Earnings call transcript Q4 2022

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Operator

Welcome to LeMaitre Vascular Q4 2022 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

J.J. Pellegrino

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

possible, our I’ll which and the will of within expressions. statements Harbor statement. of XXXX, will Reform is Act the risks U.S. we the Before make read anticipate, Today, Wherever such identify forward-looking of some pursue, subject to we to those uncertainties. similar using Safe and by begin, Litigation as accuracy statements meaning expect, we try believe, Private forecast Securities forward-looking words

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

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

measures A contained in reconciliation exchange. and our www.lemait.com. impact to the we well will as which organic gross of measures, include website, non-GAAP discuss of charges the Investor GAAP call and including in financial foreign is associated available this discussed excluding in non-GAAP growth is and margin, release the call, operating press special operating sales Relations EPS income, as this expense of During section

the call turn now George will to I LeMaitre. over

George LeMaitre

we Americas, growth end our expansion continued. XX%, $XX posted were We X% J.J. sales back shunts Omniflow, build-out million X%; patches up increase. bovine X% APAC sales QX, carotid and will up EMEA, up down QX. a APAC, number partially be our backorder up XX%. These topics. this XX% followed one, up X%. was were three MDR were Number grafts order. force offset both Thanks, by Number organic sales By project the the biologic I’ll by and on organic at led call product, increases in to in CE have filings. XX% growth was initial APAC. an was by of We by and On in which up up were today’s December three finished cover and largely headcount And largely two XX%, XX% due the XX% Rep count stood resolved head and XX% Americas QX year-over-year. XX, grew in EMEA XXX of Rep XXXX, XXXX. Organic

coverage this regional added meetings sizes lead to XXXX. January all first sales better vascular geographies We in kickoff surgeon January since customers. we meetings now Notably, will in also of Territory three we for in-person XXXX, are our and managers sales our think two XXXX. smaller, held

expect suggests $XX.X to sales quarter growth. XXX XX% record end organic with reps or XXXX for a we ahead, and XXX Looking QX guidance to million

also new our direct new countries. We’re QX, from opening sold office. we In Seoul products our first

worldwide. plan signed Korean XXth business $X.XX and international and previously our were up million in have and XX XXXX is direct distributor Our to of long-time market, we $XXX,XXX offices Korea XXXX. Korean about sales in net sales versus should our our now approximately be we buy Thailand XXXX. by a XXXX, term November largest to our Thai Korea distributor, in QX to Also we sheet distributors. two out office Bangkok a open

Turning MDA the see Europe, deadline to to MDR to were defer we legislation pass Brussels happy XXXX. until

filing the of with marks. MDR ahead pressing still our CE we’re However,

sales from MDR our nice quarter team, EMEA of applications, XX XXXX the before MDR our filed days CE our we’ll C January, we was the Pruitt problems. X FX CE XXXX. for shunts. XXXX/XXXX and the difficult a the received XX of first We final end recovery carotid a for mark Indeed, in have QX of now the somewhat file record

achievements. of Number the personnel XXX grew team XXX, of Dividend three, XXXX to over built and with call two, sales became $XXX. highlight member organically. LeMaitre Number X% J.J., Number like one, headcount the of we Index. we total several of manufacturing reps turning employees we Before Achievers sales I’d out several a to records,

factory to results including and and paying operations; MDRC undertook XenoSure the six, we invest Japan. applications, number and in off beyond. approvals, in XXXX and UK to initiatives continue with direct we Burlington. line regulatory RFA We in I APAC expansion Number in out build patches and albografts improved five, and to continue major China Germany these in a XXXX and forward look top warehouse bottom our

the will over call J.J. that, With turn to I

J.J. Pellegrino

X% were $XX XXXX $X.X QX versus organically QX. headwinds lost substantial, of we FX million in strengthening and XXXX. reported Thanks, basis to due million, increase be a in continue dollar an sales on the sales George. QX and X% to

For of QX margin XXXX, increase a XXXX, $X.X We decrease posted organically. of the lost sales basis we In strong the quarter. XXX an versus million, XXXX $XXX.X a gross full X% due XX.X%, sales on basis year year the to points were X% and dollar. of reported a in prior million

chain MDR XXXX, by this our our QX production gross margin substantially. changes, XXXX any XXX transition, increased XXXX. in in help exchange versus And the would footprint have foreign labor manufacturing team This and line dollar by labor QX issues increased basis and if mitigate will XX.X%. direct impact, related to gross margin points strengthening our potential been increase The decreased our product We force we disruptions scarcity. supply exclude we lingering XX% us manufacturing Burlington

gross And increased their hurt training production, has while staff we and our challenge, new has and unit the about a larger are our margin. excited inefficiency been

We should increased reflecting as Operating XXXX quarters, was income to in hire we year invest our margin expect sales continue operating favorably and reflected coming in many an $X versus areas, particularly in guidance. gross and as the correct this of margin QX team. million, our QX X% XX%. the in prior impact operating our this to expenses

and on now an continues by from QX $X of The in The million. and quarter our balance XXXX this offset to XXXX. an approximately end largely million in XX%. a the expect operating margin of end million growth ended $X.X end of dividends And at operations the was full we Despite of income was was $XX.X we to XXX, XXXX operating investment partially sales increase at to of million, the from slow reps. XX% XXXX XX% XXXX grow. $X.X cash driven of growth as expect with XXX XXXX cash of sheet of at $XX.X XXX. the We to operating XXX, result, in increase year and the expect We finished for year. QX XXXX with million the XXXX we and Headcount XX% in expenses by

Turning to guidance.

XXXX and a We expect $XX sales organically. XX% QX of the to midpoint million, of which increase at XX% $XX.X represents million reported

We $X to million, also million a of income expect represents of decrease $X.X midpoint. which XX% the operating at

implies per EPS to Our of $X.XX per share guidance a $X.XX midpoint of $X.XX share. QX XXXX

the sales midpoint For we both X% XXXX, a full reported represents and of on of year increase basis. to at organic million $XXX.X the expect which $XXX.X of an million,

also X% $XX.X the income to midpoint We increase expect XX% items. operating special an of $XX.X and of represents million, excluding million at which

increase of a of midpoint Our $X.XX implies to an $X.XX share per share, per of XXXX items. excluding $X.XX special XX% guidance and X%, EPS

turn operator to I’ll questions. back it the for over With that,

Operator

[Operator Jefferies. Instructions] comes first from Thank you. Michael question Our Sarcone of

open. Your line now is

Sarcone comes question Michael Jefferies. from of first Our

now Your open. is line

George LeMaitre

from on maybe unless we Michael like move he’s Sounds there.

Operator

will Our [Operator move question he Mishan is don’t now is. on. I think Key. Instructions] of comes Matthew The I next line from open.

Matthew Mishan

Can you good afternoon. Hey, hear me?

Operator

Yes, Matthew.

Matthew Mishan

Excellent. speechless. The quarter was guess good. I Okay. so people are

Okay.

the specifically with growth number. just the X% let’s from? That’s the start start and And what’s first How X? guidance. price? And quarter it just like full between more with the because no guidance actually, I’ll would really So Where then that’s break I down a is you think driving good important. year volume coming

George LeMaitre

price Give you on hike estimate say great to a was we I is various in X% for around think that. X% This our we on George. Xst installed question. would rough January Thanks geographies. the the

will get on and say, we price speaking, the X% would We but how see I X.X%, or roughly remainder not, volume. much

Matthew Mishan

Or as the regions, would most growth? then between to you APAC? the And and think Okay. drive you I Americas, kind do stay Europe where different the about of how expect

George LeMaitre

Right.

future outgrows never seen too Pac. It’s Asia the EMEA, say, up is which here just little we’ve outgrows a been the years Americas, we’ve territory sort of on in for is less course, in guidance, reflecting the new It’s Europe here X how geographies. in our what new by of that But and general, bit years the in X then would So the U.S. we for us, last I sales hard. really APAC break for

Matthew Mishan

your you gross Okay. you margin implied gross the I expect think ‘XX, ‘XX do I with Do obviously, XX.X%. you think pretty in versus XXs mean, that think as to at the than of fourth a exit back quarter like area? to And – get XX.X% high last was guidance just margin to higher exit do But exited like through where you trajectory then good course you question, a towards about ‘XX? the that starts you

J.J. Pellegrino

going guidance Yes. something around of that. giving with that, not up math But without interval doing tough sort that, the between like that math start I it’s the obviously, mentioned, quarters. wind just work but make mean you we’re to if fiddling I you you you’re doing to that think, of

productive? And utilization. the One is to working little of big operational but because it’s inefficiency amount ramped which manufacturing unutilized our to they Are the when they catch working working, two up directly will, proportionate that, are that time to DLs they want to you them we topics One the whether has that. so will it’s versus not as is size telling the do a productivity Matt, been of is take up us, for of it And I’m group. we’ve are reason time we fronts. other along an this the of on time that challenge something. actually And the

reflect numbers of in quarters your sort you how might that can year, we you from recover of operationally. the So through the walk that as

Matthew Mishan

much. very you Thank Great.

George LeMaitre

lot. a Thanks

Operator

[Operator next Stifel. comes Instructions] Wise Our of from question Rick

Your now microphone is open.

Unidentified Analyst

today. John on This good Hi, afternoon. for Rick is

just at a could tailwinds, what year headwinds, little to of what you’re color there. add guidance for seeing pushes you Just lower on to key look of a into off if start crosscurrents the higher you the you kind full end, bit range to gets a What ‘XX, ahead looking the are I’m ‘XX? end? as wondering the

George LeMaitre

didn’t. range, the This but We’ve well. you been there maybe new Things get to takes price in is this we a until actually a go the the sales actual try much question to we turnover we it’s that’s the $XXX,XXX $X I been hikes quarter, lower couple it here got what accelerate never months, are. the Japan growth. last with in of push give guess versa, hike that to I as But see know Korean Hi, of range. better. And That it I’ve why Those to make long lot turnover. And million question a close this is How it QX, How asked and of do a we see things George. the turnover help And worse. a But try off. could it is but like a you’ll the X like. sticks, carotid number. low range, the takes we us good we moving are of be will a It’s bit looks question. have little and subsidiary indication never got one. is only things. to quickly be force. it fantastic creative the Japan in vice in were very think that so all If you interest the much that if $X a okay, had would million really although it way, key. how if stuck, for a If is business, that reps QX, within that how It’s a wide takes how price taste kind with higher how of many put I’ll when parts. if is you would of It’s

sort our of So finding machine at worked. least range quarter, for this

J.J. Pellegrino

each you give four through they driving The another I’d or big year story. next their five to artegraft, valvulotomes, lines John, patches, own And growth and it. are shunts maybe restore lens look have product flow.

the the can So be lower to right extent stories, the that those the on the of be And range. of the extent won’t, you’ll end on you you you’ll that on all of range. side the end higher be

largely For that Valvulotomes extent be some but gaining that, some story And topic, example, etcetera, helpful. pricing traction get may mostly as days post acquisition. be of etcetera. will that unit George a pricing, artegraft the is these that to I is think There of sort some we talked the of about. well, units

there that focus drive those lower. us different are five will I So or product, by higher product think. stories to But on, are the

Unidentified Analyst

follow-up helpful appreciate really color. just it. And That’s I question. Great. one more

You for Is we be expecting a more guys should it for to from Thanks X% what’s be talked my taking steady the sales to expectation level put about you it questions. and to be and for in you there Last a now. adding more as you’re way you grew longer-term for at these line basically reps kind state as ‘XX, from X% ish that growth marketing about at line like like ‘XX, XX% term, On financial leverage? a is S&M ramp just a up? reach thinking should year, reps perspective? organic. we of a top rep want And

George LeMaitre

little We generally sales talk last mat of expense fix let growth grow employees answer that did the issues and just don’t year, op is to general year, and building to up bit XX%. op reps crazy, all committed but I inside expenses because like I around I’ll think as we growth. We up we’re GL heart can’t about the much you up of is the But XX%, went a kinds hey, were we more XX%. the special here. as really know in the Maybe went of, a last feel expense year. force were was op not all

will ourselves the employees as max of some leverage. putting operating that start And this company of $XXX on kind year. at think the a to clamp help we’re drive I So

And get sort think some And leverage. it the limiting less by grow think leverage. lost than expenses we headcount. I profit growth the grows our we And gross last X have point, used leverage. some to trying that operating at to over we I of of years, X we’re the back or hopefully, op find and

J.J. Pellegrino

said expense in I last think XX% had about that XX% or I grew op my year. script,

do full We’re of or of can this XX% with year you to we look looking can get at the to at closer gross OpEx there. QX the same you the with the sort a and sort assume did thing year guidance year impute XX% and that margin, cadence throughout year, just then

Unidentified Analyst

Thanks.

Operator

Michael Petusky you. of comes Research. Thank question [Operator Instructions] Barrington Our next from

open. Your line is now

George LeMaitre

doing you in how Burlington. George Mike it’s

Michael Petusky

on? I’m sorry, am I

Operator

You are.

Michael Petusky

was to Sorry, supposed I did not hear who be on.

Great. Sorry, I apologize.

today. call Xth Okay.

update So if already on pipeline. that’s or and I’m been asked commentary asking M&A there answer to Any forget, something anything say?

Dave Roberts

real it’s Mike Hey Yes. update. Dave. I would say no

the be with targets, continue in with to focused them. field open or surgery niche disposables There X We over lines, in on like to revenue. implantables, touch dozen million market. and probably of vascular are product and X legit $XX million low-rate devices, companies We $X we’re

area we’ve the hunting, target little of moral So sort expanded a bit.

growing. little a balance think is bit I as looking surgery, cash to cardiac report. little don’t We’re Obviously, bit But well. a I in anything in material really have the endovascular

can these I say, larger targets days. looking, deals, we do would margin the at on are larger So and we

hunting, to We don’t sign today. a I’m we’re just anything report. I out on but reporting have that didn’t deal So

Michael Petusky

since obviously, something So meaningful a I of been just you gotten a would needle meaningful, hard I in product... just track sort it’s can with ask graph. it’s where the more either any – say, moving what on like ultimately down assets the while Have

Dave Roberts

we mean, have I yes, correctly, question the understand I If Yes. evaluated.

think We of on that one assets a I them reasonable a have particular of of neither size. made bids in can couple transacted.

out they happen various and for still are they So didn’t reasons. there

what haven’t we I’d at price. found reasonable say, seller willing we anything perfectly just are So but a with, a looking,

when the our just and we something feeling pitch wait so our And right trigger happens. let’s and find pull for that will that’s is,

Michael Petusky

what price What guys On this artegraft, says. be level of year? share artegraft willing you you in would Buffett Alright. Warren type through to of increase put

George LeMaitre

Yes, we would be.

I going, have right than You I know what should. don’t it was was I’m exact the here less now. it really year. sitting I the think number

I think X% X%. like was or year it it before, was think And I XX%. the

Dave Roberts

year. it think last XX% I was

George LeMaitre

year. number not but for this apologize ask XX% I didn’t was fingertips year X% should. X%. that think you I having it like something I or that, know considerably to my at I reduced last

Dave Roberts

Directionally correct.

Michael Petusky

real like of rate the MDR, in it J.J., R&D mean lot that progress between was curious And the tax Does some getting to expenses and now then flattens, just you or Alright. great year Okay. sort R&D and so? sounds have guys on filings. that I made is a there related of or next

J.J. Pellegrino

that to guys characterize on on But Mike. be bit. the this quarter spend of thing. as high on We it that the yes, would it wondering that. still product to would under end little then Not eyed and officers’ were more what we were this way. up so And wide a talk I it the year going tax R&D And of was potentially I less a compensation – sort down that because increasing year, got little we are reserved would that the modestly, ago of on the credit about then were we the flattening, not it’s to like – we more kind we couple bit there for was purposes. development an of of years not in say increase, our tax of a little spend able terms at and deduct have control, were a some rate but

So, higher. rate the QX little was a

can XX.X% as you of sort XX%, guys. forward, us think of the Going

Michael Petusky

Alright. Great. so guys. much Thanks Appreciate it.

George LeMaitre

Thanks Mike.

Operator

Our Street from question Capital. next Brooks comes [Operator Lake from you. Instructions] O’Neil Thank

mic is now open. Your

Brooks O’Neil

I another Petusky, afternoon I bit because is on guys. than I today late guess too on little It’s finger Thank you. but a Good my was call. slower rare got that

new George’s of the event child the was quarter last think I coming say, to world. want to Just

glad this well on you George, and things your family, the back time. hope to I hear are am going with I So, call

macroeconomic is factors. question my sort of So,

big just lot. you for strength the a the had a the United and States? think said I sense particularly before a macro currency the but earlier us this are on, last on various outside how quarter, affecting results. I might impact you Thanks factors dollar got the have in business, give And can of some call

George LeMaitre

kind I going America And was our of this you currency But I of is a for reading through asked can about I XX% to American – Brooks, I there North maybe in been the get hospitals. J.J. little articles know thing. couple is handle I think after staffing stuff but now. business international, have

I months at staffed, in an correctly hospitals don’t months off reporting going of they sales and or two it’s fully contracts, it’s last the push made weren’t like But they time cases of the been do three always slowed like I get think the why months, are and help since and we our while and to we a bunch and staffers I we staffing starting or – because are are the off being four to better, staffed look to owe levels beds been used excuse long up down feel COVID not COVID around. have and go because staffing. being a couldn’t are about

think excited insight I quite the can maybe that. about feel are And that. we about some we currency, So, macroeconomics you from got And as has that for when on J.J. talk us.

J.J. Pellegrino

starts year in make sales. I guy starting cross. then rates million million, on down is something so year’s us change to a it So, rate last go us of it’s bad it starting are $X.X QX, QX sequential to for try was maybe year’s came the then FX the year-over-year this two full reduction or million up, that. I ‘XX, to about in weakening. hurt this like and because terms in $X.X $X.X then the last a And will Brooks And year, year, But way But dollar year-over-year. it turning guess, of for as in and here like those in

XXXX. into end you you starts year, of to And so help get QX, when neutral be the And by the are a it in kind year-over-year. of

FX year full sort the you think not of can for about XXXX. So,

Brooks O’Neil

Great guys. Thanks a lot.

George LeMaitre

a lot Thanks Brooks.

Operator

comes next question [Operator from Sidoti. Sidoti Thank Instructions] Jim Our from you.

is line open. now Your

Jim Sidoti

over back $X you million afternoon or backlog have Good that Hi. I never last QX taking looking QX the before. year years, and Is the the of question. X for for grown now Omniflow? am the years related guys. prior Thanks X to off

George LeMaitre

But not And sequential like that. are watching up it’s some it’s that precisely that to that right of that are cadence. that, there. you am that. not in happens. are you the us That’s a large a related No, rare I It’s feel glad pick no, we you quarter. it It’s closely to factor. very just of pretty following good

Jim Sidoti

Okay. What Omniflow how material with and exactly that? is happened

George LeMaitre

Sure.

In now the we that of in is transition to it of started product out make we – our running shipping bit from bump the with it’s and QX, kind sterilization of Melbourne, it out. up approximately transition, Burlington. Those January, when $X.X didn’t as million work mostly We it and got sorted So, it’s a a we and the some some validations. messed are a speed the we now been correctly. in we to European In hit used Omniflow little make product, Jim. there had and of qualifications of transfer

So, And headquarters shipping right are we our European we devices selling to are actually now. now.

selling so have $XXX,XXX think QX, was what we that are $X.X I in charts it shutout But if And that broken seeing, we remember we indeed or the it’s a I November worth million have million selling. $X.XX does December, quarter. of a from I something broken and and it. about in correctly line now great mean through product for $XXX,XXX, basically a sold and So, we was through, quarter,

have to to a that and then catch up go further. still little we So,

we are between against sales. isn’t stuff that and are it we because October. of to going did And sort to a that’s big So, selling going be – March, XXXX, such XXXX difference QX sell February we and in October now QX why stuff

an comments hypotheses. one good exactly because exactly it’s good from such to quarter. I the it’s of our last some Maybe question sort a hospital of indication of of don’t why what staffing a the not was So, We that, Brooks understand quarter. of making

pretty exactly price easy product valvulotome robust now junior sort one We hike which priced at a [ph], called valvulotome. regular priced on a of with valvulotomes it’s our of sight parity lines has always also been as have the and option

So, a hike which as price be a and little between difference we QX may got QX nice there, well. thing

Jim Sidoti

valvulotome. Well. quarter, you a my That’s Yes. Alright. air in to there. bit said good. come Okay. of you question had an Last to fourth next levels And related Did was quarter? the normal that pocket back

George LeMaitre

Yes.

So yes, that’s right. Yes. Great there. memory

think I And it here on, an on the air feels call, it nice up we it news I was QX. called then in wasn’t and but start that pocket sequentially. of XX% into better the QX is

So It’s better everything yes, than all repaired, fine. is fine.

Jim Sidoti

Okay. Last balance seems cash me. the two me. interest that to better other the implies Is The for guidance rates? growing just pickup in and a income

J.J. Pellegrino

up other income. Pick on

can two income op is larger us. see. you, income, is Jim, which there has One below been Let’s I improving down for drivers. interest tell

maybe intercompany FX, and of in in well. related FX so then so, there an the And is had and swings to items there given a a transactions other, impact little that’s other there. bit as is And the there pickup

Jim Sidoti

Okay. capacity And million now. quarter. last It’s equipment driving equipment the million what’s me PP&E, down maybe there? in new up the to to the on that the and around $XX year or and off It property around one back Burlington, Is expanded $XX the started that is in for then third million. dipped $XX at

J.J. Pellegrino

million spent $X.X we I in Yes. last been QX, CapEx. mean on have quarter, we – the

which spending I big yes, of the a too. talked significant, piece room We that other think to expanded probably that’s we about, but been cap. clean And is of trying on am larger have it

George LeMaitre

thinking saying hate million, have would people $X In million, I million because I $XX $X like or not… that’s the don’t neighborhood were of to numbers though, away Jim, walk you – that

Jim Sidoti

No.

year with total $XX the ended million property equipment. and You on

J.J. Pellegrino

I build-out but mean going piece clean get am you of I that back that, pieces a as to to can of I the answer. big room guess with Jim,

Jim Sidoti

investments? people So, you continue the capacity any have it it if demand that grow, feels without can handle so the and major to like in now place you does

J.J. Pellegrino

think feel happy I growth I mean Yes. like is we unit positive. are we already

company. And the so we it. have we know are We backorder are we glad no

And to and valleys the hairy a folks. anything unit inventory made in the cover expanded room bit able and Those we those that a so and around areas, be of sometimes. little had sort folks, issues manufacturing up of little growth clean by with because more have regulatory spikes peaks covered different expanded and size of gets the been have we can more

So, I necessarily but been for expansion. financially a nice purely, strategically, think strategically, not us really it’s answer that

Jim Sidoti

So, look years, this X you years know or back on And XX% X of get but going to are not margin. if are north year, you operating do the I there get guys think you years now at can to X place, in that some point the this again? close revenue grows years the or in if you have infrastructure next XX% X you that you

J.J. Pellegrino

to then improve at So the XX%, you answer. year got get XX% and Jim, some from full if you look the look year that you at the QX op obviously then margin, XX%, to full to and

think in I our on implied nice the So, some improvement guidance op margin. is

and play you you We quarters, interim would figure can try are the not to. get with but you giving it out and where

back XX%. to to That’s and be want would would get to that. say, we beyond certainly we where So, definitely expect I yes,

Jim Sidoti

you. Alright. Okay. Thank

George LeMaitre

Thanks Jim.

Operator

like Ladies would Thank conference. concludes today’s you. your to and you thank gentlemen participation. I that for

now may and disconnect You a have day. great

LeMaitre Vascular (LMAT) 23 Feb 232022 Q4 Earnings call transcript