泰利福醫療 (TFX) 2015 Q3 法說會逐字稿

Good day ladies and gentlemen and welcome to the Q3 2015 Teleflex Incorporated earnings conference call. My name is Mark and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session.

(Operator Instructions)

As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to your host today, Jake Elguicze, Treasurer and Vice President of Investor Relations. Please proceed, sir.

Thank you, operator.

Good morning everyone and welcome to the Teleflex Incorporated third-quarter 2015 earnings conference call. The press release and slides to accompany this call are available on our website at www.teleflex.com. As a reminder, this call will be available on our website and a replay will be available by dialing 888-286-8010, or for international calls, 617-801-6888 passcode 53575576.

Participating on today's call are Benson Smith, Chairman, President and Chief Executive Officer; Liam Kelly, Executive Vice President and Chief Operating Officer; and Thomas Powell, Executive Vice President and Chief Financial Officer. Benson, Liam and Tom will make some brief prepared remarks and then we'll open up the call to Q&A.

Before we begin I would like to remind you that some of the matters discussed in this conference call will contain forward-looking statements regarding future events as outlined in the slides. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors 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.

The format for this morning's event will be similar to our prior conference calls with Benson providing a high level overview of our quarterly results and an update on some key strategic initiatives. He'll then the call over to Liam, who will review our product line and geographic revenue results, provide updates with regards to recent GPO and IDN developments, new product introductions and regulatory approvals, as well as highlight an acquisition that was completed in the quarter. Following Liam will be Tom Powell, and Tom will review our third-quarter financial results and provide an update regarding our financial guidance for 2015.

Finally we will open up the call to Q&A. With that said, I would now like to turn the call over to Benson.

Thanks Jake and good morning everyone. To start, we view our underlying business fundamentals for the third quarter to be healthy, and as a result, this boosts our confidence in a robust fourth quarter and our confidence in our longer-term goals outlined in May. Since Liam and Tom will go into the numbers in significant detail I want to use my time to emphasize some particular highlights.

We were pleased to see that revenue growth this quarter was particularly strong within our key North American franchises of Vascular Access and Surgery, each of which generated their highest constant currency growth rates of the year. In addition to these areas we also saw a year-over-year and sequential constant currency growth rate improvement from our Anesthesia franchise. Now Anesthesia is still low by comparison to these other two franchises, but we fully expect to see continued improvement in our Anesthesia business as we focus more resources on higher-margin, higher-gross products such as med, nasal and pain pumps.

Additionally, just this week, we launched the LMA Protector in the United States and were quite gratified by the positive reception it received at the anesthesiology meeting. As you might remember, our general revenue growth thesis for our three-year plan anticipates continued growth in the North American markets. These favorable third-quarter numbers give us confidence as we exit the year, and further support what we have been saying for the past few quarters now, which is that the North American healthcare market is improving, and more importantly, that Teleflex is taking market share.

In addition to strength in North America we also saw a return to double-digit constant currency revenue growth within our Asia segment. This is despite that growth in China was not as robust as it was several years ago due to that country's economic issues. Revenue growth generated from Asia this quarter was broad-based, was comprised of our continuing ability to increase the average selling prices of our products within the local markets, the successful integration of acquisitions and distributor conversions, and an improving in underlying volumes in areas like Southeast Asia.

However, during the third quarter not all of our businesses and regions performed at their peaks. Our Respiratory Therapy business is a showing a decline. Although on closer examination, our sales into dealers in North America is lagging behind dealer sales to hospitals. We expect this lag to correct itself by the first quarter of 2016.

That correction, along with anticipated benefit from some GPO wins, leads us to believe that Respiratory Therapy revenue growth will be a positive territory in 2016. Latin American businesses also experienced year-over-year revenue declines. This is primarily due to oil-producing countries like Venezuela, who simply didn't have the funds available to order products.

To a lesser extent, European revenue growth, while still positive, was diminished as a result of lower sales to Russia and the Mid-East. I would add that while it's possible that while we could see some near term improvement in these oil producing countries, we are not counting on any rebound in order to hit our fourth quarter expectations.

Turning to adjusted earnings per share, it was $1.60 in the third quarter of 2015, up approximately 2%. And while at first glance 2% earnings growth may not seem impressive, in this case that couldn't be further from the truth as we had to handle significant year-over-year point currency headwinds and these once again mask underlying gross and operating margin expansion and earnings growth. Thanks to leverage generated from our higher-margin products and regions targeting operation expense cost containment initiatives and reduced interest expense and an improvement in our tax rate, the company was able to overcome a 17% foreign currency headwind and deliver adjusted earnings per share that was higher than our most recent internal projections.

Before turning the call over to Liam, I would like to provide you with a brief update on the status of our manufacturing footprint consolidation plan and financial guidance for 2015. We continue to remain on track with our updated timetable for our manufacturing restructuring program and expect that we will begin to see the initial benefits in our gross and operating margins beginning the fourth quarter of this year. Or from a timing and synergy-generation perspective, there are no changes from the comments we made in our second-quarter earnings conference call, as we continue to believe that we will be substantially complete by the end of 2017, generating annual synergies of between $28 million and $35 million on a pretax basis.

This takes me to our 2015 financial expectations. As we have been saying all year, 2015 is a fourth-quarter story for Teleflex and we expect a strong close to 2015 with revenue growth accelerating from the 4.7% level that we have achieved during the first nine months of the year. This acceleration in fourth-quarter constant currency growth is based on a few key factors including continued strength within North American markets, incremental revenue generated from already completed M&A and distributor conversions, easier comparables for our business in China and one additional shipping day as compared to the prior-year's fourth quarter.

Regarding our gross margin goals, we were negatively affected in the third quarter, primarily by some additional expenses related to recalls. While this will modestly affect our overall gross margins for the year, we do not expect it to interfere with our 54% target for the fourth quarter. And finally, as it relates to our adjusted EPS, we have seen strong sequential improvement each quarter this year and expect the same trends to continue into the fourth quarter.

This morning we narrowed our adjusted earnings per share range between $6.20 and $6.30 per share and anticipate ending the year close to the midpoint of that range. This new midpoint is an improvement from the midpoint of our previously provided adjusted earnings per share range. Perhaps more importantly I'm happy to report that we are not cutting back any of our investments in Percuvance, LMA Protector, MAD Nasal or Vidacare.

In fact, we continue to be quite bullish about the opportunity these products percent for us. Just yesterday we had a very exciting Percutaneous presentation and demonstration from one of our leading US clinical sites and we see a lot of enthusiasm going around for this product line. In summary, given our year-to-date performance, status of our end markets, the successful integration of acquired businesses and a more robust product pipeline, we feel very good where we are as a company and anticipate a strong close to 2015.

I will now turn the call over to Liam and he will provide you with a update on the strategic business unit results.

Thank you Benson and good morning every one.

For the consolidated company third-quarter 2015 constant currency revenues grew 4.2%. The major driver of revenue growth this quarter came from improved volumes associated with our Vascular and Surgical North America and APAC businesses combined with acquired revenue and distributors that we converted to a direct sales model. A particular note was our growth in North America, which was 5.7%, this was up from 4.3% in quarter two and solidifies our view on our quarter four and full-year growth projections.

During the most recent quarter, revenue growth coming from acquisitions and go directs contributed approximately 160 basis points towards our overall revenue growth. This was the highest contribution year to date and is a reflection that capital that has been deployed in terms of acquisitions is yielding returns. In addition, we also had approximately 112 basis points of growth stemming from new product introductions.

This was a sequential improvement from quarter two levels and was driven by increased revenues of our European ASK CVC kits, surgical product introductions stemming from our partnership with a robotics provider, new OEM product sales to other large medical device companies and increased revenues of our Rusch disposable LED laryngoscope. Additional sales coming from new product introductions in the quarter were somewhat offset by a decline in new product sales within our Vascular business.

This was due to the lingering effect of the Arrow Advantage PICC recall that occurred late in the second quarter of the year. I am pleased to say that we expect to have this issue rectified and behind us but the middle of the fourth quarter.

Moving next to product volumes. The increase this quarter in our overall revenue growth rates from product volumes increased with approximately 115 basis points. This came from two key areas: Vidacare constant currency revenue growth rebounded from quarter two levels, generating approximately 66 basis points of overall Company revenue growth, while core product volumes increased by 49 basis points. Vidacare revenue growth was particularly strong in the Vidacare OnControl Bone Marrow and Biopsy product lines.

The market for these products is still somewhat in their infancy, but we are very encouraged by the growth rates they exhibit in the quarter, as it is our belief that these products offer a superior patient clinical outcome and have the opportunity to address the market that currently uses a very manual and often painful approach to bone marrow biopsy procedures. Year-to-date, Vidacare continues to track in the high teens as a revenue growth percentage. We still believe this will continue and improve through the fourth quarter.

Core product volumes was led by a very strong North American Central Venous Catheter volumes and Asia volumes which were approximately 2%. These increases however were somewhat offset by year-over-year volume declines due to macroeconomic issues in Latin America, particularly in Venezuela and European volumes, which were relatively flat as compared to the third quarter of 2014. Our volumes was also impacted by the previously-mentioned recalls which occurred late in quarter two and were not completely resolved in quarter three.

Finally, from a core product pricing standpoint we saw the average selling price of our products expand. As such, this led to additional revenue growth of approximately 37 basis points and was a sequential improvement from the second quarter in which product pricing was relatively flat. The ability for Teleflex to continue to drive positive product pricing is promising. As in the quarter, product pricing was particularly strong within our North American Surgical and Cardiac businesses.

Next, I would like to provide some additional color surrounding our segment and product related constant currency revenue growth drivers. Vascular North America's third-quarter revenue increased 8.6% to $82.6 million. The increase in Vascular revenues was largely due to sales of Central Venous and Arterial Catheters, Vidacare EZ-IO and OnControl devices and catheter navigation products.

Moving to Anesthesia North America, third quarter revenue was $47.6 million, up 1.6% versus the prior year period. Growth in this segment during the quarter was driven by increased sales of LMA MAD Nasal Atomization products as well as higher sales of Laryngoscope Airway Management devices.

Turning to our Surgical North American business, its revenue increased 11.1% to $39.6 million. The increase here was due to higher sales of Automatic Polymer Ligation Appliers, Access Ports, Chest Drainage products and the positive contribution from the MiniLap acquisition which occurred in December 2014.

Shifting to our overseas businesses, EMEA revenues totaled $120.9 million in the quarter and generated constant currency revenue growth of 1.1%. This is down slightly compared to the performance this segment realized in the first half of the year as strength in Vascular, Anesthesia and Urology sales were somewhat offset by decline in Surgical product sales. Surgical sales were lower year-over-year due to the discontinuation of some low-margin products which occurred in late 2014 which impacted the overall growth in EMEA by roughly 1%. As such, this led to a difficult comparable for European Surgical products. While the discontinuation of these products has a negative impact in our year-over-year revenue comparable, it has a positive relative growth margin percentage impact as the discontinued products had lower margins than our core business.

Moving to Asia, our third quarter revenue increased 11.3% to $61.9 million. The quarterly increase in Asia revenue was primarily due to higher Central Venous Catheter sales within China and improvement in Respiratory sales within Australia and the impact from the acquisition of Human Medics, and Stenning, as well as our go-direct initiative in Japan.

Turning to OEM, revenue in the third quarter increased 2.5% to $39 million, and was primarily due to higher sales of introducer, dilator and catheter products. Similar to our European Surgical products, our OEM business has a tough comparable as in the third quarter of 2014, it benefited from a spike in suture product demand due to the ordering patterns from some of its large customers. As we transition to the fourth quarter, our OEM division does not face the same difficult comparison and as such we expect OEM revenues to improve from the constant currency levels achieved in quarter three.

And lastly, our All Other segment was down 2.7% totaling $52.1 million. The decline in Other revenue was due to lower sales within Latin America and Respiratory that was referred to earlier. Latin America was impacted by the devaluation of local currencies within Brazil and Venezuela.

Which resulted in a lower amount of US dollar denominated sales. We do not see this having a long-term impact on Teleflex as these geographies only represent approximately 1% of our global sales. Next, I would like to shift gears and update you on additional group purchasing organization and IDN agreements we received.

During the third quarter Teleflex is awarded a total of 12 agreements. This represents the largest amount of agreements awarded in any single quarter dating back to the fourth quarter of 2014. Of these agreements, 2 our brand-new, while 10 were renewals of existing awards.

The two new GPO wins were both sole-source awards and were in the surgical instrument and chest drainage product areas. The remainder includes items such as CVCs, antimicrobial PICCs, laryngoscopes, hemodialysis catheters, surgical ligation and laryngeal mass product categories. We continue to be quite pleased with the progress we are making in these areas and believe that these GPO and IDN wins continue to position us for growth in 2016 and beyond.

Next, I would like to update you on a recent product regulatory approval that we received as well as an award that we were bestowed within the industry. The Arrow brand name is synonymous with leadership in the CVC space. And recently we have been expanding our expertise into catheters to include peripherally inserted and hemodialysis product offerings as well.

To this end, we have been investing behind our dialysis product lines and during the third quarter we received 510(k) Market Clearance from the FDA for our ARROW Triple Lumen Pressure Injectable Acute Hemodialysis catheter. While our dialysis access product sales make up a small amount of our total company revenue to date, the revenue growth rates from these products is approximately 6% on a year to date basis, and it is our belief that the hemodialysis space will be a growth driver for the company in the future. This particular device, which is available in our ARROW ErgoPack System, will help hospitals maintain compliance with current vascular access guidelines and standards while improving maximum barrier protection against infections and should contribute to future dialysis sales growth.

Another area of investment for the Company has been in the area of minimally-invasive Laparoscopic Access. This includes the recent acquisition of MiniLap and the limited market release of our Percuvance product line. It also includes our Weck brand for surgical products, including the Weck EFx Shield Fascial Closure System which was recently selected as a 2015 Innovation of the Year by the Society of Laparoscopic Surgeons.

This new device is designed to allow surgeons to provide fast and safe closure of laparoscopic port sites and it is the only shielded port closure device that provides enhanced sharps protection for consistent and uniform closure, an innovative technique with unassisted suture retrieval and an intuitive wing development. We are honored that this product has been awarded the distinction of 2015 Innovation of the Year and we are enthusiastic about the future growth potential of this product.

Finally, before turning the call over to Tom, I would like to review an acquisition that we recently completed and we believe will benefit our surgical division. As many of you already know Teleflex is a strong presence in the area of ligation clips with our Hem-o-lok product line. During the third quarter we continued to bolster our position within the ligation space with the acquisition of certain assets of Atsina Surgical.

Atsina, a portfolio company of Option3 and Research Corporation Technologies, is a developer of surgical clips. This acquisition complements our existing surgical ligation portfolio as the Atsina Gator Clip has a proprietary angular element, or elbow, to secure, and then pull, tissue proximally during closure. This all-cash acquisition is yet another example of Teleflex executing upon its strategy of acquiring innovative pre-revenue technologies that allows us to take years off the product development cycle and eventually leverage our sales platform to support new product growth and capture additional margin.

That completes my prepared remarks and with that I will turn the call over to Tom.

Thanks Liam and good morning everyone. Given the previous discussion of the Company's revenue growth drivers I will begin my prepared remarks at the gross profit line.

Before I do I will reinforce the point made earlier, which is that underlying operating performance remains on solid footing. Additionally, we remain on track to achieve our full year 2015 constant currency revenue and adjusted earnings per share objectives. Consistent with second quarter results, foreign currency impacts have again tempered revenue, margin and earnings growth.

For the third quarter we estimate that the impact of foreign currency was to reduce adjusted earnings per share by approximately $0.27. If we are to exclude the currency impact earnings per share growth would have been approximately 19%. Given the magnitude of the currency impact, I will breakout currency as I review third-quarter results so that you can gain a better understanding of Teleflex's underlying operational performance.

Turning now to results. For the third quarter constant currency revenue growth was 4.2% and reported revenue decreased 2.9%, reflecting an adverse currency impact of approximately $32.8 million. For the third quarter adjusted gross profit $230.5 million, versus $238.1 million in the prior-year quarter. Adjusted gross margin was 52% which was down 10 basis points when compared to the prior-year period.

During the third quarter we realized the benefit of stable product mix, principally in the Surgical North America, Vascular North America and Asia segments, as well as the impact of improved pricing, largely within the Asia segment. Additionally, we realized improvement in adjusted gross margin from manufacturing cost improvement programs, distributor conversions and the acquisitions of Truphatek and MiniLap. However these improvements in adjusted gross margin were offset by both the unstable impact of product recall-related expenses that serve to reduce gross margin by approximately 50 basis points and by higher cost incurred while on the manufacturing transfer/startup phase.

Additionally, foreign exchange rates reduced gross margin by approximately 50 basis points during the quarter. We continue to have success controlling discretionary and overhead spending for the quarter adjusted SG&A expense was down slightly from a year ago spending levels. As of percentage of revenue third-quarter adjusted SG&A was 27.9% in marking a 100 basis point sequential decline from that of the first and second quarters of 2015.

Third-quarter adjusted operating profit and margin was $94.1 million and 21.2% respectively, versus $99.1 million and 21.7% respectively, in the prior-year quarter. The decline in adjusted operating margin was due to the combination of the unfavorable impact of foreign exchange and recall related expenses. In addition, in the third quarter 2014, we had an atypically high operating margin marking for a tough comparable.

On a sequential basis, operating margin increased by 80 basis points from the second quarter of 2015. Again, if you were to normalize the results to exclude the impact of currency, adjusted operating margin in the quarter would be approximately 22.7%.

Adjusted net interest expense was approximately $11 million in the quarter and down sequentially on the second quarter refinancing of the 6 7/8% senior subordinated notes as well as the repayment of approximately $50 million in revolver borrowings during the third quarter. As result of these transactions, we anticipate that adjusted net interest expense will remain in the $11 million range for the fourth quarter.

Moving next to our adjusted tax rate. For the third quarter 2015 the adjusted tax rate was 13.3%, a reduction of 550 basis points as compared to the prior-year period. The year-over-year reduction is primarily due to a tax benefit associated with the US federal tax return filings and a benefit associated with a reduction in the estimated tax with respect to non-permanently reinvested income due to an increase in the estimated tax credits available to reduce the US tax on any future repatriations.

On the bottom line, third-quarter adjusted earnings per share was a $1.60 or increase of approximately 2%. If we were to eliminate the impact of foreign currency, earnings per share growth would have been approximately 19%. Turning now to select balance sheet and cash flow highlights.

For the year to date cash provided by operations was approximately $177 million, which is running behind year ago levels, largely the result of increased accounts receivable as well as a decrease in accounts payable and accrued expenses. The increase in accounts receivable are primarily due to increased elections of receivables during the first nine months of 2014, primarily in Europe. Accounts payable and accrued expenses decreased primarily due to the timing of both interest payments and select vendor payments and we look to make these timing issues up in the fourth quarter.

In addition, we experienced an increase in employee-related benefit and compensation payments earlier in the year. As we look to the fourth quarter we expect an improvement in cash flow and project that full-year cash flow from operations will be approximately $275 million. From a balance sheet standpoint, at the end of the quarter cash on hand totaled approximately $276 million, of which approximately $39 million was based in the United States.

Turning next to an update of our full year 2015 financial guidance. As discussed, we remain on track to achieve our full year 2015 constant currency revenue and adjusted earnings per share objectives and look to finish the year with a strong fourth quarter. As such, we are narrowing our constant currency revenue growth range to 4.7% to 5.5% for the full year.

We expect a strong fourth quarter will push our full year constant currency growth rate above the 4.7% growth achieved through the first nine months of the year. The acceleration a fourth-quarter constant currency growth is due to one additional shipping day, which is estimated to deliver an additional 90 basis points of growth in the fourth quarter. We also have an easier comparable in China the fourth quarter.

Further, we expect to generate incremental revenue from already completed M&A and distributor conversions and finally our North American markets have performed well through the first nine months and we expect for this robust growth to continue into the fourth quarter. On an as reported basis our outlook is for full-year revenue to be in the range of minus 1.5% to minus 2.3% versus year ago levels. We currently project closer to the mid-points of both the full year constant currency and as-reported revenue ranges.

Continuing down the income statement, in our last earnings conference call we had guided 2015 adjusted gross margin to be in a range of between 53% and 54% for the year. Stating that we expected to be closer to the lower end of that range. We now project 2015 adjusted growth margin to be between 52.5% and 53%.

The revision is primarily attributable to expenses incurred in connection with the previously discussed product recalls. The current projection represents an approximate 100 to 150 basis point improvement in adjusted gross margin versus 2014 and includes an unfavorable currency impact that we estimate will reduce full year gross margin by approximately 50 basis points. Consistent with our previous comments we expect fourth-quarter adjusted gross margin to improve sequentially in the third quarter to approximately 54%.

The projected sequential improvement in adjusted gross margin is based on the assumption that we will not incur a similar level of recall related expenses in the fourth quarter. In addition, we project improved manufacturing overhead absorption from increased fourth quarter volumes in a positive margin impact of distributor go-direct and continuing efficiency gains from manufacturing cost improvement programs.

Moving on to adjusted operating margins. For full-year 2015 we now expect adjusted operating margin to increase by approximately 150 to 200 basis points to a range of 21.5% to 22%. This range is lower by 50 basis points from previous expectations to reflect the reduction in our full-year adjusted gross margin range. Similar to gross margin, we expect both a sequential improvement in a year-over-year improvement in the fourth quarter adjusted operating margins.

This improvement reflects both strengthening fourth quarter gross margins and approved forth quarter SG&A leverage. Similar to gross margin we expect the foreign-exchange headwind to adversely impact adjusted operating margin. Currently we estimate that adjusted operating margin would have been approximately 100 basis points higher if not for foreign-exchange.

And turning to taxes. Given our third-quarter results and expectations for the balance of the year, we are improving our full-year adjusted tax rate assumption to a range of 18% to 18.5% percent. This is a reduction from our previous full-year estimated rate of between 20% and 21%. Of note, our current rate estimate does not assume a benefit from a potential 2015 R&D tax credit.

Turning to EPS. We are narrowing our adjusted earnings per share range to between $6.20 to $6.30 per share, versus the prior range of $6.10 to $6.35 per share. This new range translates to EPS growth of between 8% and 9.8%.

In closing, with nine months of 2015 behind us we are pleased with our results to date. Our largest market, North America, continues perform well allowing us to deliver year to date constant currency growth of close to 5%. We expect to finish the year strong which would set us up for a good start into the new year.

Throughout the year we have successfully integrated distributor conversions and smaller acquisitions that will enhance revenue growth and margin expansion as we close out the year. In addition, the previously announced manufacturing restructuring program remains on track and we have taken steps to further reduce our operating expense cost base to drive additional financial leverage.

Finally, we've been able to absorb significant foreign currency headwinds and remain on track to achieve our adjusted earnings per share target. That concludes my prepared remarks, at this time I would like to turn the call back over to the operator for questions.

(Operator Instructions)

Larry Keusch from Raymond James.

I was wondering if we could start with the recall expenses and just trying to understand why that deviated from your initial expectations where you thought that there would be a very minimal impact in the third quarter.

It's a good question. As you recall, Larry, the recalls happened at the very end of the second quarter. What we reported on at our earnings call last time was our best estimate at the time. As it turned out, the root causes for some of the recalls turned out to be harder for us to get to and, in the cases of our PICC product line in particular, there was more than one problem associated with the remedy. So, you're absolutely correct that these turned out to be greater than what we thought they were going to be at the time during our last call. It's one of those things that you have to keep at it until you actually find the root cause of the problem and fix it. It took us longer. We've identified what that problem is now and, I think, are in much better shape at predicting the fact that there's not going to be an impact in the fourth quarter.

Okay. That's definitely helpful. And then, secondly, you obviously have done a nice job of steering us to what the 4Q will look like. But, at this juncture, as we're kind of finishing up the month of October here, I'm wondering if you could at least give us some high-level thoughts as to how you guys are thinking about 2016 maybe from a -- again, from a top-line growth perspective and how you are thinking about margins playing out?

Again, we are -- I think have a good level of confidence that we are going to see a fourth quarter in the range of 54%. I think that will give people a lot of confidence in the -- that the margin improvement story is well intact. That's going to then serve as the jumping-off point for us, really, as we move into 2016. And, other than the comment we made on the last earnings call where we have moved one of the -- the [wet] kit manufacturing, essentially, ahead about three months, I would say that everything else is right on track where we expected it to be originally and still on track from what we predicted and estimated it to be on the last call. So, through nearly a third of the fourth quarter, we haven't seen any surprises come up, so we see a high-level of confidence in a robust fourth quarter.

Larry, I will just touch on the revenue line. We don't deviate at all from what we said at our Analyst Day -- we expect 5% to 6% constant currency growth. We have some exciting products in the pipeline, the Protector that Benson mentioned earlier and Percuvance, which we think will augment our revenue to 2016 and beyond.

Okay. Great. Thanks very much, guys.

Kristen Stewart from Deutsche Bank.

Thanks for taking my question. Benson, I was wondering if you can comment on the markets again; if I look at the businesses, a lot of the different segments did seem to improve across the second quarter to the third quarter with, I guess, the exceptions being the other area which a lot of other companies had seen weaknesses within Latin America and then just a little softer results in EMEA, but North America clearly looked to have picked up. Overall, I guess your tone seemed to be pretty positive heading into the fourth quarter and it seems to be setting up for a very strong 2016. Some other companies have talked a lot about FX -- it seems FX is hitting you guys pretty hard this year with pretty heavy impact on EPS. I wanted to make sure that, as you stand here today, what's the outlook for FX looking into 2016?

FX in the third quarter had a bigger impact on us than what we expected. As we move into the fourth quarter, we are now going to see comparables to the prior year, which are a lot less severe than they were for the first three quarters. So that's -- in the short term, that's where we see FX. I would love to be able to tell you that we have the currency situation figured out for 2016. I think there is a lot of volatility there.

Our general assumption is that we are going to likely see continued strengthening of the US dollar. We don't think it's going to be at the same level of comparison that we saw in 2015. One of the reasons, quite frankly, that we are putting more and more resources around growth in the US -- and there really are two reasons. First of all, we think, as demographics kick in, there's going to be good expansion in the US. But, secondly, it insulates us from some of the ongoing currency fluctuations the more -- as a higher percentage of our business is centered here. I think our forecast from 5% to 6% constant currency is not going to be affected by what happens, obviously, with the currency.

Right.

But, we are not expecting the same level of severity that we saw in 2015. And I will turn it over to Tom, now, to give you a little bit more detail.

To Benson's point, in 2015, we saw a pretty big move in the US dollar relative to the euro, and that's the currency that we're most impacted by -- or that relationship. We do about 30% of our business in euros. And so, as we look at the average rate for 2014, it was about $1.33. This year, based on where we're currently trading, it's probably going to be around $1.11. So I think that there's going to be another $0.22 move as we (inaudible) to 2016. We're hoping that's not the case.

We are looking for a likely continued strengthening of the US dollar to some degree. But, again, as we look at this year we were able to put together a number of actions to offset that currency impact and still put forth pretty strong earnings growth despite what was a very significant impact to our earnings as a result of currencies.

Now we'll have Liam who will [comment] on the end markets that you asked about.

As we see, North American growth -- you're right, Kristen, we see it as accelerating in the -- we've seen a pick-up in quarter three; it was 4.34% in quarter two, to 5.7% in quarter three; and obviously that has an impact on currency growth because all of those sales are denominated in US dollars. Then the overseas market, yes, we have seen a little bit of softness, in particular in the oil-based countries. In particular in Venezuela, Brazil, and Russia, and a little bit in the Middle East, in that order. So, that's what we're seeing out there.

That amounts to about 1% of our overall revenue. Once that is out of the mix, we should have more favorable comparisons moving into the latter half of next year.

And I would say we have taken that into account in our fourth quarter estimates. We've already taken that into account with our revised guidance.

Okay. Perfect. I'll get back into the queue. Thanks.

Matt Taylor from Barclays.

Thanks for taking the question. I was hoping you could delve into some of the [O] US commentary a little bit more. A couple things -- on the prepared remarks, you mentioned that China was a little bit weaker, so I was wondering if you could talk about that. And then, in terms of some of these oil-based countries, could you help characterize the weakness -- was this -- with lack of distributor buying or utilization weakness? And what kind of visibilities do you have into those countries over the next two to three quarters?

I will take the oil-based country question and I'll speak specifically about Latin America first. What we saw within the quarter -- and we sell mass in US dollars to these distributors within Latin America. So, with the devaluation of their currency, that has obviously had an impact on their ability to purchase at a consistent rate or improved rate from last year. So, really, the impact on Latin America was in the region of about 57 basis points in our overall revenue growth. And on Latin America itself, it was greater than a 10% impact, largely driven by Venezuela.

And, it is the devaluation of the currency, but also our distributor is waiting on payment from the government there. And we see it becoming -- coming back, once the government pays our distributor because he has orders within the pipeline already. But he's not willing to ship toward those from other -- ship them through his channel until such time as he receives payment from the government. So, we should see Venezuela, in particular, show some rebound as we move forward into 2016.

With regard to your question on Asia and China, we saw a slight decline actually in China, within the quarter, but we saw very strong performance in A-Pac overall, of 11.3%. India, which has rose up there with the increase by 16%, Australia and Japan, and Southeast Asia and Korea were also in the double-digit range. So, the softness in China, whereas it was strong in center venous catheters, we saw some pressure on our less-differentiated products, in particular within our Anesthesia and Respiratory segments.

Hi, Matt, this is Jake, one other comment I would add is that China came in pretty much right in line with our expectations for Q3 and we still do expect Q4 to be pretty robust.

And, Matt, as we get into Q4 -- I think Tom mentioned already -- we have an easier comparison in Q4 and we expect a very strong rebound in China on core growth. And as a result of that comparable, if you recall, last year, we realized that some of our distributors in Asia were building up inventory and we took the decision at that stage to not to shift to some of those distributors.

Longer range, Matt, our view is that undifferentiated products which have a local Chinese-manufactured competitive entry are going to be hard to achieve the kind of growth rates in the past. There is certainly a strong trend towards nationalization now from the current regime in China that is somewhat pushing adoption of its home-grown, homemade products. And our strategy has, all along, been to emphasize what we think are the most differentiated products, so I don't think it's going to have an enormous impact on us. But China is a changing environment now, and we continue to monitor, I think, a lot of activities there.

Okay. And just one on the margins, you are able to get some pricing in the quarter, I guess I'm curious about the outlook as to whether your views on your ability to get additional price has changed. And then, given the volatility that you're talking about, how does this change -- if at all -- your views on the attractiveness of buying additional OUS distributors and your ability to take some the margin there?

Just to clarify at least what I think we were saying about pricing was we have not counted on pricing as a key component in our stated three-year goals, but that we were going to take price every place we could find it. So, I think we're seeing our ability to do that and are pleased with our ability to do that. But given other pressures in the marketplace, we're not relying on that to hit our three-year margin expansion goals. I think it's one of those areas where we have been conservative and we will probably do better than what we've committed to, and it's certainly the case that we keep looking for price opportunities every place.

I do think there are some markets that we have shied away from thinking about distributor-to-direct conversions. We have about $169 million that goes through the kind of distributors that offer us significant margin improvement. We've identified about a third of that in geographies where we think it makes sense to do that. So, I think the changing dynamics has affected our view of which geographies are more attractive to us, but I still think we are in the range of seeing, over the next couple of years, that the overall impact from the dealer-direct conversions about the same as it has been for the past three years. Liam is much closer to this than I am, so I'll let him comment on it also.

I would just concur what you said, Benson. You can expect -- and as we said during our Analyst Day, you can expect the same level that you have seen -- in the coming two to three years that you have seen in the past two years. The impact, within the quarter, of pricing was 37 basis points. And if you look at the dealer to direct, that added another 71 basis points of pricing. So, it's a strategy that is adding value, so we anticipate to continue with that strategy.

I think more germane to our ability to grow our revenue is it has to do with our ability to continue to improve our share position in the US. And I think that our expectation around the demographic impact on the overall US market and then to a lesser extent -- at least in the three-year period -- those key product areas Percuvance, LMA Protector, MAD Nasal kicking in at the latter half of those three-year period. So, that's really the core of what we need to do to hit those revenue numbers that we've outlined.

Okay. Thanks a lot for the comment.

David Lewis from Morgan Stanley.

This is actually Jon Demchick in for David, thanks for taking the questions. I think we talked a little bit about the dealer-direct distribution conversion-side, but, other on the M&A side, it's now been 1.5 to 2 years since the larger deal that you guys have done. You've made a big deal in vascular and a big deal in anesthesia. Haven't really done a larger deal in surgical, can you talk about the environment that you're seeing in the broader deal environment and if surgical is poised for that next larger deal that you guys are looking for?

Certainly, from a standpoint of smaller deals, we've been more active than we've ever been in terms of late-stage or ready-to-go product acquisitions. I will just tell you that we -- our mindset is to be extremely selective about the larger deals that we are going to do. We almost always, if not always, have some level of conversations going on. This process can take time. We often have sellers that have lofty expectations and it takes a little bit of reality sometimes for them to understand that they're not going to get what they expect to get. There continues to be things for us to look at, I would say overall our M&A department is as busy now as it's ever been. And we still would characterize ourselves as a serial acquirer and quite active in the looking and conversation phase of that.

Okay. And, just wanted to follow up on margins a little bit. I know we've gone into it a little bit so far. FX and the recall have been pretty well explained, but as we look into the fourth quarter it looks like guidance is assuming 2 to 3 points of sequential improvement into the fourth on the operating side, and maybe 1 point of that is from FX pressures waning and recall expenses going away. But, can you kind of talk about what's driving the remainder of the improvement into the fourth? And then also, is the fourth quarter the right starting point to think about as we head into 2016?

Sure. Let's just talk about gross margins. In the third quarter, we were at 52% in adjusted basis and if you think about the guidance out there it does, to your point, show an improvement. And what we're counting on is, first of all, the recall-related expenses that were incurred this quarter we don't assume will recur. We also have got a fairly significant increase in revenue during the fourth quarter, in part of what's typically the fourth quarter and then we have the extra shipping day and that will drive improved absorption on the higher volumes.

We also have some improved mix. As our businesses from the acquisitions and distributor conversions start to build momentum will continue to drive higher levels of revenue at a higher margin and that will help our mix. And then we had a couple of what I would characterize as one-off costs during the quarter. None of them were significant individually but collectively they added up to have an impact. And a lot of those were costs associated with the transition of moving manufacturing or getting new operations up and started. So we expect to see those types of costs abate in the fourth quarter.

And then we also will start to see the benefit of our manufacturing footprint consolidation program starting to deliver some savings in the fourth quarter. So, collectively, you put all of those together and those are going to be the drivers that help us get from where we are to a higher level next quarter.

I would add that we would have to see something really that is not visible to us now occur between now and the end of the year I think for us to be right in that 54% range. And the second point is, yes, we think that's a good jumping-off point for 2016.

On the SG&A side, there also seems somewhat of an uptick there as well. Is there anything organically that we should be thinking about to get us a little more comfortable or is that more just the added absorption when you talk about the larger sales?

When you say an uptick you mean an improvement in the --?

Sorry, improvement, correct.

We made it a real focus in 2015 to take a look at our SG&A spending to make sure that we were as efficient as possible. So that we would get more of the gross margin gains flowing to the operating margin. It's just a continuation of those efforts to better leverage, better use share services, focus on travel expenses and all the things that you do to drive costs down. We have seen improvements going on throughout the year. We had a good third quarter. We expect it to continue to improve into the fourth quarter as a result of the focus.

Thank you very much.

Matt Mishan from KeyBanc.

I know you guys already covered this, but just to clarify, what is your exposure to the oil-producing countries -- Venezuela, Brazil, Russia, Middle East -- as a percentage of sales? And then, what was the percent headwind into the sales in the quarter?

As a percent of sales, our exposure is just slightly over 1% of our total revenue goes through the countries that you mentioned. (Multiple speakers.) Sorry, it's over 2% of our revenue goes through the countries that you mentioned. It's not a significant driver of our overall global revenue.

What was the headwind in the quarter on a percentage basis to sales from those countries?

From those countries it was approximately -- for Latin America it was 57 basis points, and for Russia and Middle East it was probably about another 5 basis points.

Okay. And then, on Vidacare, I think you said last quarter that you thought that it would be in the plus 20% range in the back half of this year. Where did that come in?

The Vidacare is tracking, at the moment, in the region, in the high teens, at the moment, on a year-on-year basis, driven by good performance on easy I/O and stellar performance in on control. In the quarter itself it came in at 14% and is tracking year to date in the high teens.

Is that coming in a little bit --? (Multiple speakers).

We expect a very strong finishing quarter fourth, as we do in most quarter fourths with this type of product where municipalities tend to replenish their stocks at the end of the quarter.

Perfect. Last question. In the last call you talked about expanded use by surgeons of Percuvance in different kinds of surgeries. Have you also updated your thoughts on potential market sizes, I think you initially thought it was maybe $300 million to $400 million, and is it maybe a little more than that now?

Well, the overall markets for this type of surgery in its totality is significant, as you're aware, Matt. And we have taken a percentage of the overall laparoscopic market that gets us to that $300 million to $400 million. I can tell you that, with Percuvance, we have now completed 198 cases. We're active in seven sites in the US, eight outside of the US. We have 300 surgeons signed up for a training program that is taking place in November.

We had an internal training that Benson mentioned in his prepared remarks that took place yesterday from a key teaching hospital that was very exciting. At this stage, we're not going to update how big we think the market is. We still think it's a $300 million to $400 million opportunity. As we get into the actual product launch, Matt, we may update then. But the overall size of this market is in the billions as you know.

One of the really interesting things that came out of this presentation from yesterday was that one of the ideas behind single-site incisions and Percuvance was the reduced scarring to patients. And some of the physicians were commenting with replacing a lot of emphasis on the flexibility of using the instrumentation versus just the cosmetic effect and that seemed perfectly reasonable to us. Now, as they're treating more and more patients, the patients themselves are responding really favorable to the cosmetic results, and we're starting to see a change in thinking about the value that, that brings to the procedure. So, everything we've learned since the last conversation we've had with you about this, leads us to be more bullish about the acceptance of the product.

Okay. Thank you very much.

Jason Wittes from Brean Capital.

Hi, thanks. Just a quick follow up on Percuvance. Are you guys saying that you think the aesthetics of Percuvance are going to be a big driver or how should we be thinking about adoption and what will drive adoption?

There are a lot of key drivers, the aesthetics for sure is one. The procedures that have been used in are in general surgery, gynecological, and urology, and, in particular, in gynecological surgery, that is a key element. One of our key opinion leaders has spoken to some of these patients and that is a key driver. The other key driver is that you don't use as many ports when you use the Percuvance. So, on one of the cases I was in, instead of using five to six ports the surgeon used two. That has reduced cost. And the other key driver -- and this came out really clearly in the presentation yesterday, the issue with no [fills] -- a lot of these advances that they were seeing, meant that the surgeon had to change the way he did the procedure.

One of the key attributes of the Percuvance is there is no change in the way they do the procedure -- they don't need articulating instruments. They do have to exchange (inaudible). They can use the same size of heads, which is very important so that they can do the procedure the very same way as they would have done it in the past using those multiple ports. So, there are a number of drivers that makes this quite attractive to the surgeons.

Okay. That's helpful. Appreciate that. Also, wanted to get a little more color on the [Vascular], it did better than we expected. Obviously, you mentioned Vidacare. I'm curious about PICCs and especially CVCs since I know that you guys have been making efforts to improve penetration and growth there. And related to that, in Respiratory that was a little bit behind. I know that you've also been extending efforts there, maybe it's a little too early to see that in the numbers, so just a little more color would be helpful.

For our CVC business globally, it grew by 6.6% on a global basis. On our PICC business -- now our PICC business showed a slight decline, but that, as I said during my prepared remarks, was really due to the ongoing issue with the recall. If we added back the impact of the recall, the PICC business would've grown by -- into the double-digit country. So, it was impacted by the recall.

With your question on Respiratory, we have built into our quarter four thinking that Respiratory will continue to show a slight decline for the remainder of the year. And for the balance of the year and the full-year basis, we are forecasting a slight decline. But we've already anticipated that in our full-year projections.

Should we be thinking about recovery to positive growth territory in 2016? I'm not asking for guidance, just a general direction?

Yes. Our anticipation is a slight recovery. Respiratory is never going to grow in the 6% like our CVC business. But we do anticipate seeing a soft recovery in our Respiratory business as we get into 2016.

Certainly sufficient to move it into a positive growth territory.

Understood. A quick follow-up on some other questions out there. You had a few questions about end markets. I was curious, specifically, if you can reconcile your growth in North America with some of the surprising results from some of the hospitals which were actually reported some disappointing admissions results recently. I don't know if you can rectify the --

That's a really good question. Our conversations with providers lead us to believe -- and our own sales results confirm this -- that the general admission of patients is not improving, and that's one of the reasons why a product line like respiratory therapy isn't doing better. What is happening is that the acuity level of the patients that are being admitted is higher. And so that's what's driving high numbers in surgery, it's what's driving high numbers in vascular access. And these are kind of those non-postponable, inevitable visits to the hospital that people have to make.

There was a slow down in those in 2013 and 2014 and now we continue to see that get better on a quarter-by-quarter basis. But it's not being driven by general improvements in administration -- in admissions, excuse me. You're absolutely right.

That's very helpful. Thank you very much.

Anthony Petrone from Jefferies.

Maybe a couple questions, one on China and one on margins. On China, Benson, in the past you mentioned a lengthening cycle for registration processes for getting new products approved in end markets. Maybe just an update on that situation in that country. Do you think that presents a headwind going forward? And then, on margins, I know we've touched on this in the past in the prior quarters, but when you look through 2017, how do you think the margin benefits from footprint will play out? Is it more gradual or do you think you will see a step function at some point along the way?

Addressing China, I think that there is a definite trend on the part of the Chinese government that's making it somewhat more difficult for non-Chinese manufacturers to introduce products. That's exhibited in lengthening approval times, a lot of -- I would characterize it as delays around even simple things like change of location of manufactured products which now have to go through the whole complete re-registration. And the third area is increasing the fees considerably for non-Chinese manufacturers to get products through their version of the FDA.

That's going to have differing impacts on different companies depending on what their profile and goals are in China. For us, it means -- it actually reinforces what our strategy has been to introduce products into the Chinese market that we think have good legs and will stay there, will be difficult for local Chinese manufacturers to duplicate and worth the additional fees and time to get into the marketplace. We were counting on much more broader-based product offerings in China I think it would change our viewpoints. That's been our strategy with China all along. And, excuse me, your other question was --?

On the cadence of margins. How that plays out through 2017. Is it a step function or do you expect a gradual benefit from footprint reduction in the margin profile?

When we look at the margins of the next couple of years there's kind of two pieces of that. One is, you refer to the footprint, and on that, specifically, we had talked of savings of $28 million to $35 million. We are going to realize a small portion of that in the fourth quarter of this year, the majority of it in 2016, and then, the remainder in 2017. That is fairly 2016 focused and, in addition to the footprint -- we had talked about the ability to save additional monies and drive margins through 2018, and those other projects include initiatives such as material substitution, supplier efficiency initiatives, investments in automation, lean manufacturing, et cetera. And those projects are more evenly weighted throughout the period from 2016 through 2018. So they are not a big step function but rather a more a rateable improvement in share.

That's helpful. And, Benson, the last one for me is price generally. I guess it relates to Jason's question. You look at some of the hospital prints but they also reported lower revenue per patient, and so reimbursement seems to be being pressured a bit here, and you also have the HMO consolidation. I'm wondering how you see that impacting the landscape going forward?

I think it's one of the reasons why we are not counting on price as part of our market improvement goals or revenue improvement goals. However, even in a difficult environment -- and I would say it's been a difficult environment since I arrived here in 2011. Even in a difficult environment, there are some products by the fact that there's really not a good competitive alternative, they're a small part of the hospital's budget, they don't receive a lot of attention in the purchasing office, so there are select opportunities to be able to get price and it's been our mindset to take advantage of every one of those that we can. But, given the overall environment, we don't think that it's prudent to count on that as part of our market improvement goals.

Richard Newitter from Leerink Partners.

This is actually Ravi in for Rich, can you hear me?

We can.

A little bit of the follow-up on the North American market growth. You're seeing a pretty good acceleration in the vascular and surgical businesses, looking to see your outlook on those going forward given commentary do you still expect these to accelerate? And then, maybe one on the tax rate, came in a little bit lower than we had been modeling. Trying to figure what the long-term strategy still remains around what you highlighted at the Analyst Day. And if -- maybe one on the fourth-quarter tax rate, how much could the benefit be if the R&D credit was reinstated? Thank you.

Okay. I will take the -- excuse me, I will let Liam take the US revenue market question.

How we're looking at the US at the moment, you are correct, we went from 4.3% to 5.7%. As we look at the remainder of the year, our current thinking is that we will pull back a little bit on the 5.7% just for some comparables in the prior year but still a pretty robust performance, and then have an accelerated jump off into 2016.

We see very strong growth within our Vascular segment, especially in our CVC and within the Surgical segment as we move into the following year, we have the -- obviously, the MiniLap acquisition is in there, but then we launch Percuvance in late quarter one, early quarter two, on a full-market release into the Surgical business unit. And, within Anesthesia, we have a very strong focus on the launch of the Protector which will come in, in quarter two also.

It is, in part, driven by, I think, some improvement in the acuity levels that we've commented about. But our growth can't be explained by just that -- we're taking market share and a lot of it has to do with acceptance of these newer products that we are putting out in the marketplace.

And then, with regard to the tax rate, if the R&D tax credit were to be afforded to us again this year, that would probably be about a 40-basis-point improvement in the full-year tax rate. And then, with regard to your question on the longer-term tax strategy, if you will, that we talked about at Analyst Day. First, let me just talk about -- the benefits we realized in the third quarter are largely benefits that are contained in 2015, so they will not have a longer-term impact on our rate. And, as we think about the next couple of years, what we spoke about at Analyst Day is that a number of the actions that we have underway serve to improve the profitability of the US.

So, as we tend to move manufacturing out and restructure our cost base, we will be driving more profits as a result of that in the US. In addition, we've got market growth going on in other countries that are in higher tax jurisdictions. And so, what we are seeing over the next couple years is some upward pressure on the rate and we will always look for ways to identify opportunities to offset that, but have not put any into the plan as of yet -- largely because they haven't been identified. So we will continue to look for those options, but we do see that some of the actions as well as the different market growths putting some upward pressure over the next couple years on our tax rate.

Great. Thanks. And just one clarification, Liam, that North American growth number you gave, that was an organic number? For the year-to-date growth?

That's an all-inclusive number for North America.

Thanks.

David Turkaly from JMP.

One of my questions has been answered. I did want to ask if I could talk to your accountants, but then with the 13% rate in the quarter. You explained it -- some benefit from tax return and I think there was some repatriation component. But, can you tell us exactly why it was that low this quarter?

There are really two pieces to it. One was in connection with the filing of our US federal tax return, where the actual expense came in less than what we had been accruing towards as the year had progressed. And the second issue was related to an initiative to further simplify and rationalize our organizational structure. So we transferred ownership of certain subsidiaries around the Teleflex group, and a byproduct of this was that it created an increase in the foreign tax credits that would be available to offset future taxes -- or US taxes on our non-[criminally] reinvested earnings. Now, the other benefit of that movement was our ability to repatriate cash, which we did also in the third quarter. So, there is really two impacts that are driving the rate in the third quarter. As mentioned, those rates are not something that will impact the rate in future years or on a sustainable basis.

Great. Thanks a lot.

Kristen Stewart from Deutsche Bank.

Thanks for taking my follow-up. Benson, I was wondering if you can take a step back and talk to the bigger picture M&A landscape and talk about what you're seeing out there in terms of smaller companies and their willingness, given some of the volatility out there and landscape with healthcare and willingness to look towards larger companies like yourself, given the consolidations that's happening to partner up these [holes] and just what you're seeing.

I think the opportunities over the next several years are going to continue to be robust. One of the things we're seeing in the US market, by way of example here, is it is getting tougher for, let's call them, $100 million revenue companies, to be able to get a seat at the table at IDNs and at GPOs. And so it's becoming more difficult for them -- the increased costs to get your product, for example through China, make global expansion tougher for companies of that size. Even things like the medical device tax have a lot of those $50 million revenue companies just at the brink or below profitability. So there have been an increasing number of environmental factors in the healthcare marketplace that make it more difficult for those size companies.

This year, our currency is a negative factor when we try to look at European assets because they have one view of what their sales increases is when they are doing their calculations in their own currency when we have to denominate back into dollars what it's going to do to us. In many cases what looks like growth to them is actually negative to us by the time we go through the currency translation. So that's having some short-term impact in terms of how we might see evaluation and they might see evaluation. Again, once we see a more stable environment where currencies aren't a big issue that will start to evaporate a little it. That's the only thing I think that's on the horizon that makes the market, at least in acquiring European assets, a little bit more difficult than normal.

As we look out over the next 12 to 24 months, would it be likely for us to see you guys do another larger transaction or, less likely, more tuck in?

So, help me understand what you see by -- what you mean by --? (Multiple speakers).

I guess an LMA-type transaction.

Yes, so in the next 12 to 24 months I would be really surprised if you didn't see that. Yes. I think we're still not in the mindset of some kind of transformational acquisition that would be in the billions of dollars. But, in that, I think our range now is probably in the $300 million to $700 million range where we'd consider that certainly capable, financially, for us to do that, and I would be very surprised if you didn't see one in that period.

Perfect. Thank you.

I would now like turn it over to Jake Elguicze for closing remarks.

Thanks, operator, and thanks everyone for joining us on the call today. This concludes the Teleflex Incorporated third-quarter 2015 earnings conference call.