TFX
#Good morning, <UNK>.
Thank you very much.
<UNK>, this happens occasionally.
So about 50% of our business goes through these large distributors, the [cardiac care] and the Minors, so those people you should be familiar with.
And occasionally we see that they will ---+ we get trade from some of the shows, the in-hospital sales, and occasionally, we will see a trend where they destock their own inventory levels.
It normally normalized within a quarter, and if it just normalizes in a quarter, then it comes back during the year.
It's not going to have any impact in the year.
We just happened to see it in this current quarter that we're in.
I think it's too early in the year for us to talk about an upside at this point in time.
I would say everything is on track as we initially planned for 2016.
We expect to see some benefit from this towards the end of the year and more benefit as we move into 2017, but both of phase one into phase two, essentially are tracking to plan.
That's still a consistent thought in terms of how we are going to get there in the full year.
I'd say that in the first quarter, we had a little stronger benefit coming out of mix, but we continue to expect the operational efficiency gains to build as the year processes.
So still thinking along those same lines for the full year.
<UNK>, I think our long-term view remains similar, that the general marketplace is less favorable to smaller companies than it is to the larger companies through a certain scale extent.
Those companies that are $50 million to $100 million in revenue have a tough time with IDNs and GPOs.
They have a tough time globalizing.
That's becoming a much more important part of a growth strategy.
So we think there's availability of product lines that we are interested in.
We have said no to a couple of things that we liked over the past several months because we thought the valuations were out of line, so I would echo the point that we continue to be quite disciplined.
But also, as last year, we continue to be very, very active in many, many more smaller acquisitions that I think are more than gap fillers but good strategic additions for the product line.
I think you can expect that to continue with or without a larger acquisition.
Well, the $300 million, $400 million was a subsegment of the overall laparoscopic market.
It wasn't defined on a procedural basis.
When we launched the product first, we thought we would be doing a considerable number of Lap/Choles.
We are doing some of those, but we've found a broader application for the product in more complex procedures ---+ complex, tiny procedures.
But the position of the patient limits the ability of the surgeon to place trocars where they would once placing trocars, and obviously, with our device, they don't need to place trocars.
Some bariatric procedures that the surgeons are doing and have used the product for in the limited-market release.
So the market size is not limited by the procedures per se, but it's the [step] taking a proportion of the laparoscopic overall market.
Well, for us, it has to be the way to go for the most part since we're ---+ our size is what it is.
But I would point to the continued success we have with both IDNs and GPOs in this country in terms of winning awards, and for new products as well.
So that notion that GPOs or hospitals want to deal with a limited number of suppliers has some partial truth to it, but there's still a robust place for product differentiation and for better clinical outcomes.
I do think, and I've said this many times, I think we are big enough to get in front of GPOs and in front of IDNs.
We're big enough be able to sell our products globally.
So I don't see a disadvantage in our size.
I see more of an advantage in our nimbleness.
Sure, well, just a little bit of background on the transaction would perhaps give you some insight.
As a reminder, the notes come due on August, 2017.
We wanted to take steps to redeem some of those notes in advance of maturity.
Given where the notes currently trading in the marketplace, we saw the opportunity now to take those notes out at a pretty attractive price for us.
We determined that the best approach was a privately negotiated transaction versus going out with a full tender offer, just given the difference in the premium that would be required between the two.
And because we approached this in that manner, there's a limitation of the amount of notes that could be redeemed at this time.
Now, we're always evaluating the highest and best use of the capital, and so we'll continue to monitor the terms, the maturities, and the rates, and as I mentioned earlier, you shouldn't assume that we are finished with what's been done in the first and early part of the second quarter.
We are continuing to look to see if it makes sense when we can go back in the marketplace to look at the remaining notes.
Thanks, operator, and thanks to everyone that joined us on the call today.
This concludes the Teleflex Incorporated first-quarter 2016 earnings conference call.
