MMSI - Earnings call transcript Q3 2020 | Merit Medical Systems, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Third Quarter 2020 Earnings Conference Call for Merit Medical Systems, Inc. At this time, all participants have been placed in listen-only mode. Please note, that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. I would now like to turn the call over to Mr. Fred Lampropoulos, Merit Medical Systems Founder, Chairman and Chief Executive Officer. sir. ahead, go Please

Fred Lampropoulos

Officer and I'd earnings to Harbor joined conference by and and through Chief the Dalem, our us Brian third Legal take you Chief today Medical to quarter provision. call Officer Financial our Parra, XXXX call. Secretary. Raul Safe Treasurer; welcome, you, and Merit Lloyd, Brian, everyone, Corporate Systems' on and like Thank our I ahead am go

Brian Lloyd

you, Thank Fred.

remarks Commission, involve our may materially the risk factors like including uncertainties those current from could to and recent the including remind statements we are of contain uncertainties results described Before I the that differ that forward-looking company's company's begin, risks and would the expectations everyone in with most quarterly of inherent reports. that and Exchange Item to today filings based on actual annual management cause XA, indicated, and and Securities risks

statements, on not cautioned are You made. the forward-looking to only undue reliance as of date any which place speak

will press the non-GAAP the financial accordance events most to required do may in of turn laws. include Relations result accounting update accepted release accordance to earnings Reconciliations otherwise, call comparable the generally in time, and undertakes principles, calculated company refer website. forward-looking it time generally to information, of measures. to references as securities financial will so calculated in commitment our with Investor Although are revise with back new future presented or any as are GAAP. certain non-GAAP whether on except available I portion not these to as measures no the of by statements, now financial a to that the applicable Fred. call those or from also or This GAAP measures the voluntarily We measures

Fred Lampropoulos

Brian. Thank you,

of then quarter. during will challenging quarter. well our a including business operating third business I start third reinstituted in-depth by was offset quarter, the sales a a X% products, of decrease sales our growth sales the as third sheet that, year-over-year we press performance, afternoon's in opening start revenue what environment. areas despite Beginning revenue of we overview quarter, brief driven After we an this release the constant we of remarks, by products which third today. performance our remarks were and the agenda endoscopy After the will progress the financial I quarterly update the the you our growth basis cover experienced with partially And during our of me formal our of for total our my call of highlights review reported XXXX. flat an in balance we well the cardiovascular and quarter review provide will a as with of compared with a then year. with revenue financial condition. improving compared Let during guidance financial Raul open performed on Total essentially will the have and to on quarter our questions. provide currency to of results XX% our summary of third in more a a operating in in X.X% prior trends will your

months. trends reflects in that recent almost we revenue quarter-over-quarter which have basis, experienced increased in the a Our improvement overall results on XX% business

call. exceeded second sequential well quarter sequential and this growth discussed conference our we expectations end Importantly, the on above of range was growth high our

quarter. the of we in we believe the encouraged we're global we the While early remain during experienced by trends the recovery, third days improving

in a year-over-year, adjusted basis improvement then June. the days a decline improvement and in of saw a difficult a saw we April, May, XX% after modest Specifically, sales month significant we of on where

the single in decreased still year-over-year. However, digits sales low

August. Our third the were of during somewhat total for in throughout month expected down X% overall procedure business of the we quarter trends our were seasonal year-over-year. the months softness first of trends the two and July, Together, month experienced choppy sales the

was in the the improvement digits story. tougher however, year-over-year different trends We sales well. saw single a and in a September, month, against low as Now comparison steady throughout the a increased sales

patient I helpful underlying as Merit's may business. to recovery experienced minute for want gauging third Now the investors it we the quarter to that into be think take dig a I trends are during the in

even in certain of do reminder, the are are revenues come notable we variation on third the By business in decreased U.S. of roughly clearly what and from the variation U.S. where patient seeing sales region in depending the business, regions. a within XX% X.X% quarter. our and geographic recovery, year-over-year world the we First, seeing we the way of in the total

is direct, U.S. Our customers. remaining the to of business OEM U.S. the majority business roughly XX% with servicing dedicated

of year-over-year the XX% and Conversely, increase business quarter, the sales were custom Cultura nearly solutions this our of fueled worldwide fueled used kit, U.S. third a $XX in with Cultura transport procedural quarter, quarter swab in transport a comprised a by Understandably, solutions U.S. and suspected quarter. year-over-year were businesses the the custom recovery U.S. collect collection Importantly, our the incremental has quarter in the year-over-year three. line growth three, as and presence system our XX% the in been different procedure has which in response the COVID-XX. collection our part to where transport X% our adjust U.S. in as business, inventory more XX% demand recover trends in XX% two increased product to in third COVID-XX, nasopharyngeal sales decreased to to quarter. these pandemic system, in of sales Sales is customers notably and each OEM vial and this decreased of sales sample underlying OEM contribution rapid which to customers business, the from a million direct management worldwide which been slower in from result business of and specimen,

excuse business down the trends me, product in sales year-over-year. year-over-year X% U.S. U.S. other in innovation sales posted strong were the Our year-over-year the and lines CI of the intervention and cardiac X% quarter. down third in down products peripheral were but quarter, the improvement were PI third lines intervention in the during Sales in -- U.S., still the of

of outside a constant brief basis reported Total on the a sales review increased a to our international X.X% U.S. third sales on Turning the in X% quarter currency basis. and

our U.S. in and Our largest sales, regions XX% representing outside respectively, EMEA, APAC two of the international XX% third the and quarter. approximately total are

X.X% notably growth regions the are to sales impact of constantly European to year-over-year limitations decrease and Restrictions and procedures. contact X.X% causing some the total still quarter international low year-over-year lockdowns markets, the from currency an All had changing regions, increase of Third and X.X% demand APAC constant year-over-year decrease sales, elective COVID-XX world. most in are driven rest in across sales and a EMEA for a sales a in X% international recovering. by was in

to a the third recent during quarter. Turning brief review operating of our progress

efforts products and on Mexico product facilities transfer our and track XX in move continue with our are Texas to lines. We to complete of a all

will we the of PAC a the be tenant. process closed in and are in by fully Our securing the end year, sub of business Australia

new And closed, are been facility. has continue Temecula introductions our and now Texas R&D we to Our product record ongoing, production to going and our moved efforts forward. our of site expect has track

Endovascular Graft. update our to on provide studies Stent clinical the a wanted for brief I Finally, WRAPSODY

IDE the Start-up end submit targeting to surrounding central study. clinicaltrials.gov. by to study study the will the a the this arm on months, treatment study IDE. study, smaller the in received And additional one WAVE WRAPSODY study randomized, stent study and occlusion approval are First, feasibility parallel detailed a will of and with first Access page as of are outflow roll quarter began are currently for the on productive IDE the for is for to Graft hemodialysis the we The first venous we intend WRAPSODY we Feasibility first circuit evidence which controlled angioplasty The stenosis which feasibility calling or the patients activities safety after we Efficacy Wave involve to the This into are efficacy we WAVE by and study IDE calling comparing data FDA WAVE are well, we other had the with we patients among of the Central XX-patient in the Central the FDA the XXX WAVE which will and and discussions patients. Study, study. multi-center is called treatment patients run and transluminal study study in criteria, AV also Startup evaluate this of mid-October, receive safety enrollment we a approval occlusions. for Stent Study, a Wave study feasibility recent quarter. enrollment approval, Central in for the The the the Endovascular our prospective, are targeting XXXX. WRAPSODY gain and for activities venous percutaneous underway

Now turn you release. with XXXX our afternoon's let who guidance to review we over Raul? a that said, reinstated to in take Raul, results time through and the our like this would financial of financial me detailed which press

Raul Parra

you, Thank Fred.

rest our Given a performance the I review of across results, the Fred's detailed with of P&L. review of financial will revenue begin our

my and non-GAAP the company's For focus year-to-date during unless quarter avoidance commentary doubt, period. the noted, will third otherwise of the results on

X% release in the included the in year-over-year reported from press third results have full approximately to reconciliations this Gross We items our decreased afternoon. GAAP related profit non-GAAP quarter. our

was was gross in Our manufacturing in The year in basis offset year-over-year XX.X% in which prior an by point partially product driven XXX by to changes mix, gross decline compared obsolescence improvements expense, increase margin in XX% margin inventory efficiencies. primarily the period. was

Third quarter year-over-year. decreased expenses operating XX%

among in in margin temporary the result the and and on was shows The in efforts driven conventions, pandemic, reduction a research to expenses the business third layoffs, targeted continue and a expense in our X.X% period. expense result period. enhance development initiatives discretionary expenses items. and lesser management pandemic, operating discretionary expenses, reduction a long-term result other to lower driving due to improvement And focus program. was cost-cutting very a cost-cutting of of the profile. by extent, and XX% SG&A COVID-XX R&D we and focused cost more as performance training, a lower XX% an XX% was COVID-XX margin spending quarter decrease cost operating the R&D including furloughs expense salary The of in related and decrease compared compensation of compared prior travel, as was other we reduced reductions. to as largely prior lower in year Our to of to out in effort a are to year-over-year SG&A Obviously, The the profitability initiatives the in operating proud expense

included operating call items well. I noncash two quarter expenses GAAP as expense that to out third Our wanted

from expenses acquisitions. and investments and impairment The noncash Equity the expectations product first certain related million approximately with is asset revenue $XX.X of intangible associated changes in method lines restructuring.

in The benefit second a expenses item was consideration obligations quarter million operating changes acquisitions. fair estimated consideration our the impacted of business previously value $X.X our GAAP in of from disclosed stemming from our the contingent noncash third and contingent

million per Third to per $X.XX $XX share share the or quarter prior or million year $X.XX net compared in income was $XX.X period.

We and to pleased income flat net our the per our the are we year XX% compared profitability in of third in performance essentially quarter, period. where very XX% were in a share with diluted year-over-year, where quarter respectively, earnings and prior reported sales growth

review and condition as a of to Turning XX, XXXX. of sheet September financial balance our

flow resulted performance quarter, in in the of efficiency in capital profitability the $XX generation a combined third million. than strong cash third strong Our strong quarter operating with more working

the our Our of than sequential roughly cash quarter. a generation efforts third capital capex free $XX strong of expenditures resulted very flow decrease XX%, more in control in in fueled which million to

generation of going a company in quarter profitability we of of early And flow cash free took cash the forward. profile the our reduced million. that cash are is flow clearly on year-to-date from and advantage enhancing We execution $XX Our evidence and the focused strong team. by great generation result importantly, flow the our borrowings

capacity borrowing on million, obligations on December obligations XXXX. long-term our $XX.X as borrowing approximately million, $XXX debt of to of hand $XXX approximately capacity and XXXX, cash of debt $XXX XX, September of available long-term hand approximately XX, compared of million $XX.X million of million of $XXX approximately and of cash available As million

Our ratio on of September basis. was times XX adjusted as net X.XX an leverage

year we guidance, of review earnings fiscal reinstated a financial to release. in XXXX afternoon's Turning which this our

XX, revenue to $XXX to X.X% XX compared net December ended and from million, $XX.X compared approximately approximately share million between for now expects $XXX XXXX. a loss million in of company months to to XX, X% December approximately net year-over-year ended XXXX, of XX, or decrease XX $XX.X the $X.X to year-over-year million net share X% $XXX XX of range to $XX.X range $XXX.X months decrease XXXX. the the for million to XX.X% XX XX revenue range the of XXXX compared or XX, decrease $X.XX assumes million, million ended Non-GAAP December income $XXX months For range $X.XX net XXXX. X.X% in GAAP to the representing million segment year $XX.X $X.XX compared the for $XX.X from the a income or fiscal to endoscopy million per to GAAP million as million revenue of months or guidance $XX.X net to the million cardiovascular December XX to ended representing the XXXX. The XX.X% ended December of months a XX, the as revenue million, net revenue $XXX revenue million per million share net XX, as of between XXXX. revenue non-GAAP months segment compared of net net of the ended representing $XX.X of to of Net year-over-year per income of of in share $X.XX $XX $X.XX $X.XX per for to December the for

temporary of of to and diluted related XXXX gross sales back increases call approximately marketing as by For in as outstanding and increase management out approximately in driven prudent modeling guidance operating the selling QX other quarter-over-quarter. modest similar that, margins our year non-GAAP and phasing I'll financial non-GAAP XX% partially a QX, reductions, fiscal by to higher offset expenses, as largely expense expenses compared purposes, our salary G&A well expenses tax assumes in Fred. and turn With flattish the rate shares to QX non-GAAP XX%

Fred Lampropoulos

line up the we'd -- we'll up Raul, thank Thank to open our like you to wraps now and very That the over the remarks, much. and questions. prepared you. administrator, time turn our for

Operator

[Operator question Instructions] our O'Brien of come from will And Matthew Sandler. first the from Piper line

begin. may You

Matthew O'Brien

guys, in as U.S. used restocking here the Afternoon you're especially curious through as saw? much. is the far inventory results the starters, that of guidance as I'm seeing QX so guess nice just then did versus in about we hospitals QX. roughly the taking thanks Thanks field, what for for in you that implied QX same had your And what question. I here. out

you're So of? is Is trying call of we something that conservatism? there here healthy to that specifically be out that level should mindful

Fred Lampropoulos

the really Matt, thank you. forward. a to No, of Matt, looking I don't think we're well trying to we'll not focus flow call out. on days, trying in talking things XX to number really be We're and aware you're about quarter third looking today, rise,

$X we from, in seen So in you million restocking I think sales, to saw, some we preparation. -- $XX know have We revenue, million as our COVID think, up $X of saw million. may about I

comment of on storing up, So able to and enough -- see be I in know think anything preparation. I it's stocking kind that I of to don't terms

Matthew O'Brien

the how some maybe again, And environment just in were savings the virtual for to it, versus etc. trade because of thanks be this are happening in going I'm in it see. they're cost great or sustainable or to shows not curious, quarter training, on, Raul, they're Fred. those going we're not that Got virtually in, savings, then

these of environment costs of hey, sometime much come are versus, this back is some a how more in normalized to So XXXX. sustainable going in

Raul Parra

I discussion Yes. talking right, in this quite that we about think just trending direction. in And really frankly, QX started

expenses opening And are QX of that remarks, includes description going our and in our increase increases. our so as we to operating guidance said

that some did. we got targeted furloughs. salary We we've reductions did So

and back quarter, in those sure, for are those back on fourth planned we've the coming of to going come Matt. things some So

Matthew O'Brien

even Raul, for are QX are of any folks there Okay. productions to thing, is remodeling -- way folks and coming XXXX than into a great that it's but But hear for the back kind I well? as sense know to that quantify easing, as or those salaries any

Raul Parra

Yes.

year's with to for give do kind say, this progress And expenses. just our for then the we're of But QX, based cadence opening I numbers. think year, incremental which guidance, see in saw that. XXXX, we already some would this QX on increasing we as to we discussed an obviously, QX those we'll And stick you and of remarks. I going touch increase, guidance our from

Matthew O'Brien

Got it. Thanks, guys.

Operator

And our the come Wells line Biegelsen next question will from Fargo. from of Larry

You may begin.

Unidentified Analyst

X% be not have question but baked last at like uncertainty afternoon. I would organic growth asking of else you way. Good I I guidance, from Kevin Matt's outlook. [ph] in guess is actually COVID seasonality Larry. you This actually over have is about it's your curious, I'm looking into impressive quarter. QX bit on an My just comments Merit question, the only given do was up the a business. your know incremental flare-up? of typical the I for just any sequentially, a for implied QX guess sort on QX Congrats which comp X% that year. on Something different

to you on just curious Just got how have numbers. follow-up. one And those I

Fred Lampropoulos

-- very Yes, confident I think guidance. think the we're about listen, I

As we included things our a all on. our from there's are point, know, the vantage we've And those numbers. that best in going lot

XX more get will growth days, for guidance year conversation, our more talk which and we'll add into next and see we then. we information about foundations our for and color move it As Raul? in

Raul Parra

tougher our we modest year-over-year. to think, includes you also QX. as X% -- lower -- And mentioned, sales, U.S. from we QX noise of QX. really million $X for we're Kevin, we the $XX hearing It too. international nearly contribution we've million sales down then the reflects expectations, the hearing Cultura roughly then did that trends Obviously, versus approximately in to sales to than you're a got down QX we I year-over-year comp X% that in quarter-over-quarter. in in expect did were Yes, be improvement And

our year-over-year XX% over down is what X% on to sales down So QX, a in to the will X% be currency implied guidance basis, X% constant is.

the in it markets. again, we have the outlook largely OUS So reflects cautious

our in said Europe. trying had we're information regions, we Fred recovering. have some impact we from now. cautious As mentioned, as just lockdowns and right across based an I regions be, think But They're just restrictions the remarks, international mostly all prepared hand on COVID-XX. to seeing still at We're

Unidentified Analyst

is for just, My curious that pretty any into focused we're the sense. I'm there's previewed one would to up are we go? what meeting coming Anything growth It's far on last foundations of just speak any soon investors Just if curious here. Makes super Fred, thoughts head I'm financial -- so on very much. helpful. as if meeting? about investors annual can expect? Thanks How opportunity kind the goals just pipeline?

Fred Lampropoulos

we're Yes. on have looking that you in interest none. looking forward, upgraded we about to guidance, XXth. yearly forward The we're Kevin, very quarter. is, answer you we We're to on tune thank your and you'll think talking that I that piqued And we've and day. hope here much. We've to talk the this our in

it we'll that. leave think at I

Unidentified Analyst

That you. sounds perfect, thank

Fred Lampropoulos

sir. you, Thank

Operator

question will from the come James. Bedford Raymond next Our line Jayson from of

begin. You may

Jayson Bedford

can was kind of bit that of forward But increasing The offer I curious, product, the in the $X are million name going just to that's anything from capacity on to Hi, the doing demand? what of XQ to of assume is where was standpoint but that good And up COVID contribution a afternoon. tight. I'll manufacturing manufacturing I million, and going what I going? a keep a front that you little assume you COVID, from it mispronounce ramp $XX buy-in.

Fred Lampropoulos

Yes. Thanks, Jayson.

of First for vial on have fully make make opportunities here. We it We our everything. based of it our cavitation integrated we facilities. substantial make on we rest our swab. We the on in on all, capacity And Mexico. and are VTM, our some of and

room So if of we there. demand have is plenty the

Jayson Bedford

Fred, is as that U.S.? take only And is globally Or in you being sold well? something the that

Fred Lampropoulos

all are the major markets. cleared -- globally, of in on essentially selling are We it we and

but slower as So process tenders. processes, we of move those well in all we countries is is than much the U.S., it There have capability are are globally. engaged international companies, Jayson, the activities. to it That in aware, you're and

Jayson Bedford

and China given growth the Okay. all what want And quarter? question, was provided. information be second my But in greedy, in don't the I to you the

Fred Lampropoulos

Raul?

Raul Parra

Essentially flattish.

Fred Lampropoulos

it I it flat. the flat for was think -- was quarter. Yes,

Raul Parra

Yes.

part was of the So it impact...

Jayson Bedford

see Is expectation the better to some growth flat you'll that start China? than in

Fred Lampropoulos

that in a evasive, number everybody Jayson, given. guidance And is in this but days. picture. be our up our that give XX included year guidance, Yes. We'll not think full the the that's meeting I we've fair in we'll to cover coming

Jayson Bedford

progress. fair. Yes, gentlemen, the that's Thanks on congrats

Fred Lampropoulos

Thank you, sir.

Operator

Needham. question will of the from from next Matson line come Mike Our

You begin. may

Mike Matson

thanks taking the call. so for here, Yes, flow cash pretty my impressive. Question's was

So I noted down, think, XX% capex you sequentially. was that your

run something that more ask to reductions? wanted pace of the that of the rate kind cash about the quarter. Or were on the just sustainability kind Is kind that's to due flow free is I in So sustainable? of you and of temporary that capex of

Fred Lampropoulos

Yes. Listen, Mike.

I think us R&D growth. things. that organic we are has looking for at for important been always these

think the that we tune balancing It this with I said that. we're think capex. you made challenge R&D, of on But kind been are we investments. businesses all said also in without penalizing have in people today of what and we always a continue have previous have into mean needs committed, very, and we heard that the very very company. discipline also those we've lot much on this, mean, previous things but think we and I through. We comments investors as is I our going are a I when have and

XXth. I are. again, with you the And about to on to talk further where think forward So I'm comfortable looking we this we're

Raul Parra

out point more for Yes, there an a we give for you in $XX.X little accrued flow year. just cash free expense I the DOJ Obviously, the color. have we do settlement. that million to hit will in

working -- million adjusted year-to-date generation, for use big you at operating did inventory that flow a cash of target achieve. sitting basis. an in million component came back of that. year have to was for We've had on we surpassed year-to-date the strong really the that into XX if versus We So you're We $XXX million trying A that $XX $XX.X out, capital. year-to-date XXXX.

one frankly, eat actually sales a increase. into surprise QX, specifically. in little Receivables the as sustainability, will So kind was of for us that bit, quite

I faced maybe think crunches. as payments seeing customers the some to on reality we cash is, planning we deferred continue were collect. But

the force, our tandem on sales collecting with have paid them with working initiatives And in cash off. really of some

And again, so that. off us essentially number, $XX really And hats capex, to million helping the then, is them included there. for the that. building, of the driving with cost which delta year's a a big of And in that, last chunk

So we've with of happy have the overall, processes place progress this made. And we quite think to some in the super sustainable, are make I frankly.

Mike Matson

then, And for? what thanks. was that intangible acquisition? impairment, the Okay, Which asset

Raul Parra

mixed a was it frankly. quite know, You bag,

So let probably up just pull of There's it here five quick. [indiscernible]. them, real me

of whole as reevaluated through and of during guess there's I a impairment kind them our multitude we testing. So went

Mike Matson

Okay.

value was several it of partial was complete reduction. of the just -- it it them? So was a the just function of a wasn't It -- like a

Raul Parra

there's Yes, so ten that or probably of part are that.

Mike Matson

Thanks. it. got Okay,

Operator

you. Thank

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

You may begin.

Steven Lichtman

Hi, P&L? as in we'll Or XXXX? the come thanks through it details know more really any progress I Have on more is and operating the seen to some the facility next But impact on just so that get of of that recent some you month. guys. moves. inventory flows of

Raul Parra

it really is of earlier, outside some -- in really XXXX. It rest question. great of the a and seeing impact which was you're closed line, R&D That's Temecula, the Yes.

inventory to we we that impact you've we And transferred, through had track that burn the until full been when on got lines to have close for really, some say, on see or won't those. XXXX So hand.

Steven Lichtman

an Thanks. it. And got around obviously, tax discussion are the just then, here. Raul, Okay, increasing secondly, becoming election rates

opportunities here, down? a discussion sure curious month. to a rate Are have be You you historically. point to tax that's I'm on forward. your not run But on views that if going higher looking actually guys bring seeing little just next

Raul Parra

You that's a think know, question. great I

lower opportunities tax I rate. we're trying always think to our to find

I to tax think it when know it to difficult plan. don't what's happen you makes really going

election. pattern, wins, subsequent to on can happens in goes. depending direction quite on of frankly, where that, the what I taxes kind if next over to holding see the And think then we -- who the we're what so a here week on do, And

hard think you're in dynamics many when to plan it's play. I there's So -- so

Steven Lichtman

thanks Great, Raul.

Operator

And Barrington the our will Petusky line from Mike come Research. of question next from

begin. may You

Mike Petusky

guys, good couple of couple This Fred. A Hey open-ended evening. a I questions, is big one. -- of a guess sort

you like, over done want to feel Is months sort you do take this you putting have is mean the things challenging worked allowed are past you that it optimally seemingly go. guys But right, what So you people? -- as far of here guys is environment? I six it that really the it as processes? in so it manage What's to a

Fred Lampropoulos

Yes.

of we think and consolidations to have laid go and some back And movement, over we I a plan down a year. out product sat plant of research development.

to future. reporting to execute then and forward about the I and we're think, Mike, We've talking that we just plan. looking continued plan, had a

it's year, raised. that should were the way, running asking. and a have compensation are talking by in very candidly, things these did not you us. their telling We Board the that that about together. a start. Mike, that things and you've credit, put sat think that to shareholders, focus of And I that And said, plan big were and investors down they that And raised the things have we We there just these are also that, they incentives I part others the things said this been on. the are have were and

part. the think so And important that's I

were of everybody COVID, down. we already the hunkered by became So aware time

whole we'll a adapt. forward the today. That's is future. talk Investor it's I And look up about to continuation So plan. Day really idea show just our of sustainability the showing lot coming and think And ability in been to in of to our the a that's there's been

Mike, there that's just think that whole too, question so trade sorts is was, a and stayed sustainability on really I I this what And and shows think was focused. And it things. we've those previous of

I us, force. sales Merit, you how all our of to investors, you where fundamentally, talk think, you, go,

we what more have will fundamentally they changed there the many think ways. be And that never I effective. keep in I them that that way. same. we're -- They're think more at looking we'll forever, things and are things will And economical,

to the executing all way a sound kind a penalties. People it rewarding There's may I all team these and part. on when that it's It's and And blocks. of look that going And think what up. And and of And simplistic, do said, institutionalized challenge come was I and going so all think upon it. a simply everybody's chance mean tragedies are little we looking have like everybody's together. is. the opportunities and are not I we enjoyable. my them. the just sides And it? is It and of about things and think then all catching back most, these, of come Everybody from part a team what okay, of look people the various chance leading football leading getting gives leadership that's and mean, we're think I in doing at in things over the I this watching of behavior, on are team this really the areas really where maybe lot candidly, part maybe of We're their do -- watching to just are believe everything your team. these become we and watching has kind that others but point to the challenged things. as It's end to at this it's account. of when been emerge we I this you the view, of where And a a just it want this year, we those and staying today, is passes, earth.

So you, it. about I feel add little a I that's but do think may want that? we anything that how to funny to sound know to Raul, you

Raul Parra

No, drum marching I of would that think of internally, has kind just lot in. would at beat. about we're same got and a talking kind and I say say that the we've same we're executive -- the all things team transparency I of worked the

just to it. That's So helpful, we want it's and execute. really Yes.

Fred Lampropoulos

have questioned, we being think functional offending And thing and and on one and challenged. being a management I we're Board. done we have we're the team, it's Yes, I all without but final all We're page. same our appropriately and the is Board mean, anybody.

all have what through been part, Mike, that's the doing. best we organization, as a come we're all And the long a exactly through. heart. way That's right the that's answer, team, the think way as together management a from the Board is that's that all the and way I but

Mike Petusky

states Sounds just lockdowns. can there's right any, concerns power guess, or are in and very recent more COVID idea just I now? towards the sympathy any maybe with of guess, to and Democrats from Thank any hospitals maybe good. in with else? of combination and have that around I the and lockdowns everything, anything around were sort Do Or have you. Washington sweep about, the sort I you Hey COVID anything most in sort you of that? if the seeing spikes you're sort concerns hearing trends, negative if guess, so And a talk Fred, shift spikes you of

Fred Lampropoulos

Yes.

because You to of from do we're we I the listen, built to the for but I change, know with we'll think confident have when And we're our all these tried forecast. Mike, And all think as as and report that. factors they you do there today. we do products. forecast just so, confident things it's based in we some know, factors, lots them in. that of now, of on think appropriate lot we a have, we've hospitals in measure But right some COVID-type offsets have And trends, I these hear

Mike Petusky

Okay, perfect. you. Thank

Fred Lampropoulos

you thank sir. right, All

Operator

[Operator will Sidoti from Jim of & line next Sidoti Instructions] from Company. come Our the question

may begin. You

Jim Sidoti

Hi, Can hear afternoon. you good me?

Fred Lampropoulos

can, we sure Jim. Yes,

Jim Sidoti

I'm Merit million ago. in for million, incredible just June was an receivable $XX couple of That's about just your sales your accounts September, about years that's about quarter, flow, on cash a years down and two million number. $XX the looking, up $X inventory up Fred, were to yet $XX based million.

bit? little So of good there. back a to able management cash are that sustain efficiency? Or I you mean, really Does come that level really,

Fred Lampropoulos

Well, ahead, to I'm let going Raul, Raul. go

Raul Parra

targeting the flow year, free We're cash great $XX to Yes, question, be for a million Yes. Jim. full in honest.

at against will QX. loss go into components year, we capital got look on we've income the some you guidance for on, settlement. Notable that DOJ us that working the is put net the If

here that a of portion a paid few already ago. we've So days

will out. that go So

So get QX, Your similar leverage AR we a seeing quite much right? And target balances, you're reduction. I inventory have did won't as frankly, think, to there. then what in on we

job Our done outstanding an operating has team that then a little on delivering and on bit more.

will inventory as come the for build though, back, up We that see shutdown. some of we

that So we into number. expect to of kind eat

at be spend did budgeted. what we similar see that. in we've to that's least if will QX, what capex Yet we'll to again, So

planning we're what that's So on.

which the $XX expectation great a end So is kind million, is somewhere year. up of, we around

Fred Lampropoulos

sake when and the shutdown, talking For you're Raul, the you're clarity, about New talking of the Year. about Christmas

Raul Parra

build Yes, we Christmas that. Year. inventory usually for and Yes, up New

Fred Lampropoulos

that, have going sure have don't cover shortages we Make to and we enough forward.

build during done up we've little bit and we that always a period, So that.

Jim Sidoti

because salespeople hospitals. at out And don't flow. of a you year, the other question it Yes, has excited back then Are in fantastic that cash the two to know, about, XX and had have the you really fact pipeline? products And I be know you or you contribute it think you of that another launching. year, about got the COVID that been I of starting can respect or will your quarter before yet? beginning the I the new roll to is, with these those in pushed aren't new Or some all do products they had were XX and

Fred Lampropoulos

we'll But put just released. evasive. don't environment. pragmatic from in have all guidance, in again, terms of let's listen, I here things, conditions. days that the ten our other normal under Yes. be all It's these short and Jim, mean in just now. be to about products in But we that again, would are slower it pipeline that be this a talk But than

Jim Sidoti

you. right. Thank all Okay,

Fred Lampropoulos

Jim. thanks right, All

Operator

Thank you, back call to and to remarks. I Lampropoulos over closing am not time. the showing I'd any for Fred like any at further questions turn this

Fred Lampropoulos

the to ladies busy much. know We We've day. tried it's Okay. Well, a XX appreciate on purposely It's thank We been We it, time. listen, very appreciate and gentlemen. about you keep this minutes. tight. very

forward a then, from look thank Lake Salt know very -- I you Good join please night and City. -- seeing we're to forward We'll So and today. XXth, your the on for you us time. Good it's busy participation evening. we look

Operator

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

disconnect. now You may

Merit Medical Systems (MMSI) 29 Oct 202020 Q3 Earnings call transcript