But, as you know, 97% of urologists that do BPH also do prostate cancer. And of our base of urologists that use UroLift, only 20% of them are so use the Barrigel products. So, a lot of white space for us to grow into an early indications with the inbounds from our base is very encouraging.
Operator: Your next question comes from the line of Shagun Singh with RBC. Your line is open.
Shagun Singh: Great. Thank you so much for taking the question. I’m just trying to understand the underlying growth rate better here. For Q4, I think your ex-FX implies about 50 basis points of decline. I believe there’s a selling day headwind, which could be about 610 basis points. Palette is about 130 just based on our math, MSA maybe 50 basis points headwind, which gets us to 4.8% underlying versus 7.4% in Q3. So, firstly, is that math correct? It does imply deceleration from Q3 to Q4 on an underlying basis stacked two-year growth. Just wondering what is driving that? Is there some conservatism? And then what it implies for 2024 and LRP growth of low-6%? Sorry for all those numbers.
Liam Kelly: No. That’s okay, Shagun, and thank you again for the question. So, I’ll go through a few pieces of it. So, our updated guidance is 6.4% to 6.6%. If you look at that on a constant currency basis, that’s 0.4% to 1.2%. Then, if you take into account the billing days that as you would have heard in Tom’s remarks, is $53 million or around 7%, that is an underlying growth of 7.4% to 8.1%. Then as you also heard from Tom, we’ve added in the Palette that closed earlier but also the MSA that leaves earlier. So, the MSA is approximately $4 million, and that is slightly shy of half of what we bring in from the Palette acquisition. So that’s how I would look at it. So, I would say that it’s not at all decelerating.
If you take in today’s the account, the days – the lower end of our guidance into the Q4 would employ 7.4% to 7.4%, and the upper end would obviously show some acceleration. And, I think, as I said in my opening, that is truly, Shagun, a reflection of our performance through three quarters and our enthusiasm of what we see in front of us for the fourth quarter, I think, we’ve executed pretty well through three quarters. This is the third quarter in a row, we’ve been in a position to call up revenue. And I think we have a significant step up from the beginning of the year, and I just like to throw out one more number. At the beginning of the year, the low end of our guidance range was 4.75%. As we go now into the fourth quarter, the low end of our guidance range of 6.4%, a significant uptick.
Shagun Singh: That’s really helpful. And then just as a follow-up on the margin side. You guys are absorbing about $0.25 of Palette dilution in 2023. You’ve raised your EPS guidance. So, what is driving this underlying improvement? And any color on 2024? I think, consensus looking for 50 basis points of margin expansion? And how should we think about 2024 in the context of your LRP? Thank you for taking the questions.
Thomas Powell: Well, on the margin, what’s driving it is, largely, we’re seeing favorable results in pricing, mix and some manufacturing-related variances in the third quarter. As expected, inflation improves in the third quarter, both sequentially and year-over-year. Foreign exchange was a bit of a headwind in the quarter relatively – and, candidly, if you go back in time, it was actually a benefit earlier in the year has shifted to a headwind of sorts. So, those are some of the drivers that we saw in the third quarter, and we see continued improvement and stabilization in the macro environment, if you will, with regards to inflation and logistics costs and timing that we expect to play through into the fourth quarter as well. And then as it relates to margins for next year, we’re still working through our annual planning process and really aren’t in a position today to be providing guidance for next year at this point.
Operator: Your next question comes from the line of Richard Newitter with Truist Securities. Your line is open.
Unidentified Analyst: Hi. This is [Elaine] [ph] on for Rich. So, first question, I recall, last quarter, you kind of pinned on longer VAC Committee approval for Titan. Just wondering if it’s improving there? Or, like, any color you can provide on the trend there? Thanks.
Liam Kelly: Yes. Absolutely. So, regarding Titan, first of all, just looking at Surgical in general, it had a – an absolute – really strong quarter, growing 20.6%. And with regards to Titan specifically, you will recall that from Q1 to Q2, we doubled the number of surgeons that we were proctoring in Q2 compared to Q1. I can tell you that in Q3, we maintained that level of proctoring. And that is a good indication that you’re getting through the value analysis committees, because you cannot proctor the surgeon until you’ve gotten through the value analysis committee. It’s taking longer than we anticipated originally, but now we’re into a reasonable cadence of getting through these value analysis committees. And it is our belief that while the Titan will be impacted and the market will be impacted by GLP-1s, as we said in our prepared remarks, that the technology is compelling, and we believe that there is a pathway to continue to take share.
The product is performing very, very well. There are a number of clinical studies in process that will demonstrate the time efficiency of the Titan stapler compared to other technologies. And we do believe that it will be a growth driver for Teleflex over a multiyear period, given the ability that we have to save time for the surgeon to do a better procedure, to have better patient outcomes and, ultimately, we think that’s what will matter at the end of the day, and this will be a growth driver. Probably, the overall market won’t be as big as we initially thought, because of GLP-1s. That’s just a fact of life. But our objective here is to take share within the market space, and there’s still lots of room for us to grow into and take share.
Unidentified Analyst: Great. That’s very helpful. Thank you. Also, on OEM, it appeared that it’s strong. So, do you have the confidence in this trend going into 2024? Thank you.
Liam Kelly: Yes. So, our guidance would – is based on what we see through Q3, what we’ve seen in the first month of Q4, candidly. And of all of our businesses, the b`iness that we have the best line of sight is our OEM business, just because of the nature of orders are booked in advance and, therefore, gives us greater visibility into what’s happening within that business. I will tell you that the microcatheter part of OEM has continued to perform very, very well for the whole year and also within the third quarter. And we feel confident that the OEM business will continue to be a double-digit grower in – for the foreseeable future, just given the backdrop of some of the technologies that we have that are unique to Teleflex and some of the product development work that we’re doing in our innovation centers around the world with key customers.
