LMAT - Earnings call transcript Q3 2017

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Operator

Welcome to the LeMaitre Vascular Q3 2017 Financial Results Conference Call.

As a reminder, today's call is being recorded. At this time, I'd like to turn the call over to Mr. JJ Pellegrino, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir.

Joseph Pellegrino

Amanda. you, Thank thank XXXX and joining on us Good call. you QX conference our afternoon for With call on and me today's our George and President, LeMaitre, CEO, Dave Roberts. is our Chairman

statement. expressions. as I'll those by our similar statements, begin, forecast forward-looking accuracy is Wherever statements and which believe, using pursue, to of make and try possible, we Before we the Safe Harbor will expect, some Today, anticipate, read forward-looking risks uncertainties. such subject words we'll to identify

subsequent Our based XX, assumptions and or upon are subsequent forward-looking statement forward-looking of information could results factors disclosure of should as and our the cause regarding any that XX-K the representing our relied and statements date. implied. estimates differ expressed our on to Please cautionary or be and today, estimates those XXXX, October filings, materially on SEC as from to refer factors including risk views in the most recent not

we www.lemaitre.com. call financial of GAAP discuss call, associated the of the reconciliation measures discussed is Investor available During non-GAAP non-GAAP is over contained LeMaitre. turn Website, A Relations include this in and George in measures, organic and our press the numbers. to I'll this in will now is sales growth release call section which to

George LeMaitre

JJ. productive was three quarter. another QX XXXX headlines. Thanks, I'll focus on

net XX% and up growth EPS income First, with we line strong posted XX%. bottom up

second had acquired a expectations. sales despite RestoreFlow outperform Second, to our ever highest continue and prior we comp, our Allografts year quarter third, recently tough

XX%. tax bottom contributed up XX%, low EPS into our restraint margin, $X income we in As of A line. QX rate of effective operating gross record first a expense record net our translated XX.X% and headline, to for $X.XX up generated which million

the balance $X.XX million year-over-year in push up $X.X cash a As EPS million a These midpoint line bottom helped we're annual increase. our quarter. a XX% results record to extraordinary increasing to guidance our result, $XX.X

$XX.X were ever. headline, As QX to million, sales quarter our our second second-best

As two our earnings QX QX increased XXXX there difficult call, product were was which major on temporarily a because previewed stories, comparison period sales.

back Texas Valvulotome pulled competitor Our in Separately into XXXX, on LeMaitre, $XXX,XXX. QX producing Florida hurricanes forward by affected the principal in also QX approximately went and our patch and recall, XXXX. due HYDRO customers revenues order sales a

As our XX% rate a guidance XXXX HX result, our growth XX%. X% QX of of down QX a growth implies looking And was rate ahead, midpoint from XXXX. in

As Full excited Restore processing North plan to ahead our above year headline, levels. continues product. be of our Flow to approximately recent revenues about acquisition this XXXX from and is pre-acquisition XX% force third sales our perform should tissue most Allografts American services

we've continue watermark. highlighted high drive previous XX% of growth, sales, on to Biologics QX calls, a for accounting As

fundamental financial goals same. Our remain the

growth. annual income I'll We and reported turn pursue to sales call growth annual to XX% Op over continue now JJ. the XX%

Joseph Pellegrino

George. Thanks

Our XXX points gross QX favorable a was and a rates currency was over price number across QX manufacturing in by increases. foreign average XXXX changes margin XXXX. product exchange lines, basis XX.X%, of sequential efficiencies selling driven improvement increase of largely The

XXXX QX tax in was Earnings increase. a by stock share This increased million. of in in XX% million exercises. option QX a rate per X%, in rate driven stock were $X.X of increase. $X.X were million XX% cash reduced from period an net driven $X.X tax record effective option XXXX. Our quarter with increases record cash, increase record million well as $X by $XX.X of We the a of QX $X.XX from a exercises in largely income resulted finished receipts Cash employee XXXX the as million from operations

it share dividends. gives allocation options us buybacks, be acquisitions capital whether cash increased operational Of or investments, course, this

and midpoint increase reported a QX we at expect the million at $XX.X guidance, increase XXXX to million, of the $XX.X of midpoint. organic to an of X% sales Turning XX%

We also $X.XX million, share at $X.X $X.X the midpoint. of and quarter million expect of growth the income XX% of the to gross $X.XX at of to per in guiding growth of earnings operating XX% XX.X% midpoint. margin a We're also

sales full the $XXX.X is to rate growth a an and year the XX% million, guidance For at XXXX, of organic the our at million reported $XXX.X growth X% of midpoint rate midpoint.

$XX.X gross $XX.X to at and the income is midpoint. XX% Our XX.X% year operating full guidance growth million of margin our million, guidance is

of per $X.XX for that, XX% Amanda share over per turn I'll it With earnings at Our midpoint. is $X.XX to the to questions. growth guidance share, back

Operator

from [Operator instructions] Your Stifel. first question comes line Wise of Rick from the

Your line sir. open is

Drew

Rick for Drew in Hi guys. tonight. It's

George, you still was hurricane it a add Just the XQ your quarter, third to start for I heard the but $XXX,XXX just impact when back, shortfall that about guidance. I think on say that you

hurricane, besides the you maybe first about So, the the factors talk led can some just that of your other shortfall, expectations? to

George LeMaitre

Sure.

Of course.

a 'XX Valvulotome we year. the a We So issue in weaker of expected and theme quality am would. of thought lot famous and you than Valvulotome as the fixes the in from we remember the bounced probably product of it hasn’t quickly year. story principally on as put that sure of the last QX I sort been that up

three them to would we've what and be those out fulfilling about I of versus and -- myth, you speaking, things. we're TRIVEX distributor and kind would had to forward expected about TRIVEX trying the slowdown I July gotten or our guidance So gave we've to say if the on with say, we're three of would figure roughly allocate the we say XX if them in not a had I in what would we you lost do simplify contract we say going to wanted $X.XX China with fulfilling and where think into those XX, things dollars July we sort I'd

Drew

distributor, portfolio? other the distributor that the on And of or is sells Okay. there that product TRIVEX only pieces the is

George LeMaitre

distributors master one in but the isn't to distributor short distributor Yes. us. a main sub four only In yes, one through the underneath the it's sell the really your then them, TRIVEX who devices answer product product that China we real sells of and through question, distributor at person for balance other

Drew

fourth for versus to million quarter this you've so I guidance, to of a first the moving And Okay. specific million if is given $XX.X correctly a revenue and me target. revenue calling range the you're serves think range time $XX.X memory my just

So, can wrong get go you the just to bottom talk about to basically to to you go for to the has your assumptions range? to right has you top? What get end what that

George LeMaitre

Okay.

that it at and to way be were the rashes. you look the used the give to The way equivalent at we now it guidance didn't dot single they Drew. we would So, you old right midpoint was looked that giving we point

question people's quarterly guidance. that is. spend of to what this, range we range or thinking the what into might we What into enough part it, So, what When we never thought a we thought got about small means. to followers We if like go digesting to we're go guidance to got not band used we to were four has give give we or to three have quarterly mean. didn't giving is time to be we years might enough the the what When used ago, we that see and right would has you a your rationale moving equivalent as away for wrong.

volume it be other of that analysts ranges more we greater we single to and all we following a eight rather tried whom companies, should feel simplify folks now like the and than point. So, for us share give with the

Drew

your we're and Got sneaking drive M&A now mid-XXs if and seeing another how portfolio I as too last for exposure you. Biologics higher? about about we we Restore or just acquisition, opportunities, to later portfolio exposure thinking about question sense should so running push or is and indexed That that Biologics look think the to just heavily sooner Flow makes forward almost now a the the M&A, be is anniversarying

Dave Roberts

indexed Dave. it's it's do portfolio faster the our Biologics. Biologics Thanks believe in a in products heavily We bag products Drew as going to The than not our bag. the are question. nonbiological for too

are for blues continue other of like do we types sealants, of Biologics things that. more to Biologics. grass, There types and patches, other even So, look

like still space. the say we would I So, Biologics really

Drew

Thanks guys. Great.

George LeMaitre

Thanks Drew.

Operator

Your from next Mills line of Canaccord the instructions] [Operator Jason Genuity. question comes from

line open is sir. Your

Cecilia Furlong

actually just continue is XenoSure quarter sales relative provide to could that Hi. for around commentary Cecilia and be would any wanted you Biologics the and the just on This I on Furlong during contributions if and Jason great.

George LeMaitre

to Sure. try Cecilia. are I'll do you. Okay. for you that doing. Hi How

So, Their level. continue the driver to at growth rates the the balance high the than Biologics a be company. company very higher of the are at

XenoSure was but plus QX coming, knew the it QX, think rate something in one Am Of right? I or was course, doing was JJ. growth like that that minus one I this or we in all

Joseph Pellegrino

Yeah, a couple yes. down,

George LeMaitre

Okay.

looks the be of is it I rate that and is other XX%, all top an bought growth rate business you, us. XX% give for expected about we call my for get piece, rates growth that growth the that a be think the big of the there that 'XX mentioned the and going was thrilled of we script was of mentioned the as in to RestoreFlow, But and the to the I norm. we're expect XX knew no so, This think organic terms was We Omniflow as number about by in to I ProCol XX% coming. our year XenoSure but for in to number. versus November And QX, growth sales we products rate don't we we're at XX% in XXXX. all believe was so

Cecilia Furlong

quarter you from your then it's ago of what the the in going provide Okay. excluding and then as an would quarter Great. organic hurricane organic and around would one-timers if be the thoughts forward growth have been possible, estimate well. also to And just growth able year

George LeMaitre

or we more So little about or think so. the maybe we're organic, so the $XXX,XXX yes, a than X% hurricanes

growth breakeven. rate been have organic the would more about So,

Cecilia Furlong

then as year the And one-timers from well. ex prior period

George LeMaitre

period. No one the prior year in timers

Baxter we that work Okay. Cecilia to give backorder the getting at haven't number. that you done you're and

Cecilia Furlong

Thank you Great. very much. Okay.

George LeMaitre

you. Thank

Operator

Joe comes from next of Munda question Your the Analysis. line First from

Your line is open.

Joe Munda

afternoon, taking Good questions. for Thanks the guys.

George LeMaitre

Hello Joe.

Joe Munda

us if you Any was and on great. quick. the Real there search I commentary would color color for be leadership could the Europe? some a in sales both or maybe provide Americas wondering new

George LeMaitre

Terrific. that very Joe relevant. for It's Okay. Thanks asking question.

GM retirement prior XX, that. So, of Peter, We he for long retiring had lead three about the we in on a the months had was September of that. to but Europe was knew course

got will going some had the slower of gate on up well. probably We're going happen it search bit these thing is both that to candidates. the happen. I that and search and It the instances, very QX, the happened little the once is say, will a fantastic would for out close faster VP of starts We've the American In and quickly. My search quite sense QX. So, hiring Americas.

fantastic it's for same that as to a chance say at So out time a closes with issues get would into maybe a silver me I straighten of managers. this, things the thing bunch QX. and to all lining to get the these QX regional all

a both expose them the slightly to bunch as of when back well me on different think Atlantic CEO. So, fantastic we have the on as changeover to I and projects. to of topics sides reporting in managers different have angles, it's I had I I and XXXX regional did directly the angles American

searches, regional the answer those in a managers. direct of myself of between quick things question, happening your there So lot and is think meantime, to the in good the QX I for both QX but communication

Joe Munda

world? give Okay. the looks Thank like or split what could you as far North as then out count color some rep America, you. rest Europe, the And of us

George LeMaitre

to the they ago, maybe three there that retired some found their stable Americas question including good thing didn't to last over one able down summer, total but a are as it's time the we've all inside which is been topics five because for a XX start I personnel to at address hasn’t want would XX that XX year months upcoming. have say Asia, in is of roughly your moved from over to And weeks Sure, the addressing just much. was of three, way which and XX, by of back we previous for just Peter go or Europe three that it

of personnel nice happen. some these want getting movement. we're We so, And things many to

Joe Munda

lower current guess I the Okay. prior appears at JJ my of Op guidance margin question, guidance helpful be versus here, income guidance I midpoint looking is last going -- to the the be the then gross to slightly then guidance. previous pre and That's than am better

us some could some as what's give are So, I color concerned? as you picture on guess going far or margins

Joseph Pellegrino

were year X.X% the that for we to before. were mean or just we think ticked QX had I beat and Yeah, Joe, by so beat the X.X% a where I in do up from lot with

on lot fairly clean bit. a I and maybe little a with room as of expecting sort for sales down So, and end of turn we'll puts bring yearend we're year down bullish margin. down more a of calls brings flow little The think little it bit up who Valvulotome brings sequentially we're this. those well bit, restore a Valvulotome the and more clean you the getting on But you XenoSure help to be the sales

So, the there, year. some up gives takes X.X and for but

Joe Munda

guys. Thanks right. All I'll the back queue. in get

George LeMaitre

Joe. Thanks

Operator

question Haff Charles comes Craig-Hallum. from next from Your

Your open line is sir.

Charles Haff

Thanks Getting quarter questions. there as the there, from wondering the for margins you I'm you if had some pressure my to ProCol. gross to taking saw starting are said I margins back higher margins improve gross Omniflow rate? last think and growth you

Joseph Pellegrino

the band and On HYDRO now. that little they're and Valvulotome's the well, and is next topics, a quarters RestoreFlow as away from the that's fairly of get margin, sort RestoreFlow but going to gross in over margin. certainly are the fairly few in case. Yeah, accounting purchase XenoSure for to in do improve mid-XXs we that the the helps ProCol hefty quickly which extent

you're to it's now right a a good drag I forward, as you going gross move the So, answer margin. but get there on think

Charles Haff

note you And very there Is sales leverage to strong quarter. this showed and then Okay. marketing anything for there.

George LeMaitre

that I we've So, marketing with sequentially terms quarter on But, prior couple our in in VP was the getting and in Sales been say. U.S. we in so and were as that getting well. down selling sales quarters marketing, leverage as and a helped the of well of and leverage the line not would reps

percent were think so we sales in of at I a XX% QX. as or

as So, bit, too answer I position the sort ticks little hire bit, but little not maybe we the up VP it but in bounces of up around again a think a that's and it specific QX, much. then

Charles Haff

Okay.

for the level you you quarter in the this VP North expect fill region? American would fourth So, until position the

George LeMaitre

and answer that that's it's areas, and different like within kind I our of assumption. the guess I so would yeah would by OpEx generally sequentially ups there's I some QX decent within flat saying looks QX to baked but downs probably

Charles Haff

and give for regulatory Australia Japan Great XenoSure, see, us updates let's you Okay. process? on or can any then

George LeMaitre

Okay.

it's generally talked June went on didn't trial I'll XX. that, we we except update it's waiting sure that approval. about is XXXX a from it we're answer that's think be, the want we're thinking it call got Australia running really running waiting and it no XX-month the XX we submission. game enrolled. July So, on up pretty and that for and XX here again China but that in an anyway, the and It's phone and we ask now excited Am but and XX patients a you than that Gooch game up an slower June China, to about

going it's a bit the we're pleased initial don't we thinking thinking trial before were reasonably be thing and to be shortened Japan that MHLW. believing maybe a we're right from better and good and so some rather -- quarter, quite Japan understand So, animal one. thinking we China Japan, and think like. during XXXX currently we're we we going news and is clinical trial little not they're or now in an and Australia that the we got that I I something but got MHLW Japanese ruling that now human Japanese the with this long In XXXX think than but were also from the a XXXX

Charles Haff

George. do year we rate, Okay. color fourth using what the for the then Great. for you and GAAP think the Thanks should on the 'XX? And for full there quarter be tax

George LeMaitre

go ex-employee, and predict lot and stock in what QX has some exercises there you was in to there probably you with mid-XXs XX%, if like 'XX a in stop in but rate XX% a do the of XX% option QX extreme stock isn't XX% a to that guess that's XX%, XX% are reason going factor for place. maybe rate a QX, assumption over with I'm exercises of kind stock quarters placeholder. to Bucking well you to I Yeah going into the get it the kind option one, to option that in and in can't so QX, to be tax Bronco good maybe somewhere now back if

Charles Haff

full For the year?

George LeMaitre

For full full so your XX%. the yeah, will -- be year then will QX then year and be around be will

Charles Haff

Okay. Great. Thanks for taking my questions.

George LeMaitre

Thanks Okay. Charles.

Operator

Ladies concludes today's to your this and participation. I'd gentlemen thank conference. like you for

You a may disconnect. great now day. Have

LeMaitre Vascular (LMAT) 26 Oct 172017 Q3 Earnings call transcript