Merit Medical Systems (MMSI) 31 Oct 192019 Q3 Earnings call transcript

Company Profile

Participants

Fred Lampropoulos	Chairman and Chief Executive Officer
Brian Lloyd	General Counsel
Raul Parra	Chief Financial Officer
Jayson Bedford	Raymond James
Larry Biegelsen	Wells Fargo
Matthew O’Brien	Piper Jaffray
Jason Mills	Canaccord
Bob Hopkins	Bank of America
Mike Petusky	Barrington Research
Steven Lichtman	Oppenheimer

Call transcript

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Operator

Ladies and gentlemen, thank you for standing-by and welcome to the MMSI Third Quarter 2019 Earnings Call and Slide Deck. At this time, all participant lines are in listen-only mode. [Operator Instructions] I will now like to hand the conference over to your speaker today. Fred Lampropoulos, Chairman and Chief Executive Officer. Please go ahead.

Fred Lampropoulos

gentlemen, Fred and Chief Chairman ladies Officer. Executive afternoon this Lampropoulos, is and Good

here cold, provision. you on Salt gathered read have are We a General our and To with, Counsel, want Brian us. Lloyd, Lake Safe wintry we to joining thank Harbor for our begin we'll Brian. City in afternoon

Brian Lloyd

Thank you Fred.

may this purely statements projections, call be actual statements other information, statements. or those considered our today, discussion could and events that all purely not reference During are aware is forward-looking from which statements. may We such our caution involve uncertainties you that historical. not results cause events historical, materially anticipated in forward-looking to differ made be risks, unanticipated be in made anticipated to that Please which

risks website. discussed Form the Securities annual report these other and are of which our Commission our are available filings on reports in on and with and XX-K Many Exchange

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

important statements Please statements. refer to the regarding presentation information regarding for such entitled section forward-looking of our disclosure

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

period comparisons useful such regarding and of and performance However, useful can operations we financial trends over business of believe the our underlying investors period non-GAAP provide for information certain operations. measures ongoing with be

measures supplemental data sections non-GAAP to corresponding statements. reconciliations refer regarding measures GAAP call financial presentation and call. and set the release The tables and notes to our in financial included discussed this information for our non-GAAP non-GAAP measures to financial important Please financial entitled financial discussed forth of on in this

substitute net that measures GAAP. for as in financial items in addition financial reporting to non-GAAP consider prepared a affect accordance with income. not measures, some These should non-GAAP Readers exclude measures

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

Fred Lampropoulos

A slide reminder much going how and gentlemen, into the have we're that give our first our you again, Brian, thank view a to of thank Today time once insight you to will like today. taking website that deck outline you going we some on and discussion. join to products is of to us. that go that the all you very for that we're we'd more discuss through ladies and opportunities can

quarter talk with, To like to just start out the terms. about I'd third in general

many of about you slow good in summer always And down literally far procedures. and As concerned that the varied are shut is the is will really this year and it's we each so in down. as quarter particularly even quarter countries the for summer reasons, recall,

And for to predict so it's always us and to discuss. a difficult one

then about and Raul about. things not I'll interested earnings then guidance. Now be accomplished, we're and think sales you'll of other some linger that in we back. to product there rather And Then some go items we turn I'm the going come talk we bump new that discuss on for that talk some to New in and about accomplished that things We'll about our we the have wanted and back we're that such and and to competitor but being will this, moment talk quarter number of have a will the a these recall just going locations events time said in will, issues you year, last come as a a in. than were thinking other got to to to we in of then Raul talk about of other I many third that to over York meetings, specifics. previous I

theme this retreat consider on think Lake staff also in and The today session City going Salt planning our the call that's company that I be for able Basics and is week and that's us we we contemplate everybody necessary the very, as the for all the is to would things theme to are of Back as have. to think to To that talk performance like very important of bring

time being me said that Parra, Raul? let our Chief Raul Well, the turn over Officer. Financial to

Raul Parra

increase Revenue over XXXX Thank approximately X.X approximately mostly an wins was from constant CNY FX approximately organic period as of million. approximate an $XXX third the quarter you and and the X.X% basis. headwinds for The Fred. on million reported, are euro, were comparable currency markets. FX X.X% emerging

to continue the fell million. $X behind Cianna forecast XX $X $X million $X ClariVein behind revenue contributing million million, products $XX.X Acquired million respectively. contributed ClariVein and and products DFINE as falling the by by $X respectively. with our and year by for Additionally, Both million be Aspira Cianna million and

a CE XX%, direct due and declining delayed miss and X% X% of the at EMEA were be divisions is clearance. U.S. portion sales We our our to Contribution Mark X%, continued X%, X%, Sensor follows, at and to the to OEM on dealers worldwide Cianna respectively. from at OCC high as Endotek

In for by had quarters. high adjustment amount this EMEA instead million. to X%. this XX.X% most recognize of approximately OCC have amount, QX, the of relation quarter addition, the been been higher recent increase $X.X during for have was would amount recognition Had would we prior as X.X% of been also to decline OCC In an compared quarter abnormally able revenue QX and an our to we the our

material was adjustment because significantly of approximately Normally, a it's factor by necessary periods and but a felt we higher was from in three this other times than in adjustment it out. quarter-to-quarter, call the case don't our comment on recognition to revenue not

FX basis a the basis in points. year Freight points. of margin quarter, impacted non-GAAP offset and to basis mix down gross reflects product This XX points Gross variances compared tariffs margin, manufacturing XXX as a year, the And basis performance both and on prior margin decline in to basis prior the year-to-date, quarter was a of was basis behind favorable was clearly our XX.X expectations. by XX XXX compared which flat by on points negatively comparable a by quarter. the

The two our which XXX for were and DFINE expected for Aspira which Cianna was products contribution. and product basis for XX our reducing sales, respectively. continue points favorable help XX largest accounted mix, the mix and quarter our components basis point ClariVein to

were month the the approximately of which The QX in related previously of hiring operating QX higher on mostly discussed. has a basis. out up our quarter. hiring were non-GAAP in as to Expenses anticipation OpEx started third revenues, of XX.X played expenses not first and into revenue

improve operational here. about call, we around going let we've not efficiencies. we what already what would going QX out Fred to looking called that up done. finish here I'll ways be our and to just our about During improve we more with at start a bit. waiting would for to talk We're in talk things a I'm immediately little things few

FX revenues, EPS a for XX.X% rate the basis the Again, gross to result by a comparable was quarter to as in headwinds. was comparable for expected the operating quarter Tax expectations non-GAAP our the expenses period. exercises. than lower margins were period. XX.X% compared of the non-GAAP as $X.XX and it on higher $X.XX earnings EPS for for driven below compared stock option was

two our cost and XX basis payment debt of items net ratio million with on million of debt per $XXX was of QX And was $XX totaling a balance a change X.XX% driven on Cianna basis. Few for everyone, leverage by X.X%. a minor other The and approximately million. was X.XX% gross from contingent acquisitions

touch at in was on approximately we've of $XXX quarter … to $XX.X of million. capital Fred, Working million, you for what came do and comp $XX $X.X want stock the million CapEx million. expense base D&A

Fred Lampropoulos

tough much. as if I time in at I the a have quarters, can Raul then completed I we've ask heard we done guidance through been the that the look see things will to it's year-end all two and the through you that Yes, look when about Well a I the been at complete go some of discussion I would take very think then the or and but get thanks you my make and the last we guidance take measure comment and really of are you'll of show start improvements And that third if well, we've to you trough before when a say, doing that note the believe quarter. we see. that really we're we that the end then where against the and that at will things a

we because I as taken have of me think what essence trough, The what actions. the we bottom of they're I'm let And tell have significant. some are of those that you saying hit is

to would say, very X% First what we employees. global hire in was as but have and XXX they have higher I – conditions. to count were that's about our you staff to And to going head the you of we by the but were never planning then because reduced non-essential much not fun that everybody when all, that's say that adapt I'm growth, quarter doesn't come, essential,

And so we those made changes. have permanent

if contingency that steps There of be don't think X%, We have saying to to taken net some I leaner. to be we I'm to done what get necessary. an think But need will that go and adjustments. put will we I up take future is effect. to already necessary. in a that plan some I And have the think

Salt XXX. an took on And here It R&D And facility them San part and was of any activities and additional Jose that acquisition. cost our were the be shut central have to this and the permanent that Lake that's There down savings. moved closed a items We've certain California. here of going down. hires without that will facility there. We R&D define part City was in

basis at on it's of reduction. million this in aggregate, an annualized $XX in the we look about quarter expense the As

we we're passively. going to been been when by We've actively so looking do, at we And haven't sitting about that. talked very things

are discretionary watching to those like carefully a lot very things things cost addition the that we things trade money. that, In travel, of shows, like expenses,

are that things the absolutely to go We'll necessary.

which fact, And traveling there are need hemodialysis things do to do CiDA do. evening things that In Diego would we versus things a we'll to that continue and this to But you like those the the will attend to meeting, is do to San I you to those. need that meeting. be

things I very, very And watching we're think these carefully. so

sometime or additional consolidate the our quarter Salt there Lake. We consolidate we that another Lake. Salt Texas, In first satellite intend to facilities addition, in either facility will facility in in are our Mexico here here into

things reduce costs, And the all have And will active plan so permanently bottom an help efficient. more on these an effect of we have doing become to line.

no quarter into question as next will lower the and year look we costs. forward that that have there's we fourth into So

new things the we'll the these we've we of months. And that wants things, and that. and understanding forward a we believe much report backwards and six look than that to I better this everybody I has moment that comes when again, last is talk people it products understand those the of out about on what done, about – been why be things that where in path talk in will we've hope

still, to the everybody and I'll if can optimistic come now then were a you guidance that, talk And are over or a questions, back the of about things talk number there's I we'll circumstances will as and all hope about. really, to me the and And we're blame doing business – time without and tariffs. to I'll Raul, I'll come the to understands we and but that's to trying we're you excuse and the discuss this all And today some things who second, those that about why again, third we'll like happy today. message there things be XXXX. quarter, also very or talk that in FX continue and then be know, turn

I present Again, live the past, I the and have look report to on in the to but future. have to

and out with let look me that the for guidance turn over Raul, future. So to said, time that we where

Raul Parra

Fred. Yes.

hit then out I doesn't looks. our the we let's about the and are some about reflect how get on. how done guidance think But additional talk items we'll way to unfortunately of what want future that and we more needless we've excited say, to

for is XXXX our QX updated as So guidance follows.

that adjusting the that we are continue see to in change FX euro, We product headwinds and emerging mix our the CNY acquisitions. and for markets in our

will revenue of range for to million million, Our the which includes following. guidance $XXX in $XXX the revised be

X.X%. will Cianna, to our million all of revenue down ClariVein, as our $XX from to is you will on other guidance acquisitions. core and bring million for to few $XX Non-core guys Dickinson, X.X% previous year NinePoint approximately minor to We $XX a million $XX a the million. are be We our constant estimate basis Becton currency aware growth non-core

be adjust be I will Gross that is a our contemplate Gross to seen revenue tariffs make to year-to-date, on now in not FX. and will $XX and guidance with which will administration our the and into basis fluid reported contracts. XX.X% which than our XX.X%. unfavorable legacy is for along which on have want between what We year. $XX The for leads basis margins margins – does clear we XX.X% million million our FX on coming the non-GAAP between demand a headwinds, The the the change from GAAP average, margin lower our margin have XX.X%. sales mix. corporate is range products,

tax EPS On will range $X.XX and on $X.XX updates the Interest $X.XX. outlooks a forecast be $X.XX revenue FX of we between percentage expense for $X.XX the rates, range of as that XX% XX.X% in range to forecast year. million, current which approximately non-GAAP our will basis, GAAP $X.XX, million the which With for OpEx be efficiencies XXXX. obtained, of $XX for interest market current of includes operating estimate XXXX. for to to approximately our XX.X% we rate the to contemplates between Earnings approximately headwinds $XX the and the the a

The we're also and sales, that mix gross fourth the our expect related operating and had that Fred? the we change margins in quarter. efficiencies that and expense the operating the to see product to we’ve seeing

Fred Lampropoulos

Okay.

at talk had. that my to important. to We've are least what also we're don't completed about about that, comments you What me I and talked let in I do where talk and things So any again need challenges to heading. talked that discuss about think I further. the we've are about And want we've we think we've

comes have reset take want we're guidance where why. me the XXXX can make all, things to let we the that We to we sure to expectations of table. don't tell First off going anymore. And you think and for the provider premier except opportunity to is a engaged preferred now business change. with that And do have in. enough We that this understanding and we visibility we're that the

progress – that has to be remember trained. summer seeing but go are to was that are redesigned, people things to to We have it it and be have through there be

that forward. we might third, But in it's there but fourth, moving is XXXX. that So reality something come the maybe thought is might be a the

sure And the make want we visibility it's good However, as to in sure that that this don't us, we get quarter opportunity or get to numbers and overestimate what we we're for better going a but means. underestimate right to make them them.

year. So about. the guidance a I we you take think it's best to at finish the again, and up Take And we're at the it through talking show we are improvement quarter for year. third this would look will you where look to this invite a that

personally work that we to meet we'll flew with to notified A to out for then think move the I approval back next with continue And CE of mode to product. the in again, into where we're year the the forward this basics. Cianna body. things working, couple Mark we are Norway

up to relationship good that a dialogue understanding. I really helped and open think

am reasonably that done will immediately. And that by that end of year. to we optimistic have are the I the open market prepared we

and form up other We is are have everybody that. in countries we our was the being was as arguably running Tijuana. do as most several companies, want essentially and everything now in one prepared product, we that to two sites, this Becton comment that that six at is facility history, in transaction our notes to or the in about transaction are a concerned, completed. in my built now that remind and difficult I prepared I Dickinson What made far

I just as developed also are put look growth list. as six to I important. I internally. really other the all products next probably there, robust And some this that months. many about me are the is could a but are were think in These names products out we put talk coming as just there's we that over things of you'll that note new that pipeline and go on and forward, that Let There's

XXXX So be on report give we see you full you'll forecast to that as essentially at we and all as in year you come the one out start our of core things growth will we the we see is everything.

of that to debt, the actively So those but slowing can saying opportunities the on but products. say improve focus the this of We do and is efficiency couldn't up, are really that it a down. transaction, to not that we're our point. and new not and trying of our that kinds I'm we reduce something at business it's just essence deal. sits think we exist, not we out are, is not the go as make I do the important seeking another may to as pop these business the things sure transactions is introduce – Again,

the also about Wrapsody. I talk

a finished in the We accomplishment. have Man, significant First it's

to to the the will pivotal in breakthrough We designation. IDE to from the technology that the with Rhapsody have moves on kind a approval It's the very able big stent be important. the early sometime have we we that in fact are first, is this for late very, we and second think trial PMA hope meeting of FDA the that initiate FDA And and system delivery that deal. we filed and for

where are, So humbled. at we're as look we we

engaged. We are

process explain those mean, full have We let a to nothing has a And R&D pipeline. except few in you. things. I stopped for the me

to that statement. aspects things is able leverage One intention of of it talked the the our is all income about we've to be

onto costs. last well held we as do years, something have gross as margin. costs, will been will believe and the R&D invested SG&A and do you We that expect show in be that going several improvements less we that we has we've forward for So to able

so is that percentage is business That's the being entire we're earnings higher again, process. line this this a going what totally our to operating working we goal. get on. profit that bottom higher share. of the sales, is, in and a instead a manage per That's of So And we're engaged

I lives that like or in businesses, don't to but that ever experience there's very, So, any through believe out humbling here. very go things, our it's these come of any of things actually pleasant good

again, that make past intend we okay, to things on at and and judgments you up your and we that you end that show to to look you I is and to say, hope more So, forward, of the where and cash prove done do new performance, that of. that and we've will we introductions, CapEx better margins, the product that reductions things in going get flows, better capable help we're performance the the kind

we are on that Now, anyone the we're thinks unless it, early enthusiastic in not Raul about call. said

these but You about our does things, have damper not talk it to enthusiasm.

In being fact, honest very I'm with you.

and at game lost it's well, you at you – quarter, was it's new As and like looked should've the we looked won didn't. it that we But the we we now week. the said,

say, I let bring if entire issue me, you, to company. just commitment don't decide And and of can not performance, back know doing but that we and again, that believe to but have get staff, of just And we that, a best as to some that, them. the execute well, me I our the numbers you reiterate exceed the hitting

is make odd of my this sure and have I conversation for success. that's assessments quarter, know forward, when we're make job that Now, having failures an to our to pan we look but

here this, now you with got have thing, next us. I for gentlemen, and you several if more I've I will on to sterilization. sorry, talk a Raul need for net half one We've all hour. today. about been I'm ladies to And the hours be that's you and an about So

I we it, that as I to brief shape about good let comments far make are few sterilization. in know a but you as want

that some read and particular of situations. – out I industry notes I approved of number number We have my either point there sites, a from these sterilization will process coming as of also the And analysts to are of groups, review each being we opportunities week about I different or approved. because out be in notes, they’ve talked backups is different in I our think think that this there shortages, have a

is something we we things and As part risk place. have time some enterprise our system, identified of management ago in this

area, of although, not And is good everybody there we're in so that that'll in as a be capacity very the medical this risk, challenge shrinks, as call. a but device for shape

go attending. our to to will With that to Thank time I and again now time over being the forward turn will for we'll said, turn administrator. administrator ahead questions. your I you the And the and look

go. Let's

Operator

Bedford comes Thank you. Our [Operator James. first from Jayson Instructions] of with question Raymond the line

now is line Your open.

Jayson Bedford

guys. Hi, good afternoon,

quick and the fourth Just for first, contracts, recognize in is expect revenue questions. quarter didn't in to you the clarity, you don't guess, any a fluid couple correct? I XQ just as well, that management

Fred Lampropoulos

again – you for thank that process. starting are we Jayson, What just the question. No.

by a I inventory had of planning, discussions there It's configure out actually have their have people for and we a use go up approval. have a We few were and that and to to conversions structures mean, lot and and prototypes process.

so see along, And really moving of significance. year. of next that but part major any the We'll coming is it in nothing

Jayson Bedford

provider status in Or that products just And Okay. you is there that management? included? release preferred a fluid the for major other device med distributor, with are mentioned

Fred Lampropoulos

current our customer. of sell are a lot standalone products. We They

there and of that are go our BackStop, that, safety things like into syringes. scalpels So products safety our our many

But the that these the lot we've preferred. agreement, of always that that of into go we've been not the arena. provided biggest So products purpose there's guides, primary a but – change

with with other Now that theirs sold we opening to executed an an have Medline, company. and agreement it out situation the angio creates Merit where for

Jayson Bedford

just maybe question, And of Fred. bit a bigger picture Okay. a

your You're some now cut that of impact Are cost will not costs where the you're cutting here. business, stage at the you historical this sales comfortable having growth? organic to

Fred Lampropoulos

lot a like have a where other law Well, with we do to basis. preferred in you remember, of we national issues on looking they're types to China, have numbers things big and deal of have the of

a looking organic. are things think more I of and capacity in at facilities. that are of still capacity what have we're we our in those But terms So that doing, all

that one that new our that a we taking we're and think street December. new ready be And center facility come them of I are to a across to it exist out of We and manufacturing comes into as get but technology no rent we operations my sitting the here, coming consolidating out are to R&D in continues really production, R&D develop offense, online, and the really products more would room that volumes that operations in but the part do group where that the they at, guys lean looked into have efficiency goes department. products get

yourself these a X:XX So putting of situation we're – morning specific that five this at wise. are us and met about to talk sure making to

comments see this facility will the it done we'll will There this, So and correctly. make we there that these a to wise don't want we I be again, was to sure that want in right do and we there, earlier, think anything and lot decisions capacity. We've fine, San was I have an think regret. Like to are make capacity Jose you that parts Jayson, for was not being We do essentially think in sure productive. decisions R&D of I and it terms my the I easy. enough we do was of we make we the no consolidation. and production And a to would time make experience, just have foolish long that or said one

that. on color some there's again, So

Jayson Bedford

the, the guess, of line? I to let's call I'm it, you you X% base, is business though a just in top do range can lower on this cost X% still what curious grow think

Fred Lampropoulos

I an that, answer. let Go ahead, Raul but have answer to Raul. going I'm

Raul Parra

strong Well, I Fred mean, our I product think pipeline. referenced

took about but I be think think I we're I of parts, Again, the – think some to look any very but have feel XXXX we understand about we so – the we give these to guidance, business. careful pipeline. I strong not as off still think I going don't table, optimistic to to feeling we out, our want I'm moving

Fred Lampropoulos

had and that always of marketing those say because growth things. I Jayson, about feel and I And sorts sales him and all positive

So do. yes, the answer we is

Jayson Bedford

queue. back Okay. I'll jump in Thanks.

Fred Lampropoulos

for you well thank And that much. your Jason, sent as you note prior. so Thanks

Jayson Bedford

You're welcome.

Operator

you. Thank

from Next Larry Biegelsen with question comes Wells the of line Fargo.

is now line open. Your

Larry Biegelsen

the Hey things question to going the year. guys, growth the thanks the so level high for wanted in like And here. guess this is it Fred, question, wrong were did I like gone guidance. – last from lot how about frankly, implied a taking well. one question. I seemed But mean, year ask I it we seems has get outlook

anything operationally, you know, place? you How So you I think don’t to you need think to do got change? Fred, this

Fred Lampropoulos

Yes.

there couple were Larry. a think things, I of

Of course, We we felt built in facility can’t the that dismiss to went we takes Brexit. Britain items Great we and that. do But like money needed a costs time. and

OEM We know at a look margin. doing you take back, This had it’s last might. we a high play, into If come year customer of would where million couple million. but it at it customers, $X.X large year over that $X.X didn’t come didn’t thought we

I companies, again, where were to a cava and the but don’t OEM. want vena building player identify filter another we had also were We these

into one we other around that or that margins. it of revenues were the $XX come take million thought million, $XX you they loans, high million OEM $XX play and if just somewhere customer So and was would

it. affected that So

and not did these you That it. a get have We’ve a crisis. We sound when starting again you I revenues that at is we distribution dollar, dollar, back. to the thought strong channel. think but esoteric, have seen come our maybe look if world out you the take of the

was to And orders the East. shipped. about East. orders the coming that we Middle was more are the going from that talked was there of deferred It Middle One

quarter. was and rather the third in second activity We that have of lot quiet a

back So those now. are coming

we I that’s look And think look forward why at we as those.

And things effect. we way. these the we the Cianna, that of Cianna terms to us. on with But Becton sales Vascular if we force thought right and caught We time the in all let’s we – human. go we a the integration we keeping the still thought to Dickinson, because this, both did Now, Superman of spend this believe the just is of a the could go out acquisitions. just We Insights, were that thing – up in found lot we’re

Vascular Insights, on think quarter. we I are looking today mean, at beat I the previous where we

summer, revenue. third the quarter, that for the which in quarter the quarter $XXX,XXX the beat So by slowest is year, in previous over even

So I it’s or think we that XX but months will be. be it would thought behind where track, nine on

So products, and that the forecasting. factors – of came our think that the I to there were the to as those pertains do our into own overestimation had play and marketplace instability it with

So all were today. of a are number in think you them Larry. And where there and I here, we we factors are add

of here said, ones up a in progress And Now, call projects. which stop had physician R&D all we us coming will glowing new minutes on place, here utilized room. XX to just continued a to, three and gave that our remarks be been he call call about to you We’ve which time trial this that there’s did people it. our he of we’re XX, And deck, he physician being where talk pipeline. forward. today and we here, that new wanted slide took the a we had before we take to refer put the a bunch didn’t devices would XX sitting and We

have and and report know you’re our going I’ve to to go back to control. some going of the or a you’re back this, like assessment, in another make try in question, and our going these an do then were as this guys to again, quarter lot control to have do that. are said, So I And to main there the some you part guys not of factors,

forward like go, to commitments under think meet have business in going But to put our we where and We our and and going are I control. our forecast to those guys from promotions we we the and to have understand to make feel we here. calls. plans things obligations the have need place You

So best to answer that. Go way for that’s ahead. the me

Larry Biegelsen

very helpful. That’s

doing – taking digits, calling Raul from to many Now versus other is what models And organic And business focus grow the the wanted so XX% math that? I’ll it I’m if implied future outlook. on questions. the for I and Thanks drives guess margin single think acceleration also What the for updating math any QX gross about can if color just XXXX, on or just in for drop. QX? correctly, midpoints color like third – XX% the still like I right, modeling the today. doing looks I am the sounds the the lastly, X% drives And growth this you quarter. high about

Raul Parra

Thanks, Larry. Yes.

our I fourth you’re guidance, feel that a good guess but the we – at the what like provide for the looking X.X% provide you think don’t to quarter calculate midpoint, is. we we at if I So, year quarterly to X.X% should base the provided

number to there’s obviously there a number. be Now, lower and high going a

end there the obviously, I we somewhere hope the think, to middle in year. for

gross the there? your margin, at… repeat as looking you As was question can I far

Larry Biegelsen

I’m Any color guidance I’m math It that on the the quarter. third multipart improvement? helpful. like Any looks looks And from whole if I just the in It the implies again. XXXX, the to sure question. – to retracted commentary the commentary sorry, midpoint, you – sequential the improvement the make color asked doing know I be heard Yes. you’re XX% P&L. or Thanks I’m range drives question. guidance again. long you’ve what just would at on a not sorry curious XX% like about again, right,

Raul Parra

Yes.

margin, think, that. we did gross have going reductions to we cost the some into So some I obviously feed that are that

headcount reduction. also some We had

the at that we’re and low on where you look we’re the a to at cost might But different you and If doesn’t initiatives sequentially. on pretty day to you we on it, grow slightly year feel look it get out, take we we a comfortable calculate guidance, end, the in did. think cutting the number it based basis

of we’ll revenue obviously increased which our sequentially, help And costs. some fixed on also have will

think, exceed. that guidance I thing moving XXXX, As think parts guidance and we all on, that the think can just we with release that as make numbers. accurate fourth quarter we prudent deliver to we we to meet going have our we’re wait that going is provide the when to far I sure just do or

Fred Lampropoulos

Larry, jump of a quarter a in number the fourth color. let on little to add me new We just products. launched

our Torpedo. products embolic We’re that EmboCube, these are our saying

the we have ConvertX the out that’s We PhD. there, have

and a the force and that sales very product. of enthusiasm have from products we on the are So growth strong momentum newer number showing

we what delivery. and So the unfortunately in have today do we competence. a would level that’s wiser, been summer, to I we feel, have confidence where very, think we wish the to we’re get I the think that with is to bottom the of trying numbers And point difficult very have I do do. a to again, here but that’s thing is, line

costs again, week. we’ve everybody’s and sitting a in think calls, and retreat what we of try staff beauty I had overall, this And terms of I think the do here our to with

what all on parties than you. people example, need dollars. Larry, at all the and just an retreat, things ran we do, vertical share thank hundreds with in the WebEx I to over did is staff the a this. thousands saved we a even literally and everybody Salt to bringing that have meeting the with And but We’re as Lake of the Rather from of world we of various looking

things that’s more think saying, same still efficiently available. I differently the we this So made of how do those looking and that have and and information can we’re at type

very then adjustments, we’ve feel a all it the lag. on that to one responded so a then quickly this the there’s And in, future that when can think think think make can I we But those mark. that, is in mentioned I demand. these at do of an best as Raul that of might come And we you very, or lot terms there’s say, you the in doing as point. confident doesn’t So meeting of things And are I before? anticipation that why we’re build right didn’t

Larry Biegelsen

for you questions. taking Thank the

Fred Lampropoulos

right. Thank All you, sir.

Operator

you. Thank

the from of O’Brien comes question Matthew Piper next Jaffray. line Our with

Your line is now open.

Matthew O’Brien

million top what at QX, expecting. $XX is a in starters, the Thanks you’re for look when but guess number bit question. little the QX about I just to short been Afternoon. had cut you a the line, for I taking

meaningful. I of is weak Seem think QX? know standalone is So but this of is pretty that’s pretty out it, I capital quarter. part else a in like Cianna And What sliver. just coming it’s

Raul Parra

you, to with mean, everything. It’s Matt. little of be I bit a Yes. honest

for I acquisitions. outlook our think we’ve cut

going impact that. got So Cianna to that’s you’ve

a ClariVein to slow You’re so biopsy, The have great. – going biopsy points that’s little going not it. too, to that’s biopsy the impact is that. impacting sorry, doing X

Drainage struggling. is

it's going didn't just in It built think things We us. caught bit that through to should've the really to got CNY in XXX to sure also frankly some a we the bit that better. little in think those that inputs little thought I today, stabilized QX. FX we just into which and think have So hoping there's seems quite we making hitting all guidance we've helps those in XXX get were factors all to I through that was that. FX a the tried

Matthew O’Brien

Okay.

year. So it taking the in wrong rest out the virtually could of, provided everything you for go can guidance the think of you possibly that QX for

Raul Parra

of right Plus the now. doom and thinking things positive all gloom. not It's we're

Fred Lampropoulos

think that's a statement. fair I

Raul Parra

Yes.

Matthew O’Brien

then Cianna in I'm just know that there the outlook the It I the CE seems little opportunity And is lot reduction product. a Okay. on surprised in Mark. for here the by interest with like based of States. there's an

would've has like bit do So maybe along it there little something or bit so else thought going Because on Cianna far. that has feels had I would a something hiccup better it those is little the than integration a of a lines.

Fred Lampropoulos

Yes.

that's terms that the stuff, expenses SG&A of all I'll and So that all integrated. take in of Matt, all one.

is consoles very Salt this and disappointing all that comments approval with in We've in to manufacturing fly terms January, in been and President. Singapore way candidly, are been of all have in the Hong and It done we spending our to I for KOLs the we we XX Europe maybe think had Norway that that we in sit unfortunate. Europe. time, of all the has more of waiting We're But We've but made very the work, cases as of is thought City. countries forward, in in Arabia. that that's as Kong. product. integrated to almost have I important the all look in previously we'd Lake prepared and In the I down of want part Saudi who

the the lost So of and to we’re come should of for year. all was and But the slowest the time as product. starting back maybe capital then monitors I this just use. have this transition, for stuff of time cycle, of are with take it now – Cianna all And remember, always the disposable we the again, there And we where think A summer year And the and And that where is enthusiasm to those the historically, at takes our we facilities see pipeline. the drive time through is place. disruptive. transaction also you. biggest haven't slowest knowledge this applied the our in went generally those is agree that really that we would

acquired and struggle difficult I remind we the talking please, third been well. new again, I think and – it again, will year, enthusiasm that to we So our lost we always haven't want the do products about, same be as as we've everything on quarter quarter every we a had is

So that's optimistic we're levels ordered interest and production. going seen We've and one in of the increases already why forward. reasons,

of things those are two strongest them the of expect of one quarters way the historically, we the is moving and All would year. what

So that's the best way I can answer that.

Matthew O’Brien

it's this When X% think as Okay, make up that as when the to you decision tell, to might headcount go said, could about helpful. there's be it to you do so cut said a and of range I it'd you million type that? a at to point linear I something you do the you if that's go then And decide is a annualized the savings in just X%. potential far were think you million X%, up you $XX And then, if savings, that? of $XX to savings

Fred Lampropoulos

making question about are – don't know of talk I'm just there. know But selected don't are let's haven't to going we where of answer not it kind complicated. is. I to Since all things the linear process. how These decision I those the how

the of year. of Mexico, some things they'll will the will some will of to go the implemented some And before and And those products but make looking and year, meeting we end to be first the go Texas. we're decisions after

quarter of some be first maybe we've if you'll probably a the not they'll see the the effect we in it's year, really wouldn't next likely those because some of actually two those, didn't but I not So we very, But decisions fourth see take and effect as decisions. holidays, I in left make but mean, months got surprised quarter, made.

or reduce those afford these a places where Now that sure And facilities make can't consolidations and several to may beat take member, selling we're locations headcounts in to some we inventory of making miss in we to these to those and it product there. months those have customers.

have It's we but complex conversation this essentially you So in process, engaged duplicate a that well that. assure day. just to every we're then we

of facilities the aspects of this in business Europe and look Chief things location Operating U.S., and in Officer, at at Raul all the quarter, during So there. that Europe, the and our all the our just any we're it's Frost at isn't looking Ron I,

So all been the we of assessments making opportunities. of have

to something? want do you Raul, add

Raul Parra

remains, Well. again, cautious. want – we I We any – we to make make don't we've to sure that I growth going sure here. to – think had we the we're want historically just we and We're focused. want just do knee be pattern that not that jerk to reactions

of when sustainable cost it's we're the time. of it's is, at want going we target one, two, the we attainable mantra kind that And a over think I whatever also, make for that then the reach. to be sure looking to period

the sure we're not made then wrong going made that we having make regret we too spend to now. additional it three, and think, to something from we're going want money to we're fast. do six we I decision four, to that, So Because and months

Fred Lampropoulos

Well.

that some XX the decisions add things to XX I meat and of made color them built. It's talked and Let And number of apply listen, we a the since, XX to have of and we numbers be I revenue, more and take off that years to them portion years or ago, we of some within of wise, took let be business. trying too ago, a A especially just growth to to a that. about and just bone adjustments things a back $X me we're bring we mean, billion in actually the bunch think made had days lot that. we much lot

is, to of to wisdom. you that's these do hit, and we you answer same but the the can, all question do things do. And folks have we can we that is, And want and have it make still phone with again, we on the so make sure all growth? sure guys can the what And and we the sustain asked want to to

really is bring strong the we maybe the to and issue want more at can to forth think of people other everything. important strong understand a And and willed minded ideas. I commitment looking be I But here.

I been to receptive them. think we've

part we've of things it. a process Raul, this second, you Some But dialogue we this a day. to here in it's sit down convince. people wait and engaged X I well, been didn't able and understand long But a That's o'clock cafe that's and morning in it. down the We for we're started at fact that. are what doing every street. mom-pop think

Raul Parra

That’s right.

Matthew O’Brien

Got it. Thank you so much.

Operator

you. Thank

with Our of comes next from Jason Canaccord. line Mills the question

now open. Your line is

Jason Mills

taking Hi, the question. Fred. for Thanks

the you is you growth. awesome optimal been thing in been than was about for sales it. most I gratified several the flow. that What to operating tell we've is asking about to the deleveraging quarters, less But hear I'm me it right? disconcerting And other want has to cash So the don't mention line, the

XX%, what So is mean, down be going XX%, whatever the going I down in to to it's to tomorrow. stock be me,

maintain I even either positions think up. folks, to think For or about catching

get comfortable, less the and fair the they're knife it's to to now think cash I'm ability falling then earnings with growth going your and I say, out putting flows. to stock to of with just in right think improve a terms level abreast sales that, have this I

but of I'm margins got they understand in being is to here awesome. So the the deleveraging the in gross why guidance I the deleveraging where terms and how relative including business that the in are hurts, expectations of folks interested own were business of fairly my and most the models, – we

margins coming cost in forward. operating $XX I'm to business out is able going if so fact enough And wondering, million of of to be the grow

Fred Lampropoulos

set it's going to also the helping said, at both and do to we've to we a done up that to that generate drop it And we think things this at things at million level we need other were areas things. will do, were we that. Well, we we I both $XX went of reason various and need CapEx. don't X%. additional And least done. we But revenues. terms the the and revenue that generate We those that What starts by to think again, question. X% in about were help are Yes. starts things think these the growth from year's we say, It we we it's to to talked be need on that when good do did want to

that think That’s income important and based all of I we points the in part. And different now the the leverage – another on the statement. look have ability

just points, I’m were expense to so an numbers went As from XX%, that’s right are say now, use types so demonstrate, you substantial please than just going to on basis example, if take, that’s SG&A that and and we higher – let’s cost you various – a what of to these round to XXX so this and that going is maintain have programs reduction of went sales they’ve also just down of a thing percentage growth terms than at instead less and having increase. to its as It’s R&D number projects a had get department its believe or of in attainable. of And of just would of that number. a be that we kind have amount

to going essentially levels at forward. operate have XXXX So they’ll

Instead looking of to pipeline, things hit will and R&D numbers that and we’ve to XX tactically at offer as the in need best be project. Now which the we’ll having opportunities to selective we the been have ones doing that select in fit And our is those we means, strategically matrix to those. what projects more hit.

efficient that think, that things less, to become people the marketplace. work faster I to more on So are actually through more we’ll Jason then we’ll get things and have to

improve looking operating profits earnings at So margins increase of and to all share. think operating and I these we’re per

do add you something that? to to want Raul,

Raul Parra

just I starts increasing with mean, think earnings. I No, our it

side, that and more now I mean sure what can generate sure is that we making we’re making we we expenditure should drop think million cash I $XX a flow. a next and So help our on Fred focused capital that earnings. our mentioned that year obviously, costs wiser increased doing right being reducing And free with the just on earnings lot then reduce footprint

Fred Lampropoulos

And let to little further that. me go bit a

and as and why be that that’s why don’t the decisions we is going business, do balance the it well, And in and We make do do we go we’re this do this to through We chop through to don’t do see to best why try us right you that sequential and doing going out heard going know and quarter. you in this You’ve be say it. know We and XXXX, and be that? we’re that process don’t while and we that. one we properly. go this about making sure thing not done think that’s wise it to And could want one you we – improvement. will then will that’s this this

doing the we taking execute. it’s have need mean, you’ve the many we out where XXXX, we No We take we understand, and haircut we what to want don’t have expectations developed consolidation. can we will us the reset do, just counts one’s have a think told business, than to I the times have things tomorrow to that Again, and I But not plan. away personally. things it have in go we’ve I It’s to as don’t said is about than to that into it. know commitment better I a go do. up whatever it’s understand that want been serious more until we out to me only that, many, those. don’t from. that we’ve that meet do we’ve hurt and I Its to as a do, come listen, get everybody. this thing we plan, to Well, I but do but the prove we we’ll prove or – need and to we happens whatever and and to we’re going that need now we efficiencies we medicine expect we’re

be that’ll we’ll do. what And

and people unfortunately people doing how can said – a not but that thinking mean, sure time, about that something it, attentiveness. mean? just talk mean we’re stuff in future. people, are do Jason, about day, to It’s not every you we’ve I’ve it we’re like, have I that these at been time, same like and you to but I we look better it again, get we’ll path. You the to not what we so for on this So but times, at here takes to will many level I is have scare – are we know wise out – high and this go be through and be you just through about before do of I the days to things make

Jason Mills

all Fred. it’s for that I know Thanks it. appreciate color, call. difficult afternoon, difficult, I difficult

not yet, the that you’d for like do. Here one to

follow-ups, back few in get a queue. I’ll Just

something go CapEx its go that we of So you forma year, let’s sort next Will just conversion on So pro pro forma use of sort close in to earnings, least Can this earnings, we conversion non-GAAP year? than you reflect let’s be year? reduction. cash cash do gap? for And as cash from expenditure back midpoint, reduction I to growth or And is we’re we I is second. next to gap level be conversions? you going operating see do operating say close flow. think. higher in at your How let’s proxy cash – low say put capital see do say, a anywhere a to we for Operating in free commit wanted just to $X.XX see operating of near that point at, if Will to year flow look to operations wanted not and to next can operation to of mouth XXX going at and million going which you do cash flow, just It’s I flow confidence that? cash the back that income. more you that an that. How gap? have flow year, you better for words $X.XX flow. to going Will be that next close a X% whatever,

Fred Lampropoulos

now. but can’t, discuss to right it I wants Raul Yes,

Raul Parra

No, at I think, right? look, again, I again. reference mean, looking mean, aspects, that I’ll all just I we’re

more cash flow. First profitable bottom back line that comes and of it more that we’re and the flowing to converting was that through all, operate making sure that, to free profitability

at is of our to going We’re a live. on looking inventory number that a measures capital. working just go We policy implemented new

get turns That’s costs our some get out crack. hope We to there. take some January Xst. time. of the I inventory, think That’ll biggest up to in nut

Receivables, say we’re unfortunately you’ve heard me growing this, internationally.

think So do takes those, I longer as long DSOs, them to is current you maintain for it The reality as can business, we be pay. happy. we’ll their OUS, when

sites also be this to next at to other have just, that money we CapEx building a a less going we’re And at year. think that. if looking there. on. making so that spend we’re not And reduce building building we have building payables, our with then again, sure And I to mean, we deal – can And footprint, year. I we’re squeeze we whatever there’s also

to through So flow. free cash that should flow

Jason Mills

Okay.

back I’ll question. get Okay. Last in queue.

does not Fred, acquisitions few forces As –in forces it’s of impossible force enamored to of any on which years, How how it M&A, of analogy many get out I sales looking good future? the out about need part vis-a-vis deals. did inform, know and is for in does plans but employed And were the from standpoint. cases, and with a sales different have streamline how levels specific where to organic to you you’re very sales you difficult all you these found don’t mentioned disparate the deals maintain what is, sales which you these you’ll various to and in and in acquisitions and the them have and I keeping if them. forces, now of needing you’re be the selling now you you’re specialized included, levels And will it expertise we’re sales various go to these finding and force consummated technical a that going acquisitions, be to very, these – How you differently? these understand you’ve an question – a experiencing read than basis. how relates M&A those going it and human. really And Superman trials the tribulations Did back defined Cianna do

Fred Lampropoulos

Yes.

Jason Mills

Fred you, the Thank question. for taking

Fred Lampropoulos

good question. It’s really

dealers Essentially our Vascular converted all outside Let’s was we’ve the that dealers. with U.S. that direct maintained start what through some to Insights. then done is and over those of And sales force. we’ve

But up. So we pipeline the was have in was in that think that story terms audience, filled day easy, that, play of got track out but painful on another one a different that relatively revenue. out way was have for that others that another we what now. That’s played didn’t

let to Cianna. go So the me

with all there evolve with as And but that group. complexity defined on out I we that left these things go to we’ve back gone we’ve think okay we’d of you’re there. define, we’re learned us don’t original have of listen, right, any have in is I salespeople we along, and the if Cianna folks that know

all looking they’re think back that – I was that, at things. gone. now And think I

probably not you to of about And best that was acquisition. of this talked some the me

So I think realigned. have

intervention, We intervention. have our cardiac peripheral our

We endoscopy our OEM have our we fitness, business. have

point our be can hitting at aligned our we numbers effective where selling, in be growth. are to we and I in that So can this effective point we think the

execute find a ops side. well. to We as We But listen, we didn’t that, have statement product. say on fair did the the

– bucket, any this They maybe, that on at of transfer. did I and I positive the different side, was on we stuff the go our – things quite there all mean HeRO. we can sorts go the quite are boots little have been correct. of most an and are in of we giving things want I’m or marketing and look We’d think didn’t sales manufacturing We’d for was that they those all to That back we we think, we’ve I the don’t example perform understand are things, if then you’re learning specific of bring clearly, operationally, terms you some say well we on and the we not it those things did over look It have at of these just and And technologies. a our on big in did them. the executing successful the is, did on all back disciplines, where snare I the point the business. got that ones was different something way to. a fine. we well.

lessons. given all taken haven’t we’ve painful had these lot but a learn on to time it’s things, we and Now, some up more

is So best correct. that’s can assessment the way answer at your I reasonably

Unidentified Analyst

Thank you, back. Fred. get I’ll

Fred Lampropoulos

Thank right. you, sir. All

Operator

you. Thank

question comes with the Hopkins of of line Bob America. Bank from next Our

now is open. Your line

Bob Hopkins

hear good me Thanks you and Can okay? afternoon.

Fred Lampropoulos

you. We can sir. Thank

Bob Hopkins

Great.

your one been last didn’t of kind questions a in a some asked. a rethinking this structural businesses six much I question to you’re basis? the things now, of release to problems require that more on of way that have and So, series just is, months, do of have of in Fred, break you the a think how that adjust strategy quite way run having that of of structural versus more the a a

Fred Lampropoulos

pieces think of it’s them. I – of both

onto didn’t that break So, way. let’s our things the go

think those perfect almost in discussed it about I we the terms ad nauseam, storm. but talked of

you international you’ve benefits. have things in not got going on our we’re all We these things got business, to that tariffs, all Brexit, China, have you’ve the of

of So that’s part it.

structural wanted I maintain whether to R&D whether philosophical think Mexico, moving maybe, the that we to a that it, on think of think capabilities. it I it’s things side deal the I be

others? people example an of view Texas. we that’s have So have of said, answer that R&D, we part of well, grow you how well, facility And a a always small an core can come was, point that in a had, guys more from than

in Ireland. on have going We R&D

France. We have going on R&D in

R&D have Malvern. in We going on

say to have a lot And just It’s some to I is. conflicts lot and groups, Mexico, a even a manage. in disparate in extent R&D but We want of of Texas. to – lot don’t

now we’re much saying, is I expense. at okay, think looking structurally it too what there’s

but revenues do people, good us things about to capabilities today. classic talking of not Jose I the think help example was that, bringing we’ve a been that create San

executed we And over. made and it’s the so decision. that We’ve

be may ones Now, bit more say we have to look at there little the complicated. a other and

think what works, things we work. what doesn’t I past, So, the done we’ve assessing the that are in

a of And the so two combination it was buttons.

Bob Hopkins

outside one curious, issues through path? better guys just follow-up, in some any are I’m changes get just bringing And Are of a in-house? needed to sort think all to tackling Great. of that as you the on structural be this kind might structural you maybe, of help quick and the

Fred Lampropoulos

no. No,

for in up down we’ve specific structurally consultants that in terms affects consultants lot I There’s of at Oracle how of one and too for like It assist as they think And products the on other and up indications. efficiency actual we of the and lot systems, them we’ve an was time. before, looking we’re reaching looking with with issues things they brought the things we of project. brought were grow a Rhapsody Oracle existing one to the system. an parts but orders, work of that, done studies with the How of and issue. where were were uploading, instance, We’ve doing we terms out when that. in inventories, both and of reaching example a in we’re of the us long been on going the Oracle, we’re and information. We’ve people.

deal, a IDEs animal. they’re in the think it’s you different Rhapsody, that it’s entirely high we’ve opportunities a PMAs, an and With We play it has developed. when the of different technology where world and

assess so say, mistakes we at. can people so advise didn’t are people in, And we well, looking the why us we on we think that make we’ve and things on we’re this? brought advise us do need So, that that doing, bringing things and into don’t they

not about didn’t say, here, invented trying not to we’re it. we think So,

not idea. good So, it’s a

just go I to and that your find life, fact there’s we’d when lives, but that to and strange, understand word find businesses, a weaknesses look then if those we you of at without again, all back try that my always the think then and weaknesses you humble in sounding moment improve of you at comes look being and strengths. those you become your we’d

where are. we that’s I So, think

Bob Hopkins

Thank you, Fred.

Fred Lampropoulos

Thank you, sir.

Operator

you. Thank

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

line is now open. Your

Mike Petusky

the I ask were of plan. strategic high years your time. from sort In guys strategic long-term a guess, executing guys. to about at XX I strategic, of you’d press you’d talk releases, XX stock have plan, a you long-term a really Hey period wanted the the in few took level to when ago short the

the – just decisions. approach tough-minded to seems a just this M&A in lens. discipline just, of say allocation use strategic There you terms it was running a a run You’d was there capital a decisions lot how guys tough-minded just guys self-inflicted. every of And lot you it this was were implied through decisions, CapEx, of terms the lot of of that And – just long-term like in language in feels business.

same had mean, longer-term XXXX, plan? and the I when you tough-minded you you it’s think And sort you go of times say, way, tariffs approach do survived at the had look time kept a maybe, just three have you we back businesses wondering, to and the I I up that strategic the four stock could revisit guess, you’d when executing. were FX we guys took know years ago you approach I’m what, the you when

Fred Lampropoulos

Mike, any intent offend. to with Yes,

talking about how we’re the that’s looking I for is at think we’ve been last what the long-term. hour,

Mike Petusky

word, plan. strategic You long-term said the

Fred Lampropoulos

can the things we and business. the done us believed strategic that can we’re at helped Mike, that need be to be looking issues can tactical sure accomplish be and make we predictable. We that in

to go have We the an we finance to that been specifically. example think with as I question engaged team every meet day.

time? think, Now say, why waste time are someone oh, that of wasting I don’t can you it’s all. at

We in. the been the through numbers. team finance We’ve going have come

looking the We’re strategies. at

time or looking time, do being we’re long look at a two finance at the have tactics wise. looking We’ve I that to Group, they long, a doing looking, plan necessary that. are and but with strategic that things the and the that at the every the and FP&A and day tell to spent effect in every I’ve in can day this the things an you We’re and group, spent hour business, never

lot they come I could modify into They We’re spending offense you always sales okay, well a a have did this? of have my with to view marketing how certain don’t it negotiated guys. I we we’ve also And do And but think, no thing doing say are saying, this they improve. to if of Well, time not No. to this? know about understand things, that things this. we accounting of and team,

look if tactically locations, listen, is accept that, and would I looking are assessment both we our but I’ll sight facilities, and strategically, so for things at to like product our lost I that, us we want And our this you taking things mix, and that know hard of the threshold has your one reach R&D of – a that, say order at is the automation, things the to like move we’re very each a the to dial. in project

the I of as So, that think one we coming kind of up projects. that things were acquisitions, was you’re we missed, the and making say R&D

allow projects time us fit, goals the those this may last we We’re now does to on the the taking is, think I have does threshold the to go we that will not meet spent what a strategic two looking are acquisitions. where meet it and years. to and back in at we three And out have what look that at now, seat to what

XX, previously, on they’re business. as XX, a but projects, of, instead impact So, they XX maybe, having high having I mentioned XX, are the

also it has Now, high risk.

all to the assess those we of so is to little products. It’s of one have our have risk And of XX, things. hard measure we business these strengths all the

weaknesses One we the these is all of products. of little the business have

make products, at with looking of the the impact, through an I have this sure we’re is the we’ll transition, focus so, as think them And doing we’re risk on as going associated business instead those usual. and

I think think I strategic into and that’s Raul? it plan. tactical fits our

Raul Parra

long-term take sure talk like quick, can make that we just real our we – we where then think make the finish out about to that long-term We to want just I time plan. we’re we to Just need and sure plans. we And XXXX see at.

Fred Lampropoulos

not mean, XXXX I those point or we’re talking I But the the just not mean business things you plan. view, of we’re at about a we’re as well. looking quarter talking about, we’re – from giving but all XXXX

Raul Parra

formulate that… to trying just We’re

Mike Petusky

what out trying about lot do plan were sort to Yes. this was trying was and get there really on guys margins. lot we’re what hey, I’m to with a reemphasize, of talking was three-year you a of every focus I is gross just it quarter, sorry, where a

guys and we’re got of wondering We’re that plan I away this I’m and there. feel like hey, think, was what numbers do but from was wasn’t, – idea allocation getting an longer-term the, you And cetera, earnings attached great you the approach that it of is upon this with strategic guys no one I may a to that’s be you discipline it maybe that. I doing was to – and that’s it and M&A. about that for just It previous we’re capital enforces trying terms a there’s we’re that doing guess it. at there this, and et I’m just things was better in it public out guys doing

Fred Lampropoulos

we brought I down a the down, we can years sat sat to can the and We staff that have need plan into that we establish plan put effect. that stand publish behind five and and to forward credibility, ago and

same initiatives. got have you you. issue to they years they Now, I FX, I in with them survived will that ago. to China were and whether instance, an it’s five are will tell come think buy things, for we’ve I the don’t but issue local wanting as of not We’ve

You have the itself. currency

government looking the lower for have You prices.

Great survive not analyst listening strategy us I so different conditions. Britain when noise do know get medical and devices and my about we about battles the other something, I Brexit. talking were the please we not was come the who say may up you’re the I answer on we a that wasn’t and we the best making question guys was I and the companies to thought can – with that a talking into mean, we gee, we sure and world the today have one to listen, Well, says, only adapt Brexit well, yes, attention had all going So, me share I did. the people. call haul it is that to got long companies from with don’t and talking, for your get only do NHS, seem. ago, who can the the I to long

So to do forward. I going and it’s that positively think thing merit, to very, serve right going was the

So criticism. listen, I accept your

good you have think points. very I

the call You’re not however, about our appreciate so on and we’ll following right talk that happy forward, about topic of all can this to do points, in you But be your talk I to meeting. we it those bring everybody.

Mike Petusky

Okay. Thank you.

Fred Lampropoulos

Thanks Mike. much, so

Operator

you. Thank

from Our question comes of Oppenheimer. Steven Lichtman line with next the

line is Your now open.

Steven Lichtman

Hi guys.

of I scaling you would is, on anything the how opportunity can yourself obviously, remind mentioned building helpful. here in big know Just any that in can you but you not near-term, management, provide think you fluid type be

Fred Lampropoulos

Yes.

these in are go have is to Premier the the let’s been country. Premier shared So now again, the deal. to opportunity, the largest that numbers me the of GPO what

do have We training to They the And then all an flu what is, now. is their what million about the make that is are work XX% worth level of and of of hospitals. $XX administration build understanding to thing. the into that’s represented million rate that exclusive my sort that in but and for inventories business, do the compliance we $XX and annual that again, conversions, have

not of just it’s as are custom. as an quite these taking portion good off-the-shelf, So, easy because a products

the that’s first part. So

the and device there’s that, company there a to a sold situation, part provider of On for angio distribution – Medline. was and the large was other preferred where angio national was business that by

And products main their so of competitor. company this course, other has that with

be place, And to and contracts, said, you than they product through, have September, using, would you have broader offering are October. signed so and came be have been able have us new are we fact, you provider, were to they guys to late have they worked product preferred in early they a and the we’ve we people signed, like our we in

new. to So, then between $XX go somewhere process. That’s million million. same that and through we where it’s And relatively $XX have

So we a percentage better what what until it take? meet out and and don’t we of end quarter to number there looks it we and And XXXX it we do again, to get feel how early like miss number. hesitant through this going next of get, it of somehow we’re on throw that’s does go the that all that a depends why long this

is is day. we this need something we every understand more news, we, good So, that is to the think I do it, about every but something day. build Steve, we This

no capital new there’s So, required. There’s no required. facilities

what for then let we you’ll what it it is, reflected we see products, but will have that in see but it’s play these capacity built and we’ve to and and We out have just share that we increase told fact whether we haven’t inventory. in been

expect haven’t we lost We’re things it’s It’s I anticipation, that be that out I my just about but the to meaningful, do going for implementation. say doing in will there enthusiasm it. not

Steven Lichtman

Fred. a maybe, Got for couple it. Raul. then Thanks, And

You talked you Where process which today underway. the you talk facility but has COGS could new year? how some Mexico, on on save is that next about moved can and that about facility are been consolidation, – in believe to I Malvern much

Raul Parra

Yes. Okay.

think line, mostly We it’s it’s one the When $X have approximately transition. So, QX, by some There’s There’s product on should but be We’ve our savings, moved. million. inventory already looking part, on now, its most way. for we lines of it’s started for it. at builds right look at well we out we’re that track. the

it’s halfway you year. through – by the done because won’t all the to though, going You full next time the how get year benefit be up – pick

So, to pick XXXX. expect that in up we do benefit

say I So, and there, think on yes. nothing more underway. it’s well track It’s yes, to

Steven Lichtman

And just Okay. here that reduction in OpEx is how and annualized million that cost of it in mentioned, lastly, date much then of in how COGS? the you $XX much is to

Raul Parra

About XX%.

Steven Lichtman

– XX% of OpEx OpEx?

Raul Parra

XX% in SG&A R&D. and

Steven Lichtman

right. guys. All it. Thanks, Okay, got

Fred Lampropoulos

on in that the one other addition Steve, are have There’s That done number to we And is savings. that. of to total just thing things that that, cost last that.

There’s that that’s and So reductions. are to a you want the additional or things headcount there liked one closes? that do that want one that leave dollars you And any just other programs we’ve initiated. lad

Raul Parra

close just I to want No, it.

it’s X% I when think – I think, $XX San the about Jose just again, we’re the what the million, closure. we’ve plus talked

Steven Lichtman

thanks Got guys. it. right, All

Fred Lampropoulos

things were those done. And

great. Okay,

we’ve ladies listen, Well, the ever inappropriately. and Okay. gentlemen, had call it’s longest

I about to and additional be questions raul And going questions with minutes and following we’re here comments So, clarification then reviewing staff that. internally. will our spend taking here take XX and

you your attendance. thank very for So, much

what what to do. We’re know, I going about doing. apologize. I suppose, don’t like do don’t you we I not more than I’m we’re any curious it

I think that and evening forward. take good to, strategies reporting Have we and night. tactics to and steps taken steps the the are our we’ll look a more going and we’ve good need there very results

Operator

participating. call. today’s Ladies conference you and gentlemen, concludes this Thank for

You may now disconnect.

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