LMAT - Earnings call transcript Q1 2018

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Operator

Welcome to the LeMaitre Vascular First Quarter 2018 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. J.J. Pellegrino, Chief Financial Officer of LeMaitre Vascular. sir. ahead, go Please

Joseph P. Pellegrino Jr.

LeMaitre. [ph]. our and With QX is CEO, today's [Skylar] joining me you us call George and Chairman on XXXX our Good you, thank afternoon for on Thank conference call.

will Our President, Dave on is travelling phone not business call. overseas the be on Roberts, and

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

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

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

George W. LeMaitre

acceptance the American the Valvulotomes. are close substitute These highlight [indiscernible] by over veins in Thanks force These North ahead. up two record in was veins sales the to prepared increasing year, pod. the two acquisition. see QX, a peas J.J. a saphenous really more are we growth The prior and [Indiscernible] products the in-situ Restore a LeMaitre by hit of the QX of sales Flow XX% saphenous

million lines. non-vascular lines. tightly also The higher-margin to surgery, companies Now our several March XX product to past, acquire we was million further year divestiture a and particular and recent sales the dividends. on in $XX our balance This and I'd to we've price the sales sheet. Company portfolio, more Also, the intra-company have expands higher-margin recently devices. pay product you vascular remind our we This to used our our biologic pruning of coming warchest focus of into our two cash $X.X lists commission remains beyond and initiatives In like our undertaken of Reddick our on eliminating intention. modified plan divestiture incentify reps towards the our the cash

XXX And our by to cost. Europe Guenther, sometimes reps on grafts made been catheters and sold of to have to the Frank now accelerate manage to ramp of changes In four time, added the in a sell our on XX generally in exiting help ample we territory President We and quarter This with found Europe. our In plan master continue European state year-end. we America importers just up to of March being hiring to and excited for is out distributors. we we below approximately to we also fixed. in sales the were through begun X. North Europe, QX virgin Specifically, layer were we China QX, payroll hiring. recently. cut growth, new to XX hospitals of welcome This to have same in At force layer sales and single a order has see

our remind to XX% to everyone Before We turning annual a annual the like JJ, growth. operating I'd of XX% goals. aspire and call reported sales financial over growth income

Joseph P. Pellegrino Jr.

George. Thanks

up $XX.X QX to income XXXX the post operating Operating the margin. effects was expenses prior by were sales, $X.X only million, XXXX in a decrease increased QX offset in allowed million, XXXX. weakening XX% partially and Restore was The control margin which This versus manufacturing inefficiencies operating versus gross of QX us Flow dollar. X% XXXX up QX period. XX.X% Our by were versus and driven largely of XX% year XX.X%, the cost prior the representing

Our effective XX% Australian stock in U.S. tax was drove and rate rate as QX NOLs lower exercises, option XXXX rates, tax the down.

quarter We from our cash, million a and $X.X finished from XX%. rate cash stock by Cash operations QX full-year to expect million XXXX approximately of million were $X.X exercises of The added another XXXX. effective tax in Reddick approximately April. in divestiture XXXX to cash in $XXX,XXX. million increase with $XX.X increases QX an We be the option of $X.X driven record

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

We also and income XX% of in a million, XXX% to of midpoint. operating the million $XX.X expect margin the of gross $XX.X growth quarter at

$X.X a guiding at is also operating amount million divestiture. This the are from of Included We as accounting the our XX% the of growth may EPS estimated settles. income guidance to $X.XX gain change $X.XX, in Reddick an midpoint.

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

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

questions. call midpoint. a $X.XX Skylar that, over XX% will turn Our of With to to per guidance growth the annual EPS the at for back is $X.XX share, I

Operator

[Operator first question Rick Wise from Stifel. Instructions] Our comes with

now line open. Your is

Drew

lingering towards some can in off Drew you any It's compensation there just to think first start structure and about for that results, your see revenue disruption the was I just any change guidance? of maybe Rick. issues. led you talk margin to quarter quarterly the on you sales lower Was procedural softness China factors on guess of that I or a being that force the mentioned from there gross the divestiture? end

some Just help pieces of understand here. the us better

George W. LeMaitre

appreciate that. Sure, I

the issues the midpoint QX. revenues QX should we end probably we maybe have, here So some big as to I in with fairly just of the didn't quarter, contest good-sized our range, we ran bottom out as guidance, which say was of of QX and XXX,XXX off understand that the our making a into barely going and well pulled of would

As TRIVEX. it XX,XXX China, in of issue sort good although to, to of happened what's real having here revenues, as to China down terms the happen. we not clips a be we relates what's feel about the continues mentioned the past, issue about pulled China well guy bad had in you China And as revenues, effectively of of

So, product it those two lines. affected

sort We didn't quarter. help unexpected are these the I proper but softness and Germany were X% don't XX% long-term issues both out it and think that in organically. also Switzerland, of down sort had of lingering

Drew

with we Street I to to just has as so in reported And XXXX that mind, annual accustomed Okay. guidance, growth. become look XX% think seeing the

you geographies reported growth that driven that are mean by revising see? now, X% softness all So, in I divestiture you or the products lingering is other just a any or are that there

Joseph P. Pellegrino Jr.

the for we year, off growth the number QX So, full with where the start we are at.

behind right. So us the April, all a that puts bit little

And coming so out X% QX for with growth. are we then

good to talking So, that's QX. The then robustly QX definitely more sort of in just in starts HX. through, of HX. to recover was Reddick more a bit I robustly CCC XX on we pretty on we in throughout reps going the some of the is as That divestiture that We've Drew, HX. probably organic the won't year move and bet China higher from to And for an also got QX I about, the more Germany probably XXs, George was from going and see HX probably topic some on get recover in little basis the surge we'll some to have easier comps year. but XXX, hire sort we the of challenge well in of currently there are think recovery drag a us, maybe should as by the we that help then on Reddick the going that because us. growth giving reps end

So, what reps. I a you're in comps, answers with looking nice generally think sales recovery, at China, of is Germany, little easier and your HX, good sort HX all light, all, some and then bit in

George W. LeMaitre

sold at is, last that, guidance which take True. Maybe the has the can Catheter been high-level year X.XX I down brought Reddick X.X also the for the by and year. shot

we is add X think the And number along it's our you been, product that. this time year that to pretty out warchest – not reported it's there we say, I but long sell but the do at predicting this is and that is rare plenty big. you barrier, stuff I'd had are like meet XX% first and so, of that, as is pointing and this big point And correctly, to a anything going the some maybe we're know don't so to as also haven't ever we

Drew

have a divestiture, general but or need foundation the with of you in something right, M&A, topic always about of for more other company with is All so mind, any any the ask vascular pure-play just this surgery are divestiture, We and do with laying the on slower a M&A transformative lower you the M&A surgery to adding margin signaling just product like products? to warchest a And the portfolio, now. prune growth type the front? just you on and

George W. LeMaitre

question them, XX that wanted I piece of I time. foundation a would back to Reddick the laying sell say go for we have I a hire anything wouldn't, be on side. very long the vascular-only is answer tell strange a for vascular really reps This world been first, specifically we to sales say, wouldn't has of and our specific. the Right. this we'd

a this So, pruning. is really truly

rather there don't life X changes rid could months want better all you products, our specifically anything evolves our are but other life are asking XenoSure necessarily, we Not If and bag, that get valvulotome up see X sleeve. to some other honestly, [indiscernible], and although bag shunt as is we and or also, we XX in products have that of? than or

evaluating constantly portfolio. the are We

Drew

about last you an growing the called just Got you can the out Restore update other biologics you there? you. Restore us and one And your in talk just breakdown just Flow question, and provide quarter, just for – Flow revenue can

George W. LeMaitre

Sure.

Flow you growth of thing. the had side. headlining on XX% Valvulotomes actually not biologic don't were rates tell and can were XX%, gave respectively, and I prepared all XenoSure, Valvulotomes know biologic up, full XX% shunts XX%. and I am quarters So, we record their strong you, I XenoSure the if and up up, three also Restore

Joseph P. Pellegrino Jr.

you that. to back get on We'll not. did I

George W. LeMaitre

We'll you on get Drew. that, back to

that. about have I Sorry more been should prepared.

Operator

comes with next from Mills Jason Canaccord Genuity. question Our

is now open. line Your

Cecilia Furlong

your your Furlong to is target provide wondering, really just quarter dynamics [indiscernible]? you I drove on on was and rates and your an update just the hiring could sales retention on what This you Jason. and increase actually just Cecilia recent leadership transitions in for in the force

George W. LeMaitre

asking. Okay, for Thank you much that's a very Cecilia. good question,

Frank we replacement a the Okay, started for in is so Peter, He XX. mentioned X. retired who script, March September

Frank and all Europe taking to over back reports Frank reports care and seven to those of is me. given now have I So that

in about like turns thrilled Inside that of had also that. retirements a we and coming PetXer have European in the that are retiring. have things been We the way portfolio, a and good as was couple

some the me with U.S., couple new we about fantastic real SMs our in new in have So the of but I am U.S. of meantime for are – to In the managers VP of direct it's Sales, excited the there. the searching just for a over the still touch

months, because it's maybe turnover the high fairly turnover, keeping X.X% been the and I I reps pretty around the, [indiscernible] that's two of voluntary dramatically in that's something would a plans U.S., environment, one, LeMaitre that's strong had what growing one, a and year of lot but I we four be. we have easy only XX, think these have doing as force, two resignations. first though lower turnover external that, again, do question triple answer to the the days. that's feel the old some to remember would think months lower although XX comp And worldwide there expected about so out well. maybe for particularly that's is But are of than that's know the that than had with we sales the you it an year still last you a year transition and we as only rep we the

rep play keeps you to can is, in access, you there. sales say, we and rep as much not to us the Reddick what money if Chicago, you driving the and which Jackson, that sales first things would a are great a a the what with, the like far bit you is, an these having look when divestiture, one going in thing too Portland Portland surgeons and with and opportunities that, you As force, to have don't of second not say it's grow one do have Mississippi to because I at a vascular you the opportunity are sell little places more

fill we pretty are to that. cities So, of taking in to some be advantage juicy there seems and

Cecilia Furlong

you valvulotome on Okay, thank the seeing far you. could are gears, trends product? in then some so color well what outlook And as for and future just XXXX, provide switching you the as recent your

George W. LeMaitre

of okay, kind certain from quarter is record recoveries might really hard fixed serious, it was we issue that's year or driving I we complaints I we process Right, cut up about Those so, a think early XXXX force. rough two those our in had expanding trending quarter and back was record about of us to last sales and valvulotome are in in see some so on products. XX%. as and and as now a year an quarters issue XX complaint XX%. for The and devices numbers quality late for tracking we reiterate, are internal and our XXXX It what's rates as to at we valvulotome were XX we XX%, extent up is well a a the which XXXX. and top think complaint by rate numbers surgeons which very lodged The you of was and running in QX, complaint the XX business QX,

Cecilia Furlong

for great. Okay, much color. very Thanks the

Operator

Our Benchmark. next Raymond question comes Myers with from

is line Your open. now

Ray Myers

first ask in the was XenoSure me XenoSure the Let revenue quarter? What revenue. about

Joseph P. Pellegrino Jr.

saying are it's We up XX%.

Ray Myers

where it a them new hire U.S., of targeting areas? planning international, across it you you described country us tell sprinkling to the the Is And particular great. any reps. kind about sales is or any as particular Okay, bit geography, are product or

George W. LeMaitre

okay. Right,

it's So, geog a good topic. good question, a is

gotten product North Sydney, sort Europe, concentrated Asia as only big Flow of XX% doctor. say a $XX,XXX basically would is which I finding we being wrinkle we might There we America was business XX-XX. but valvulotomes here, Restore it's a year a XX% where it's into So, have add the of and a sell are to with more in

'whales' to to You have and might if And the big reps sell those whales we will, in might Restore top 'whales', And surgeons of you that some these we a Flow maybe we of really $XXX,XXX be. doctor. on found to well. geographically call need think of drop loosely cover where could you we some

about of bit this think So but wrinkle there is this. product don't in a there, little a I growth is

great so I then a is opportunity questions. ourselves, your us bunch I about Antonio rep suite in a of the of and devices, hope growth to this with see think vascular continuing terrific and so forth. asking and on I have shouldn't we covered San

happy want out answer, you through parse to didn't to keep ones figure which If and I'm I going.

Ray Myers

America to it your North experienced that, be America real Head have year where and you North Sales, a done expect from now? say sales intend understand of That's Talking doing past I been about you do you are you have and leadership quite it. Do in you role in maintain long-term helpful. the to that at

George W. LeMaitre

career be even CEO. the not to a plan is long term Chairman, My

seven. have this and great forever. that So, hope seven don't doing fantastic I been I them ones feel two I we out the this of turned new to on will regional two and Though of over no, say I I I since have keep put have the about managers in seat I got

to reps his why fairly little good 'I because the of into A of closer of to you to about of had lot I'm a now, previously things business the action a when I'm that to the go layers able can So, hires me. well, to quick to CEO hand bit Cecilia's get kind whereas which found' out pick have kind is it make quickly. smart through and stick happens question I tied as a bit little is, happen

totally there no, for so, on delegate want And are and nine I been we someone staying enthused I don't to not don't just searching about. that I've plan to it forever. months

are here Bostonian, we when their to person Frankfurt the slowing hired he to in be Frank over if things the a work been or that a the of down and Frankfurt, that the whatever. insisted would citizen Georgia we And a Boston. in that this One insisting be has lot area, Europe process of move we San a sales of house Antonio move from they or want you to in don't They for or Boston. RSMs want will, instance world to on

think unique person are so, in to bit us insisting say operational but a we little that. It's with into I on had RSM that And slower we hands and that's little strides have while bit the down, the my program it's all program. mentioned, of started turning be been building the comp the been comp going kind the on, squad. issues, and I'd as working re-profiling a I been amazing a also that and with year, we've honestly, I making the over over

Ray Myers

Can you. that Maybe to touch TRIVEX more. Sounds you change? changes China little some distribution China good. mentioned on Thank You a on elaborate That's distribution. the helpful.

George W. LeMaitre

heard you bad So, it's story no or China, story, QX, been the have four that and consecutively, QX and revenues. us quarters QX, probably a from three effectively

officially selling They we them master want. throughout were of also layer March. We contract, them China. sub-distributors January. in TRIVEX that's cure couldn't leave I such cure. now, They distributor. to was can was our sent two in we they as or distributor a had sort those targets, tough we such one shut at of they the missing we of, down targets. had said, maybe end think who a a old the And we finally to And hit you through letter and quarters contract, when XX We in terminated in a it

through. are our are sub-distributors of own and now starting getting sell we set to We

about topic. to a me to beyond it China feels for next we And a it's So three we like it's us QX going straight have to selling effectively QX and then is zero to distributors it a to After becoming of our comp price but group been business ability than at start topic good their tough Chinese has sells over, quarters, quarter, to higher in because rather bad hospital. whereas of start comps. our importer and to being to the sell a the the then it down $XXX,XXX closer-to-retail TRIVEX quarter master who have sub-distributors

Ray Myers

Thank news. Good Great. you.

Let me leave there. it

Operator

Our with comes Munda First next question Joe from Analysis.

open. now is line Your

Joseph Munda

I here, some volume could the Real was sense us quick us price, give versus quarter, if for you that. just wondering down in couple of a growth unit break

As us well breakdown by as, George, geography? could you the reps current give the of

George W. LeMaitre

Of course.

So, organically to usually, your is first X% quarter very sort really unit unit. doesn't a so know, and reported price, price And X% matter quarter. have we and grew XX-XX X% X%, is the and question, growth this zero you is of usually, as FX of but and normal different we FX, is

of end the right where for XX. XX in the and the should now As Asia Pac in XX reps XX Americas, QX, are, rim in at you Europe, give

Joseph Munda

Okay. prepared done us give give price that some a you below what us bit your In and little list. talked out on have color figured remarks, more you you sold your regards and remedy? and this little know you I new how to you pricing you about could but there. going a in list, occurring that more talked was a about comments Can were being was products and color there made list to what you bit

George W. LeMaitre

be will great. that course, Of

is our And are the profit around that so, and know this the reps the to thing all thereof. one world on all gross time compensated dollars all growth about

for volume catheters, get to have the to knowing factory. to been one also single-lumen AlboGraft to our of had things feed sales there our that, try we we our So, get and done trying

on said, We help bid de-subsidization. reps stopped Billington Head this it's there five years profit. so, all process let's Europe ago or prices a and was in the gross called though in even had so, lower and no January the X to show it's now, profit of now of transfer Frankfurt Europe stopping between And that gross real call

specifically AlboGraft the subsidizing and catheters. single-lumen stopped have the we embolectomy So

and single-lumen unit AlboGraft, a we embolectomy kind it a so, through in although as of as for probably manager there. going for a and a as right me our the transition it's QX It's issue things sales well are dunk, as And catheters profit-seeking relates little below your five to that's business that's business. reps is, get slam move let years for been in it's now our cost, in selling not paid don't

Joseph Munda

about the then that's last you current my – And I talked you guys take I the question, manufacturing we you some Thank out helpful. you. building quarter, guess efficiency operational manufacturing clean this inefficiencies built hold are at room, you start are a Okay, on line new of efficiency, guess, the when HQ, more going J.J., margin can to gross really in see forward?

Joseph P. Pellegrino Jr.

last we on processes gross know, there biologics clean room of is Joe, so. rooms, probably dedicated year, efficient spent clean main $X more out clean essentially of immediate million think about layout. we building There the expanded improved So room. a as and part as margin is headwind or a result I you an one two our But X.X% the then by

are better, that That you to little time one laying time. probably and Joe, from just improvements through, of a fluids another, not So products general much moving to but in you out lot I come areas. in process just are a think takes location people better

half this clean increase starts cost latter to room in biologics of in the buildout. from the that the year, maybe that of maybe So depreciation combat sort

So probably main little that room see maybe pretty quickly, then in a the that. than clean and you'll longer bit

fixed see coming over at [indiscernible] cost should few the underneath from of improvements next you some you quarters. that buildout sort So the

Joseph Munda

Okay, thank you.

Operator

I'm time this At questions. further showing no

and your the This gentlemen, thank great you ladies may participation conclude you does and program now Everyone disconnect. today's day. have for in a So, conference.

LeMaitre Vascular (LMAT) 25 Apr 182018 Q1 Earnings call transcript