MMSI - Earnings call transcript Q1 2021 | Merit Medical Systems, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the First Quarter 2021 Earnings Conference Call for Merit Medical Systems Inc. [Operator Instructions] 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 Fred Lampropoulos, Merit Medical Systems' Founder, Chairman and Chief Executive Officer. Please go ahead, sir.

Fred Lampropoulos

Thank you, and welcome everyone to Merit Medical Systems First Quarter 2021 Earnings Conference Call. call Treasurer; Raul Chief and and Secretary. the Financial our Legal on Corporate and Officer Brian joined today Parra, by Chief Officer I'm Lloyd, our provision, taking the Brian, us you mind Safe would Harbor please? through

Brian Lloyd

Thank you, Fred.

we everyone this remind receive Harbor presentation like securities federal that that protection statements get under started, forward-looking laws. Before would Safe to I contains

uncertainties, uncertainties. extraordinary Although, results those currently including from as these subject to are reasonable assumptions, we they of of effect believe these unpredictable transactions cause materially well anticipated. any risks the forward-looking our The and the statements risks pandemic actual of are could differ company or events based upon COVID-XX impacting realization unknown to ongoing or as

refer of upon XX, be such required date. to addition, law. should not statements, representing and as We today, these most obligation as to April of statements our presentation factors cause statements. to to statement refer discussion statements the any for specifically only the In Please forward-looking any relied also a XXXX, from update regarding actual except forward-looking cautionary views represent important Please our as SEC could information for differ of section our any filings such other applicable disclaim forward-looking with entitled recent statements. as that by views in today's results regarding

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

that operations. sections furnished most included and operations investors today's in press financial US can and regarding information note measures This such non-GAAP the financial on measures measures, certain should under substitute notes Please provide of financial call. and for the Readers non-GAAP financial with to certain non-GAAP period-over-period of GAAP presentation of with financial as SEC Please on comparable business our today's our However, presentation investors important Reconciliation financial non-GAAP measures directly for consider measures similarly other measures. our the comparable prepared turn X-K. with this release to, discussed Both entitled to contains for presentation of also measures financial and non-GAAP the Form the refer release will companies. comparisons press GAAP. non-GAAP be to to financial not performance and information not addition believe a ongoing measures available accordance in to non-GAAP now useful trends we presentation underlying in useful our website. reporting back and measures of page these calculations regarding titled are the I is may be measures Fred. of call

Fred Lampropoulos

Thank you, Brian.

financial results our of will more then, the you quarterly as the balance financial will sheet XXXX questions. as release, up review highlights call my and the and that first well we for remarks, and After condition. a progress provide of Let this quarter. for in with experienced performance afternoon's open updated And will me including brief challenging overview our our of start during business the trends will we we on of the quarter during the of areas first our agenda and I then operating start provide prepared business our a environment. operating remarks with update an quarter, will today. performed the the what with despite an that cover revenue opening formal financial summary guidance a in-depth I well in Raul press our during we

reported our of a up performance, one first GAAP quarter we quarter total million $XXX with X.X% beginning of review revenue Now year-over-year. revenue in

by growth primarily revenue GAAP sales total a growth growth X.X% a in driven, X.X% and international in US was Our sales.

peripheral products, of sales intervention in low Our and our products. of and cardiac both was by invention US sales OEM single-digit CPS single-digit low in growth driven offset sales which our increases declines

by driven the a constant in year-over-year which on customers to was changes in year-over-year benefit the X.X% the prior currency Our International X.X% international Sales rates increased declined year. sales quarter, to of basis. first compared exchange of all

products our of of of OEM declines Excluding compared Total result year growth international revenue intervention sales benefits, on CPS reflecting rates mid-single-digit year-over-year of compared our single-digit period. our exchange constant products, in benefit were ago sales changes FX of on offset the and our as cardiac results growth products, currency driven to increased prior which by revenue period. sales first the intervention to in a a the peripheral our high sales year and quarter GAAP X.X% basis, results in

four QX expectations, quarter year-over-year. constant Our we currency the call, for currency to better than on called revenue X% notably provided constant growth our which were results decline

constant growth offset partially of to prior a endoscopy driven sales in which our cardiovascular was products growth performance by by products, compared sales the X.X% our Our currency decrease year. of X.X% in

while we growth to XXXX. the year-over-year first constant pleased sales Importantly, currency the our was for only time increase quarter of modest, return to are since first

intra-quarter positive the believe we in currency play the one in at deliver in far two constant dynamics Now, quarter, while XXXX. to quarter we growth were trends important reflect thus experienced pleased we

start each largest in trends total during all, company's the were the history. still down sales experienced after but represented the modest March, quarter, improvement digits mid-single into month, quarter. month the growth of We then a a two ultimately slow significant we the of growth which our to saw First months over the March of acceleration trends first in

Now, the quarter, including do wide the we despite improvement across the in of where within see recovery we trends variation regions continue pace notable regions. certain of business, world, in overall variation the geographic to during

more to fourth region, from performance APAC regions which region. Australia, the international XXXX. and sales EMEA by which in that growth in strong constant basis, sales of reported -- international sales early by the on-set fueled come in APAC customers terms period geographic recall by related constant growth of comparison impacted XX% region represented include in our mid-teens business our by increased of year to demand like XX% currency in prior on and was currency In we the aided respectively. the APAC ITL procedure quarter, our the China, from closed first in COVID growth of Sales in-part sales easier the that sales also in a than would XX% in of first pack quarter highlight, in December an major the which We

in continues and overall those sales limitations continued in to early conditions budgets first timing Iraq, causing weaker the Egypt, procedures. with in sales of encouraging, recovery. impacts are Saudi the elective Restrictions quarter from returning still of impact to material of sales, during in With changing for EMEA growth region continues stages constantly elective quarter and this the our quarter respect demand our divested Excluding on basis, in contact pace approximately emerging the across business, is COVID-XX diverted the have demand constant weak low lower and for we challenging Arabia, and tenders APAC as lockdowns growth healthcare our was quite sales monitor as see double-digits COVID-XX the first and normalized recovery procedures declined during the governments demand four, trends which to The in in currency and the region. region, XX% a is to constant region. quarter, Iran the currency the to one, to business fight the markets from in as

like the bright quarter, I region, to really first in in challenges continued the EMEA two callout spots. despite would Now the

of February critical the is month on the demand basis care did in each first second notable GAAP in a that in from high-teens strong growth single-digit January remained first is, and flat trends improvement the we in The products in down quarter. a the year-over-year in March. low Europe for to throughout that And see posted sales quarter

Turning continues driven be CPS We in Sales by recovery single-digit U.S. materially in the of results sales reported low these sales single-digit X.X% our of and declines year-over-year which products, from way increased expected to of in which our the products in contribute Cultura CPS the reminder the stated, and one, in are sales products. OEM U.S., U.S. our the results swabs, of over PI choppy. by to XXXX. $XXX,XXX Simply offset by to CI of quarter but decline to pandemic sales our CPS aided a for balance not growth roughly were low

U.S. the in digits Excluding mid-single quarter year-over-year our CPS in sales business declined Cultura, one. of

continues COVID-XX. In to to management, recover, inventory slower our low of a in OEM be to one, demand year-over-year. OEM as to result sales response as products quarter U.S. single-digits Our customers in business adjust the decreased to customers

SCOUT in localization radar programs. higher Finally, one, of a benefited for demand, our sales our Medallion products business products posted strong U.S. demand which X% and COVID vaccination of direct for by our fueled result from growth as quarter

improvement the we the the in willingness more new first We environment evaluate believe operating reflective which of underlying is continued from during quarter, U.S. and also product hospital receptivity customers, saw the during period. in to offerings

assumed and in call see remain year-over-year financial for return proud environment, revenue are availability outlined minutes. we and forward, and our and execution resulted expectations thinking, XXXX, of These guidance delivered our far the to results that and expect But this you're the in guidance, our guys just over will results quarter, of Raul execution in as I imagining review currency guidance confident procedures of vaccinated headwinds in on half vaccines quarter first a continued the what what XXXX, strong our release growth end to no We remind percentage in of the are mean full we afternoon. which of press release forward. this exceeded The third discussion expectations tone, this we of for key ahead supporting by the team assumptions cautious of in the it. the expectations strong the first of environment indicated normalized operating measure access reaffirmed the press fourth remain our guidance fueled you look on patients hearing does one. Raul guidance "While improvement optimism in we we quarter quarter of materially So, XXXX. quarter the on and plan during our call year if increasing year. through February. I'm Americans, that, XXXX." our move where fourth Well, a our assumes in a the guidance we which elective wider progressive full material to from provided improvement in we fourth you're our in not the sure at to that our call going details in for improvement our we reaffirmed But our will an which organization's I growth very these guidance operating few of afternoon were measured you constant quarter our outlined, our in the

a on comment I the in other turn few to Raul, before I to Now, over quarter. noteworthy time items wanted the

First, period. the and XX% low-digit growth growth in our compared revenue to operating prior we non-GAAP and drive which XX% year increased impressive leveraged income, to income non-GAAP respectively,

We continue quarter. with And I'll towards progress than $XX our growth success goals goals -- our we our free there's generated say, of make area in of this again, to profile. $XX enhancing evidence no flow cash early better profitability to million Merit's in and that first also million, long-term the of the

XXth, of an treatment Hoggard that WAVE Stent stenosis the we in dialysis March the the for Graft studied first study Carolina at successfully North on circuits. or Raleigh of Surgery occlusion Second, LLC outflow device RAC Endovascular two within Jeffrey the Center Dr. patients being enrolled WRAPSODY in investigational announced the

the safety successful We're meeting. the Europe. disease Cross patients the -- the around a from kidney has more or announce pleased from of XX goal follows and a outflow study WRAPSODY than of study the patients that been venous occlusion step suffering The evaluate recent completion first-in-man feasibility patients was and subject towards which WAVE stenosis Stent the that our study hemodialysis to Endovascular circuit the the podium Charing the standard-for-care represents First in six-month WRAPSODY the data important included designed establishing world. an Now, study of of treatment efficacy study for to as for Graft million this two WRAPSODY the at in presentation

most In late at the Voigt worked brings the Resources in Chief as that XXXX. Rob forward our look presented from to of Radiological and most study years executive the the XX having also recent including at Director. and Marketing, Cardiovascular at Vice Europe Chief wanted experience Innovation Human of to at business at from to R&D Medtronic In XXXX finally, at Bard the and Pharmaceuticals, And recently industry XX-month Becton as CIRSE as is Interventional a various We of of at positions I Vice October Officer. important Society XXXX. Michael Dickinson serving to Manager He Annual this also additions Officer Resources in known Michael operation the HR Devices recently he than their worked from highlight as Access back March, to Nestlé Fredericks executive months. in Mavenir and Strategy dating Vascular Lexicon of positions Meeting more various and to Galderma as the data two December, President teams XXXX seasoned XXXX. And Officer. Marketing and to Chief Verizon. Strategy, at and Rob CR Senior joined of prior President Global President in Skin XXXX Health, General Vice joined Finance, Human

enhance team as cash to to of the foundation very support many excited forward. going these generation we're flow of effort expect strong we to continue growth individuals sharp profitability years company's executive Now, and which our and to part our talented to add

Now, the and this ahead afternoon with go detailed take through XXXX and over we our financial to review our which quarter who will time release. said, in guidance first that I will a turn financial press of results Raul? reaffirmed you our Raul

Raul Parra

you, Fred. Thank

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

company's otherwise on first For quarter during non-GAAP the my will the the of unless noted, focus doubt, avoidance of commentary XXXX. results

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

improvement compared efficiencies XX.X% prior on point XX year-over-year the margin was was in basis primarily period. in in well Our expense changes as decreased higher due year XX.X% and gross gross to volume. in approximate as to The margin mix increase manufacturing product obsolescence

other in to benefit related expenses $XX.X KA with of R&D investment some related marketing pleased increased while timing-related and operating dynamics XX% and Both to decrease lower projects performance The certain new we and in our in compared first the reduction QX. a acquisitions partially Note, increase first Total projects. expenses X% these compensation due in The initiatives a driven in a operating of WRAPSODY our result offset particularly, expense, by a in The expense prior operating expenses for was spending income discretionary result SG&A X% in COVID-XX a sequential operating expenses to travel, spend clinical and from and our were count cost-cutting operating in result year-over-year expense increase and R&D WRAPSODY shows, delay a expenses quarter. expense X% to quarter, result as of or conventions SG&A during lower $X.X Medical selling and study the did largely expenses quarter decreased compensation for increased R&D pandemic. was expenses reduced period. increased to decline year-over-year and in the in the of from The a by our head will XXXX in million million. in of were year second reduced expense uptick period year-over-year. in training, as partial outside modest

margin XX.X% to an increase operating basis period, of the XXX prior XX.X% year-over-year. Our points was in compared year

lower First quarter average rate interest a was to last change driven lower in other -- by compared result interest net by expense million was and expense year. as decreased effective driven $X.X $X.X balance. net of million other expense decreased The debt

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

on constant performance in a prior less the where and reported We our XX% per growth a respectively share than compared of basis our the are X% year-over-year net XX% where income with very to diluted first currency were quarter year sales quarter in up period. pleased in profitability and earnings we

combined of year-over-year. $XX.X balance review increase million, performance strong the in a flow sheet capital as to our with condition March Turning and our an operating quarter in strong XX% resulted quarter of in efficiency first financial of strong generation working profitability of XXXX, cash the XXst, first

million Our free of first quarter. the in capital in which roughly than generation year-over-year resulted fueled decrease a cash strong efforts CapEx to XX% of in flow control more $XX our very expenditures

flow and continued clearly team company the Our we QX free from that focused going evidence enhancing great cash the cash forward. profile flow are result execution the importantly, profitability our of and of generation on is

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

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

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

net range $X.X approximately assumed range, of share, basis year, guidance compared benefit points months to GAAP XX to tailwind prior XX, for and The to ended growth revenue GAAP of to $X.X revenue million to XXXX. revenue $XXX.X revenue million in December ended million range net net $X.XX segment net rate $XXX of net the revenue between range a months growth to from X.X% our million representing the million $XX.X million per and ended of compared the now $XX.X to points revenue a increase an of to the rates growth range for to an foreign as in X.X% million, guidance range year-over-year representing approximately the approximately million $X.XX or to range, of benefit prior a XX billion, year-over-year. which and of net $XXX year December in between The expects months revenue to December net as of X.X% $XXX.X X% X.X% per segment X% XXXX compared for increase XX, million to rate to the income increase changes months representing December an in ended the to The loss assumes of cardiovascular currency XX approximately share. of is $XX.X of from fiscal company as Net XX, year-over-year, $XX.X compared XXXX, of the $X $X.XX XX This approximately expectations. revenue or XX this the year-over-year representing million in net our of the million, million $X the $XX.X the basis of X.X% unchanged assumed $XXX GAAP or from million, exchange net from the guidance range revenue XXXX. GAAP For million approximately the million GAAP range GAAP X.X% guidance $X.XXX approximately in XX $X.X XX, of Endoscopy XXXX. XXXX. assumes to prior compared

For or million compared XXXX, net $XXX.X $X.XX the share prior December unchanged or XX from share to for December $XX.X in income income per XX months The net non-GAAP income XX, unchanged to XXXX. XX, million to per the is net range $X.XX expectations. from the non-GAAP ended expectations. GAAP net income guidance months range of is of ended guidance $XXX.X range Non-GAAP the $X.XX prior million

marketing assumes reductions, our increase operating guidance result purposes, to the approximately on expenses in prior of and gross year-over-year approximately by XXXX approximately of margins in shares year and A outstanding. largely million G&A of higher as fiscal to modeling driven expense non-GAAP as approximately of sales reduction and non-GAAP diluted non-GAAP range a For the XX.X% range a to XX% XX.X management obligations our financial largely salary well $X modest million year. in outstanding rate, XX% debt and by as the expense the offset in driven to lower by increases out tax temporary as partially other interest compared related the expenses, prudent in selling phasing basis expenses, of XX.X%

XXXX to is given With significant for GAAP of XXXX rate, of approximately increase guidance constant revenue XX% COVID year-over-year basis it impact to currency Fred. pandemic benefit expect while not the to practice, year-over-year turn doubt, our that, in we I'll call back Lastly, the our the increase a XX% QX the the of a related avoidance the and growth second the quarter in XXXX basis. standard and of quarter second XX% year-over-year total on XX% our on approximately to to

Fred Lampropoulos

a Thank they I think XXXX Raul, It's community review important the in much. well presented. mind revenue I we for very bear before the to key lot to you our of And considerations questions, and open investment as assumptions call guidance. very wanted evaluate the and for information

the is to represent which our items growth call two our for XXXX results material that revenue XXXX. contributors out have of to We as to assumed rate headwinds guidance,

revenue a We assumption half over second also XXXX XXXX. have the our key expectations of impacting

some color. additional me Let provide

of of Australia Hypotube businesses XXXX; announced the Medical assets agreement revenue the areas and the to during and XXXX Together calls represent our not in businesses suspension two during XXXX, related year of to one in contribute disclosed to prior quarter results disposition Regarding in fiscal procedure August Merit's exit filings Merit's growth revenue discussed product three the revenue approximately to first, year we these Healthcare closure of our of with manufacturing million fiscal will XXXX. that XXXX. as of in headwinds pack expectations, in operations the NinePoint the and in decisions contributed ITL XXXX of in on XXXX; XXXX: $XX.X the importantly, strategic most distribution December

resources to from prepare tirelessly and product benefited to in this critical results by in to samples COVID-XX, engineers, need revenue initiative test the and Cultura help which of and distributed Cultura and the of days. State we was of kit developed staff, quickly swab sales nasopharyngeal to the collect in our and we marketers for as second this production the development to response a finish XXXX states, other April response the our kits the of pandemic. of testing with of beginning Second, manufactured The and of from XX a Utah year, used transport result our shortage XXXX start COVID the swab technicians, direct to organization line test and bring in quarter directed last the working swab

this strong to and represents R&D not our ability also Merit's our great changes in to Now our demand a manufacturing to time-sensitive customers. but of capabilities, to adapt respond and example markets only believe quickly from we

a line Cultura core for product is not Merit. Importantly,

so $XX generate year-over-year compared our in in million XXXX. product XXXX going This to a expect to million in material from $X headwind revenue profile. we more growth sales to And forward $X approximately to million this than represents

The third to wanted profile item, second our I consider for impacts is assumption our XXXX. the revenue out of point to growth a APAC is revenue XXXX investors over half that key evaluating when

approximately million in as Our to total related the single-digits to year-over-year growth strong in increase during we second the revenue guidance pricing a includes of $XX XXXX we $XX headwind unit the expect expected to expect million of despite year. lower of of China as the result a Overall, revenue result half tenders XXXX. in our low headwind pricing a in

points million lower demand we're to able the million that driving headwind the we $XX XXX to $XX growth represents we related XXXX. currency headwind our tenders, growth, note unit of while Now constant pleased this to company such in strong expected with basis pricing are rate that of to offset total pricing approximately

XXXX, in of to quarter the currency contributions the exited the sales to of total XXXX growth second as to to approximately the for from businesses basis sales China revenue currency points as and revenue Excluding headwind growth contributions from X.X% our year expectations on approximately our fiscal half related year-over-year a guidance pricing Cultura. of the tenders range year-over-year XX%, XXXX for second the respect over of constant XX% businesses the the range With well XXX revenue of in for the X.X% headwinds and exited in revenue include Cultura from in reflects of XXXX basis. constant growth

in our single-digits revenue single-digits of XXXX divestitures total pandemic-related a currency that on product to and constant Now the sales basis remain guidance reflect excluding continues growth benefited mid for low to high in to confident importantly, currency XXXX. demand in impact the revenue our uniquely trends mid from in constant And year-over-year growth the XXXX, in we guidance year-over-year.

contributions expect the in Growth. related also and program report growth driven Foundations multi-year non-GAAP for in to execution strong initiatives strong flow for We margins free to strategic improving operating by and cash our XXXX

Now open And does but up now that that right And I questions. think would up to our we wrap our is administrator to a the -- of prepared information. line now for like remarks. lot

Operator

the you, [Operator from And Jayson our first James. with Instructions] sir. line of Bedford Raymond Thank question coming

open. is line Your

Jayson Bedford

and guys, questions. afternoon the taking thanks for Good

Fred Lampropoulos

Hey, [ph]. Jayson you’re welcome,

Jayson Bedford

got these on the have little covered. late if so call apologize So a I I been

on Just your strong integrated year. full very the guidance guidance, exceeded XQ that the you've

So more reflective there that point this overall wondering reason is as there or I'm caution dynamic just you raising guidance, for to is the can anything these the a not world in out living days? of given we're

Fred Lampropoulos

this if it. and still so hotspots shake Yes. some don't there. in brief comment But and that's out to There's to. that's part then in issue of let out, Well I'll Raul have wants still going weigh we pricing he unresolved that's China. We know how

with knowledge just discussed, is just move our think we're that to up. there Business it's potential -- And and out those remains. headwinds early confident think be we I a in but it improving Jayson, only to that without full we seems I in confidence so little were just year bit And And -- confident the that. it's it quarter. first as

we'll think it reevaluate I the the at in Raul? as quarter we're progresses. to look business second how able

Raul Parra

QX excited I guidance how our the Yes. year. with out. just I'll for excited really in our feel really We're saying think -- confident start we're panned off about Jayson,

the start the of got off I think a we came of to quarter. is for slow kind to down beginning really

months, we really, a good guidance line we're just couple of First with in really March. saw original that of our And then kind we given. had

the And can plays we of rest see let's how quarter, think the just so second do out. the is end of I kind At evaluate what quarter to the want of we still and -- choppiness we're But see where some guidance that. we for need before we consistency just to if more want we at on move now some to. there's update from and

Jayson Bedford

trends Have the saw in March? trends from differed you April in

Raul Parra

gave color. So QX some we

that show -- if it I think leave see to that going where does guidance, we're at it I look at of we'll at. kind leave improvement, but what Obviously, of it no that. you you'll that's think kind

Jayson Bedford

that it, one your you what's at-risk about on sure let's When in. last the line call then that? and XX the And Okay. of do others guide, there's get months China XX the, expect I'm one to want or impacting time that's the hear to tender

Fred Lampropoulos

Yes.

open those quarter. third tenders in early third So up the quarter,

mean, out it There's on start But a much to to anything out. that get might haven't the think and a we I we as it. better we we the there if we any know, we risk to number, this the benefit and reasonable in number indications at again, risk we'll for then not, So if have be fourth call, of it's again, a had point discussed as this business. quarter of And feel that point. happens, thought that there's – it all

still there one you're that recall, be we other way we'll with we we or Maybe we based we and stand have the nothing see otherwise. avoid But don't. that companies and indicate issues by would – some maybe don't some until other So to – again needs today it you know some And we really things there that following. other. and and seeing trends again, fact as it on was anything were out the it, I

really the want make that's I think to point I Jayson.

Jayson Bedford

Okay. Thank you.

Fred Lampropoulos

very Thank you much. Great.

Operator

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

Your open. line is

Steven Lichtman

you. Hi, guys. Thank

mentioned if a rollout some of just know WRAPSODY you could I data. wondering early WRAPSODY progress the could about you So if about talk But in in Europe. let overall. talk me you bit little I'm Europe first, Fred

Fred Lampropoulos

as listen follows Well all is and day, Europe very you Yes. choppy. every this know, everybody

– And that was that going places open This and are there still to this other today places Now up. announcement. are on was news certain hot. some there are the

are we the So selling product.

just was maybe sponsored indicator the call. XXX of was were of is they than British I Society a told approximately this this Radiology involvement, recently. a part that think higher evening, this I we participation that had Interventional this anything on we symposium bigger by had physicians and

show And to access. access It's it's product. being open again, the more this I'm of if the seeing also I've it's haven't doubled haven't best, previous So – will Europe. to kind almost our have back They other I from new is to US I do right shows still it more bit Steve almost think can and sold. products. of in little as up than I that, I It's this hospitals. use on discussed calls, Europe, the in but the now, there a day. can XX%. up, general now to of number say going orders can every so is getting reps get I this the way this quarter. But think at sales time They we're in XX% interest going take get a And there's access by dramatically. – It's about we In more that's XX%. We're this

access. kind comes it's of that that from of And half So almost about zero.

our are numbers reports these force. again, So sales come but that they're our from anecdotal coming are from that

even it's see not product. more the in your more So ordered in the almost – if that Maybe as base have past reordering. important, know as than sale. people is Europe. exciting initial is you of what's to selling making you but important But question, go reorder we're the And that access improving when to the

So, the we fine where technology. I'm are. with I'm fine with

day, be everything in move still has trial. it see enthusiasm we at WRAPSODY then prepared say, our course it's anything, three At done, improved. or when for playing And hope if it's changed US we up to just We're as again, But that in going going starts the trial we've unwind not I opened we all. think the And would now itself there. It's get going the be of for. to And of that has more as along. hospitals end course up. of to two get the we to announced I that comments, the years.

Steven Lichtman

terms Great. of tuck-in of then all, you're cash free flow, use I Great. and thinking And guess about what are, is obviously increasing at in M&A, and are that to wondering, continues there. the thinking or your ratios leverage out just just you impress. about what to where landscape cash given M&A –

Fred Lampropoulos

Yes.

that when cash, we're As said, down debt. previously our generate we we paying

said I I things come strong – are us. think out this have you to that we're – very capable. looking. a and that balance We're sheet There think we you very Steve the

be disciplined to very have you think in this market. I

You have to buy right.

have look to right. You

around so way of important do again, about. discipline actively the to can things things our but We're we're course I question selective. So grow. the to and whole and is anything. remind want we forced not in talk there to thing And But looking coming the don't and we're nothing are and everybody to considering of do it have the maybe we

projects. R&D a We full pipeline have of

up, right if to get – And the be move. markets these comes back will prepared but open As back normalization. along, we'll to thing things

Steven Lichtman

apologize, just those as conservatism you'll the or built visibility, guidance you've the China in get I this. on place tenders. wondering I Obviously, into know I if then Great. you you're already keeping just sort you whether are When that. know to of not? think And do mentioned lastly it potential on but

Fred Lampropoulos

the in they'll go of it's day. QX. Yes. We that done question It's province. the Remember, out province know by

with dealing almost. each like it's So state

guys do these will – get this You get it, in. you'll

quarter, start some not third know lots go of out in we'll into our itself or it It's go lot to things. as we products third the play quarter. of from products the have will but just up So a the because we visibility tenders

Steven Lichtman

Thanks, Great. Fred.

Fred Lampropoulos

Thank right. sir. you, All

Operator

Matthew of Piper coming the question from next O'Brien Our with Sandler. line

is Your line open.

Matthew O'Brien

of for the but the for Fred. afternoon. and for my one then that kind with the question starters, Good metric. really Thanks guys. year adjusted for quarter good sticking you're for was One margin Raul outlook in taking But Raul full probably gross

range midpoint end saw we talk you the there? higher you about the you of can of back then some And of why saw of the to based would So provided kind versus we that in benefits on go what QX? the kind

Raul Parra

it noted I'm reality we where mix product if as of product have at think I we sequentially you good was quarter. Look kind frankly the is fourth more But mix. out looking -- Yes. Matt, the look quite at we of came

helping with was that's Our the less. then obsolescence obviously And expense also. volume

and feel quite - margin the our year think guidance gross So for it. expected where I I we think our the with comfortable we frankly was of kind

So...

Matthew O'Brien

Okay.

you then business there 'XX and know XXXX nicely in you're all segments like of is grew go performance talk want back which And peripheral peripheral somewhat the understandable. if to business little you about Fred off being the QX the a know But we I the look dynamics Sounds is to here. of XXXX. different conservative over I But business this should of peripheral Thank to and years? couple of for that more doing well. the bit trajectory that is think at. year we quite the the and talk challenging the are of about that business chunk course about you. Can how some next even you just the assisting

Fred Lampropoulos

don't is and I in that say in that fragmented as will generally and you research have of Yes. market -- Matt to know that in -- on me which for we we've invested focused development, years. I highly numbers just front the but one our

are So Surfacer, you heavier products look other of in areas areas at some at like if a than are you invest simply at that interest. WRAPSODY, you the to all look the SCOUT, the embolics, the those the those you probably the getting that areas things of because of continues And opportunity. are these look look lot just a Merit take at at products look the like you microcatheters,

a company been I it's of think focus. So more

of lot would these peripheral we'll be investment and Now an has electrophysiology some and to the that and for being over so. we of markets go coming But a time said, all that things quite to clearly the been interest will continue of open marketplace products side. on have up do back that development as area in other cardiac

Matthew O'Brien

you. Thank Okay.

Fred Lampropoulos

Thank you sir.

Operator

line from Mike Matson question the Next Needham. with coming of

Your now line is open.

Mike Matson

be first what an about the R&D sort WRAPSODY. that The incurred of and the a and timing spending guess in wanted for curious percentage just the cost I in I that PMA your to sales. means the as of -- trial of kind of had estimate if U.S. of you ask that will

Raul Parra

Yes.

if included So the at going actually expense the we you our one R&D of the year guidance beginning of or it's quarter reasons our and Mike up. is last remember that why

the baked our study, actual won't I talk the So actual but guidance. to into of it dollars is

additional and the it reason in say just expense delayed again, Some part for I'll guess was of keep we'll in and QX, that in that to start But QX R&D is why expense just guidance see level included so growing. high I it our it. is our of it's

Mike Matson

from that. Okay. And I All and from some things guess quarter the like to and savings strong very reduced continued of then due perspective operating margin travel that is and right. conferences

could do get the think or is levels So there, we think pre-COVID you'll of the of savings OpEx see? you to how full any kind in And about ramp-up should back quarters? we over there permanent next few kind

Raul Parra

Yes.

QX. uptick do for we in expect So expenses operating an

there's talked that our we do expenses statements. we increases WAVE non-GAAP the our making about. think investments in operating as we're plan on but savings there year-over-year. opening study we modest But Obviously talked as I is we about keeping, that as far expect such also some as

Fred Lampropoulos

And like There of going -- several Mike, things number to a that. as example. I And we've consolidation an continue back home to office and in answer those is in normal people think of terms things at you will fact and asked to partially. are go week be some issues times have in to issues, met and work continue when we this you the

of I'm all is high was SKU normal? is, go continuing our at are enough, working helpful. saying these things have were but it reallocated is details, shown to we to the things space more service we've did be a in conference entire Interestingly going think the this efficiency, is efficiencies, levels satisfaction moving for And back question areas this won't go that that higher mean but priority. is what week And the your for I Foundations businesses, are the back we and at internally done part answer and to to other we're those the I our are Growth. efficient we the discussed us nothing departments and department rationalization expect the of all that at for into to this fact There modifications, customer reallocating. normal. in, to of make and about And in do as things talked surveys Merit you I are customer home. reason we've meet.

evaluating last is three all and are are years. good those assessing those that and months of portion we things now least the of six Remember just go and beginning. some a And year plan for to worked year planning of at starting and that of

things back what think to going doing go things that to are be and normal momentum So and considered past we're I the would us tell performance. would not there that

that in that continue we'll So our do to we believe promised you've have the to board plan of we the course. And business seen across so. as improve

important it's So too I get us. to soapbox pretty to but much the on don't want

Mike Matson

Its are lower higher important costs revenue normal. to us. be EPS than happy the That's helpful. And are and than normal the all and we'll if

Raul Parra

I agree. we think

Fred Lampropoulos

Mike? else Anything

Mike Matson

stop. I'll Okay.

Fred Lampropoulos

All Okay. right.

Operator

question of coming Biegelsen Larry Fargo. next from the Wells line with The

open. is line Your

Shagun Singh Chadha

for could taking number you about I I This question. was you Thank couldn't COVID. a launch for during of launches. is believe Larry. talk Shagun a number in the new hoping impact of products product the you products from --

new a mentioned So backlog on that new recently how briefly significant is Officer Chief hired And a Fred of the you you Strategy products? call. that then, That's role.

you why Thank bit added table thinking talk So taking succession a little brings can the question. role, that about you the to you're planning? you for about and how Rob what

Fred Lampropoulos

you. Thank Yeah.

back the new go products. let's to So

the signs is the what the of industry recovery some of that one encouraging the I early is stages products introduced we think essentially we of of of believe stalled.

are to things a on forth. and comment starting But a products, just few we're down. fill and again with and locked what the those seen about that come procedures interesting we about getting to those peripheral And You introduced minutes then by areas orders that elective products increased are to so talk access back and We're talked and that I hospitals products previously we life. that so them cardiac locked ago. good into see down, is we've mean that

and overall growth still we our new that that development as as think I products go see more of forward early is the the it's to the these key all strategy. But fact of of didn't to launched. very, stop part that will products of all of very but -- continue to part we our be So we and and this benefit

me the individuals. let go Now, to

that this part press able in experience in so and our had we We of about talked is this is competitive let's you helping compensation strategy talent to operations build in These again Board in think think what be been able many, are read experience or that here It's release prove in the say so just Rob doing And we think in had foundations myself our about. on us for structure I've and base for on of and and And of or -- experienced part It's something this in in this I of for I lot the that are in a helping then to him. isn't a the is help guys forward our have engaged to and many necessary. part about it's that's and people. for on benefits part me. going this the growth. growth. think I But I've succession helpful and have foundations it's This -- it's planning. the being there been is we're years. business. sure got -- of forth talked side, of of and bounce off can the to This and parts to good recruiting talked our that make and we HR and sales people ideas of that had instance globally. the people, marketing

didn't they're time seen cases it's So experience we're they in same we and The experience giving of and then pleased. places. their about culture And of interesting, us their -- wisdom, benefit that get a and with the things consider. the things many at looking at other to pleased experience agility things and that we've the We've maybe because been in difference. talked things

a So that have I you add when you all together think stronger company.

for the even grows attract more the just for succession essential talent well-being to business. as You're able company road think and and of the we the planning that's both down

places over time think been growth we So I and think are that necessary support. process. good other continued in And fill it's for we'll a

important of strategy our for and important So growth. part talent is development an talent foundations acquisition in is part an

well-planned thought and So haphazard. it's It's It's planned. not out.

We that to years delivered. plan have and execute three schedule we that a

Shagun Singh Chadha

Thank the taking question. Great. for you

Fred Lampropoulos

You're question. welcome. the Thank for you

Operator

question Sidoti line Company. coming from of Jim & Sidoti [Operator is with next Instructions] Our the

Your line is open.

Jim Sidoti

Hi, in now, a stick good afternoon. that little And give products XXXX? Fred, bit? Can able you pipeline? to those be significant you have a on subject they'll what new little or think you us color for by launching do can the are we on start you

Fred Lampropoulos

a And always Listen it's the the that Merit we'll guidance. known has road. a new again been company into products we built been appropriate at the cultural time. and look time. when you meeting and here Jim thing take innovation listen is But doing of the Well, question. -- It and our of if as all appropriate that innovation. a incorporated we customer got business, long discuss we've this on a do foundation We've if a down good needs the business

toe be growth our the the with electrophysiology products, SCOUT it from with that whether the to again people your So be in of the the as and area also I want in area Merit head, whether it or up come in is is very -- area or things building in peripheral continued see these foundation that products to cardiac your pleasing back and a start fact products. and is is needed complex to future. think procedures for What

ago, And back I have But that in XXX to spend as in we're to to for people and I sit you a meeting but think all they've the WRAPSODY Zoom, technology. been a mean is together, tired how symposia physicians back that's the going day, terrific to thing never I BSIR can I just shelf. people Jim mean come But great a show products. that you about. working exciting showing you or want innovations. on hours year this Teams this sometimes were me get -- X.X products whatever they're know is -- evening. -- dark -- on these thing You the if told these them starting chance this is things

growth concerned side. changed not for has on despite that innovation the anything the I'm So foundations

really, spent really the it's on to sure, next generation. time and making of lot thing the preserved In that have we a it's passed fact,

Jim Sidoti

If capital, look XX inventory are quite flat. working then, just And that months. last What's receivables mean, sales there? All capital quite sustainable? The ago, in Raul on management your right. I a And -- are lower. a changed bit year the is it's higher now working is improved change bit we a

Fred Lampropoulos

look, move. got Officer Operating about, when plan was room. This spread announced Chief my were we talked beginning. staff our we listen, And products in other months really Well, Yeah. going all financing Raul at do properly XX initial the the some here, got the then, I've looked and I've out. XX things. we And to listen, were my ago, we what going the facilities with just to months,

don't the front get low-hanging We whose You I things are, I so There talking right some mean, that, in you. are there we're busy about. sometimes of all -- fruit. care so-called business, nuggets, over

little that maybe is a stuff at the the difficult. then, more And in that's mid-range and we're looking that. So stuff the

So get we respond its … Jim. how compensated And to humans

Jim Sidoti

Okay.

Fred Lampropoulos

the and track. are daily are talk …incentives goals. incentives we weekly the we on about meet to And sometimes -- these are

or today, foundations And not behind it's But for want underestimate there leave again, being cheap. not anybody growing good if of some going and growing see -- job. our foundations misunderstand we've were And it's complaining them foundations see And -- ahead business and on, to commitment measures -- I I continue were don't more the profitably. on. you to our our lower to I some the growth. were for cost. think to labor will think for It's the for it fruits It's done benefits foundations a then, forward. It's

to So those we're being hit too yeah… aggressive I'm be. we But And goals. That's, continue here. maybe And engaged. we'll assertive

Jim Sidoti

Yeah.

Okay.

Raul Parra

there's, targets year. every And

Fred Lampropoulos

And it's fun, yeah.

Raul Parra

almost update of we Receivables, stands. inventory we're Ron weekly an just an the -- a we've it. that on basis, got on and close in we Actually track a them. we're it. good contact on We're a There's, I, keep eye keeping handle on targets weekly basis. get where

Fred Lampropoulos

and call out forecasts. the a -- a would is of difficult there. stuff still lot goals Listen, you're there's I about what talking And

is guys have out transportation this forget battle. storm I'm -- things things the But other medical like, I pleased pleased And device And there. me, you on say, and these I'm what of just how by are because working committed, backwards, there. open committed picked stuff have sure we're with and that am but that's and it's a to working on left looking his you really not And calls, Suez everybody I up have to the shortages I quarter. people out that constant going Let's There's and have mean for do not hard. as together. staff results all everybody just wide Canal. to this looking

think I hasn't if me, to people. surprised surprised we've I the don't know see things. It

do Now And is that, doing didn't you every Why always right? don't ourselves it we And results things. the that of And all on ask question Jim. didn't think, aspect why well, of do before? do that? our think we you're I life, I almost Well, we the question same seeing why, this? we're should

go another to anything an I one because to So hour. And hour, committed call on I this half I stop, so, better keep else? Jim, could

Jim Sidoti

No.

not cash working -- anytime flow, and sounds capital like, like, I there. in that's think, management cash improving something sounds it soon on that's management the focus the it and going away

Fred Lampropoulos

can I've weeping, down grown happen. and gives flexibility And maybe need not absolutely we more No. of And that pleasing as sadness because it. importantly mean don't to eyes, most much men, women the watching the debt bankers one No. won't in it us. seen they're go getting never take that as their things money. and I because the Watching bankers'

Jim Sidoti

Thanks, Fred.

Fred Lampropoulos

Jim. Thanks, right. All

Operator

this at And I'm questions time. further no showing

Fred Lampropoulos

calls. again. your for you. you, of three See no this. so. forward Well, time We'll appropriate I the listen take soon. back listen, to do We the busy day. everybody. you be two appreciate to forward looking Thanks you. you to Thank a around Bye-bye. will taking I or and Thank We more know your to look to hours, time. it's next when Raul coming

Operator

our your Ladies Thank you does for conclude gentlemen, that and today. participation. for conference

You may now disconnect.

Merit Medical Systems (MMSI) 1 May 212021 Q1 Earnings call transcript