LMAT - Earnings call transcript Q2 2019

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Operator

Welcome to the LeMaitre Vascular Q2 2019 Financial Results Conference Call.

As a reminder, today's call is being recorded.

At this time, I would like to turn the call over to Mr. J.J. Pellegrino, Chief Financial Officer of LeMaitre Vascular. sir. ahead, go Please

Joseph Pellegrino

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

read I safe harbor Before will statement. we our begin,

identify Today, we and which of to within as using will is to risks Forward-Looking some Wherever by the U.S. possible, the try accuracy of will pursue, XXXX, forward-looking Litigation Securities the make uncertainties. words we expect, Private believe, expressions. Reform forecast Statements statements meaning those Act of subject similar and such anticipate,

views are statements any should forward-looking of be subsequent today, estimates XX, based Our or and not assumptions representing as on on our as relied date. and XXXX, upon July estimates our

the cause statement risk or those differ subsequent SEC expressed information and to our recent the refer of results implied. could disclosure forward-looking cautionary factors XX-K the most regarding that to filings, and in factors from Please materially including

call, operating During A www.lemaitre.com. non-GAAP in and organic and section as the income operating we which website, of excluding charges. in one-time to discussed available well is call reconciliation the this in associated as gains growth press include GAAP our financial sales certain and and measures, growth measures numbers, this contained is of expectations, income discuss non-GAAP will release Relations Investor

now call LeMaitre. the over turn will George I to

George LeMaitre

X% up of Europe grafts million, and quarter. sales Thanks, quarter the drove the record respectively. in X% embolectomy record J.J. growth Both catheters, had XX%, In we QX, and growing dollar XX.X and allografts polyester reported and Americas

growth, the call. full-year our XXXX XX% up X% from at increasing last are sales guidance We to

X%, the XXXX well and over guiding X% of growth the XXXX. also we the sales are rates last sales for largely acquisitions for three QX XXXX are reported XX% growth surge rep have We XX% as responsible as sales The quarters.

ahead of million at grafts existing acquisitions two polyester pre-acquisition causing and also significantly and annual XXXX results. be are our seem in acquisitions catheters. sales of The in running to The embolectomy Cardial eight Syntel growth organic

Separately rights XXXX. the international as the valve you may recall, true we cutter inside bought in to

follow-up we HX with the sales watermark. rights, QX could U.S. a we Worldwide, reps, to sale. add believe in a $XXX,XXX ended a As XXX which July, bought high we

We presence as sales also the are opening offices aim we enhance more countries. to our larger in

Brexit Asia-Pac sales In U.S. headquarters to Western office in hope England. QX, opened office in a opened In And of we hospital. new surgeons warehouse we QX, our opening the Chandler, in and Singapore. we QX, Arizona by to and in Hereford, sales ahead get serve

Following the Hereford opening, XX we America and four Asia-Pac. sales Europe, offices, in North in in will have five four

HX version in an side patch R&D indications our directly competitor. Plus. launched our And to expect for DuraSure, current is to aimed a of we carries is XenoSure U.S. which and On XenoSure identical main launch spinal. but Plus QX we at thicker patch XXXX, neuro XenoSure,

As China, know, you large XenoSure in we of three also Korea. Asian markets approval to pursue Japan continued the and may

XXXX. enrolled, clinical now expect in we trial In China, XX% currently our approval is and

Though Japanese approval in in to accelerate begun reimbursement another and has Australian our XenoSure make filing to growth September have country. received XenoSure approval expect XXXX we We Korea. in that sales we finally And specifics. await

over it With that, I'll turn to J.J.

Joseph Pellegrino

Thanks, George.

the Our product and The recently period. down our margins with XXXX catheter stronger sales. export was and lower cardiac lower prior XX.X%, decline QX margin year embolectomy gross in the versus line margin X.X% was dollar acquired by driven

quarters, execute more are maybe bound for Our we typical projects of and those cutting range while cost integration our acquisitions. gross measures after several margins Two underway.

the we both applied also We catheters transfers be XXXX. in Australia to transferring from manufacturing are and Omniflow anticipate completed transfer to to HX to begun now embolectomy have medical We Burlington, Burlington.

special items. margin excluding $X.X was QX XX%. in income quarter operating was the XXXX QX The up In operating XXXX from million, X%

In These The operating and addition, bottom-line to excluding solid sales compare X% QX, expense growth the for be should past increases control. favorably XX% and full-year increase special. are leverage by XXXX our guiding a we increases growth. returns driven operating of quarters in income and mark

we dividends For margins million million. stock million ended QX were XXXX of partially of net working cash quarter. and uses XX.X increase the expect $XXX,XXX by We in was with driven during by the offset which exercises, option of full-year, income QX $X.X in capital operating XX%. and an increase of $X.X The

of $X.XX Board dividend implying our yield Directors X%. approved of the Separately

at XXXX a sales QX of XX% on the and million, organically. basis Our $XX.X XX% guidance represents increase reported midpoint year-over-year a million $XX.X

income QX We $X.X XX% operating as of increase an also million midpoint. expect to XXXX of million $X.X the

$XXX.X our representing increased to a million and of increase have XX% a a organically. a million reported at full-year sales the basis $XXX.X guidance on to X% midpoint year-over-year We

$XX.X expect to million also income We operating an items. be full-year million X% $XX.X including to of one-time increase

operator that back for it With questions. will the I over to turn

Operator

from first Wise Stifel. is [Operator you. our Rick And from Instructions] Thank question

Your line open. is

Rick Wise

gentlemen taking Hi the thanks questions. for [indiscernible]

wanted on share one you to the is you procedure customers? this increasing maybe are with expectations mentioned in just little they touch above actually wallet some are LaMaitre product bit of categories. other on more start a seeing LaMaitre the that Can you growth surgeons thing, maybe Just George and organic the are board some acquisitions as causing recent to going your of more, or that on growth that organic

George LeMaitre

are France something is general are remember devices. happening about it’s house new thing acquisition the acquisition the really our house Drew which what AlboGraf largely we into AlboGraf leakage to French in our ascribing you we called was has former in the type brand a Python think with word it brand the Dacron so of acquisition, more Dacron a I applied good the calling we Daclon sell than the nice and Syntel, our the with medical and same from are the and latter of happened is we seeing and

the you good guy acquired growth and are organic they the devices embolectomy as from embolectomy leaking had. into in are into well of reported envelop that brand devices are and those bought we also getting already getting our good growth then you We so guy catheters

Rick Wise

restore Got it touch just flow. and to on

I think discussing in bit second point? touch all to quarter on was and looks some through of could the you improve second just April it what saw dynamics maybe but issues a the is improve last it throughout how the you there you at product and recovery were through continue quarter the did it have like you with unfold that of RestoreFlow worked quarter, this the challenged, progressing

George LeMaitre

cadaver our beginning started for question, issue our was gotten weren’t or we we whatever on not very and veins, call after feel have the the us long have yes, gotten Okay granting think our the I able of sell like to us, sourcing at at you early these of beyond of the which I of cut XX behind we sort it your end end source XX of allowed that or people. the enough acquisition now to centimeter gifting product our to them now and to issue is

was said giant we And said we call it's a tissues this now, early thought is I my and Chicago think in I played force we out enough lot the effort But got like tissue our think gosh, they vascular beyond it a at thing have now out that know January we backorder God it we February would, in a the late and place the sales galvanize you have entitlement so factory. where so today nice it of bank one we don’t or product, a done. oh are we what

going up are sales now and product that. as enough have We result of a

of months see but and new been Let's it's for happen what first half fantastic. next, this four situation, the

Joseph Pellegrino

this flow has lost year QX, new rate original bunch JJ, and think quarter and our and we of week increased a on And organic a of recall we the you store is ago lot. about large growth the talked a or is very that customers customers sourcing I a

so around customers product it's now up were we from I dramatically think where when a acquired active or we line. XXX

going over the growth helping that So was purchasing healthy customer as topic hump get new which on a of in there terms on side. that us well is is to nice

George LeMaitre

XX% AlboGraf service organic categories. the QX in is

Rick Wise

Great. And housekeeping last just question. one

I an by you your think mention miss did headcount provide I salesforce geography. But you I sales heard offices. updated

George LeMaitre

I��m in Europe XXX board in growth watermark. now, give too on it Americas, right goes it’s high been comes didn't I George and Europe XX and a about of happy of XX lot the in a XX is hope I it, the it’s a lot a and - Asia-PAC growth Asia-PAC.

Rick Wise

Thanks much taking the Great. for questions. s

George LeMaitre

you. Thank

Operator

you. Thank

next Genuity. Mills with Our from is question Jason Canaccord

now line Your is open.

David Rescott

you hear can Jason right? for me Rescott David its George Hey

George LeMaitre

Yes.

David Rescott

at in contribution growth within are done was the where are well up would first on guidance mentioned of from coming how you kind acquired the acquisitions, as products parsing acceleration to that contributions could kind those as new if recently know far lumpy in in going new finding the guidance acquired thinking of past see forward you whether excepted you able start or going forward and the know first be areas the products those as least to the the be wondering think so I I and different you Want have products as as about legacy differences the and quarter you the from.

George LeMaitre

that, in the want? first of down, is you lots that what those Okay, question could dissecting mind you question questions

David Rescott

Yes.

one the there, there acquisitions kind just quarter. first was the was in there. timers the out of I anything break guess would know So I be in the can on what kind what we of contribution

Second of one about come of kind growth of and going show then acquired would the know growth are to will any three that be are it new that being areas thinking or products which is one majority the be kind of and forward you how acceleration. whether legacy you those third product going the where launches from products,

George LeMaitre

Okay.

with first going two. I’m So up

Cardial XXX QX. add XXX,XXX about you you just XX in applied acquisition what in number the are that the The asking. and and if about want and gross was in So QX the was XXX acquisition if will QX was

the And XX% guidance I going there of growth year is to on also you in is be I then are growth continue think acquired or the say asking acquisition, heard about what it is going reported would I growth, X% that and forward, to sort and organic. organic to the

petered an anymore. out So that isn't acquisitions say according there see we for those is some from two X% it's in them. story from there. QX, kind of the QX, mostly very Remember, since QX, really the is in bought organic by we in to then Company what growing And could contribution acquisition QX, you year. late early It's And here. much companies there

David Rescott

volume of about Okay. you it And think via that kind you as have that going well past, been ASP have you to how as Is thinking growth I increase of kind are able derive another well? And increases follow-up forward as well. [indiscernible] kind mentioned growth. then, I the in of as

George LeMaitre

Right.

at looking units, XX% exactly say the would I But and pricing business XX% from our of that. on XX% comes look QX, we from growth guide at give wouldn't did business I unit, So XX% The that. pricing. with

David Rescott

one the more And CEA. specific then maybe within

saw I around. know, affect competition if it [indiscernible] product provide in? coming we kind are you procedures. any of So data really, of of some kind lines? around How thinking And about Wonder you of your your thoughts could could TCAR where

George LeMaitre

Yes, I think is in USA. there the question no

no great We with in the line. is gets and will that adopted endarterectomy of is question that area are and the product our business. affects it doing shunt how and our see we product how But shunt, technology carotid there

the some a is And there stock is well. way company coming people of shunt, and lot quite of data we say, setting and doing this that on is a they out. better So sense,

us hasn't yet. affected So

what going We to surgeons next. happens do. will outguess hard the see to It's what are

David Rescott

Alright. Thanks.

George LeMaitre

you. Thank

Operator

Thank First Joseph our with And next Munda from is Instructions]. you [Operator Analysis. question

open. is line Your

Tracy Marshbanks

some for pitching Tracy me Hi questions Joe But here. Marshbanks for in you. he guys. left

was could quantify in the first So percent quarter? one the a on, as the of biologics you revenue

George LeMaitre

about are quarter. And about is prior XX% XX% from in Biologics the in sales that So up the quarter? of

Tracy Marshbanks

going really Okay. gross between your on from gross improved on? mean, was margin various it integrations operational and you And and you activities then help coming the outlook quantify sort outlook? of I on the you margin is on other But are touched could a bit. other question the where

Joseph Pellegrino

Yes.

good margin the last year up and increase, beat a most and guide, So in little guiding Tracy is beat we XX.X we that QX, that the are would get we cranked I is production QX up our really, from gross X.X% from the for is of seasonally know, And which over some as oddly should RestoreFlow you And last little year. from bit the quarter. typically bit. say might had better guys a

and will And mean, the some there well. we P&L, back on it sheet makes of way balance mix helps and will that there topic I declining. the and onto comes some of on but it's that still maybe get still P&L to to a come the is us that

Tracy Marshbanks

might do from market you that and have talk launched Xeno okay. is feedback, feedback you how bit going about if Could Plus. any you that a little don't. and have you Right, Noted the when you

George LeMaitre

Yes sure.

have seems to we product. have we trying about We say but little it XX our going a I are some, cases. done swimmingly, to would replicate have to we seems Everything XX be very or competitors be -

is We big but right the see as competitor everything market now, love we rolls has the it kind have have is product market it, with out. and we of very our and leader happy and a so own that in who a big will chunk fine the it’s we surgeons seem also it

Tracy Marshbanks

facing? will are the a and company one out your for And acquisitions ability that you and there additional last maybe both you if landscape thoughts readiness on your as

Dave Roberts

The is $XX quarter cash. this at million as very of but another good is it’s always remains full, Roberts. the did We pipeline couple think just I weeks with We level, strategy as of the ago, smallest the Tracy looks acquisition ended same. a a been. Dave the Yes just ability high

know so are the before and year, are we wait until situation a You normal, but about the valuation bit maybe higher we an than see very close we valuations little acquisition hunting, so deal. always a the do only dependent will we right we out

Tracy Marshbanks

much. very Thanks Alright.

George LeMaitre

Tracy. Thanks

Operator

Thank you.

Our comes Research. next with Michael Barrington question from Petusky

is line Your open.

Michael Petusky

flow? evening guys. guys numbers give but have Hi for valvulotome's XenoSure, did may store good you growth this, missed I

George LeMaitre

reported XX%. is give QX Xeno was to you far I valvulotome what given flat and I its think X% organic, so flow X% we have other store or numbers organic it’s X% Happy the like the think reported for only one was single-digits -. one to

Joseph Pellegrino

Xeno. for organic X% about

George LeMaitre

Yes.

Michael Petusky

you the speak there? I As current to thing XenoSure, can color mean a that around state to the can there you any is competitive give pricing sort of and and of extent issue

George LeMaitre

so saw I lucky Sure a educated in It I’m and this to me I'm to I week of on we specifically share market U.S. as bunch be. like just feels the chart last share might have we that and could of year had job issues in good a last so bit the market little and explain a wise there. is some half do and the down market the that continue

at right us. two of In as the is market and Europe us enjoy great XenoSure, in the Europe as much and going That going we better don’t where we U.S. for much share. ways on Europe. look for It’s tale some in cities

in rate number in is Europe growth organic to is like nine talking I one me five it’s one-ish, and I here. for more - help it think while Europe six we or its The U.S. I eight and - mean the quarter, someone the in then are think

much have Europe. we over in and different very a So market lower share

in you it’s U.S. U.S. than a the we get in XX Pricing asked about way you we do competitors pricing will have pressure progress. In definitely so Europe. and so various by to we good the sense more we into like go the the the and to or feel make harder more

doing are a out lot of price there So competition. we

Michael Petusky

think good takes recent I there. about sales and like get way really that hires surge. very in okay anything quarter it and these feels now three, we maturity speak traction. for mean four away Is on a reps in or from fairly mean two, terms you it to sort I Alright sort to probably of latest quarters of can guys George guess I still it that fair two full or to of then the are

George LeMaitre

Yes.

have seen last X% the quarters. and that know growth sales are this we call in X% three now You saying we XX% in

are - fill could to this two you crazy, feel always once little you think territory so like feeling but years a take going. bit, like So and really, sounds it I are we a I'm starting really

in starting got So you that feel patient, does it it, guidance some as but giving it around to are the takes to all it a I to about feels well. start just feel be you other and long-time, we good can think we good we are here sale

started I there I think have to yes feel coming more So, think on. we still it, is

Michael Petusky

Okay.

Joseph Pellegrino

about Mike of lighter little you and been Europe feels kind the too. maybe feel in sales it’s that you one bit numbers can been it’s in strong that our Europe and flattish, ramp is rep really some more in really Americas and hasn't feels kind pretty know been piece dramatic, there. other there is And Europe a correlation

George LeMaitre

U.S. meant to he feels lighter say.

Joseph Pellegrino

Yes U.S. feel light.

Michael Petusky

Yes. on that. I tracked

Okay great.

chance for comp Just quarter have one the and more by housekeeping and any you based really this for CapEx JJ. the handy? Do stock is

Joseph Pellegrino

are you or do I I it Stock feel comps like CapEx just for so. wrote want down you what G&A? XXX,XXX, based

Michael Petusky

CapEx.

Joseph Pellegrino

G&A and XXX X.XX. CapEx

Michael Petusky

guys, Thanks appreciate I good. it. Very really Okay.

George LeMaitre

Mike. Thanks

Operator

our and you next question with Capital. Takkinen Frank Street Thank from Lake come

now is line open. Your

Brooks O’Neil

or put this ago company the ready afternoon that on that you aggressively George, you up are just some I in you might quarters say commentary time, that are number. guidance Frank. call to and LeMaitre a would I think for still that growth for declare to of back to would Brooks from for of period few growth is working XX formula you stepped had, is I’m historical kind you the back would missed you some are say we away find back the get curious Good where to a I but have the XX

George LeMaitre

remember Brooks big is way this a topic. by the I

appreciate I four phone think three staying calls so on with topic. you or ago the you,

then lot and intermediate learned I of think we with what that a that. of like in interfere XX, things conversations what term one-on-one learned it was room we guidance the XX, with broad

lesson if we and stay the ourselves, so and to go lot we go a could feels intermediate XX, know it’s term. XX, don't it are longer back XX, better or it's sort should to know or ever we seven XX don't if year we I this going I So XX, Whatever of within I'm stay think XX sales. that last year within to year going learned be, a than this whether ever I guidance, to it back XX, should

year adjust And think items. I for up I the forget was if five last out you all negative - two,

it story. we about XXXX feel end a feel I keep we harder a comeback lot like you that think shy figuring just is. of we And then is the little beyond So we the going gun out a is nice seven are crafting bit divine future but it as XX, a to think

back thing, go to going of the is are future we knows doubt I to maybe uncertain. type that who So but

Brooks O’Neil

and you a the just are about what opportunities marketplace regurgitating better you are put feeling said company you you going forward. in run see you the Okay. elements I'm to positioned, said, how and you But together the the company feeling lot the is

George LeMaitre

to the a feel a haven't top-line seeing at with seen you Things in right me you seeing great LeMaitre out double-digits are X% income the XX, now growth. and at for are of guidance guidance And while. the we

going are J.J. not you not correctly. - because seriously. make in good worse to sure, are feel really better we we We we a two guidance But or based - I room know I forever guide and what than conference to on the trying I how So do we guide, spent we to locked be. feel days take used

Brooks O’Neil

that No, no. I'm are positive and better, important going things lot you better. thing. It's are And and glad a good. It's a really is feeling

So it up. keep Congratulations.

George LeMaitre

question for Thanks the Brooks.

Operator

Thank with And Roth is next our Scott question Capital. you. from Henry

is Your line open.

Scott Henry

like It results. afternoon. looks good you, Thank great

line. looks of mine always quarter-to-quarter? first a I still a as going have product question in I XQ But be lumpiness they Very an on trajectory The Should a little quarter guesstimate. strong can the basis it questions. guess - for will on couple had that or sometimes new RestoreFlow. about lumping asked. But line. looks number is forward a quarter like it's be think Most some based the record that product a been Just the absolute

George LeMaitre

to the question customers a us a RestoreFlow. to is and little this confirm record is number answer it harder The for bit understand. quarter? So is, one for quarter yes. fewer you, of It I was a with the agree is record

this It's we small large definitely one, where have valvulotome customers. more On like hundreds not we have of business, the and LeMaitre customers. hundreds

reliant less actual we Although, our it the than on of model RestoreFlow what we call that whales the model company large the company. from bought is

with So nagging solved I a issues of don't was for except bit and it's lumpy. about it. we that little I RestoreFlow, what last the XX% future quarter. But have two had up think supply some we you know say just the agree It a for sorted were us to the the you, out record I years.

ago systems around So I would say all RestoreFlow.

Let's our don't We fact happens by the vascular of mutual that a We guidance next. fund love we product are line. devices. see what breakdown

to exactly down well which try don't break do for to product guys. we and is So well not you going do

looking bit. are at we course, a that internally Of

Scott Henry

then one on XenoSure. question And the just other

you mentioned numbers we start that if right new even on-board. get products a up. plus from start goes? they we You and should are kind or at going far think when accelerate where Thanks. should growth, sustainable it to growth a you of as around, minus But to as come think of slightly point out forward, we sense flat category to are have trying or kind Do small coming I'm about just of

George LeMaitre

a Right. organic I coming on XX% X% hard with Again, and I’m agree read. don't reported we It out is putting product feel with a any guidance expectations and it. comfortable We But lines. feel specific you to here.

something say. put kind what And in - and of rather somewhere happens let's well. see there, I see going is so would and not But I that wait in would QX

Scott, Sorry, not is that but what got. a is answer, satisfying we very that

Scott Henry

alright. the thank Quite for you you for and the taking thank Well, color questions.

George LeMaitre

Thanks Scott. a lot

Operator

concludes And I that you would may you like disconnect. participation. now to today's conference. thank great Have a your day. gentlemen, for and Ladies

LeMaitre Vascular (LMAT) 24 Jul 192019 Q2 Earnings call transcript