 million.

On April 4, 2023, one of our Mexican subsidiaries received a notification from the Mexican Federal Tax Administration Service (“SAT”) setting forth its preliminary findings with respect to a foreign trade operations audit carried out by SAT for the period from July 1, 2017 to June 6, 2019. The preliminary findings stated that our Mexican subsidiary did not evidence the export of goods temporarily imported under Mexico’s Manufacturing, Maquila and Export Services Industries Program (“IMMEX Program”), therefore triggering the potential obligation for payment of import duties, value added tax, customs processing fees and other fines and penalties. In response to the notification, our Mexican subsidiary has requested that the matter be referred to the Procuraduría de la Defensa del Contribuyente, or “PRODECON,” (local tax ombudsperson) to help facilitate the process by which our Mexican subsidiary may provide SAT with appropriate documentation evidencing the export of the goods in accordance with the requirements of the IMMEX Program.

While we cannot predict with certainty the outcome of this audit, based on currently known information, we do not believe a loss is either probable or estimable. Accordingly, no loss contingency has been recorded in our financial statements as of April 2, 2023 related to this matter. However, if the final resolution of the matter is not favorable to us, our Mexican subsidiary may be required to make payment of certain import duties, fines and surcharges, which could be material.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Tax audits and examinations: We are routinely subject to tax examinations by various tax authorities. As of April 2, 2023, the most significant tax examinations in process were in Ireland and Germany. We may establish reserves with respect to our uncertain tax positions, after we adjust the reserves to address developments with respect to our uncertain tax positions, including developments in these tax examinations. Accordingly, developments in tax audits and examinations, including resolution of uncertain tax positions, could result in increases or decreases to our recorded tax liabilities, which could impact our financial results.

Note 13 — Segment information

The following tables present our segment results for the three months ended April 2, 2023 and March 27, 2022:


	Three Months Ended
	April 2, 2023		March 27, 2022
Americas	$	411,864	$	377,961
EMEA	143,340		136,908
Asia	78,731		69,190
OEM	76,997		57,656
Net revenues	$	710,932	$	641,715


	Three Months Ended
	April 2, 2023		March 27, 2022
Americas	$	98,618	$	96,901
EMEA	12,771		9,094
Asia	21,000		17,417
OEM	20,037		10,923
Total segment operating profit (1)	152,426		134,335
Unallocated expenses (2)	(37,452)		(30,799)
Income from continuing operations before interest and taxes	$	114,974	$	103,536

(1)Segment operating profit includes segment net revenues from external customers reduced by its standard cost of goods sold, adjusted for fixed manufacturing cost absorption variances, selling, general and administrative expenses, research and development expenses and an allocation of corporate expenses.

(2)Unallocated expenses primarily include manufacturing variances other than fixed manufacturing cost absorption variances and restructuring and impairment charges.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Teleflex Incorporated (“we,” “us,” “our" and “Teleflex”) is a global provider of medical technology products focused on enhancing clinical benefits, improving patient and provider safety and reducing total procedural costs. We primarily design, develop, manufacture and supply single-use medical devices used by hospitals and healthcare providers for common diagnostic and therapeutic procedures in critical care and surgical applications. We market and sell our products worldwide through a combination of our direct sales force and distributors. Because our products are used in numerous markets and for a variety of procedures, we are not dependent upon any one end-market or procedure. We are focused on achieving consistent, sustainable and profitable growth by increasing our market share and improving our operating efficiencies.

We evaluate our portfolio of products and businesses on an ongoing basis to ensure alignment with our overall objectives. Based on our evaluation, we may identify opportunities to divest businesses and product lines that do not meet our objectives. In addition, we may seek to optimize utilization of our facilities through restructuring initiatives designed to further improve our cost structure and enhance our competitive position. We also may continue to explore opportunities to expand the size of our business and improve operating margins through a combination of acquisitions and distributor to direct sales conversions, which generally involve our elimination of a distributor from the sales channel, either by acquiring the distributor or terminating the distributor relationship (in some instances, particularly in Asia, the conversions involve our acquisition or termination of a master distributor and the continued sale of our products through sub-distributors or through new distributors). Distributor to direct sales conversions are designed to facilitate improved product pricing and more direct access to the end users of our products within the sales channel.

Results of Operations

As used in this discussion, "new products" are products for which commercial sales have commenced within the past 36 months, and “existing products” are products for which commercial sales commenced more than 36 months ago. Discussion of results of operations items that reference the effect of one or more acquired and/or divested businesses or assets (except as noted below with respect to acquired distributors) generally reflects the impact of the acquisitions and/or divestitures within the first 12 months following the date of the acquisition and/or divestiture. In addition to increases and decreases in the per unit selling prices of our products to our customers, our discussion of the impact of product price increases and decreases also reflects the impact on the pricing of our products resulting from the elimination of the distributor, either through acquisition or termination of the distributor, from the sales channel. All of the dollar amounts in the tables are presented in millions unless otherwise noted.

Certain financial information is presented on a rounded basis, which may cause minor differences.

Net revenues


	Three Months Ended
	April 2, 2023		March 27, 2022
Net revenues	$	710.9	$	641.7

Net revenues for the three months ended April 2, 2023 increased $69.2 million, or 10.8%, compared to the prior year period, primarily due to a $63.0 million increase in sales of new products and price increases, partially offset by unfavorable fluctuations in foreign currency exchange rates. Moreover, net revenues for the three months ended April 2, 2023 reflect the impact of a five day increase in the number of shipping days compared to the prior year period.

Gross profit


	Three Months Ended
	April 2, 2023			March 27, 2022
Gross profit	$	391.4		$	346.2
Percentage of sales	55.1		%	54.0		%

Gross margin for the three months ended April 2, 2023 increased 110 basis points, or 2.0%, compared to the prior year period, primarily due to price increases, lower logistics and distribution related costs and favorable fluctuations in foreign currency exchange rates, partially offset by continued cost inflation from macro-economic factors, specifically, raw materials and labor costs.

Selling, general and administrative


	Three Months Ended
	April 2, 2023			March 27, 2022
Selling, general and administrative	$	232.7		$	203.9
Percentage of sales	32.7		%	31.8		%

Selling, general and administrative expenses for the three months ended April 2, 2023 increased $28.8 million, compared to the prior year period primarily due to higher sales and marketing expenses across certain of our product portfolios, higher operating expenses incurred by acquired businesses, primarily Standard Bariatrics, an increase in contingent consideration expense and higher IT related costs. The increases in selling, general and administrative expenses were partially offset by favorable fluctuations in foreign currency exchange rates.

Research and development


	Three Months Ended
	April 2, 2023			March 27, 2022
Research and development	$	41.5		$	36.4
Percentage of sales	5.8		%	5.7		%

The increase in research and development expenses for the three months ended April 2, 2023 compared to the prior year period was primarily attributable to higher project spend within certain of our product portfolios.

Restructuring and impairment charges


	Three Months Ended
	April 2, 2023		March 27, 2022
Restructuring and impairment charges	$	2.2	$	2.4

Restructuring charges for the three months ended April 2, 2023 primarily consisted of termination benefits related to the 2022 restructuring plan.

Ongoing restructuring plans

We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the 2022 restructuring plan and Respiratory divestiture plan of $39 million to $48 million and $24 million to $30 million, respectively. We expect to achieve annual pre-tax savings in connection with the 2022 restructuring plan of $21 million to $23 million, once the plan is fully implemented.

For additional information regarding our restructuring plans, refer to Note 5 within the condensed consolidated financial statements included in this report.

Interest expense


	Three Months Ended
	April 2, 2023			March 27, 2022
Interest expense	$	18.3		$	10.4
Average interest rate on debt	4.0		%	2.0		%

The increase in interest expense for the three months ended April 2, 2023 compared to the prior year period was primarily due to a higher average interest rate resulting from increases in interest rates associated with our variable interest rate debt instruments partially offset by a decrease in average debt outstanding.

Taxes on income from continuing operations


	Three Months Ended
	April 2, 2023		March 27, 2022
Effective income tax rate	20.7	%	17.1	%

The effective income tax rate for the three months ended April 2, 2023 reflects an increase in tax expense related to the revaluation of certain U.S. state operating losses and credit carryforwards. The effective income tax rates for both periods reflect a tax benefit from research and development tax credits. The effective income tax rate for the three months ended March 27, 2022 reflects a net tax benefit related to excess share-based compensation.

Segment Financial Information


Segment net revenues
	Three Months Ended
	April 2, 2023		March 27, 2022		% Increase/(Decrease)



Americas	$	411.9	$	378.0	9.0
EMEA	143.3		136.9		4.7
Asia	78.7		69.2		13.8
OEM	77.0		57.6		33.5

Segment net revenues	$	710.9	$	641.7	10.8

Segment operating profit
	Three Months Ended
	April 2, 2023		March 27, 2022		% Increase/(Decrease)



Americas	$	98.6	$	96.9	1.8
EMEA	12.8		9.1		40.4
Asia	21.0		17.4		20.6
OEM	20.0		10.9		83.4

Segment operating profit (1)	$	152.4	$	134.3	13.5

(1)See Note 13 to our condensed consolidated financial statements included in this report for a reconciliation of segment operating profit to our condensed consolidated income from continuing operations before interest and taxes.

Comparison of the three months ended April 2, 2023 and March 27, 2022

Americas

Americas net revenues for the three months ended April 2, 2023 increased $33.9 million, or 9.0%, compared to the prior year period, which was primarily attributable to a $54.6 million increase in sales of new products and price increases, partially offset by a $29.1 million decrease in sales volume of existing products, notwithstanding the impact of a five day increase in the number of shipping days within the three months ended April 2, 2023.

Americas operating profit for the three months ended April 2, 2023 increased $1.7 million, or 1.8%, compared to the prior year period, which was primarily attributable to an increase in gross profit resulting from higher sales and

price increases, partially offset by higher sales and marketing expenses to support higher sales, operating expenses and contingent consideration expense related to Standard Bariatrics and higher research and development costs.

EMEA

EMEA net revenues for the three months ended April 2, 2023 increased $6.4 million, or 4.7%, compared to the prior year period, which was primarily attributable to a $10.2 million increase in sales volumes of existing products, reflecting, in part, the impact of a five day increase in the number of shipping days within the three months ended April 2, 2023, and price increases. The increases in net revenues were partially offset by $7.2 million of unfavorable fluctuations in foreign currency exchange rates.

EMEA operating profit for the three months ended April 2, 2023 increased $3.7 million, or 40.4%, compared to the prior year period, which was primarily attributable to an increase in gross profit resulting from higher sales and price increases, partially offset by unfavorable fluctuations in foreign currency exchange rates.

Asia

Asia net revenues for the three months ended April 2, 2023 increased $9.5 million, or 13.8%, compared to the prior year period, which was primarily attributable to a $7.1 million increase in sales volumes of existing products and $7.0 million in sales of new products, partially offset by $5.1 million of unfavorable fluctuations in foreign currency exchange rates.

Asia operating profit for the three months ended April 2, 2023 increased $3.6 million, or 20.6%, compared to the prior year period, which was primarily attributable to an increase in gross profit resulting from higher sales, partially offset by unfavorable fluctuations in foreign currency exchange rates and higher sales and marketing expenses to support higher sales.

OEM

OEM net revenues for the three months ended April 2, 2023 increased $19.4 million, or 33.5%, compared to the prior year period, which was primarily attributable to a $15.0 million increase in sales volumes of existing products and price increases.

OEM operating profit for the three months ended April 2, 2023 increased $9.1 million, or 83.4%, compared to the prior year period, which was primarily attributable to an increase in gross profit resulting from higher sales and price increases.

Liquidity and Capital Resources

We believe our cash flow from operations, available cash and cash equivalents and borrowings under our revolving credit facility will enable us to fund our operating requirements, capital expenditures and debt obligations for the next 12 months and the foreseeable future. We have net cash provided by United States based operating activities as well as non-United States sources of cash available to help fund our debt service requirements in the United States. We manage our worldwide cash requirements by monitoring the funds available among our subsidiaries and determining the extent to which we can access those funds on a cost effective basis.

Cash Flows

Net cash provided by operating activities from continuing operations was $84.3 million for the three months ended April 2, 2023 as compared to $62.1 million for the three months ended March 27, 2022. The $22.2 million increase was primarily attributable to favorable changes in working capital driven by higher accounts receivable collections as compared to the prior year, partially offset by an increase in inventories due to purchases to maintain customer service levels during a period of elevated global supply chain volatility.

Net cash used in investing activities from continuing operations was $21.9 million for the three months ended April 2, 2023, and primarily consisted of $21.8 million in capital expenditures.

Net cash used in financing activities from continuing operations was $93.6 million for the three months ended April 2, 2023, and primarily consisted of a $75.1 million reduction in borrowings and $16.0 million in dividend payments.

Borrowings

The indentures governing our 4.625% Senior Notes due 2027 (the “2027 Notes”) and 4.25% Senior Notes due 2028 (the "2028 Notes") contain covenants that, among other things and subject to certain exceptions, limit or restrict our ability, and the ability of our subsidiaries, to create liens; consolidate, merge or dispose of certain assets; and enter into sale leaseback transactions. As of April 2, 2023, we were in compliance with these requirements.

The obligations under our senior credit agreement (the "Credit Agreement"), the 2027 Notes and 2028 Notes are guaranteed (subject to certain exceptions) by substantially all of our material domestic subsidiaries, and the obligations under the Credit Agreement are (subject to certain exceptions and limitations) secured by a lien on substantially all of the assets owned by us and each guarantor.

Summarized Financial Information – Obligor Group

The 2027 Notes are issued by Teleflex Incorporated (the “Parent Company”), and payment of the Parent Company's obligations under the Senior Notes is guaranteed, jointly and severally, by an enumerated group of the Parent Company’s subsidiaries (each, a “Guarantor Subsidiary” and collectively, the “Guarantor Subsidiaries”). The guarantees are full and unconditional, subject to certain customary release provisions. Each Guarantor Subsidiary is directly or indirectly 100% owned by the Parent Company. Summarized financial information for the Parent and Guarantor Subsidiaries (collectively, the “Obligor Group”) as of April 2, 2023 and December 31, 2022 and for the three months ended April 2, 2023 is as follows:


	Three Months Ended
	April 2, 2023
	Obligor Group		Intercompany		Obligor Group (excluding Intercompany)
Net revenue	$	530.9	$	79.7	$	451.2
Cost of goods sold	327.6		128.4		199.2
Gross profit	203.3		(48.7)		252.0
Income from continuing operations	51.3		14.3		37.0
Net income	50.7		14.3		36.4



	April 2, 2023						December 31, 2022
	Obligor Group		Intercompany		Obligor Group (excluding Intercompany)		Obligor Group		Intercompany		Obligor Group (excluding Intercompany)

Total current assets	$	930.9	$	168.8	$	762.1	$	878.3	$	110.5	$	767.8
Total assets	3,411.3		1,567.4		1,843.9		3,420.3		1,510.9		1,909.4
Total current liabilities	987.9		741.8		246.1		882.9		627.9		255.0
Total liabilities	3,193.7		839.8		2,353.9		3,168.0		712.3		2,455.7

The same accounting policies as described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 are used by the Parent Company and each of its subsidiaries in connection with the summarized financial information presented above. The Intercompany column in the table above represents transactions between and among the Obligor Group and non-guarantor subsidiaries (i.e. those subsidiaries of the Parent Company that have not guaranteed payment of the Senior Notes). Obligor investments in non-guarantor subsidiaries and any related activity are excluded from the financial information presented above.

Critical Accounting Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

In our Annual Report on Form 10-K for the year ended December 31, 2022, we provided disclosure regarding our critical accounting estimates, which are reflective of significant judgments and uncertainties, are important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions and conditions.

New Accounting Standards

See Note 2 to the condensed consolidated financial statements included in this report for a discussion of recently issued accounting guidance, including estimated effects, if any, of adoption of the guidance on our financial statements.

Forward-Looking Statements

All statements made in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “should,” “guidance,” “potential,” “continue,” “project,” “forecast,” “confident,” “prospects” and similar expressions typically are used to identify forward-looking statements. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about our business and the industry and markets in which we operate. These statements are not guarantees of future performance and are subject to risks and uncertainties, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements due to a number of factors, including changes in business relationships with and purchases by or from major customers or suppliers; delays or cancellations in shipments; demand for and market acceptance of new and existing products; the impact of inflation and disruptions in our global supply chain on us and our suppliers (particularly sole-source suppliers and providers of sterilization services), including fluctuations in the cost and availability of resins and other raw materials, as well as certain components, used in the production or sterilization of our products, transportation constraints and delays, product shortages, energy shortages or increased energy costs, labor shortages in the United States and elsewhere, and increased operating and labor costs; our inability to integrate acquired businesses into our operations, realize planned synergies and operate such businesses profitably in accordance with our expectations; our inability to effectively execute our restructuring programs; our inability to realize anticipated savings resulting from restructuring plans and programs; the impact of enacted healthcare reform legislation and proposals to amend, replace or repeal the legislation; changes in Medicare, Medicaid and third party coverage and reimbursements; the impact of tax legislation and related regulations; competitive market conditions and resulting effects on revenues and pricing; global economic factors, including currency exchange rates, interest rates, trade disputes, sovereign debt issues, and international conflicts and hostilities, such as the ongoing conflict between Russia and Ukraine; public health epidemics including the novel coronavirus (referred to as COVID-19); difficulties entering new markets; and general economic conditions. For a further discussion of the risks relating to our business, see Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2022. We expressly disclaim any obligation to update these forward-looking statements, except as otherwise explicitly stated by us or as required by law or regulation.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the information set forth in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b) Change in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are party to various lawsuits and claims arising in the normal course of business. These lawsuits and claims include actions involving product liability and product warranty, commercial disputes, intellectual property, contract, employment, environmental and other matters. As of April 2, 2023 and December 31, 2022, we had accrued liabilities of approximately $0.4 million and $0.5 million, respectively, in connection with these matters, representing our best estimate of the cost within the range of estimated possible loss that will be incurred to resolve these matters. Based on information currently available, advice of counsel, established reserves and other resources, we do not believe that the outcome of any outstanding lawsuits or claims is likely to be, individually or in the aggregate, material to our business, financial condition, results of operations or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our business, financial condition, results of operations or liquidity.

Item 1A. Risk Factors

See the information set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant changes in risk factors for the quarter ended April 2, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this report:


Exhibit No.		Description

31.1	—	Certification of Chief Executive Officer, pursuant to Rule 13a–14(a) under the Securities Exchange Act of 1934.
31.2	—	Certification of Chief Financial Officer, pursuant to Rule 13a–14(a) under the Securities Exchange Act of 1934.
32.1	—	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	—	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	—	The following materials from our Quarterly Report on Form 10-Q for the quarter ended April 2, 2023, formatted in inline XBRL (eXtensible Business Reporting Language): (i) Cover Page; (ii) the Condensed Consolidated Statements of Income for the three months ended April 2, 2023 and March 27, 2022; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended April 2, 2023 and March 27, 2022; (iv) the Condensed Consolidated Balance Sheets as of April 2, 2023 and December 31, 2022; (v) the Condensed Consolidated Statements of Cash Flows for the three months ended April 2, 2023 and March 27, 2022; (vi) the Condensed Consolidated Statements of Changes in Equity for the three months ended April 2, 2023 and March 27, 2022; and (vii) Notes to Condensed Consolidated Financial Statements.
104.1	—	The cover page of the Company's Quarterly Report on Form 10-Q for the quarter ended April 2, 2023, formatted in inline XBRL (included in Exhibit 101.1).

____________________________________

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TELEFLEX INCORPORATED

By:

/s/ Liam J. Kelly

Liam J. Kelly

President and Chief Executive Officer

(Principal Executive Officer)

By:

/s/ Thomas E. Powell

Thomas E. Powell

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Dated: May 4, 2023