Merit Medical Systems (MMSI) 27 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Fred Lampropoulos	Chairman and Chief Executive Officer
Brian Lloyd	General Counsel
Raul Parra	Chief Financial Officer
Matthew O'Brien	Piper Jaffray
Bruce Nudell	SunTrust
Adam Maeder	Wells Fargo
Jayson Bedford	Raymond James
David Saxon	Needham & Company
Mike Petusky	Barrington Research
Jim Sidoti	Sidoti and Company
Mark McGrath	Kenmare
Christopher Hillary	Roubaix Capital

Call transcript

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Merit Medical Systems Incorporated Fourth Quarter and Year End 2018 Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. to host like Mr. today's now would introduce for your conference, I Lampropoulos. Fred Sir, please begin.

Fred Lampropoulos

and Fred our Counsel Lake Safe This joined afternoon, I'd our and gentlemen. Good ladies General this time is by want thank our provision. afternoon. Harbor asking staff appreciate Lloyd, your we to here general our Lampropoulos. today in to and Salt start read City like to Brian? you meeting with am I Brian

Brian Lloyd

Fred. you, Thank

could projections, made to today, anticipated is Exchange not Securities discussed are and discussion Form uncertainties may actual call in other considered reference our filings anticipated We those you reports be information and on differ the Please on from made our statements. events, to forward-looking which may Many or our which and risks, these caution events, results such During that and not XX-K be Commission be website. other aware annual in are available report historical. unanticipated that forward-looking our purely of all historical materially involve statements. that in risks purely statements cause this with statements

a result such presentation Statements the information, Forward-Looking not obligation to entitled risks information such new our we and presentation call. today's whether regulation, to date press in required of law any important identified of as slide by call regarding Regarding assume this as events are any for made or Any connection only release Disclosure with do our Please in or update future statements of section as refer of Some distributed forward-looking this these made statements. otherwise. in are and except statements,

the in principles are generally statements United financial which are accordance accepted accounting States. in prepared Our with

to and included be discussed information supplemental entitled of release underlying set call consider measures tables our Measures presentation non-GAAP should operations items such operations. refer can regarding discussed However, of forth provide call. measures affect The GAAP some with to, for certain trends for with and this not prepared measures of performance Readers financial financial regarding ongoing financial financial reporting accordance that measures business and in for the exclude statements. our reconciliations non-GAAP period-over-period a useful and addition non-GAAP and net on in sections substitute data useful financial Notes GAAP. Please on the non-GAAP investors our non-GAAP this Financial corresponding measures non-GAAP important income. Financial we as believe to information comparisons These financial in to Measures

titled Finally, be may companies. with these not comparable similarly calculations measures of other

Fred Lampropoulos

Brian, thank in very this day. me the done of It then us your about time Today, and to but talk and XXXX thank you time quarter thoughts. ladies And always for we you we business. let joining again much. we're talk get once just clarification Well, it's an then XXXX, going you to to a afternoon. guidance. discuss it's performance to are year this our talk that discussion. an gentlemen, our fourth added and as added to our this about general kind up to exciting and is, on lead And And we've about we've going

we'll some talk and first me Let go to acquisitions, Insights. recent about Vascular Cianna

pleased say ever we're that, very And to with Cianna transition. the made. this course, has point, I have largest the would acquisition Merit Of is to

drive thing add only territories we our then we kept in the we that in appropriate was as And all the expect recall, to we not may we business. Merit place and you throughout what the As move think that for we sales but part will do, year. and purposes, it's additional force intents of think sales will people

a again development and research And we're Vascular of but I generally number satisfied nevertheless, a have business. the deal, also with moving there. overall much We smaller projects think forward

just our think moment. a for performance, could slip back if I I

fourth transitions that excited of were It very because our we involved was, busy the I think about quarter I it. was in. transactions, very the a time

very, speak job, future. Raul for numbers the busy. mirror. also were And very give about I'll a little out those I is But essentially think will a significance just believe to And we of in but insight you the So are into the the let those those moment numbers. talk discuss rearview themselves. my of I

that about new robust. running really very modified our that business things Johannesburg done And to We're a number products those of Johannesburg, The the a Our facility We've to that, In approach. are couple a England and up we've past dealer in a doing our Brexit. in successful direct very in excited of locations. In we've And is a prospects. been as interesting in number we're busy well globally. the that of last year, released is from we facility, year care whole of and pleased products the in very been very fact, is like the and of last Reading, throughout location, terms the opened the candidly, shipping of new and we going with a South really PreludeSYNC Africa. of Ideal. Prelude in it as very, in half customers we've out location taking

both that our positive about in I products expectations forward. think those both exceeded cases, and have we're going very In fact,

things go through you'll shareholders only guidance, and margins improvement moved, commitment some consideration the we've that think from revenues, will our In that gross the into bottom into that the of well have gross the these our added not increased but year some the next margin been things continued see of actual terms we take you, terms numbers that in with the acquisitions, as line. I we've and there's Raul about as to but

fourth again, very to with candidly. turn excited So over quarter. that through sometime pleased our go our a I'm of stuff lot And kind I think forward. going to very about with said, business I'm I'll Raul of

I'll to shareholders you here. information let go. numbers. the over There's time. time be all and turn going now go very Raul? you're to you're this are through right So Raul, And for and I hope you our a set of your interested. the lot up all Take to And

Raul Parra

Fred. you, Thank

think cover we'll and year-end I fourth then the real and on quick guidance. move the I'll quarter XXXX to the

with you're it. If okay

Fred Lampropoulos

I'm fine.

Raul Parra

Perfect.

FX quarter approximately $XXX for $XXX Acquired year we $XX the quarter headwinds an million and on for reported, With $XX approximately million constant basis. XXXX XX% of on our fourth for as period XX% and revenue divisions was a revenues million. products constant revenue all reported, as the were a approximately and the of currency XX% over So currency most year. Again, contributed product FX million acquired contribution just our million the $X year. Full and both increase million organic over and XX% increase products an of $X basis. had and contributing the revenue approximately comparable and of products lines contributed organic of

gross to margin. on Moving

Our non for gross GAAP was XX.X% XX.X% the quarter margin compared for to period. the comparable

the of decrease improvement due and points quarter, headwinds the XX During basis FX a period. a comparable point operational a basis from of XX had we XXX from decrease to variances. Australia basis points, That's our

basis due We was an XX had our XX.X% year, the is were XX points both integration FX compared improvement year. basis XX.X%, BD the line of of year and in which that the the for headwinds year. basis a Operating over XX margin non-GAAP decrease and expenses a with included for to For quarter decrease and earlier from of in variances expectation full our the points the our XX%. the in Australia gross

XXXX rate, to an and the for compared of XX.X% Tax were $X.XX to primarily award. period the XX%. period end at year related ended for XX.X% $X.XX tax non-GAAP and U.S. related for at XXXX, and Our reduced the GAAP XX%. of is increase the for full end compared same quarter the related earnings a based end the $X.XX ended tax XX.X% for up rate non-GAAP tax tax quarter of The benefits year in rate reduced the effective approximately to XXXX, to at basis increase on ended and $X.XX EPS earnings XX.X% a basis. respectively. and Tax year for Reform GAAP an XXXX a share Non-GAAP same payments basis on QX rate up on corporate

margin a expensive to of A few on ratio drive balances the basis leverage on the a X.XX million. items end and of and the quarter us. X.XX earnings year for stock too, Also revenue, basis. approximately $XX with the D&A discipline increased of Our for expense other $X.X debt and Reform gross increased operating of at continue net million Tax comp the new were million expansion, $XXX

for get XXXX. some and XXXX those the QX the So guidance are into of now. highlights We'll

$X XX% are And do [ph] Insights, be cost increase of plan mix the support savings is transferred. to XX.X. spend will margin we savings the improvement our a XXX headwinds, in initiatives our contribute margin complete could includes of the moving to over improvement million related our in be to approximately a transfer transfer continue the range to of a revenue $X.XX between and We in on keeping XXXX, operating brings million basis basis into in transfer growth, different point to BD, revenue over once for approximately our Gross Mexico Malvern which fully we on efficiencies, of We therapeutic to million Those basis to XXXX historical our $XX and and increase and our of products. Cianna, growth started several to our other plan $X in million our to to XX.X expenses our QX gross will that's we invest And constant non-GAAP to with Vascular up million XXXX. X% guidance. in pieces, FX currency facility of specifically non-core line million XXXX built acquisitions. reported a $X manufacturing on recent XX.X, core XX% is $X.XX X regulatory revenue $X clinical to expenses The margin XXX and acquisitions. non-GAAP see expect studies of reported a which in we to and from of XX%. which point of in XX% that included operational requirements, fully revenue ensure So expect be $XX on billion, couple of that billion

tax to Moving rate. on the

Tax have will for be include more range Reform $X.XX on new the tax as of Our between $X.XX. of approximately tax to and to the GAAP a understanding comes forecast and $X.XX again the rules. and XX.X%, EPS between guidance a out rate XXXX. On we be here we basis, $X.XX range good non-GAAP continue conservative XX.X% will

allows our just reduction impact for coming $XX our lot additional to Tax but now in that I X a everybody FX think from which with I XXXX, Reform, headwinds know studies million continued core and coming regulatory pretty our robust, XXXX. clinical our information, WRAPSODY shows XXXX and of following. everyone be consolidation that was is no about our and million million make to have business, Bottom to business new gross $XX out need is an continuing investments that, our to impact includes for from investors new be for income of guidance geopolitical more margin line acquisitions cover growth our a the includes also capital, as NDR, excited balance we the Malvern reminder, but want Mexico increases and we're our it'll the expansion. the note, us standard of And this project, with. sheet and statement. up the working in about benefits to one a on With European manufacturing continues the lease we from shares this let And of requirements, dealing the an

Fred Lampropoulos

have Brexit we lot that here. add something is to is have going I prepared think we there the that still if of could Raul things there this listen We going with. that for. And a to out everybody's And Yeah. deal that on deal

the the business the of just $X the of and $X right terms world the I terms, are I have MDR to business watch work what And the aircraft our products, or that out, sure And It's of we're We the and FP&A I'm that's very to and new we've just and think an operational speaking leaning new all we're But coming rudder, discipline. and Group we're certain time. though adding candidly, you to and sure that in out you efficiency in rudder, of expense ability momentum, into million on estimated the overall just uncertain numbers. that's we the it's our make is course. the that know, million think put the and look group. making but performing we it know, left focus our in

probably me, And Now, that you to we do take didn't talk Raul? that one, want about leave to think you or to want XXXX. I

Raul Parra

take I'll let it. you

Fred Lampropoulos

Okay.

have, new X% our will number to go XXXX number products, you we're add we've our on pretty grow we essentially on retail, good of So, issues account line that I take know, know, you various that where there. this visibility, And XXXX I months into at, into line I And look XX%. the at revenue a a couple we mean, top year our comfortable wholesale know, that of again, and distribution, through of believe of XXXX. know, you saying think our look additional a pipeline, that things out decided you when you that we we we're of we'd are now all to could the

sake a you know This to guidance change this larger XXX bit then but to have step I that will that's $X.XX you're said is to year. our a addition still line in think, And meant the points - And may this I we basis to margin XXX our little of And $X.XX. look year mean, is percent. at, gross I where think. seeing improvement. where cents, and We up bottom than say I that's that's will

much, So line. it's on the to very bottom so you thank XX% XX%

listen, this view, measurement So an by in any exciting is time. my

excited that said the think the We're I CFO businesses Raul was maybe very I right add about very noticed Our to robots it said and I think have mix. this is saying I businesses anything Raul, I the robust. you that can can saying robust on if you I call. - hear get you the And want missed. think CEO robust, you else,

else want You anything what to we said?

Raul Parra

- our to just business. a I see of continue momentum lot No, we in

a of very we're around department lot the excitement very excited. excited. You is there's know that. know sales I Cianna,

think I know, you there's pretty good. these yeah, just are looking

Fred Lampropoulos

I technology one acquisition opportunity just she probe talked this comments surgeon being more use Dallas. skilled was on And and mass think ago became physician color a watched little into more important but how on to the actually patient. in was. as physician, weeks watching a least about times I an call, these the convinced Cianna of know treat about a I had a opportunity this extraordinary the exercising XX this add there's made And least physician patient. a like in me case the it on was for few on a the Let is at that And down Cianna I lot battlefield is or nothing and couple scrub this you at a time. the comments, this you We've a know company. quite

know, of that a you that's almost up XX%, seven. know kits, that. everybody want slower And in the we're so custom you at our for want confidence not look also bit little I XX% devices one just look pushing. the at of kind make that But to areas sure of I And at year, a standalone a we as last scorecard know

are those the So lower products. margin

at particular is I inflation market just for year, going at look interesting note almost And believe into the look think like very devices. of QuadraSphere. at we've explanation to you lot entries you needs and our had we I our EP were these that are our XX%, we it's to continue have share for and devices, Embosphere area our think to forward. that a business that this market only in of marketplace know, we a and that maybe a the competition they up new little we couple at catheters is And And things coming grow If XX.X%. area. The one Embolization We Merit year. XX% think look I at look to our that as

have this physicians. We've that like convenient We with. getting It's who response. It product we're is and so for very hope that are year I new called EmboCube. And competing released know you very that now do names product. the defines very, a good you the a

add business, that XX%. at my Endotek And that So see start if improvement will year. this look belief at we and number it's then down this to endoscopic into we'll the

you the it of you at new us at and if comfortable with deliver. products, look going the So look plans that, makes our to XXXX you the at what look terms business 'XX and the forward, efficiencies of our hopes business in view Merit of

for going two, administrator. speaks that. a in. So reminder over to go listen, or you well I I'm interested ahead and information, that pretty no will I Raul just now that to call for clarification, on our the just here but think be turn have may that time and aspects an you're And that some clarification various new to following back hour

the and now questions. being time ready that said, So over let's administrator the turn we are for your

Operator

question of Our first from the Instructions] [Operator Matthew Piper from comment Jaffray. O'Brien or line comes

line open. Your is

Matthew O'Brien

guys, questions. Afternoon, for much taking the so thanks

this going And question, for winded I the on know little sales rest of for business growth but, a you year be points Just business the think year, on to would you order delivering bit growth. still love quite to that the sorry something such and a about would adding, of bit of you force of XXX to know, basis year about then, we after more the of integration long Cianna, hear have there, starters do through get magnitude and am you XXX you know, know a next organic retention, this forward?

markets, come all does where you is it cetera? product et introductions, from, emerging that So,

Fred Lampropoulos

you pondering, know, Yeah, there. there I your lot Well, question. was you much. very a stuff was Matt, And thank of

to time, yesterday. lot that I I've mean, three California. you Southern there to I two there think as We a business, going or On are know, been spending well the be the down of had By down we a as is expected. Cianna times team integration

you of is You gone essentially order still online. in the force, terms everybody know, we've sales know, to cash

know, meetings You that and international their and best They in invited we national we meetings. recently our all us us joined President's have at meeting. producers to Club join of

You know, the coming that they the inquiries will when all two a when there to three sales or week will I saying in me you people tell recently, Europe get was available. over to that be were you as product I know,

this second late likely approval could You expecting very so for but know at that's business, the we're important. be time, any quarter, Cianna quarter

nicely. think everything is quite working So I

R&D You terms have that side, think over, - force, those have which turnover administrative important no who on view those essentially know in we've there's the the guys, in where of essentially another most in worked is of the sales physicians in the startup area. people But company. have ultimately some turned moved have voluntary to particular factor, companies startup been my

I think that's a good start.

how mentioned, greatest XX know you that not Dallas you in procedure, this this was me in out breast - physician I the to that That's, years. you That's As see was and care this innovation her and get in healthcare quote. uses quote. women's when know, in you product, my position a said the

R&D And in were still team in those of so see, the to in I think that that came Matt, four R&D it no that or you importance other that terms products. ideas means in products place other and the have They well. what up other know get being than we five and us as several helps is less thing as procedures, you

this correctly. managed So I think we've

forward, growth the think to of conservative. be I going trying are terms In

job sure we give make on to something that you the we opportunities. move and to Our then attain can that is whatever to

higher it And good force, I lot we think will customers, business, its this I about of to long to can't terms don't a That's mean the me Cianna. I things first operations, personally in the I business sales expectations know, better personally front did on, than But I diligence. I say need a I what you going did forward. because I it when ultimately have understand going number you answer. had the I've will work manufacturing, and but talked the in enough I of even the Now, due bought that tell have growth of forward. I

Matthew O'Brien

a it's No, long question.

then appreciate And I follow-up that a So Fred. question. as

some modeled. mean, Just in outlook R&D line you bottom outlook know, line margin account total it top spending than is great, great, the is I gross for does is or higher either But outlook great. the SG&A I had the

spending you extra where help us can that from line those either just items? understand of some two So comes

Fred Lampropoulos

answer that. Raul, you

Raul Parra

are operating Yeah, expenses for Interest expenses is XXXX. line in in XX% about too. there there

moving be the model picking just in We're guidance also what for NDR. additional We've that facility not requirements, to then we and talked might we some mentioned, that the new us expenses regulatory But a to we relates there. So the Malvern I clinical and have which Mexico. over that some I that MDR WRAPSODY. got sure do - about have I'm studies you up, the

baked those that expenses So are being in into our are guidance.

Fred Lampropoulos

in maintain, jump on the to transition so on we put mean, on the Yeah, those this been that those make it support, these line years that or company more too. kinds Matt, products know, that this clinical and the studies therapeutic as I in takes and that, more than priority. the expenses, keep if a that miss that always those sure it tried could to and takes things that and the training Merit structures, last clinical can types we've we makes chosen I we've those rather I several have they're operating say that between, for past to that of R&D do think you of

margins. it is sure So we're into that I improvement focusing you of is we've helps silos And a product you that we know, been one that. do to able to make in really again, is be, know, gross think acquisition making what any on an our that

that the worked continue we has worked future. those believe will things very, And four I very think the years last and formula used work the we've So that five to well. for in or

Raul, general. our further? So anything, that's

Raul Parra

fine. that's think I

Fred Lampropoulos

Okay. Very good.

Matthew O'Brien

Thanks it. so Appreciate much.

Fred Lampropoulos

you, Thank sir.

Operator

you. Thank

SunTrust. Bruce from comes Nudell next or Our from comment the line question of

Your open. is line

Bruce Nudell

welcome a of others I you articulated, have end successful that what And guys. looks as great. you year. simple end? to kind company of - kind And looking secondly, you step? you questions. the organic second the on factors know, One, to put very push guidance. know your afternoon, it X to kind know, a are is the congratulations to for conversely, have of And but size out pretty the what year really put confidence guidance guidance so you you and know, that, know, low know, you could, forward next you much. to Good it's take high push unusual, out, of XXXX what you gave Fred, two XX, to That's it. And Thanks

Fred Lampropoulos

Insights, would Thank as confidence Bruce, three what we there now, that analysts got are that A being for And by Snuff really come go you there. already that's area last are the who a another it month right same added opportunities the about, think know, now here I Cianna's asked you who things thought distal text as product or months from a us you, Louisiana. the first you our two the PreludeSYNC, what different someone XXXX, is smaller had hospital things, as know, I Then tweeting adopted That's about product that is we've Bruce. into about the I this so, you out of else that and or we've year. it, Box. down a well. and system we Vascular like I to know, into about a know, you is just deal. about know, of if But radio the and known what there's number know has built we're two ourselves, SYNC remember And you look, and months a was there's say this approach. have the we of to wristband which we're that? nobody that's it thing the confident, then in picture a physicians adopt night a bunch was you It's there

in is want take know, give OD and to, big product is call take surprise, ideal larger you And Prelude but when device like The for, allows gives a a you that, important. $XX to so that's sheet you range know, you the it smaller the a of us I larger put hit this $XX. that you and selling to a ID sheet Ideal know, So a to but which you It's probably, in pipeline it's in flexibility. know, a Canada had in Canada. up of kind brought It's with big capacity a the of gel has to we a a is is facilities I EmboCube, in comments in mentioned hit a And as my products. that And we've the bit that the at Australia. it, The a convenience - It's you little we just product keeping product look on. produced foam then France. is physicians. in of in problem our additional a a

why that what you from from it you they solving that think and see response And know, know, thing. didn't say, hear I you're that's is you kind customer, best of the a them. know for know, about? customers you mean, nice I know, you fact, that problem In a doing a when

some spine are new inflation We take products our system. coming that part think take at new look take We I way. that's that have we look a We So at a a it. balloons. at of new look

already we So I and medicine, go I a can our mean Becton that product just good the slide anniversaried giving into is XXth. Dickinson you at the the deck TEMNO - through so and kind along We a Merit. board that again which in endoscopy, I call have make answer. was to Elite, for - regions, of we things tried see be put preview you that a to In in believe our of now Page prices. the across with here's this that kind sure everybody of deal. and that on just cardiac so That we the of slide the looks us you'll manufacturing deal, just whether are long we products a to think Nu-STAR everything. a I because it's CorVocet our so put think February as big time on and one what mean we it's through at But system, our that work bring and see you'll me manufacturing in peripheral is coming here's attractive Ablation online TEMNO and so it attractions, do X, I'm first-in-class Elite, the other - now slides, deck think

we see the You'll use area. electrophysiology device that a new in

coming put and answer lot slides here again, to So, question we new products again in have the we online that a your of support this about year.

force, maturing the Raul, sales jump So of sales It's on force. you of the it's all I'll that. stability the it's this. in the of let

Raul Parra

I originally, made XXXX since might we've - June, think not, do put we something but to questions we that and just in was numbers essentially to in November like enough only and the I think going think, to I think sense I went if Yeah, on was our out or plan. extend felt ahead our I look that going I it confident what the But Fred, it thought guidance. been momentum - XXXX what long-term with do I getting we we think mean were

Fred Lampropoulos

finally... then And

Bruce Nudell

guess just... I And

Fred Lampropoulos

please. Well, go ahead

Bruce Nudell

XX%? gets what - X% you gets just XXXX sorry, XX% I'm to you to organic, what to X%, guidance,

Fred Lampropoulos

These good Yes. are questions.

a require some our approvals and to seeing of number disruption on it's the getting some approvals, scheduled products you're So, I on Brexit. so getting [indiscernible] release, here them sitting these of of market, are you're always - of the think here them that

presence customers. that big Britain means a be know things in have to the of conversation in - the Great deal want is of with there We brings we terms of those done big that. with found a having prepared careful that a how is that and I recently having I haven't had confidence facility presence One say some companies having that who we run system, Brexit and but for that who deal the by - healthcare this, a

And no in Great a company so seeing it time. long situation been But made that's growth goes, Merit, at clearly they'll We've opportunity. as how matter Britain work a a it's those lot a for we're commitment. in a of

down it slowed mind So China own a but - was slowing all. in on hasn't it's I China my you know the little international business. what, bit, down at

momentum, and new silo; just the obviously so Asia as Southeast for margin think on that Pacific are it's the responsible products. I we - is stats Rim, preparation, at all the high who Wright, Joe look fact, not these products, Vietnam In the into and

So look it; you did, once for year. think through our - what kind the Raul, take - give you way, us at it's of go just a for we by last growth year that and and if core numbers I the the

Raul Parra

% XX.X year and XX.X% for the the quarter. for then

Fred Lampropoulos

XX.X%, but Yes, those - XX.X% for the were mean, and year. I

our own are and because gone our our up own force confidence this the always I extraordinary, because now was moved believe, we've grown the South but we've So simply warehouse have problem. our is margins product there, sales the Africa, and and getting there

can deliver competitors our advantage That retail get us day we of now to a we same and over warehouse, have prices instead customers. we So huge a gives wholesale.

So, play? we on because talked about do Brexit? on policy - come Are that any to upside, just downside, I've got the anything miss issues always public there the we've

Raul Parra

Geopolitical.

Fred Lampropoulos

Maria and had we that last us. - slowed that affects year when everything bit down weather a disruptions, Geopolitical

mostly of on those Raul. our unpredictable issues enthusiasm and downside So on maybe the the it's upside, kinds

Raul Parra

thing little I a that hiccups, a add, if any got in there. going room direct we've just only will you sure the one think making you're couple there's bit markets that of understand I Yes, and

Fred Lampropoulos

Yes.

Bruce Nudell

so much guys. Thanks Congratulations.

Fred Lampropoulos

sir. Thank you,

Operator

you. Thank

Larry Our line next from comes or comment from question Wells the of Biegelsen Fargo.

is open. Your line

Adam Maeder

in back should with Maeder roll And of line, just I to thinking finish about nice smaller year-over-year we in until doesn't Congrats for for thanks year. of Cianna top then It's on Adam QX, mentioned, how guys. on you a the the some Larry. one questions. off wanted to the the taking cadence this the be throughout growth the curious, but anniversary Hi, challenging The conversely quarterly month the as and XXXX? as BD counts more half look year. organic growth, deals organic in comps and start

So just progression guidance, recognize think I but any don't quarterly there the a helpful. follow-up. quarterly through you color be and trying to give And would had

Fred Lampropoulos

sales early. Year, we little slow about talk was first we because quarter, talk markets; kind If international of a started the our and a little look more have the to first things history. I the And of done the which up quarter, like out the bit in you expense Chinese meetings, have have take to mean, slower a at I you always in get we'd bit Europe. it's just a New Yes. get little of about

France and that shutdown now quarter different Terumo people third if in the we look a So and situation bit see at areas, Germany slower at look the affects had summer little and quarter you you is year, of because a it in you generally, little that, then the third this in gave business. us bullish, the a but,

the into we fall if they cadence at Raul? pretty you think I well generally category. look will think will same history, that find I

Raul Parra

Yes.

think it help that I will that QX FX us, be rates. only the the is thing would

But mind. that in expense that heavy, mind. So just QX just operating bear again bear in

Fred Lampropoulos

something that's always New first because we Chinese talk about of meetings and And the that quarter, Yes. Year.

Adam Maeder

And thanks margin is then for gross my the Okay, that. on second question outlook.

the underlying of can gross levers XXX different for us of Thanks basis the accretion from year? guys. is you versus How XXX the for improvement I remind basis improvement to much guidance taking just this think is roughly margin year-over-year. points questions of And points improvement that M&A?

Raul Parra

it's say the margin I'd and gross about Yes, XX-XX improvement. on

of more efficiencies. have We we items a obviously operational can always be a goal efficient. will help will have where Some always us get there cost-cutting on the that initiative. We

sure hit us those also will then that our acquisitions So we're making areas. recent those And we help goals. in

Adam Maeder

just Okay. for the - year? levers And then sorry

Raul Parra

do. mean, So those what that's are expect to I the we levers,

Adam Maeder

Okay. Yes,

Fred Lampropoulos

overhead as we volume to see as the a apply think ideal we the up, that to we and increases, this is better. I start but whenever if - mix, I and think you growth and mention Well the you some to didn't the continue get have product start

we of saw to are to performance. be improve trending if Embo help So, products of higher performance see any important newer this both these the can year be we gel things that type margins going same that have leveraged

both we and able mix, Malvern force. help Over but our it I that with cost whether touched it but molding that over on to agreeing to to you produce they nice in be of and down is but I I kinds to to issues number Mexico reduce efficiencies, this incentive alone, the in have help don't give add think the higher terms hallways operational savings me he you I happen just my rather earnings in of $X mean, internally of several group, million execute than directly which going of help And operational Raul those do going I many are of very $X if and in looking moving so, from with give last and that the the on this they to levers has will just or for guide talking reduce a - those like my resins. And our cost. to is operations place, things this come active week I'm is me. that in over sources. distributors, this those to year. my - mean, down opportunity I to at have the week say there would on - think I job And up these even could started. savings leverage operational to million in to can going through group upside, we're this, and with lawyers things heads done as such a that They have have to tell years are aspects that already plans. things do those cavitation, the

Adam Maeder

specifics. Thanks for and color additional the

Operator

Thank you.

Canaccord Our from of question the line Mills Jason or comment next comes Genuity. from

line open. is Your

Unidentified Analyst

Can Hi, this me for hear Jason. you alright? on [ph] Steve

Fred Lampropoulos

thank are. We Sure, you.

Unidentified Analyst

we provide improving Great. into least maybe areas especially cost within first, year? think see if of to kind wonder you from Fred, past of question, Okay, at and revenue revenue acquisitions XXXX? earnings could the synergy so see acquisitions seen your profile color the as kind we move products more the the over concern kind on acquired And you quick I respectively, of any most about these of kind through And of where should there upside? how

Fred Lampropoulos

mean Yes. Well, Cianna, that, earlier what have in sales the that those been and in opportunity. I listen, question lost the by I We're already largest haven't has we which there's seeing was we by the that operating no replacements anybody. on for. gone stability most mentioned stability, the the side acquisition, the have and who as staff, merged force operational And

writing be had the Those group. I've is deal. enthusiasm not momentum sales, exactly of it's things, what's of what to past, innovation, team part So big from this I forward and you can the those, know I building the and culture from I But in of I'm this we're had been haven't guys culture. type going an but to term. for me gotten the looking with sorts the to read don't to And business for, that long enthusiastic we that not people letters organization but is that of saying the had the think nice I've it's say more a hoped this those but a Cianna interesting

Now, thing there's Cianna another too. about

personnel. clinical The other highly does are trained that - this these thing

the I don't and there level doesn't is lot and a of of people to like on sales level a my or the understanding hope I All of But sales have support. offend force of mean and clinical this a good line, the higher majority them higher anybody.

that our somebody's have or We work our we're to need don't, surgeons have that hand here and of see as life, about anatomy; and whether decisions scalpel and try critical it's make kinds not the in the products have folks when folks that holding to to we're a knowledge you going of know to areas going borders to there; going and I these their when even types electrophysiology are areas in issues. and a is critical other doing save to the are complicated. need get you who strong that starting physiology with tell sell, how of I think someone it's more but these our interface and

those are going and things things business upside. think I to the these value of So that add to kinds drive the are the

Unidentified Analyst

can like these the comp and on of mentioned and little see All in and of anniversary stronger playing a most kind about And kind much what and know bit about well how the I your as thinking just as product in Thanks. we as kind XXXX about products, talk competitor kind core right, in our - thanks. as you far but cadence maybe of how a you we about seems think XXXX? of recall, those of anniversarying, acceleration groups you growth we for as

Fred Lampropoulos

look $XX the size, going back we business, was we Becton I think the of but Dickinson value about the when about take up deal, remember, $XX of million issue this - and at we getting worth ended would Look, it if revenue to talking a about million to biopsy talked year cost, that we $XX Yes. now million were

Raul Parra

$XX million.

Fred Lampropoulos

our and to yes, think $XX million, exceeded on the from expectations, just $XX but high we're end. that million I million $XX

easy initially we is to the through we of but think, I yet were to that are just on that big and only went able as disruption end business hold do. a we expectations, grow to the is the and transition to not business, high not deal, always able and that beyond

Raul Parra

growth. core And a it's going to to be contributor

Fred Lampropoulos

Yes.

but contributor and then came of transferred, And biopsy newer some top to so which that's products. that mid-year, be had already Laurane this which and product is big year had which going on these a to on be the CorVocet, anniversary biopsy; our of

just Merit part have doing, won't out not tooling, new we'll better of So, time new I the worries the six everything the and the and I they're a that product; right other device. we thinking labels product, all we production, product not we we of to the things and product, the be we've products new launched fall peritoneal we this that you coming have the started to to and the by been it drainage brands Dominican is of been we couldn't, been some simply those biopsy the going has even Merit things. And the that was candidly get year been products vascular disruptions and essentially you we because haven't produced that about have big the cohort, - pleural think therapeutic attention essentially done, I of from never we with and in talked is effusion a brought about the all did have this drapes whether get introduced, Europe, this my something because BD great. access that about, launched thing when anniversary with factories, a driver still late has automation, and we're the you, CMC had pulled ClariVein, along Merit there at but have this look very I is being to by some Aspira, the start Republic there's but these kits another all IMs be that's just have And go but building a device think the on will the sorts mean labels. and their we especially think go production all products to year, are get and not put away and the name so

a company, have original and those And the does. that or we produce Merit Vascular things Insights all didn't didn't the so, of have

on also the people We that sales overseas. for brought

have our calm to we this tempering I great and think we, just seen just enthusiasm, by are you've you business, you hopefully here sound all sound in my I and and it? a for we're remember, here up; And mean, Medical. I back don't mean that we I stay and our have. trying you, stay think the - Merit mean, but So same with funny job this this to a steady yield stay can going to cool of isn't enthusiasm stay opportunity have is come steady, believe that and we that I

Unidentified Analyst

And one just in one. last Fred. can then if All right. squeeze I Thanks,

Specifically Insights be Thanks. Vascular revenue fourth the whether are in the them and contribution line or there's in and from quarter? to on going reported Cianna where any

Raul Parra

product it about line. There when in line separate was if it'll XX-Q, in a the and fourth stand-alone to disclosure, at they're own going our be on their be $X disclose quarter, million XX-K and look you we our

Fred Lampropoulos

We'll other lot about words. we in talking about

Operator

Thank you.

of Jayson comment next Our or the from James. Raymond line from question Bedford comes

open. is line Your

Jayson Bedford

evening. for good taking the Thanks Hi, question.

cost you call, $X these talked talked down talked $X the mentioned OpEx couple, cost the think that moving million, and if Just What I the XX% dollar MDR you move I there your to I about the of is to about business, involved. is of additional in to a Mexico amount repetitive, part European you related assumed in is about missed million guidance? are apologize but cost you also Malvern Raul, and this and

Raul Parra

assumed in It's assumed our margin. also our OpEx it's and in

Jayson Bedford

value? And is similar cost the million is the in Okay. or or what it million $X MDR dollar $X

Raul Parra

$X million $X to million, the neighborhood MDR somewhere is the Malvern then move of about $X in is million.

Jayson Bedford

Okay.

we so And look... when

Fred Lampropoulos

$X of that's million essence that is that of significant. to all Jayson, absorbed that pretty $X being the is and million

Jayson Bedford

completion complete in be I down agree. to I would savings $X to incremental million XXXX the will And mentioned Mexico, assuming Correct? then you move date. million think No, the as $X you that that's that in

Raul Parra

Essentially Yes. wash the quarter. of but a because fourth and kind as benefit is location, and it to will I'd say be XXXX, will will lines be expense in third completed year the some the of XXXX will the some start we'll when manufacturing this of probably we wash it some in see and so dual have of do the

Jayson Bedford

those Okay. last some of the on outside And, US, approval of Fred, just for rough that? what's line getting the BD questioning, timeline along products the

Fred Lampropoulos

were correct our in Mexico all and approved produce that those the process we and, on think all if of those in the those things these So regulatory the to we've I and versus sites either certificate the former products, BSI are approved. those have were things things this BD am had those referring new been of to We've products. I products, and or Raul, added manufacturing to sort that

Raul Parra

CSI, yes.

Fred Lampropoulos

no all disruption will and to to make we will refile, built - is essentially the BSI, future not sure product go which markets future you and already extra in China, and who on bigger existing registrations, be adequate let's product we've have in covered, in those filed in big stand adequate have with a build are not say we we that will back for we that to shelf, be mean they there have significant Raul the and growth are with we place we've would one. as then the the where it so on like new of China business and it's inventory those that where could the a booked bigger be Any place. in but and it file where inventory not

are Europe direct. we'll some and couple covered. thing going to of folks this, all this not material; on those the One coming partners States of have a So and the are like thing is also will hear too, of the aren't number material of go the our United that other other over distribution markets years, but on next

is another thing will sales through that essentially sell on both existing direct only be So our be to Merit retail its to devices we and wholesale biopsy force. continued will that

So, build the both and eventually river. two grand those rivers will meet

consider back caught hope important comfort when and things sure was that that our that companies. you're that pull building as So were we speaks we model some is you work Merit look that how we that, sales the with business strength core those the And the about and say to sales and business. that have on back same do make lose these, because to growth the other the modeled with is on these the brand a compete we I that the in to time you side maintain and we us in transitions mean, answer fact, going give if And at almost point, our thing when business, going it all we we I expectation. bigger to think customers, of BD so the issue, volumes way I everybody relationship that that we top can the and the did

Jayson Bedford

Okay. I question. appreciate the Thanks.

Fred Lampropoulos

Jayson. Okay. Thanks,

Operator

Thank you.

Needham from question Mike & comment Our of Company. the next Matson line comes or from

is open. Your line

David Saxon

you've Mike. Fred between Hi, David on apologize I've taking Thanks I it. Saxon Raul, answered for for jumping around and call, been it's and the so if questions,

I be breaking First, going Cianna out forward. you're the and ClariVein to going understand

guidance? how XXXX two wondering of Just are those into much baked

Raul Parra

Yes.

So the when we the guidance happened. we acquisition disclosed changed that haven't

mid-November go a a is portion will core Cianna, for that but is is stand-alone $XX $XX then on in be mid-December. sometime to doing to it, million; products. of $XX see growth, that Cianna will be million million will ClariVein anniversary in basis, million to in anniversaries we'll able stand-alone and in ClariVein you So, $XX

David Saxon

you're end then And of Thanks. talk to then there And the kind want targets do you M&A can and about of with regards you pipeline? year? the out understood. you just seeing have Okay, where to leverage, any in what for terms just assets

Raul Parra

that Yes, is we're I think pay probably a shoot somewhere on million around to million, leverage, down $XX on there. to - going about be $XX the going

Fred Lampropoulos

Those to of to But I it on done to there further had to They are the let's we've looking marketplace. across. of you five we're execute. types that either number these to less And in pay assets be think let issue be price time, got words there at. for than opportunities. the me be we go and for back they reasonable jumping pick deals to be importantly we've and they I've then have up given have other interesting, to able like things agreements our not think be insight not else, because law criteria decided It's the be were that able we're they've it has the other; criteria hurry. fit gross things candidly, have of the to and to go see have core now business. they to us and on and got have our four of that sort I'm that and going thing off at a to exceed form someplace worked scalable; our more grow or to our be it's go they've happen, sales that it and the But your opportunities. one opportunities in any grow signed; all no continues any to At that's to afford will that, the we manage and that they and to silos we come maybe I in other able features and to contribution. able have more I've you in margin see wherever these important, or we There gain us. one area. again, talking and and patient able they're looking just eye be got to on are, and seen,

So good we've I a think, done of job things. those

are effort the appreciated, these That's extraordinary while performance by But we the this it Dickinson again, that, everybody I know think don't get overall Our of appreciates, day, improvements. going have product to done sorry do operational that I you a oftentimes you in on sitting is. us look line hopefully to we've and symphony. you people that Becton on keep pull takes what are got you're while where at you're the then the deal it's side on expectations not if to individually company. like the really don't top when products to products moving you team, to the from development get it's are - at business multiple great those factories developing here, high enhance room appreciated but in and season hitting guys, that I'm that missing that everybody but lines. data, people all really isn't team, that appreciates How one? we think, something like the a location And end that I of beat, of great off at a mean, single something like judged customers serving a look and a being what one again, an is just six I countries is it those

David Saxon

very helpful. that's Yes,

Fred Lampropoulos

room. in I got faces the smiling all

smiling. So can like one me so people keep I question that give another

David Saxon

congrats and year. color the the appreciate I Yes. for

Fred Lampropoulos

Okay. Thank you very much.

Operator

Thank you.

question of Mike from from line Barrington or Petusky Our the comment comes Research. next

is line open. Your

Mike Petusky

outstanding Really, guys. evening, year. good Hi, really

a just of D&A I by that questions. caught quarter give stock Raul, So, and did the you CapEx chance? any couple comp, for

Raul Parra

XX.X. it But for me here. get sorry, didn't. you I - is let CapEx

Mike Petusky

Okay. XX.X, then guys for coming even this for and in are year? what CapEx thinking you range a

Fred Lampropoulos

Yes.

have we million estimated year, $XX of million. to Our $XX this CapEx an range

Mike Petusky

right. All Okay.

at 'XX a should look you elevated? down that will As still come or bit that

Fred Lampropoulos

whether the you add some we look these tell the growth of a can't business rates what a to the I'll and we at kinds why. want be If having of business think grow at without opportunities where we just have capacity, and and you to it take No take at head are, look - we capacity. molding

we do to So, to that don't with people make in we get going we it this will is to debt of want least pay to all that or of sure that. or out down our thinking, go this that sync do do way and

able to to this in We have things to put growth place be rate. maintain

we pull down. are why, to that's back So going not

was to for it time But I'm them. back, to couple at we go you'll years come after I'm, CapEx If about say forward, Thank place and going got don't you four of or back roll now can't appreciate a to if thousands notes do. Mike, of on after major thing and and five all right the won if building them. you people probably add we business house a that looking I we me a exactly that recall, the reduced after fact, have at effect the a your to then you it, people plan years and letters

billion, and that and the I we - we're adding or city. just year and disciplined do over first piece-by-piece, this that got for go like take myself now time or new have have the remodeling the order did So will to at get in so billion starting projects next our we question some planned we've business how are $X I to what is to But capacity a but we going ask be want it this I we building things, doing on that for make can planning systematically thoughts to I'm on be not put business. the or capacity sure I various think can we time where the we And more my the discipline and same able approach, in and go to have to frame? much us own place grow in to to

it's So but a you long do to? answer want Raul,

Raul Parra

exactly No, I add Yes, I can't think that's right. anything.

Fred Lampropoulos

Okay. Thank you.

Mike Petusky

ones. quick A couple of Okay.

Fred Lampropoulos

please. Yes,

Mike Petusky

What interest currently? debt your is - the average on rate rate interest

Raul Parra

X.XX%. On - December year-end, at the

Mike Petusky

And is roughly for 'XX? sort modeling the of that

Raul Parra

end toward interest No, rate year. hikes the we've of tail two got the

Fred Lampropoulos

In our model.

Raul Parra

model. our In

Mike Petusky

That's all last helpful. headwinds assumption FX then super And right. just our this Okay, for year?

Raul Parra

to top line about on million $X.XX $X million dilution then on bottom. the $X and the

Mike Petusky

congratulations. again, Well, Okay.

have job. few guys last You Great really years. executed these

Raul Parra

Thank you.

Fred Lampropoulos

Thanks much, so Mike.

Operator

you. Thank

Our from Sidoti next line Company. comes Jim from the or Sidoti question and of comment

Your line open.

Jim Sidoti

you me? Good afternoon, hear can

Fred Lampropoulos

you? are Jimmy, how can, We

Jim Sidoti

I'm giving guidance well, billions, not well. in I'm [indiscernible] millions. your

Fred Lampropoulos

Jim? I a that think compliment, was

Jim Sidoti

Yes, yes. from me. Two ones quick

issue briefly that that at this resolved You mentioned Terumo the quarter, helped is the last point?

Fred Lampropoulos

They have in come to Okay. new continue guide our Terumo, The No. take on business, particularly wires. we but market, back the on

Laureate wires to So guide continue grow. our

whatever demand. month we a to I amount record meet produced this think last

the and importantly the opportunities a as build of our places, more reputation So it but is, seen able in it's nothing this be not that summer, we we've I lot part it whether the whether some kind been other of help maintain past still Terumo, I - all mean, bind that's we've business, and of important or of hot issues that them. a see I think to as think give with led are during to to in it from be companies us was does this that but portion in customers the

reputation our customers. a business helped for It's us. to been for reliability build good with that's our So

there to still - no, continuing it's grow. So,

Jim Sidoti

or And any has months? the change for the gotten that from last worse any better Okay. three tariffs, then

Fred Lampropoulos

in what would about thought added tariffs are see we we and essentially tariffs everything in But I'll place. the round, back has a and second, been are then was that initially that saw in both ask on since million time. put in $X.X Raul We still are the initial if burner else on we that place just those

to added have and built significant, subject, think into gets another our embedded I XXXX, the don't in If our that again, we and device we going it doesn't, our said Jim, tax in a think tax it's anything, but when seen doing, already that's to have XXXX, that between people if other the want our on medical but know suspended but throw and tax, into before, the comes what numbers. we that's Cadillac we assume haven't and to device at we what's that look this that - back I and are I medical actually be added taken We but in, I happen we've expense. numbers trade-off it's

that; to of, into million loaded that $X.X may wanted about hears conversation. So $X not million there. we of XXXX, I - just think make that this everybody sure It's have that overall may it's expense part an I or be important

of So point to interest. just

Jim Sidoti

right. Got Thank All it. you.

Fred Lampropoulos

Okay.

much. very you thank So,

Operator

you. Thank

or Kenmare. Our Mark from line next the comment comes of question from McGrath

open. is line Your

Mark McGrath

and taking long. for the on call being Thanks so

I - at on like wonder looked I the question my of quarter. to the balance read net $XXX million a Just as the press looks sheet, last by relative and debt that went it And Vascular cash there deals other where payments deals pay payment. of started in to Cianna Were the You for releases the $XXX the the contingent? it million upfront those for already was quarter? almost

Fred Lampropoulos

payments, give contingent here. and any that I'm going watching paid not have Raul answer. We Raul

Raul Parra

It's $XXX million million for $XX for Cianna Vascular. and

So…

Mark McGrath

$XXX It's a million.

Raul Parra

Yes.

Mark McGrath

so that's growth. see, I the about

Okay.

Thank answers you. that Okay it.

Fred Lampropoulos

there I I thank and for… line in the thank your Mark, been know you've you patience. for you

Mark McGrath

You guys are marathon runners.

Fred Lampropoulos

Thank you.

Operator

you. Thank

Our from Christopher of next line Hillary is open. comment question the your or line Roubaix comes from Capital,

Christopher Hillary

good Hi, afternoon.

Fred Lampropoulos

you. Thank here. Good have to

Christopher Hillary

Great, thank you.

would ask your that reinvesting through opportunities? margin or you expansion were augment And the relative you that positive anticipate that? occur, is anticipate to wanted outlook, P&L do to come that anything if Just seeing there your would to

Fred Lampropoulos

is that mode Well, generally billion-dollar is I been I'll reinvestor. And this is to always our that's answer mean, building that has reinvest. in business to Merit been a

Now areas, margin hope a products. upside And so. that we it's we higher said, there are there being number some of hope opportunity, is a

be to the margin I most are business is would in And part listen, that margin So we but think this the core to, commitments lower and the expansion. even top could that's wanted growth, can our more that us important the line, and is say if products. it grow commitments I the of gross meet we

we I this, are running been way, eye I tool helpful very sitting we here we've do and ball everybody's keeps And good XX think say do in been and Christopher it this the found room everybody keep are do really how the some may why pretty a our other on think it's has very a job. done good very, there you to with found me, we very, go the and goals about by has what focused have to business, that. folks, on

hope the we we that right So get mix.

be Cianna, in are things out some our mix high of is like other products products, that margin coming important. We have going very EmboCube, things products with Merit like to very,

coming get we SYNC. if think this like just that and are products I new to So, on got the our we've that DualCap some lucky, other things

plenty could there's the give products upside momentum. additional of that - us So upside

So are that's and where most very from will of products. come high-margin it those

Christopher Hillary

you so thank Great, much.

Fred Lampropoulos

Okay.

You something want to Raul? clarify

Raul Parra

two rate I and for year I XXXX. at we've on the the the was X% of that we've approximately X% got clarify interest end do. wanted interest hikes ahead - to then I just rate rate got in built myself,

Fred Lampropoulos

you you If long better the efficiencies, get operating withstand for would you the it call, fit Raul.

thank mentioned of you a looks look to for have will their Okay. next wish Raul as like in questions. on from you Well, very I everybody I we've been we hours. couple evening very be all it to Good and good time. for Thank City. night. your we I ladies and hour. thank We gentlemen, the you - good for want an want the now here now almost calls; much Salt Lake and made

Operator

program. thank today's concludes This gentlemen, and Ladies the conference. in you for participating

disconnect. day. wonderful You have Everyone a may now

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