TELEFLEX INC
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
TFX$150.87-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-03.
0000096943-24-000072
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000096943-24-000132
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 74 previous paragraphs and 87 current paragraphs.
39 unchanged; 26 reworded; 20 added; 8 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
In connection with the termination of the TRIP, we transferred $34.2 million of the surplus assets in July 2024 to a suspense account within the Teleflex 401(k) Savings Plan, a qualified defined contribution plan. We plan to use the transferred surplus assets to fund employer contributions to participants in the Teleflex 401(k) Savings Plan over the next several years.
Current report
Goodwill
Current report
Our goodwill impairment testing is performed annually during the fourth quarter of each fiscal year in addition to periods where changes in circumstances indicate that the carrying value of our goodwill assets may not be recoverable. No impairment charges were recognized during the three and six months ended June 30, 2024. We did identify indicators of a potential impairment as of June 30, 2024 related to our Interventional Urology North America reporting unit, included within our Americas operating segment. The indicators of a potential impairment primarily arose from lower than anticipated sales results from our UroLift product line (“UroLift”), primarily driven by the adverse impact of persistent end-market challenges within the U.S. office site of service. We performed a quantitative impairment test of the reporting unit using both the income and the market approaches, which determined that the fair value of the reporting unit exceeded the carrying value. The more significant judgments and assumptions in determining the fair value included the amount and timing of expected future cash flows, the expected long-term growth rates and the discount rate used to estimate the present value of the future cash flows. Our assessment indicates that the Interventional Urology North America reporting unit is susceptible to future impairment charges if future revenue is lower than our current expectations, in particular with respect to the adverse impacts stemming from end market conditions related to UroLift, as well as from continuing negative impacts from macroeconomic factors, including increased inflation and higher interest rates. The carrying value of goodwill allocated to the Interventional Urology North America reporting unit as of June 30, 2024 was $645.9 million.
Current report
Italian payback measure
Current report
In 2015, the Italian parliament enacted legislation that, among other things, imposed a “payback” measure on medical device companies that supply goods and services to the Italian National Healthcare System. Under the measure, companies are required to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year. The payment amounts are calculated based on the amount by which the regional ceilings for the given year were exceeded. In response to decrees issued by the Italian Ministry of Health, the various Italian regions issued invoices to medical device companies, including Teleflex, under the payback measure in the fourth quarter of 2022 seeking payment with respect to excess expenditures for the years 2015 through 2018. Following the issuance of the invoices, we and numerous other medical device companies filed appeals with the Italian administrative courts challenging the enforceability of the payback measure, primarily on the basis that the law was unconstitutional. The Italian administrative courts referred the question regarding the constitutionality of the law to the Italian Constitutional Court, which in July 2024, issued a ruling upholding the law as constitutional. As a consequence of this ruling, we recognized a $15.8 million increase to our reserve (and corresponding reduction to revenue for the three and six months ended June 30, 2024), of which $13.8 million pertained to prior years. As a result, our reserve as of June 30, 2024 was $32.0 million. Following the ruling of the Italian Constitutional Court, the appeal before the Italian administrative court will proceed with respect to the remaining legal arguments asserted by the appellants with regard to the enforceability of the payback law.
Current report
Net revenues for the three months ended June 30, 2024 increased $6.4 million, or 0.9%, compared to the prior year period, primarily due to price increases and an increase in sales of new products, partially offset by the unfavorable impact from a $15.8 million increase in our reserves related to the Italian payback measure.
Current report
Net revenues for the six months ended June 30, 2024 increased $33.3 million, or 2.3%, compared to the prior year period, primarily due to price increases, an increase in sales of new products, and an increase in sales volumes of existing products. The increases in net revenues were partially offset by the unfavorable impact from a $15.8 million increase in our reserves related to the Italian payback measure and, to a lesser extent, a decrease from the net impact of acquired and divested businesses.
Current report
Selling, general and administrative expenses for the three months ended June 30, 2024 increased $27.3 million compared to the prior year period, primarily due to an increase in contingent consideration expense resulting from changes in the estimated fair value of our contingent consideration liabilities, higher operating expenses incurred by the acquired Palette business and higher performance related employee-benefit expenses.
Current report
2024 Footprint realignment plan
Current report
2023 Footprint realignment plan
Current report
2023 Restructuring plan
Current report
Americas net revenues for the three months ended June 30, 2024 increased $2.1 million, or 0.5%, compared to the prior year period, which was primarily attributable to a $9.3 million increase in sales of new products and price increases. The increases in net revenue were partially offset by a $10.5 million decrease in sales volumes of existing products, primarily driven by decreased sales of our UroLift product, and a $4.4 million decrease from the net impact of acquired and divested businesses.
Current report
Americas operating profit for the three and six months ended June 30, 2024 decreased $25.6 million, or 22.0%, and $36.2 million, or 16.9%, respectively, compared to the prior year periods, which was primarily attributable to an increase in contingent consideration expense resulting from changes in the estimated fair value of our contingent consideration liabilities and operating expenses incurred by the acquired Palette business.
Current report
EMEA net revenues for the three months ended June 30, 2024 decreased $0.7 million, or 0.5%, compared to the prior year period, which was primarily attributable to the $15.8 million unfavorable impact from an increase in our reserves related to the Italian payback measure, partially offset by a $10.7 million increase in sales volumes of existing products and, to a lesser extent, price increases.
Current report
EMEA net revenues for the six months ended June 30, 2024 increased $15.5 million, or 5.3%, compared to the prior year period, which was primarily attributable to a $20.7 million increase in sales volumes of existing products and, to a lesser extent, price increases, partially offset by the $15.8 million unfavorable impact from an increase in our reserves related to the Italian payback measure.
Current report
EMEA operating profit for the three months ended June 30, 2024 increased 0.2% compared to the prior year period, which was primarily attributable to lower expenses related to the European Union Medical Device Regulation, partially offset by a decrease in gross profit. The decrease in gross profit was primarily attributable to the unfavorable impact from an increase in our reserves related to the Italian payback measure.
Current report
Asia net revenues for the three months ended June 30, 2024 increased $0.3 million, or 0.4%, compared to the prior year period, which was primarily attributable to revenues generated by the acquisition of Palette and, to a lesser extent, price increases and sales of new products. The increases in revenue were partially offset by $3.0 million of unfavorable fluctuations in foreign currency exchange rates.
Current report
OEM net revenues for the three months ended June 30, 2024 increased $4.7 million, or 5.6%, compared to the prior year period, which was primarily attributable to a $3.5 million increase in sales volumes of existing products and price increases.
Current report
OEM net revenues for the six months ended June 30, 2024 increased $15.4 million, or 9.6%, compared to the prior year period, which was primarily attributable to a $13.0 million increase in sales volumes of existing products and price increases.
Current report
On July 30, 2024, the Board of Directors authorized a share repurchase program for up to $500 million of our common stock. The timing, price and actual number of shares of common stock that may be repurchased under the share repurchase authorization will depend on a variety of factors including price, market conditions and corporate and regulatory requirements. The repurchases may occur in open market transactions, transactions structured through investment banking institutions, in privately negotiated transactions, by direct purchases of common stock or a combination of the foregoing, and the timing and amount of stock repurchased will depend on market and business conditions, applicable legal and credit requirements and other corporate considerations. The authorization of the repurchase program does not constitute a binding obligation to acquire any specific amount of common stock, and the repurchase program may be suspended or discontinued at any time. On August 2, 2024, we entered into an accelerated share repurchase agreement for $200 million of our common stock, which we plan to fund with $130 million in additional borrowings under our Senior Credit facility and cash on hand.
Removed paragraphs (8)
Previous report
Net revenues for the three months ended March 31, 2024 increased $26.9 million, or 3.8%, compared to the prior year period, primarily due to a $10.8 million increase in sales volumes of existing products, price increases and an increase in sales of new products.
Previous report
On April 4, 2023, one of our Mexican subsidiaries received a notification from the Mexican Federal Tax Administration Service (“SAT”) setting forth its preliminary findings with respect to a foreign trade operations audit carried out by SAT for the period from July 1, 2017 to June 6, 2019. The preliminary findings stated that our Mexican subsidiary did not evidence the export of goods temporarily imported under Mexico’s Manufacturing, Maquila and Export Services Industries Program (“IMMEX Program”), therefore triggering the potential obligation for payment of import duties, value added tax, customs processing fees and other fines and penalties, which may cause an adverse impact on our gross profit in the future. In response to the notification, our Mexican subsidiary has requested that the matter be referred to the Procuraduría de la Defensa del Contribuyente, or “PRODECON,” (local tax ombudsperson) to help facilitate the process. In June 2023, we provided SAT with the appropriate documentation evidencing the export of the goods in accordance with the requirements of the IMMEX Program.
Previous report
While we cannot predict with certainty the outcome of this audit, based on currently known information, we do not believe a loss is either probable or estimable. Accordingly, no loss contingency has been recorded in our financial statements as of March 31, 2024 related to this matter. However, if the final resolution of the matter is not favorable to us, our Mexican subsidiary may be required to make payment of certain import duties, fines and surcharges, which could be material.
Previous report
Ongoing restructuring plans
Previous report
As the 2024 Footprint realignment plan progresses, management will reevaluate the estimated expenses and charges set forth above, and may revise its estimates, as appropriate, consistent with GAAP.
Previous report
Americas operating profit for the three months ended March 31, 2024 decreased $10.6 million, or 10.8%, compared to the prior year period, which was primarily attributable to operating expenses incurred by the acquired Palette business and a decrease in gross profit resulting from lower sales and higher manufacturing costs, partially offset by price increases. The decreases in operating profit were partially offset by a decrease in contingent consideration expense resulting from changes in the estimated fair value of our contingent consideration liabilities.
Previous report
EMEA net revenues for the three months ended March 31, 2024 increased $16.3 million, or 11.4%, compared to the prior year period, which was primarily attributable to a $10.0 million increase in sales volumes of existing products and, to a lesser extent, price increases and favorable fluctuations in foreign currency exchange rates.
Previous report
OEM net revenues for the three months ended March 31, 2024 increased $10.7 million, or 13.9%, compared to the prior year period, which was primarily attributable to a $9.4 million increase in sales volumes of existing products and, to a lesser extent, price increases.
Reworded paragraphs (26)
Previous wording
During the first quarter of 2024, we purchased a group annuity contract, using TRIP assets, which resulted in the recognition of a non-cash pre-tax settlement charge of $138.1 million during the three months ended March 31, 2024. The participants, beneficiaries, and alternate payees whose benefits were transferred to the group annuity contract will each receive from such group annuity contract the full value of their benefit that accrued under the TRIP. We also continue to evaluate our options with respect to TRIP assets in excess of liabilities ("surplus plan assets") remaining in the Teleflex Retirement Income Plan Trust subsequent to the purchase of the annuity contract and that will remain after plan assets and liabilities are transferred to the PBGC for missing participants and beneficiaries. We may contribute any surplus plan assets to a qualified defined contribution plan, which may impact our operating cash flows from continuing operations. As of March 31, 2024, the surplus plan assets were $37.2 million, which is included in Other Assets on the condensed consolidated balance sheet.
Current wording
During the first quarter of 2024, we purchased a group annuity contract, using TRIP assets, which resulted in the recognition of a non-cash pre-tax settlement charge of $138.1 million during the six months ended June 30, 2024. The participants, beneficiaries, and alternate payees whose benefits were transferred to the group annuity contract will each receive from such group annuity contract the full value of their benefit that accrued under the TRIP. The assets in the Teleflex Retirement Income Plan Trust exceed the estimated liability for amounts to be transferred to the PBGC for missing participants and beneficiaries (“surplus plan assets”). As of June 30, 2024, the surplus plan assets were $37.7 million, which is included in Other Assets on the condensed consolidated balance sheet.
Previous wording
Gross margin for the three months ended March 31, 2024 increased 130 basis points, or 2.4%, compared to the prior year period, primarily due to the favorable impact of gross margin attributed by acquired and divested businesses, price increases and the benefits from cost improvement initiatives, partially offset by unfavorable fluctuations in foreign currency exchange rates and continued cost inflation from macro-economic factors, specifically with respect to labor and raw materials.
Current wording
Gross margin for the six months ended June 30, 2024 increased 100 basis points, or 1.8%, compared to the prior year period, primarily due to the favorable impact of gross margin attributed to acquired and divested businesses, price increases and the benefits from cost improvement initiatives. The increases in gross margin were partially offset by the unfavorable impact from an increase in our reserves related to the Italian payback measure, continued cost inflation from macro-economic factors, specifically with respect to labor and raw materials and unfavorable fluctuations in foreign currency exchange rates.
Previous wording
Selling, general and administrative expenses for the three months ended March 31, 2024 increased $10.1 million, compared to the prior year period primarily due to higher operating expenses incurred by the acquired Palette business, an increase in legal expenses primarily related to higher litigation costs and, to a lesser extent, higher IT related costs. The increases in selling, general and administrative expenses were partially offset by lower sales expenses across certain of our product portfolios and a decrease in contingent consideration expense resulting from changes in the estimated fair value of our contingent consideration liabilities.
Current wording
Selling, general and administrative expenses for the six months ended June 30, 2024 increased $37.5 million compared to the prior year period, primarily due to higher operating expenses incurred by the acquired Palette business, an increase in contingent consideration expense resulting from changes in the estimated fair value of our contingent consideration liabilities, higher performance related employee-benefit expenses and, to a lesser extent, an increase in legal expenses primarily related to higher litigation costs.
Previous wording
The decrease in research and development expenses for the three months ended March 31, 2024 compared to the prior year period was primarily attributable to lower expenses related to the European Union Medical Device Regulation related costs, partially offset by higher project spend by the acquired Palette business.
Current wording
The increase in research and development expenses for the three months ended June 30, 2024 compared to the prior year period was primarily attributable to higher project spend within certain of our product portfolios and expenses incurred by the acquired Palette business, partially offset by lower European Union Medical Device Regulation related costs.
Previous wording
For the three months ended March 31, 2024, we recognized a settlement charge of $138.1 million related to our plan to terminate the TRIP resulting from our purchase of a group annuity contract to provide participants, beneficiaries, and alternate payees the full value of their benefit under the plan.
Current wording
For the six months ended June 30, 2024, we recognized a settlement charge of $138.1 million related to our plan to terminate the TRIP resulting from our purchase of a group annuity contract to provide participants, beneficiaries, and alternate payees the full value of their benefit under the plan.
Previous wording
Restructuring and impairment charges for the three months ended March 31, 2024 primarily consisted of a $2.1 million impairment charge related to a portion of our operating lease assets stemming from our cessation of occupancy of a specific facility and termination benefits related to the 2023 Restructuring plan and 2023 Footprint realignment plan.
Current wording
Restructuring and impairment charges for the three and six months ended June 30, 2024 primarily consisted of termination benefits related to the 2024 Footprint realignment plan (defined below). Moreover, restructuring and impairment charges for the six months ended June 30, 2024 reflect a $2.1 million impairment charge related to a portion of our operating lease assets stemming from our cessation of occupancy of a specific facility.
Previous wording
In May 2024, we committed to a restructuring plan primarily involving the relocation of select manufacturing operations to existing lower-cost locations, the optimization of specific product portfolios through targeted rationalization efforts, the relocation of certain integral product development and manufacturing support functions and related workforce reductions (the “2024 Footprint realignment plan"). These actions will commence in the second quarter of 2024 and are expected to be substantially completed by the end of 2025.
Current wording
During the second quarter of 2024, we initiated the "2024 Footprint realignment plan," encompassing several strategic restructuring initiatives. These initiatives primarily include the relocation of select manufacturing operations to existing lower-cost locations, the optimization of specific product portfolios through targeted rationalization efforts, the relocation of certain integral product development and manufacturing support functions, the optimization of certain supply chain activities and related workforce reductions. The actions under the 2024 Footprint realignment plan are expected to be substantially completed by the end of 2025.
Previous wording
We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the 2024 Footprint realignment plan of $33 million to $40 million. Of these, it is anticipated that $15 million to $19 million will be incurred in 2024, with the majority of the remaining balance expected to be incurred before the end of 2025. We estimate that $26 million to $32 million of the total charges will result in cash outlays, of which we expect, $4 million to $6 million to be disbursed in 2024 and the majority to be disbursed before the end of 2026. Furthermore, we expect to incur $12 million to $15 million in aggregate capital expenditures under the plan, of which $6 million to $8 million is expected to be incurred during 2024. The majority of capital expenditures are expected to be incurred by the end of 2025.
Current wording
We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the 2024 Footprint realignment plan of $37 million to $46 million. Of these, it is anticipated that $18 million to $22 million will be incurred in 2024, with the majority of the remaining balance expected to be incurred before the end of 2025. We estimate that $31 million to $38 million of the total charges will result in cash outlays, of which we expect $7 million to $8 million to be disbursed in 2024 and the majority to be disbursed before the end of 2026. Furthermore, we expect to incur $13 million to $16 million in aggregate capital expenditures under the plan, of which $6 million to $8 million is expected to be incurred during 2024. The majority of capital expenditures are expected to be incurred by the end of 2025.
Previous wording
We expect to begin realizing plan-related savings in 2026 and expect to achieve annual pre-tax savings of $7 million to $9 million once the plan is fully implemented. The impact of product rationalization efforts will partially offset the annual pre-tax savings generated by the plan, with the impact beginning in 2026.
Current wording
We expect to begin realizing plan-related savings in 2024 and expect to achieve annual pre-tax savings of $12 million to $14 million once the plan is fully implemented. The impact of product rationalization efforts will partially offset the annual pre-tax savings generated by the plan, with the impact beginning in 2024.
Previous wording
We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the 2023 Restructuring plan and 2023 Footprint realignment plan of $15 million to $19 million and $11 million to $15 million, respectively. We expect to achieve annual pretax savings in connection with the 2023 Restructuring plan and 2023 Footprint realignment plan of $29 million to $35 million and $2 million to $4 million, respectively, once the plans are fully implemented.
Current wording
In September 2023, we initiated a restructuring plan primarily involving the relocation of certain manufacturing operations to existing lower-cost locations, the outsourcing of certain manufacturing processes and related workforce reductions (the "2023 Footprint realignment plan"). We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the plan of $11 million to $15 million. We expect to achieve annual pretax savings in connection with the 2023 Footprint realignment plan of $2 million to $4 million once the plan is fully implemented.
Previous wording
We have ongoing restructuring initiatives consisting of a restructuring plan primarily involving the integration of Palette into Teleflex and workforce reductions designed to improve operating performance across the organization by creating efficiencies that align with evolving market demands and our strategy to enhance long-term value creation (the “2023 Restructuring plan”) and a restructuring plan primarily involving the relocation of certain manufacturing operations to existing lower-cost locations, the outsourcing of certain manufacturing processes and related workforce reductions (the "2023 Footprint realignment plan").
Current wording
In December 2023, we initiated a restructuring plan, which primarily involved the integration of Palette into Teleflex and workforce reductions designed to improve operating performance across the organization by creating efficiencies that align with evolving market demands and our strategy to enhance long-term value creation (the “2023 restructuring plan”). The plan is substantially complete and as a result, we expect future restructuring expenses associated with the plan, if any, to be immaterial.
Previous wording
The increase in interest expense for the three months ended March 31, 2024 compared to the prior year period was primarily due to a higher average interest rate resulting from increases in interest rates associated with our variable interest rate debt instruments and an increase in average debt outstanding.
Current wording
The increase in interest expense for the three and six months ended June 30, 2024 compared to the prior year period was primarily due to a higher average interest rate resulting from increases in interest rates associated with our variable interest rate debt instruments and an increase in average debt outstanding.
Previous wording
(1) The effective income tax rate for the three months ended March 31, 2024 represents an income tax benefit and the income tax rate for the three months ended April 2, 2023 represents an income tax expense.
Current wording
(1) The effective income tax rate for the three months ended June 30, 2024 and the three and six months ended July 2, 2023 represent income tax expenses. The effective income tax rate for the six months ended June 30, 2024 represents an income tax benefit.
Previous wording
The effective income tax rate for the three months ended March 31, 2024 reflects a tax benefit associated with a pension charge recognized in connection with the termination of the TRIP defined benefit plan. The effective income tax rate for the three months ended April 2, 2023 reflects tax expense related to the revaluation of certain U.S. state operating losses and credit carryforwards. The effective income tax rates for both periods reflect a tax benefit from research and development tax credits.
Current wording
The effective income tax rate for the six months ended June 30, 2024 reflects a tax benefit associated with a pension charge recognized in connection with the termination of the TRIP. The effective income tax rates for the three and six months ended July 2, 2023 reflect the tax impact of a non-taxable contingent consideration adjustment recognized in connection with a decrease in the estimated fair value of our contingent consideration liabilities. Additionally, the effective tax rates for the three and six months ended July 2, 2023 reflect a net-tax benefit related to share-based compensation. The effective income tax rates for all periods reflect a tax benefit from research and development tax credits.
Previous wording
Comparison of the three months ended March 31, 2024 and April 2, 2023
Current wording
Comparison of the three and six months ended June 30, 2024 and July 2, 2023
Previous wording
Americas net revenues for the three months ended March 31, 2024 decreased $5.6 million, or 1.4%, compared to the prior year period, which was primarily attributable to a $14.5 million decrease in sales volumes of existing products and a $5.7 million decrease from the net impact of acquired and divested businesses. The decreases in net revenues were partially offset by price increases and an increase in sales of new products.
Current wording
Americas net revenues for the six months ended June 30, 2024 decreased $3.4 million, or 0.4%, compared to the prior year period, which was primarily attributable to a $25.0 million decrease in sales volumes of existing products, primarily driven by decreased sales of our UroLift product, and a $10.0 million decrease from the net impact of acquired and divested businesses. The decreases in net revenue were partially offset by price increases and an increase in sales of new products.
Previous wording
EMEA operating profit for the three months ended March 31, 2024 increased $13.3 million, or 104.4%, compared to the prior year period, which was primarily attributable to lower expenses related to the European Union Medical Device Regulation within research and development expenses and an increase in gross profit resulting from higher sales and price increases, partially offset by higher manufacturing costs.
Current wording
EMEA operating profit for the six months ended June 30, 2024 increased $13.3 million, or 51.6% compared to the prior year period, which was primarily attributable to an increase in gross profit resulting from higher sales and price increases in addition to lower expenses related to the European Union Medical Device Regulation. Moreover, the increases in gross profit were partially offset by the unfavorable impact from an increase in our reserves related to the Italian payback measure.
Previous wording
Asia net revenues for the three months ended March 31, 2024 increased $5.5 million, or 7.0%, compared to the prior year period, which was primarily attributable to a $5.9 million increase in sales volumes of existing products and, to a lesser extent, revenues generated by the acquisition of Palette, partially offset by $3.0 million of unfavorable fluctuations in foreign currency exchange rates.
Current wording
Asia net revenues for the six months ended June 30, 2024 increased $5.8 million, or 3.5%, compared to the prior year period, which was primarily attributable to a $6.3 million increase in sales volumes of existing products and revenues generated by the acquisition of Palette, partially offset by $6.1 million of unfavorable fluctuations in foreign currency exchange rates.
Previous wording
Asia operating profit for the three months ended March 31, 2024 decreased $3.8 million, or 18.1%, compared to the prior year period, which was attributable to unfavorable fluctuations in foreign currency exchange rates and an increase in sales and marketing expenses to support higher sales. The decreases in operating profit were partially offset by an increase in gross profit resulting from higher sales, partially offset by unfavorable mix.
Current wording
Asia operating profit for the three and six months ended June 30, 2024 decreased $5.8 million, or 25.2%, and $9.6 million, or 21.8%, respectively, compared to the prior year periods, which was attributable to unfavorable fluctuations in foreign currency exchange rates and an increase in sales and marketing expenses to support higher sales.
Previous wording
OEM operating profit for the three months ended March 31, 2024 increased $3.1 million, or 15.4%, compared to the respective prior year period, which was primarily attributable to an increase in gross profit resulting from higher sales and prices increases.
Current wording
OEM operating profit for the three and six months ended June 30, 2024 increased $2.3 million, or 9.9%, and $5.4 million, or 12.4%, respectively, compared to the prior year periods, which was primarily attributable to an increase in gross profit resulting from higher sales and prices increases.
Previous wording
4.25% for €230.6 million at an annual interest rate of 2.78%. The cross-currency swap agreements expiring in 2029 include four different financial institution counterparties and notionally exchanged $250 million at an annual interest rate of 4.25% for €230.4 million at an annual interest rate of 2.89%. Both of the 2024 Cross-currency swap agreements are designated as a net investment hedge and require an exchange of the notional amounts upon expiration or the earlier termination of the agreements. We and the counterparties have agreed to effect the exchange through a net settlement. As a result, we may be required to pay (or be entitled to receive) an amount equal to the difference, on the expiration or earlier termination date, between the U.S. dollar equivalent of the €461 million notional amount and the $500 million notional amount. The 2024 Cross-currency swap agreements entail risk that the counterparties will not fulfill their obligations under the agreements. However, we believe the risk is reduced because we have entered into separate agreements with nine different counterparties, all of which are large, well-established financial institutions. Based on the U.S. dollar to euro currency exchange rate in effect February 26, 2024, and assuming exchange rates remain constant throughout the terms of the 2024 Cross-currency swap agreements, we would realize a reduction in annual cash interest expense of $7.1 million. During the second quarter, in response to changes in market conditions, we terminated the two cross-currency swaps executed in February of 2024 and replaced them with new agreements featuring similar terms and the same U.S. dollar notional amounts. The impact of replacing the cross-currency swaps is expected to be immaterial to our financial condition, results of operations and cash flows.
Current wording
On February 26, 2024, we executed two separate term cross-currency swap agreements set to expire on February 26, 2027 and February 28, 2029, respectively, to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Each of the swap agreements had a notional principal amount of $250 million and were designated as a net investment hedge. On April 25, 2024, the cross-currency agreements executed in February 2024 were terminated in response to changes in market conditions, resulting in $0.4 million in a cash settlement payment, and we simultaneously executed two new separate term cross-currency swap agreements with the same expiration dates and notional values (together, the "2024 Cross-currency swap agreements"). The cross-currency swap agreements expiring in 2027 include five different financial institution counterparties and notionally exchanged $250 million at an annual interest rate of 4.25% for €233.4 million at an annual interest rate of 2.44%. The cross-currency swap agreements expiring in 2029 include four different financial institution counterparties and notionally exchanged $250 million at an annual interest rate of 4.25% for €233.4 million at an annual interest rate of 2.45%. Both of the 2024 Cross-currency swap agreements are designated as a net investment hedge and require an exchange of the notional amounts upon expiration or the earlier termination of the agreements. We and the counterparties have agreed to effect the exchange through a net settlement. As a result, we may be required to pay (or be entitled to receive) an amount equal to the difference, on the expiration or earlier termination date, between the U.S. dollar equivalent of the €466.8 million notional amount and the $500 million notional amount. The 2024 Cross-currency swap agreements entail risk that the counterparties will not fulfill their obligations under the agreements. However, we believe the risk is reduced because we have entered into separate agreements with nine different counterparties, all of which are large, well-established financial institutions. Based on the U.S. dollar to euro currency exchange rate in effect April 25, 2024, and assuming exchange rates remain constant throughout the terms of the 2024 Cross-currency swap agreements, we would realize a reduction in annual cash interest expense of $9.0 million.
Previous wording
Net cash provided by operating activities from continuing operations was $112.8 million for the three months ended March 31, 2024 as compared to $84.3 million for the three months ended April 2, 2023. The $28.5 million increase was primarily attributable to favorable operating results and a decrease in cash outflows from inventories as we moderate our inventory levels. The increases in cash flows were partially offset by an increase in accounts receivable resulting from higher sales and lower levels of accounts payable and accrued expenses.
Current wording
Net cash provided by operating activities from continuing operations was $204.5 million for the six months ended June 30, 2024 as compared to $170.6 million for the six months ended July 2, 2023. The $33.9 million increase was primarily attributable to favorable operating results, a decrease in cash outflows from inventories as we moderate our inventory levels and an increase in accounts payable and accrued expenses stemming from the increase in our reserves related to the Italian payback measure. The increases in net cash provided by operating activities were partially offset by higher tax payments.
Previous wording
Net cash used in investing activities from continuing operations was $24.8 million for the three months ended March 31, 2024, and primarily consisted of $38.4 million in capital expenditures, partially offset by $13.7 million in net proceeds on swaps designated as net investment hedges.
Current wording
Net cash used in investing activities from continuing operations was $55.0 million for the six months ended June 30, 2024, and primarily consisted of $73.2 million in capital expenditures, partially offset by $18.3 million in net proceeds on swaps designated as net investment hedges.
Previous wording
Net cash used in by financing activities from continuing operations was $71.4 million for the three months ended March 31, 2024, and primarily consisted of a $57.1 million reduction in borrowings under our Senior Credit Facility and $16.0 million in dividend payments.
Current wording
Net cash used in by financing activities from continuing operations was $128.0 million for the six months ended June 30, 2024, and primarily consisted of a $98.3 million reduction in borrowings under our Senior Credit Facility and $32.0 million in dividend payments.
Previous wording
The 2027 Notes are issued by Teleflex Incorporated (the “Parent Company”), and payment of the Parent Company's obligations under the Senior Notes is guaranteed, jointly and severally, by an enumerated group of the Parent Company’s subsidiaries (each, a “Guarantor Subsidiary” and collectively, the “Guarantor Subsidiaries”). The guarantees are full and unconditional, subject to certain customary release provisions. Each Guarantor Subsidiary is directly or indirectly 100% owned by the Parent Company. Summarized financial information for the Parent and Guarantor Subsidiaries (collectively, the “Obligor Group”) as of March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 is as follows:
Current wording
The 2027 Notes are issued by Teleflex Incorporated (the “Parent Company”), and payment of the Parent Company's obligations under the Senior Notes is guaranteed, jointly and severally, by an enumerated group of the Parent Company’s subsidiaries (each, a “Guarantor Subsidiary” and collectively, the “Guarantor Subsidiaries”). The guarantees are full and unconditional, subject to certain customary release provisions. Each Guarantor Subsidiary is directly or indirectly 100% owned by the Parent Company. Summarized financial information for the Parent and Guarantor Subsidiaries (collectively, the “Obligor Group”) as of June 30, 2024 and December 31, 2023 and for the six months ended June 30, 2024 is as follows:
Previous wording
(1)During the first quarter of 2024, certain existing subsidiaries were designated as Guarantor Subsidiaries and as a result, we recast the prior period comparative summarized financial information.
Current wording
(1)During 2024, certain existing subsidiaries were designated as Guarantor Subsidiaries and as a result, we recast the prior period comparative summarized financial information.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Gross margin for the three months ended June 30, 2024 increased 70 basis points, or 1.3%, compared to the prior year period, primarily due to the favorable impact of gross margin attributed to acquired and divested businesses, price increases, the benefits from cost improvement initiatives and a decrease in costs associated with product recalls and quality issues. The increases in gross margin were partially offset by the unfavorable impact from an increase in our reserves related to the Italian payback measure and continued cost inflation from macro-economic factors, specifically with respect to labor and raw materials.
Current report — wording carried from elsewhere
The decrease in research and development expenses for the six months ended June 30, 2024 compared to the prior year period was primarily attributable to lower European Union Medical Device Regulation related costs, partially offset by higher project spend within certain of our product portfolios and expenses incurred by the acquired Palette business.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On February 26, 2024, the agreements related to our 2019 Cross-currency swap with an original maturity date of March 4, 2024 were terminated resulting in $12.1 million in cash settlement proceeds. On February 26, 2024, we executed two new separate term cross-currency swap agreements that expire on February 26, 2027 and February 28, 2029, respectively, to hedge against the effect of variability in the U.S. dollar to euro exchange rate (together the "2024 Cross-currency swap agreements"). The cross-currency swap agreements expiring in 2027 include five different financial institution counterparties and notionally exchanged $250 million at an annual interest rate of