Earnings call transcript Q1 2023

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Operator

Welcome to the LeMaitre Vascular Q1 2023 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. ahead. go Please

Joseph 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 X, any based our not assumptions our estimates or be subsequent today, representing statements date. views as XXXX, are on May 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

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

call turn now the to over George will I LeMaitre.

George LeMaitre

price and Thanks, J.J. units. XX% XX% X% QX, grew Sales in organically

XX% regions was product The APAC increased X%. XX%. XX%, were shunts largest reported five the and Valvulotomes allografts XX%, three was up XX%, patches EMEA Americas geography, Our led XX%, carotid growth. all up up By way. grafts and up were lines bovine XX%, carotid

LeMaitre was QX felt movie, specific already driven were in and we volumes sales larger sales you've heard saw partially items, the staffed a three force growth by QX up At But pricing, All like on new levels. competitor we Once. as also improving the environment it The least macro ORs At growth to Everything Procedure pre-COVID Everywhere from a hospitals increased stumbles. about. their in line,

realized from and we a European QX, In price domestic increase our shunts. Valvulotomes XX% largely

We plan flavors, year-ago, the on XXX And European reps end backorders XX% year did abandoned we to which also we two and sales stumbles, March finally, more than and to a XXX benefited with we QX, had XXX came from competitor in approvals. MDR in reps. XX,

their costs next-gen many the While the several products backorders to gaining of competitors withdrawn Europe of have marking. high due resolved, have from CE

update Seoul million. in our I'd XXXX. ex-Korean new the expectations, Asia and office should a subsidiary above efforts previous This topline double turn XXXX to we historical sales small about profit running. is of sales our $X.X are to volume on the now continued an This should trending expansion and give a Pac, also in like distributor. is post up Korea in

recently selling QX. we to to market. buyout distributor, will the our This Thai agreed be XXth plan Additionally, in hospitals directly direct our to Thai and begin

use in In to we carotid XenoSure for for the approval additional expect APAC-related Japanese other an QX, indication artery. in receive news,

artery. usage annual for use for indication XenoSure so the is in QX be carotid artery, Our could in the million, Japan femoral Currently, market, only Japanese run typically XenoSure whereas $X.X rate salesforce XenoSure our this meaningful. worldwide is in additional of

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

David Roberts

the we during two to worldwide product be XXth, Aziyo patch the exclusive to signed three-year business acquire an U.S. the a of line distributor Biologics, Thanks, George. their year with agreement option the year On three. or with cardiac April in

products the $X.X were sales payment. inventory there U.S. Excluding upfront initial purchase, XXXX is these no million. of

designed cardiac expects second-generation full-year Aziyo some XenoSure to in surgeons. sales surgeons. anti-calcification record used Aziyo primarily CardioCel is tissue. primarily patch used XX% a clarification of to used Aziyo a our surgeons. into by several patches is the in by XXXX LeMaitre resistant portfolio, a with porcine have by margin. cardiac patch million vascular bovine We perhaps is first-generation to is and be warranted. is bovine third-generation to the now $X.X gross infection remodel $XXX,XXX healthy and in QX patch

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

Joseph Pellegrino

Thanks, $XX.X Dave. organically QX were on a XX% an XXXX XXXX. and sales increase basis, versus million, XX% of reported QX

In are XXXX by full-year a and we margin posted hospital sales growth headwinds efficiencies selling mix. manufacturing We volumes price begin flat as expect increases FX to as for year now moderate the organic versus to product gross XX.X% sales offset were guiding average of and normalize. as we QX may XX% prior period procedure XXXX, unfavorable

Going half of addition has personnel already MDR margin chain inefficiency, to staff hurt This in margin. one supply gross team direct Aziyo our and the changes of about in product mitigate by disruptions. larger has of product forward, will X%. line gross helped line XX% issues by XXXX. manufacturing which has our driven the increased increase related labor us We the the transition, this however, decrease Training

XX% guidance begun have we for gross this in improvement Although to full-year. is the area, see margin

commissions operating surpassed quotas. increased of QX increase XX% reflecting sales due Operating of versus QX was income as sales XX%. million, XXXX in expenses was the Much prior the $X.X QX an significantly margin to higher year. operating selling

XX prior sales had our three regional year we meetings. reps January more the addition, and versus sales In resumed

we were CE up costs working as in our the marks. XX% quarter, obtain continue to MDR Regulatory

December headcount we expect We XXX expenses the as flat slow March Indeed, through operating from the XX, of was XXXX. year. XXXX to to move of XX, growth

charges EPS growth For the special an operating we full-year expect XX% XXXX, XX%. of margin of and excluding

EPS in full-year and QX and QX XX% excluding the and release, our of full-year. in of press growth XX% in sales charges of non-GAAP growth QX in see the full-year, organic a sales please and growth XX% reported in include special and today's few issued highlights XX% XX% full-year, reported in XX% in guidance, in XX% but the business EPS QX For XXX% the growth of in outlook

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

Operator

Mishan first our Matthew question from of [Operator come KeyBanc. Instructions] will And

Your open. line is

Brett Fishbin

Fishbin is This guys. Matt. Hey, today for Brett on

wanted the quarter. Just quickly start to on

of definitely touched at You outperformance three driving the key level, the some on high the topline. on of drivers a

if you wondering like in surprised a expectations, around on what seeing year? the versus then the the type little maybe maybe trends where versus a bit step Americas you up specifically like of Just you took outlook just and expand what and procedural into were coming EMEA, were else could

George LeMaitre

KeyBanc So think in that, it about place Brett, And Thanks the got this right, swipes If credit XX% welcome data report I There it in the this USA hospitals. for versus of Actually, guys, to fantastic take all. credit sort is hospitals. says QX sends you a question. was around card your me since QX. swipes you're by I looked more George. card that the the correct out at these you we when team sent KeyBanc in way,

we worth it we're worth So $XX of QX, In medical $XX I medical where XX% strong of million million Americas. was QX devices. we devices. a between sold sequential think change very sold again, And

So us. this The lot hospitals And think captured it where and I for procedures. a data your of are business doing for happens is open what's happening.

Brett Fishbin

driving a you price terms step in just been that you something the the guidance? just Like, increase what's then seeing I as seems uptick really guidance, you to expected to – are initial an is lot on well. the it. Maybe side expecting volume in versus continue of upside that in the are some actual outlook? upside on But All volume have me It how of pretty driven might looking at ahead also XQ up. And the in helpful. quantified by right. based a like nice was That's you

Joseph Pellegrino

Yes.

with I underneath robust you So you're another. full-year, of think the out. for particularly It one probably in form or issue and drivers, quarter the That be may seems quarter me. the not topic that. mix if to a sticks XX% thinking There's pricing in

maybe be So but the maybe that, see. hospital think there's procedure return some over going normalization time. we'll assuming it I it's to But not to quite we're that piece, is,

be a in there'll bit step work that topic you a sort So backlog a QX. that, of there down and through maybe QX in little QX and was in of

for but Aziyo the still, levels the elevated distribution like And then the is agreement. QX. full-year in So saw third you piece not

$X.X So sales from million year. maybe in of million coming the $X to that

are full-year. your the I big as chunks for think guidance those of So think you

Brett Fishbin

the And actually would little All of thought of I that expected right. by a from bit and tailwind then resolved Really it to know point. a of some end was last there clarify just be question, you the helpful. the Omniflow backorders, XQ.

quarter? much you go So And a could quantify tailwind much. away it very like to of Thanks that you possibly quarter? how next still this was expect if

George LeMaitre

a lot. Sure. Thanks

Omniflow year-over-year organic an basis. and X% reported So basis grew QX, X.X% on on a in

the largely to things bit by the So are be a came at that But ended a with this on the tailwind. backorders. holding that beginning $XXX,XXX specifically we little largely improving. into the QX And some end we're then we backorder in will the of year-over-year cleaned and of facts backorder, QX. I real would in $XXX,XXX approximately estimate say for with year of year, still Omniflow backorders, here,

cut we've up pushed again, to was – X% backorder. So extra to here, through that we've $XXX,XXX year-over-year that helped it But – go an reported.

were didn't to QX. at So help but us really suffering nice like be what in not we all, was it

Brett Fishbin

very All Thanks right. much.

that, up by Thanks that again, not clears driven taking of the probably anything that think beat or questions. much was I for one-time. too the

George LeMaitre

lot. a Thanks

Operator

And next our question Rick will of from Instructions] Stifel. come [Operator Wise

open. is line Your

Frederick Wise

comments. and But touch I three missed Apologies, want it but I everybody. maybe to juggling commented so afternoon, your on salesforce. the very you Good George, the on I of wanted I tonight – it, start was calls

assume about all here, XXX number, do this have little end are and a you the this the a right had quarter, I right there leverage have your if of attrition. normal year does You I the are year, lot as the this operating moving year is the equal? what a unfolds? But things pieces of appreciate suggest And more and thoughts reps you at that maybe number XXX just

George LeMaitre

Right.

And so to to XXX the to we're that we year. right had have XXX saying And continue for be that XXX things year. is reps around at XXX one here, end plan we Rick, the the the of we now, of

reps So of be or year. the the sitting there's still, by end the nine on let's seven call more will it, P&L that

if XX%. we or and of, for margin we're And year an the X%, question. it think there, if X% get about the your I I So that's know, think I for do if keyed What's XX%. a guidance, not for op don't of that's looking don't we addition I at know I mean, posted in that's have part leverage, that we many. but

QX. are We in that right doing

Rick, so leverage little answer a your question, And short here. there's to bit of

The that on to only we And employees. the is focus that had XX, XXX other also. March fact at wanted we with I we ended key year employees here think XXX

hiring approving growth, requisitions largely. down but in November headcount, just headcount not last And We slowing of October, reps, began all about so stopped of the year. really

I better And and so leverage need the report. we what you're end at in QX of we're slowing to down than get we're think the seeing year knowing the

Frederick Wise

on is have for it and about Can you us the it. Dave, you're third to the able And a clarity that you can Dave. effective. was opportunity. product? gen. clarifying Aziyo a Got the now be second, done you certainly perspective patch, with Maybe going – that great think clear a what patch you and reps, opportunity first, just hasn't quick on do question I'm the about more And been give be potential more some to maybe or

there appreciate better appreciate color more any Just the us opportunity. – helps that

David Roberts

a LeMaitre their the a about dozen so Rick. is had own which have, through primarily – of Yes. sales But a was used very in for reps question. had – pouch. that channel channel direct independent was Aziyo is product of biologic Thanks interesting selling EP to maybe agents. they and handful a primarily which they these selling relatively or plus small Sure, patches different

product. them their so to sales strategic that efforts And on really was for choice a it team's focus

and a relatively they recognized in So a has salesforce States. were home LeMaitre the they that looking large for United

Americas, sales XX have reps the U.S. so about We or in XX probably salespeople.

and with vascular And surgery and selling both of patches. with familiar course, peripheral cardiac very the XenoSure CardioCel patch space we're

that. interesting very the just body, it was have good when resorbs benefits a in neither a So really which our of a – we does if one and it combination. it's it patch can implanted lot properly, of patches felt like It's

So we're And pleased it's have a signed good agreement. distribution very to very fit. the

we're you're see and excited We to of yes, that acquire to have goes. it an option where aware

Frederick Wise

us preclude any anxious M&A? other And does that share from in with I you're way deal plans. know pursuing always this specific you to your

David Roberts

is No. I first into upfront well, transaction the mean, the actually now. We complete put of cash deal. didn't all, any

it affect So sheet didn't balance at really the all.

to expected described. we've we accretive as fact, In be

balance our improve should deals. it future anything, sheet if so for And

a very with having terms an future so in And bandwidth. always acquisitions, we more came it was large interesting of when potential. deal cross-selling that's good Something – it of fairly inordinate didn't it is is number absorb frankly, the customers, do which amount straightforward, of

hunting no, the were I deal, so is we don't answer us down And and this slows we're all. it before think just out there at as

Frederick Wise

for last Great. one a me. And just

Just the the price saw about things. to maybe what procedure commentary growth out a of versus little that you help thinking the Especially, quarter, extent more sort in the overall? quarter on the price volume aspect did versus of recovery in we

Joseph Pellegrino

Sure, straightforward. Rick. make Yes. up Price It XX. was and to unit was pretty XX% was that X% growth

Frederick Wise

Thank it. much. Nice so see this you strong to Got start.

Joseph Pellegrino

Thanks Rick. a lot,

Operator

Petusky will our come Michael And Research. from question Instructions] next Barrington [Operator of

Your line is open.

Michael Petusky

business business other in guess, that me guys I way start. evening, there Strong have? risk CardioCel Aziyo that a you cannibalizes is Dave, Well Good or the any quarter. let guys. done.

David Roberts

primarily and understood are negotiated on this, cardiac as you Aziyo also. patches out, But The we pointing they fully Aziyo patches, as is with are CardioCel that.

idea support with I those that and customers current a is the products. So current using Aziyo, customer or CardioCel the current using when customer going obviously, a customer think have to key we new a we're then is is

are are who customers Of neither. using there lot out a course, there of

sales so reps us, just And our customers. extra it's for cardiac specifically present those for to optionality surgery to

as see supporting like really see each additive a forward. I it we'll don't going of the customers I And it bag. So I set conflict, as said, be to

Michael Petusky

on in I or just part this it's that this on but this type XX%? were mean, on category, but sort big And a was point you to increase Can while there you of describe, product Awesome. – guess guys of growth had get me. to a price George, guys had you price can a this. wants it, just in to guess, XX% an guess innovation possibly to not able weigh to I its just what's is product mature anybody Valvulotomes, stunning or I was in raise it of of I life that at speak cycle? underneath an how

George LeMaitre

Sure.

go first. action there's I price, Maybe out, still things. here mostly And it's some couple at a you're unit So units pointing as but too.

of last sort gasp January it the Omicron, Omicron. that a XXXX remember was of of was You

guess, of XXXX, XX%, And so in weak, sort maybe you're don't that X% I of me, can't QX bit and QX XXXX something January was getting a it's lift. excuse in a of XXXX so what versus I like or this of is know little it normal. XXXX, even was January because

So bit you get a little of that.

So there's some of that.

Valvulotomes, look But for QX annualize me with unit here. at even if the something you and you like, are seeing don't number we I and the them have

year. a it's not is a versus was unit We One December. reason think annualized Valvulotomes like typical. don't possible in X% rate grow or study growth something that there them I last That's really X% published important on much. very

saying cardiologist, usually you and radiologist a and it's Valvulotome possibility I Although BEST-CLI with don't than this and putting surgeon that more this the this is the do it's and angioplasty know true, bypass a just to saying, And and in is – coming durable bodies. stents using is called balloons that is BEST-CLI. a

a study. published it's in The important England that's us. very helping Medicine. was New out. for big Journal So Very of Maybe study It

in XXXX. And Valvulotome. Eze-Sit we finally finally too finally old this complicated the the year And said, know on it's the and here, then pricing, Mike. bought this to there. year, see one price It's not the on – you couple into customers Valvulotome are – for so one Eze-Sit – the then we on answers going know price LeMaitre what? But the I perfect we these

all same they're now. So the

move deconfuse just sort level two was. was Valvulotome the I to was would so same what of the to the say of about the them to bring anyone of key pricing And that price a

plan. these I a of or nichey we life, power So it many to We not we some when business happens. one pricing But in hefty increase of around. there's do it's – price was lines. number a you're that have like LeMaitre's with late and some this these competitors hanging reason. And in validation try supposing, for that of wow, agree these number in some Maybe in markets, what be you feel product is two

Joseph Pellegrino

give you George reserve hasn't seen. that numbers Mike, my some detail can private I more on from

Michael Petusky

Excellent.

Joseph Pellegrino

so XX%, was hike. And price was a in from ASPs up it XX% QX, from

I XX XX%, HYDRO increase plus units. you normal so in the Eze-Sit the the answer. of of guess, And And increase, that, kind of then if sort of really and the split the the bulk between HYDRO, it high-single digits was range, percent the Eze-Sit

Eze-Sit And Valvulotomes really piece. for it in from increase So ASPs XX% particular. was of the that came

Michael Petusky

I $XXX,XXX but catch J.J., the didn't the heard QX, – didn't Awesome. full-year catch And I Aziyo I contribution? in

Joseph Pellegrino

the million, – is of sort full-year $X.X $X.X our million. we're guidance For about baked into

Michael Petusky

and Okay. Last in for just guess, year I'm your guys of item break you that as up? pulled or however to just it building XX.X%, the remainder I that cash marketable income quarter, out? also, curious, Has still I What's you because have these guess, want by securities. included XX%. the rates And interest Thanks. tax assumption, on roughly

Joseph Pellegrino

XX%, will, depending of whose our XX.X%. sort operating, on exercising sort options, you more. of And XX%, lower you normal it'll Yes. be have is ETR if if

if weird sort at of level. happens, So nothing that you're

income days, closer we're $XXX,XXX or kind quarter, to days. $XXX,XXX of know Mike, probably these at something a you $XXX,XXX For like interest these that,

Michael Petusky

that But forward a going items, than $X.X quarter. there's line a no more million unusual you're on doing

Joseph Pellegrino

Yes. That's right.

Michael Petusky

guys. Thanks, Outstanding. start. Really impressive Thanks.

Joseph Pellegrino

Mike. Thanks,

Operator

question Capital. from will last Scott come our ROTH of And Instructions] Henry [Operator

is open. line Your

Scott Henry

couple you, good afternoon. A of Thank and questions.

For you mix biologics ask me starters, I between and give non-biologics? the to like could always

George LeMaitre

XX% biologics.

Scott Henry

pricing? we regards With to to inflation, is price Thank just And about follow-up price being for on you get the excess it believe about price much a you have sustainability increases do on Do to of just to How then so your great. vary? beyond as increases addition should increases inflation? how you. lines able much put we think through if increase. product pushback? and Just price you Valvulotomes. had think Does Okay, the in you conversation room

George LeMaitre

remarkable good the your on said, depending be January little the we December on I and and came of it price was Because a from around happy, that I just nervous February, when week. European them just in reps visiting George, think now conscious manufacturers. pushback did. more year, getting you question And so even our matter. very They're to didn't no That's about question. very cared, do like would about Okay. if making full we European not just one right And last the subsidiaries this. to And were me everything hikes were They're their statements now. you you're corner supply right talking

least So the when also I Germany put two hospitals now, chain it. these supply the at in now, a think you inflation conspire price then they're right things let's dynamics Those blinking. at XX%, for external to call not and of hike XX%

we and Now, ago, in little years or we all more in before I price presentation pushback was online where I ago, four years think PowerPoint guys did case. our about me in the got and that now. ago last chart company these two a XX the hadn't bit half right a out eight hikes, nothing we this years two – you QX have And And two out, before this and the this but you call help nine years not that.

Scott Henry

noticed than color. That's a model, that when in just sales rep, trends a helpful. should on just or of which little look usually bit numbers. think trend. that? expense and those for the is G&A at we you was been that the marketing, Are per past. couple bit then calculate about noise, above And Thank how it's I then higher was great. I I And Okay, a

Joseph Pellegrino

Yes.

that generally few asking say increases quarter, the I I language. I'd then maybe speaking. And year-over-year, more, think G&A then more COLAs, definitely year-over-year, up traveling employees. a few in more And a salary So T&E, more think you're X% and we're cost-of-living year-over-year. hires,

talking marketing XX% year-over-year. more, about what's up as that's things. more think XX And George I of And number is, growth. selling So that a was that's reps and reps, driving more year-over-year. One X% then

also sort at however of it. higher hand-in-hand want were goes than with significantly year-over-year But the higher or in sales. QX obviously run commissions rate to look you And or that

and made up for and were fantastic a quotas out sales well. back as October, be So up, quarter, so reps November, turns in to way QX are commissions cases December, are

it will hospital piece the comes that sales high that high backlog, “case it'll surge” so And that stay stays and of and come it, piece stays if if down. high, normalize

we'll see. So

QX the other the then And piece is sales meetings. in

We done off for last annual meetings were We year, in have were Americas, APAC. the sales and for typically this for but Europe, on we January year. historically

And number comparison. so decent that's a the year-over-year for

Scott Henry

entire way is it? hope would is thing. the as as a product try more that question, And just something the couple the final when And options. get you pencils where you If it to this out of little looks type mean, the more have good, And transaction, Aziyo that fair think Great. product process on the at want I a of buy this understand want a years. I looks is everything good the And look it Okay. this of deal is if to and better this. sharpened transaction. like the you you to is, for you a to obviously mean, about I

George LeMaitre

look. this for Yes, product you never line while, a perfect Scott. due with get familiar a diligence We've of been but course,

have good we And so in the for buy it United a own try bag is selling it. before be way States our it and to us in really ourselves to just

done There's So the if second. it biggest it that's about, or the U.S. do little grew, we million we was OUS. But would if be I bit it And the could be imagine, $X.X exactly acquisition LeMaitre revenue a as of what it option, the is. third would've exercise it talked in

not it's us. small for So

it. to but transactions before no, for sort our perfect of in Of drop larger have we this nice going we course, it a size get is try time buy except site on a we LeMaitre, transaction, set out forward, this

Scott Henry

congratulations, really strong the results. questions, and Okay. Great. for Thank you taking

George LeMaitre

Thanks a lot, Scott.

Operator

Barrington. Michael follow-up showing And I Instructions] open. from am question your line of [Operator Michael, Petusky is a

Michael Petusky

I wondering later, rather than you J.J. texting Yes. could… if you was

Joseph Pellegrino

Well, I'm driving…

Michael Petusky

comp, cash flow ops? keep I Exactly. Stock-based and from want to safe. you CapEx

Joseph Pellegrino

$X.XX X.XX and X.XXX of million. stock-based CapEx, amortization comp, [$X.XXX and million], depreciation

Michael Petusky

I'm you Did cash sorry. a for there cut flow ops? out from It give second.

Joseph Pellegrino

X.XX.

Michael Petusky

Thanks. you. a Thank good Have right. night, All guys.

Joseph Pellegrino

you. Thank

Operator

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

LeMaitre Vascular (LMAT) 2 May 232023 Q1 Earnings call transcript