泰利福醫療 (TFX) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Teleflex Incorporated fourth quarter and full year 2010 earnings and 2011 outlook conference call. My name is Stacey and I will be your conference moderator for today. At this time, all participants are in a listen only mode. We will conduct a question and answer session towards the end of the conference. (Operator Instructions)As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the call over to Mr. Jake Elguicze, Vice President of Investor Relations. Please proceed.

Thank you, operator. And good afternoon, everyone, and welcome to the Teleflex Inc. fourth quarter and full year 2010 earnings and 2011 outlook conference call. The press release and slides to accompany this call are available on our website at www.teleflex.com. And as a reminder this call will be available on our website and a replay will be available by dialing 888-286-8010, or for international calls 617-801-6888, pass code 84161006. Participating on today's call are Benson Smith, Teleflex Chairman, President and Chief Executive Officer, and Randy Meier, Teleflex Executive Vice President and Chief Financial Officer. Benson and Randy have brief prepared remarks and then we'll open up the call to questions.

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 on slide four. 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 events or results to differ materially include but are not limited to factors made in our press release today, as well as our filing with the SEC, including our form 10-K, which can be accessed on our website. With that, I would now like to turn the call over to Benson.

Thank you, Jake, and good afternoon, everyone. I'm extremely pleased to have the opportunity to speak with you today as we report our results for the fourth quarter and the full year 2010, and also provide our outlook for 2011. I'll begin this afternoon's call with an overview of some of the highlights from the past year, then I'll discuss some of the recent developments that have occurred in 2011, and provide you with an update regarding the achievement of some of our strategic goals. At that point, I will turn the call over to Randy and he will provide you with specifics on the fourth quarter and full year, as well as share with you our outlook for 2011.

So let's get started. 2010 was a significant year for Teleflex, one in which much progress was made towards transforming the company into a pure-play global medical technology company. Early in the year, we took an important step, and provided longer-term growth in profitability objectives that we refer to as the high fives. I will update you in a few minutes on what progress we have made towards obtaining those goals, but I feel it's important to start this conference call by letting you know that I am fully committed towards the achievement of those objectives.In addition to providing the high fives, we continue the divestiture process of our non-core cyclical assets. Using the proceeds that we receive from these transactions to continue to deliver the balance sheet and further invest in our medical platform, as evidenced by a 70 basis point increase in our vitality index and a significant increase we made in R&D.

In 2010, R&D spending was up 16% as compared to prior year levels, and as the year progressed, we began to see additional new product introductions. And whether that was what the first convertible endotracheal tube that was introduced in the first quarter or our ArrowEVOLUTION picc with chloragard technology that was launched just before year-end, our R&D efforts continue to support our strategic objectives to provide safe and effective products that reduce infections, improve patient and clinician safety, enhance patient outcomes and enable less invasive procedures. I plan to bring even more heightened focus to R&D, new products and product line extensions in the year and years to come.

During the course of 2010, we also made progress with the FDA corporate warning letter, as evidenced by the approval from the FDA of all currently eligible requests for certificates to foreign governments or CFG's. And although the corporate warning letter is still in place, we believe that the FDA's approval of the of the CFG's is a clear indication that we have substantially corrected the quality system issues identified in the corporate warning letter.

In addition to making progress on the regulatory front, we also completed a series of refinancing transactions that extend maturities, further optimized our capital structure and provided financial flexibility to grow our medical business. And finally, despite significant investments made across R&D, sales and marketing and clinical education, our adjusted earnings per share increased 14% over 2009.

Next, turning to some of the recent developments that have occurred in 2011. In early January, we acquired privately held VasoNova. Based in California, VasoNova has developed a unique central venous catheter navigation technology that allows for realtime, accurate confirmation of placement of peripherally inserted central catheters and central venous catheters. This technology will allow Teleflex to expand its vascular access product offerings, and is the first real time intervasculour catheter navigation technology that does not require external metal detectors or viewing screens, nor subjective interpretation of ECG signals. We expect this acquisition to be accretive both in revenue and earnings as we end 2011.

VasoNova has been part of Teleflex for just a few weeks now, but I am pleased to tell you that the integration is going very well. This acquisition was followed by the announcement that was made on January 31, in which I was appointed to the role of Chairman, President, and Chief Executive Officer of Teleflex. And although I've only been in the role for a few weeks, my familiarity with Teleflex, its strategy and people, coupled with my experience in the heath care and medical device industry, has allowed me to hit the ground running.

As I mentioned earlier, I am committed to finishing Teleflex's portfolio transition to heath care, bringing innovative products to market through improved R&D and increasing the long-term growth and profitability of the company. In the short time I've been here, I have met with employees, visited many of our key facilities, both domestically and abroad, and reached out to several key customers and thought opinion leaders. In 2011, I will work closely with our board, leadership team, and employees to further drive the execution of our strategic objectives.

Also, we announced today that we issued notice to the holders of our 2004 series senior notes of our intention to pre-pay the remaining aggregate outstanding principal amount, totaling approximately $166 million. This was yet another step in the optimization of our capital structure.

With that, I would like to briefly discuss how we performed in 2010 as compared to our high five objectives. When comparing our results for 2010 versus 2009, you will see that some improvements occurred. However, there is still much work that needs to be done in order for us to achieve our longer-term goals.

Constant currency revenue growth for the company improved from negative 5% in 2009, to 3% in 2010. However, much of this is attributed to the rebound in the performance of our non-core assets. On a constant currency basis, our medical business grew 1%, and although this figure was negatively impacted by the IV tubing and IABP voluntary recalls that were announced in 2010, it's an unacceptable amount. One that I am confident will improve in 2011, as we gain further penetration of the ArrowEVOLUTION picc and picc wand.

Turning to adjusted gross margins, they improved 60 basis points over 2009. Further gross margin expansion will be key for us to achieve the high fives. Gross margin expansion will be achieved through various initiatives, which may include the consolidation of facilities, customer service, and efficiencies gained from the reduction of third-party vendors. We anticipate additional gross margin expansion to occur in 2011.

I've already talked about R&D and my belief as to its importance, so I won't spend a great deal of additional time talking about it now. Suffice it to say that in 2011 we plan to continue to increase our R&D spending, and you should expect to see similar base point increase in 2011, as what occurred in 2010. Finally, from an operating margin standpoint, we took a slight step backwards in 2010. This was due to the significant investments that were made in R&D and sales and marketing over the past year.

As we look into 2011, we expect this trend to change and for operating margins expansion to occur. With that, I will now turn the call over to Randy and he can walk you through our fourth quarter and year end results, and our 2011 outlook in more detail. Randy?

Thank you, Benson, and good afternoon, everyone. Revenues for the fourth quarter were $493.2 million, up 3% on a constant currency basis. Medical constant currency revenue growth during the quarter was 1%, while aerospace and commercial segments grew at rates of 16% and 10% respectively.

Adjusted gross profit and margins for the quarter were $214.6 million, or 43.5%. This compares to $209.3 million or 43.1% in the prior year quarter. Gross profit during the quarter was negatively impacted by approximately $2.1 million, due to the IABP recall which was announced in late December. In addition, during the fourth quarter, the Company decided that is would exit the IV tubing business, and as a result, incurred costs impacting gross margins of approximately $5.9 million. The costs associated with the IV tubing shut down have been excluded from calculating adjusted gross profit and margins.

Moving to R&D, it equaled 2.5% of revenue, and increased approximately 10% over the prior year quarter. We continue to focus our R&D efforts in the areas of vascular access and anesthesia. Turning to operating margins, in the quarter, adjusted operating margins were 14.3%, down 180 basis points when compared to the fourth quarter of 2009. The decline in operating profit was predominately due to the $4.4 million charge we took related to the IABP recall that I mentioned earlier, as well as the $2.1 million charge we had to take related to Greek receivables.

We expect to receive a total of approximately $10 million of zero coupon Greek treasury bonds, and settlement of the amounts owed to us from the sales to public hospitals systems in Greece from 2007 through 2009. The bonds mature over a three-year period, and the charge we incurred in the fourth quarter reflects the respective outstanding receivables at year end, at the fair value of Greek treasury bonds with a comparable maturity. Yet, despite these charges, our adjusted earnings from continuing operations was $1 per share, an increase of approximate 4% versus prior year quarters. And, before I move on to discuss the full year results, in the fourth quarter we announced that we prepaid approximately $166 million of our 2004 series senior notes, and we closed on the divestiture of our actuation business.

Now, let's move on for a quick update of the full-year results. Revenues for the full year were approximately $1.8 billion, up 3% on a constant currency basis. Medical constant currency revenue was 1% while aerospace and commercial segments grew 7% and 16% respectively. Adjusted gross profit margins for the year were approximately $800 million, or 44.4%.This compares to approximately $774 million or 43.8% in the prior year quarter. R&D spending increased 16% over 2009, equating to 2.4% of revenue. Adjusted operating margins were down slightly to 15.8%.

Once again, the year over year decline was primarily due to the charges we took in the fourth quarter, associated with the IABP recall and the reserve for the Greek bonds. However, despite the slight decrease in operating profit, our adjusted earnings from continuing operations was $3.93 per share, an increase of 14% versus the prior year quarter.

With that, I'd like to briefly comment on the fourth quarter constant currency top line performance from each of our segments. Medical revenue for the fourth quarter was $386.3 million, up 1%. Going into a bit more detail, critical care revenue was $257.7 million, up 2%. During the quarter, urology sales grew 8%, anesthesia sales grew 2%, while respiratory and vascular sales were flat.

Respiratory sales had a difficult fourth quarter comp, and were impacted by a very light flu season in 2010, coupled with the impact of a very strong flu season in 2009. Vascular sales were flat to do the impact of the IV tubing sales that existed in the fourth quarter of 2009, that did not occur in the fourth quarter of 2010. Excluding those results, vascular would have grown 3% on a constant currency basis.

Moving to surgical, its' revenues were $71.7 million, up 7%. Similar to the past few quarters, surgical growth was led by sales of our ligation and closure devices. And, in addition to the strength of those product areas, this quarter saw an improvement in the sales of our surgical instrumentation products.

Turning to cardiac, its' revenues were $16.1 million, down 15%. The decline in cardiac was solely attributed to the recall, and I would like to take a minute to provide you with an update regarding its status. We reintroduced the 5800 series product, beginning in January, to select customers, with priority given to our European market.

We have continued to fill the pipeline with increased quantities of the 5800 series product since its update, and anticipating having a full recovery during the second quarter. And, before I move to discussing the top line results of our non-medical assets, let me close the discussion with a review of our OEM business. OEM revenue was approximately $40.4 million, up 1%. Growth in OEM was led by increased sales of our orthopedic product lines.

Now I would like to quickly turn your attention to top line performance of our non-core businesses. Aerospace revenues for the fourth quarter were approximately $59 million, up 16% on a constant currency basis. This segment continues to perform very well, and similar to previous quarters, we saw revenue growth due to increase in the number of narrow body cargo-loading systems units ship, and improvement in spares sales as well as continued increase in the sales of our cargo containers. In commercial, its' revenues were up 10% on a constant currency basis to approximately $48 million. This was due to a significant increase in the sales of higher margin after market marine products as well as an increase in sales to OEM manufacturers.

With that, I'd like to now turn to our 2011 outlook. In 2011, we expect total company revenues to be between $1.81 billion and $1.84 billion. Of that amount, we expect non-core revenue to be between $360 million and $370 million. On a constant currency basis, we expect our medical business to grow approximately between 2.5% and 3 .5%. From a product line standpoint, we anticipate sales of our critical care products to grow slightly above the overall constant currency growth expectations that I just referred to. This will be led by increased sales of our vascular products. In addition to the improvement in vascular, we expect continued strength in the performance of our anesthesia, urology, and respiratory product lines over the course of 2011. For our surgical products, we anticipate that sales will grow in line with normalized surgical procedure growth.

Moving to cardiac, because of the recall that was announced in late December, we are anticipating that revenue will be relatively flat in 2011, compared to 2010. And turning to our OEM franchise, we currently anticipate a slight improvement in 2011, as compared to 2010, due to sales of our OEM specialty products and a small improvement in the sales of our OEM orthopedic products. From an earnings perspective in 2011, we expect to achieve total company cash earnings, excluding special items, in the range of $4.95 to $5.15. Of that amount, we expect our non-core assets to contribute approximately $0.90.

And before we open the call to Q&A, I would like to tell you that, prior to year end 2010, we engaged Goldman Sachs and Jefferies and Companies to assist us in the evaluation of our strategic alternatives for the marine and aerospace businesses. With that, I would like to turn the call over to the operator for questions. Operator?

Thank you.

(Operator Instructions)

Your first question comes from the line of Lawrence Keusch with Morgan Keegan. Please proceed.

Hello, guys. This is Tom in for Larry. In terms of your five year margin expansion goal, excluding divestiture of non-core assets, what specific actions are you guys going to be undertaking over the next 12 months to increase margins?

We've had a variety of discussions about this. We usually describe this in sort of three categories. One, certainly, we expect to get about one third of the way to our margin expansion through the divestiture of our non-core assets. Second, we expect the introduction of new products, some improved product mix, and pricing to improve about another third of the margin expansion we're anticipating. And, the remaining third will come predominantly from some cost initiatives, continuous [improvement] initiatives that we expect to initiate subsequent to the divestiture of our non-core assets.

So in 2011, kind of excluding divestiture, what gets the margin up? Are there any kind of plant consolidation -- I guess how are you guys thinking about margins, organic margin expansion or is it more in the later leaders?

Well, as we described, similar to the sum of the things that we took charges for in 2010, we should enjoy some margin expansion as a result of some plank closures, specifically the Camargo facility that we did at the end of 2010. But I would also expect that we would put a number of initiatives in place this year that would begin to move in the direction that we've talked about. Prior to that occurring, I would expect the divestiture of our non-core assets to occur first.

Got you. And then in terms of uses of cash, you guys did a very nice job in 2010, 2011 kind of refinancing and pushing maturities out. Is the use of cash from operations and from divestiture, are they going to be primarily for acquisition or do you anticipate more delivering?

Right now, we would anticipate that some of the asset sales will go towards continuing the deleveraging of the company. The pro forma for the deleveraging and the retirement of the 2004 series will have a total debt to capitalization in the mid- 20s. So, we're very comfortable with that level of leverage right now. So, I expect that some of the capital that we have available we put to use towards the acquisition of some products or technologies that we can utilize over the coming years to generate top line growth.

Got it. And then lastly, your 5-year plan, I believe you guys rolled it out in the first half of 2010. So is 2011 the second year of that five-year plan, or has that been pushed out? I just want to make sure I understand correctly?

Yes, this is Benson, yes,that's correct. It's not been pushed out. This is our second year.

Terrific. Thank you.

(Operator Instructions)

Your next question comes from the line of David Turkaly with SIG. Please proceed.

Thank you. To the extent that you could, could you help us get into sort of an operating margin for the medical division in the quarter, and then remind us, kind of in terms of the high fives, where we think that's heading in 2011 and beyond?

I think in the past we've provided sort of segment margins for the medical business that have been just north of 20%. Moving forward, given the focus of the entire company, [ex] some of our non-core businesses, we would expect that you're going to be up in sort of the higher teens as we end 2011. So sort of on a fully diluted basis again, different from the segment profitability that we've given guidance in the past, we would expect we'd be in the 17% to19% by the end of 2019 -- excuse me, 2011.

And then in terms of cash flow, any targets in 2011 for cash from ops, or free cash flow for the year?

We're looking at about $250 million, based on the portfolio of assets that we have today. Obviously, that may change, subsequent to any divestiture.But right now are looking at about $250 million.

Nice one. And any comment on a tax rate for the year?

My guess is we'll be in the 28% to 30% range at year end.

Thank you a lot.

Your next question comes from the line of Richard Newitter with Leerink Swann. Please proceed.

Thank you, guys. Thank you for taking the question. I have a few. I'll start with the medical segment. Randy, you said surgical growth, your guidance for 2011, you said it was moving back to normalized rates?Just based on your Q4 surgical results, which are strong, 7% growth rate ahead of what we look for, what do you think normalized is and maybe just some color on that?

I think what we were alluding to was back to market rates, and we've been looking at the surgical business growing in that 2% to 3% range. So we would anticipate going back to that level. As you know, we experienced some pretty good instrument sales in the second half of the year, and there was a fairly easy [comp] in the year over year quarter due to fairly light surgical instrument sales in 2009. So again, as we get to a more normal -- that's what we would characterize a more normalized period -- we think we will grow at market rates.

Great. And then maybe you could just touch upon the quarterly flow of gross margin? Thank you for the EBIT margin quarterly kind of break down. Could you do the same for gross margin? And also talk about your growth rate sales including and excluding whatever IV tubing impact maybe having on 2011? -- not IV tubing, sorry. Your cardiac -- your cardiac recall?

The cardiac recall -- Rich, it's Jake. I think we still said some where between $5 million to $7 million of a negative sales impact was our estimate. And that will be predominantly the first half of the year focused.

Again, that's why we were looking at basically year over year having flat cardiac sales. The impact of that will be in the first quarter or two in the year.

Okay. And maybe can you just talk to the gross margin for the year? I'm assuming more back half loaded?

Again, when we look at our gross profit margins, we would expect to see a steady increase or expansion throughout the year. As you know, we have a little bit of seasonality to the business, but also with some of the products that we've launched in the latter half of 2010, they begin to take some momentum throughout the year. We should expect to see some nice product mix improvement. So I'd expect to see a nice gradual expansion of that. We should end up for the medical business in sort of the high 40s at the end of the year.

Great. And one last one. Your EPS ranges -- it's pretty wide. Can you just maybe talk through some of the factors that would get you to the high end of that versus the low end? Where's the upside potential?

Our range is fairly consistent with where we started -- gave guidance last year. Some of the issues that we have there, there's some of the volatility that we have in the international markets, and how much impact we see from the events over in Europe. And also some of the traction, I think, from the product launches that we had at the end of 2010. So I think were fairly comfortable that it's a reasonable range that we have out there. With better execution and some strengthening of some of the macroeconomic environment over in Europe, we have an opportunity to sort of be in the upper half of the guidance.

Thank you a lot.

(Operator Instructions)

Your next question comes from the line of Josh Jennings with Jefferies & Company. Please proceed.

Hello, and good evening. Thank you a lot. I just wanted to circle back on the operating margin question earlier for the medical segment, just to make sure -- Randy, you said 17% to 19% for expectations and 2011 for the medical segment, correct?

That's correct.

And just --

That would be for the medical business excluding our non-core assets. So again, it's not the segment, it would be for the full year, ex our non-core assets.

Okay, great. And then can you help us back into what the operating margin was for the medical segment; the adjusted operating margin for the medical segment in Q4, and what it could have been -- or what it is, ex the charges for the IABP and the tubing?

We are probably down at the lower end of that range (inaudible -- technical difficulties) 2011 -- excuse me, 2010.

Okay, great. And just in terms of exiting the IV tubing business, can you give us color about the decision; why that was made, and also, on top of that question, with the growth rates that your giving for the medical segment, is that excluding IV tubing contribution which I know was limited in 2010?

Yes to your second question. I think the decision was made just about the [lose] of the commodity orientation to that business and the lack of profitability. And quite frankly, the cost of reentering that business. So we made the decision, at the beginning of the fourth quarter, that strategically it didn't make a lot of sense for us. But we wanted to manage the transition for our customers, too, in an orderly fashion so we continued to service them over the last two quarters.

With your constant currency growth guidance for the medical segment, 2.5% to 3.5%, it looks as like one of the drivers is going to be the antimicrobial pick, and attaching the VasoNova technology onto your catheter business. Can you talk in terms of where you guys exited 2010, in terms of your pick share and how much share you expect to gain in 2011, relatively. And what attraction -- I know it's still early, but what you guys have generated on the antimicrobial pick today?

Yes. We ended the year roughly speaking with a pick market share of about 5%. And as you know, we began to introduce the antimicrobial pick in sort of the middle of the fourth quarter. So we're starting to see some -- a fair amount of interest associated with that, and again with a lot of the GPO contracts coming up, beginning in the second half of this year. We are pretty excited about the opportunity with a pick one, the antimicrobial pick and with the addition to the VasoNova technology, to begin to make some significant headway.

I wouldn't expect to any significant market share gains in this year. Just based on how the GPO contracts work, but I think we will see some positive momentum into the second half of the year. So I think moving the dial a little bit is what our expectation is, as we sort of gain momentum into 2012.

Great. And just on the VasoNova technology, can you speak to how this product is positioned competitively and just how applicable it is to your catheter business? Is it going to be used with all your central venous catheters and picks?

I think that's one of the opportunities we had around the acquisition. I think initially it can be utilized with predominately the peripheral access market and it can be used with a variety of different catheters -- not only our catheters, but some of our competitors catheters, so there's a variety of different ways we can introduce this technology to the marketplace. But I think over time, utilizing this technology more broadly with all of our vascular products is a significant opportunity we saw at the time of the acquisition, and we continue to explore opportunities to utilize it in that fashion.

Are there any limitations in incorporating these limited technologies onto your central venous catheters with the FDA warning letter in place?

None at all.

Okay, great.

Related to the warning letter, we are today operating as if we have no restrictions. Were just kind of, you know, we continue to wait for sort of the finalization of the letter from the FDA. So right now, with the reinstatement of our CFG's, last summer, we don't feel that we are under any difficulties in operating both domestically or internationally.

All right. Thank you a lot, guys.

(Operator Instructions)

Your next question comes from the line of Lawrence Keusch with Morgan Keegan. Please proceed.

Hello everyone (inaudible) just have a couple of follow up questions. This quarter, how much of the R&D tax credit adds to the EPS?

It's Jake. It was some where around 600,000, or some where around $0.001.

Got you. And then, just generally, if you can provide commentary with regards to kind of your price pressure you are seeing out there, and in your guidance for kind of -- what kind of impact from pricing have you guys assumed?

You know, I think with our guidance, that was kind of baked into, you know, the macroeconomic environment. Some of the pricing pressures that we're seeing both domestically and over in Europe. And some of the growth that is available to us and some of the emerging markets. So I don't think it's really changed that much. The last time we have an opportunity to -- the pricing environment in Europe remains difficult. So I think with our product portfolio, the breadth of exposure that we have to hospitals in terms of our lines, we're going to do okay there.

I think we're pretty much exposed to the acute care and product care areas, so we don't have a lot of exposure to elective procedures. So I think we're in fairly good shape over there, and again, as the percentage of the overall cost of procedures, our products don't make up a significant portion of that.

Having said that, you know, I think the environment is such where all costs on the delivery of healthcare is going to be under pressure over the next couple of years. So, again, it's going to be an opportunity for us to continue to introduce new products to maintain our pricing and introduce higher prices. But again, all of that into our guidance that we provided.

Thank you.

Your next question comes from the line of David Turkaly, please proceed Please proceed.

Thank you. Earlier in the call, I think you mentioned that the EPS contribution from non-core was $0.90. You know, Randy, given kind of your background, as you look at kind of conservatively the offsets to -- given that you hired these folks -- to what that dilution might look like, can you walk us through anything to help us can get a feel for, you know, with a conservative estimate of what you might get, what the numbers might look like for the year? Or the offsets that you could work on to mitigate that or make it lower?

Well, I think, those businesses, when you carve out the businesses, those are sort of carve out numbers, so that the probability of these businesses on a stand-alone basis would probably be a little bit less. But there is a variety of things that we can do and as you've indicated in the past, as we move from a portfolio company to an operating company, there's a variety of costs that we can eliminate after the divestiture of these assets. We've done a number of things in terms of off setting some of the costs through debt reduction and again, we also expect to be able to redeploy some of this capital into things that hopefully will return greater amounts than what we're divesting, at least that's what the theory is behind our strategic repositioning of the company.

Thank you.

(Operator Instructions)

Your next question comes from the line of Richard Newitter with Leerink Swann. Please proceed.

Hello, guys. I had one more quick follow-up. Under your medical 2.5% to 3.5% constant currency guidance growth rate, I know you've talked about the CFG's having had in the past a negative 1% impact to growth -- I think it was to medical growth. Being that we're two months into 2011, what visibility do you have in terms of how much revenue we can expect back, and is a contribution from the CFG's baked into that 2.5% to 3%? If so, how much? Are we talking 50% you recoup, or 20%?

You know, as we indicated at the end of the third quarter when we started talking about our ability to get back into the market, we said the time frames that it would take because of registration and process would vary geography to geography. We do expect to see some benefit of this in 2011. It is in our numbers. And relative to a medical business that's a little less than $1.5 billion, it probably represents 30 to 40 basis points of the overall growth.

Great. Thank you a lot.

(Operator Instructions)

At this time, I'd like to turn the presentation back over to Jake Elguicze for closing remarks.

Thank you, operator. And thank you for joining us today. That concludes the Teleflex Inc. fourth quarter and full year 2010 earnings and 2011 outlook conference call. Have a nice day.