Earnings call transcript Q1 2023

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Operator

Welcome to the First Quarter of Fiscal Year 2023 Earnings Conference Call for Merit Medical Systems, Inc. At this time, all participants have been placed in a 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

Chief welcome Secretary. year Merit please. I XXXX call us Legal Safe Parra, on and Brian our Treasurer; quarter our through would Lloyd, am Systems' you of the Chief our Raul by fiscal Earnings and today statements, Officer everyone you and Medical and Corporate to Officer first joined Financial Brian, Thank Harbor Conference taking Call. mind

Brian Lloyd

forward-looking statements you, that contains Thank I this under protection to would receive everyone remind that federal Fred. like laws. Harbor Safe presentation securities

reasonable we they and forward-looking Although, these statements believe subject are risks based unknown upon assumptions, to are uncertainties.

realization transactions materially currently anticipated. The as or impacting uncertainties, our or company, from those actual these any differ of could risks to events well as extraordinary cause of results

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

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

operations the regarding be for such financial release presentation to financial with trends presentation reconciliation to on to certain performance the also business measures. of the believe However, measures and can important operations. X-K. information this entitled call. Measures furnished non-GAAP useful SEC and provide measures press included GAAP today’s financial useful non-GAAP ongoing information Please directly our contains under certain refer financial of we Non-GAAP is Financial regarding comparisons of This non-GAAP investors section our for non-GAAP Form most measures the measures in A period-over-period of underlying presentation US comparable discussed and

should note be as a Readers Please of the of calculations measures to, non-GAAP substitute may that GAAP. prepared are addition today’s for, with reporting presentation accordance these other on in in similarly with titled page available press not measures consider and financial Both comparable companies. release Investors our website. measures our not financial

will I turn to the now Fred. call back

Fred Lampropoulos

Thank you, Brian.

financial of prepared a brief will the After first I Let in for will financial and the what agenda for our in questions. more and summary as our balance revenue provide our remarks, quarterly during financial opening press will sheet that cover of release, with then XXXX me the an March XX, quarter. my well guidance as with review start today's our XXXX. remarks. with We'll we results depth we of for of formal a results updated overview open of start as a you condition call Raul

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

the and Our was total in States growth X% growth XX% GAAP revenue in by driven growth sales. international United

Our an basis. on quarter currency in total X.X% constant the increased revenue organic year-over-year first

exchange rates the changes our year growth to to the Excluding revenue headwind related prior GAAP in to period. compared

in stronger the all. our than that Our fourth notably growth first were expectations quarter results revenue outlined quarter call we

in expectation year-over-year revenue constant our range growth X% the X% currency for Specifically, to quarter we one. shared in of

rates And revenue the all with and a basis. our let stated, more are detailed currency review note reportable provide and you growth beginning in each in quarter, year-over-year otherwise our constant results the Now, primary first performance a approximated categories. on me sales of of with are unless product

press our reported results GAAP item in included available our our on have reconciliations presentation We the non-GAAP release from and to website. related

total segment. cardiovascular our our segment quarter XX% and was driven growth endoscopy revenue in in First growth XX% by growth

growth revenue of one. upside expectations of nearly the in end drove exceeded versus high While cardiovascular the constant quarter the our our currency high in expectations both end of our all segments, segment

of our representing this cardiovascular intervention driver Sales X%, again peripheral the products quarter. largest growth segment increased total of

of together XX% of of the segment, recent Biopsy in and quarter drainage continues our product driver both roughly one. years appreciate while XX%, Radar total access note, line. of Localization of XX% Localization PI growth Within contributions to believe category represented our value growth PI that PI cardiovascular differentiated category, products the the year-over-year, is our and our products together sales increased and PI sales the represented our PI increased our total roughly our and in it and XX% growth of Of products Angiography from to Radar in come SCOUT product to be I highly portfolio largest growth in our total products of important

our EP products increase to growth, increased segment and the CI and results were products. of high and in the first Intervention on end Intervention commercial exceeded second year-over-year. Mini total which the increased our X% over largest in in Cardiac sales following quarter XX% SCOUT in pleased of our our growth continued improving XX% than categories, three a increased Kits demand the products growth of of CRM largest revenue more sales the quarter XX% quarter customers we coming products, to sales and our was our a to one expectations, including These of XX% have of OEM EP our attribute in sales growth multiple larger the growth contributor to in response together drivers, and year-over-year XXXX. products half total which one. cardiovascular We Reflector launch discussion angiography a our with one CRM from contributors been Continuing products both with market access from

receiving Cool our positive Sheath August increased our upside from customers by Focus CRM the single strong in growth products for IDeal growth in market diagnostic Sales our growth guide Compression expected EP teens Sheath, sales Custom of high and growth driven Prelude Safeguard was was InQwire than our which last as CPS we Prelude CPS better access expected was US. is of following mid Procedural the high to was our of device, strong driven declines sales wires, was year. quarter outside Radial by than demand primarily This growth Angiography which digit commercial X%, products Solutions, by notably stronger products in well demand for launch driven by the of SNAP products or HeartSpan one. and products in response driven growth as and our

Middle increased year-over-year digits sales one. in in low East Specifically in China, where Germany, double quarter the and

in segment Finally, high our was which the sales increased end our of endoscopy XX% than modestly expectations. growth better

return and in qualifications vendor. to our continue quarter While pleased one, work material to endoscopy business for as disruption navigate results are the expected, new to as on we to business shortages we experience growth see continue

However, we in improving trends for mid-teens continues our expect growth year, will in guidance to endoscopy the move XXXX. result assume through business as which we

to a on geographic performance brief turning sales of our summary Now, a basis.

end than came company . and the our roughly XX% Our higher expectations first in year-over-year quarter million customers total $X increased Sales in high of represented quarter. growth our growth of to US constant currency this sales the US XX%

performance US sales increased macroenvironment improving is and strong in continued March. in reflects year-over-year, execution global the performance growth X% which the US in trends light strong International challenging overall particularly Market, the Our year-over-year of international of respectively, posted of X% the expectation, XX%, markets. sales of in APAC Rest . above increasing in growth our high regions certain three our X%, and EMEA, All major World and with end the regions month of

assumed, has by While largest international our we growth expected, COVID growth materially international in are to pleased of guidance was as headwinds China, deliver our what our related market. ahead o-US impacted

Which our improvements in in entrenched expectations due quarter Sales digits March. one. the in in exceeded material primarily single China declined year-over-year high to

Excluding China, quarter international total one. XX% nearly growth in our was

the with while driven which three the demand than growth, Middle upside are Now, region, primarily France, region's the saw was the in East we to year-over-year expectations in EMEA Germany, Spain. pleased growth most we by versus the expected stronger regions and all where contribute

World contributions our in fueled sales growth both and of Japan sales and lastly, mid-teens strong Rest in in Excluding XX%, customers , APAC Australia China, And declines Korea. prior from Mexico, increased in year Canada growth X% growth digit in period. high by in the partially offset by region, to solid single Brazil by America, Latin in to driven and compared growth year-over-year we delivered

happier be couldn't we to fiscal a summary, strong XXXX. year with In start

financial and to delivered significant our our share. net improvements one a this per Clearly, in in expect proud review Raul our moments, US is quarter performance of we operating in and encouraged results our updated I very guidance earnings commitment more that year-over-year demonstrate that the a are We impressive achieving financial Foundations few program quarter off. result strategic in and year-over-year are Growth QX than release certainly the to we is quarter. but by paying multiyear the XX.X%, we share for XX.X% plan. and our the growth will XX% and first you margins both on for the results afternoon. international respectively, view the and which we Non-GAAP hard non-GAAP profitability direct improving announced In growth and continued gross recognize of income continues work my in delivered non-GAAP that team's focus of team's our we very, trends both markets, press will in in the

and we to have Now know said, yet are work this that focus, a we do not losing of year. we lot

our better We expected quarter. in than financial reflect have results the financial to updated first XXXX guidance the

team's non-GAAP our and the at at the in December for period more and continued we operating million. Growth $XXX cumulative of at cash our flow for remain of confident growth organic of called least X%, increase ending three Importantly, in XX, a free CAGR targets progress constant ability Foundations related which to our of deliver than XX%, program margins revenue three least in currency year financial to XXXX year for

and you the let me a first through who quarter today's to which financial guidance, take review Now we with XXXX updated that in our results call Raul, of press detailed will financial over turn Raul? our release. said,

Raul Parra

Fred. you, Thank

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

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

our XX% our included presentation website. on quarter. reconciliations and to GAAP first reported related in the the Gross our increased have non-GAAP available year-over-year profit We approximately release results in items press from

XX.X% year margin period, well The expense, distribution, primarily related in mix, and was quarter freight history. first gross gross changes to as XX.X%, prior FFG as the for year-over-year efficiencies. the company's in margin favorable the was obsolescence highest first gross improved the due compared quarter Our margin to representing in in product increase other

the basis to XXX the margins are our year-over-year, expectations we quarter better increase high margins basis first raw The gross which of the our margins we impacted call, than in to due on in to and outlined gross period. expected, freight, were exceeded on cost fixed sales As QX points labor seeing end in by primarily expected performance point for the increase year-over-year XX the leverage XXX inflationary gross logistics, materials. headwinds called

Operating R&D expense prior compared The expense expenses the SG&A expenses increased was a XX% in operating XX% year-over-year driven and to quarter. increase the in period. increase in year-over-year in a year XX% first by increase

million. operating Our due in year-over-year our and reflects first focus QX million growth to the management operating Total leverage $XX investments continued expected to quarter XX% strong was better increased in or performance support and prioritization to $X.X income on expense of initiatives. operating future expense than our

Our XX operating increase point operating year non-GAAP point the in margin offset margin gross basis XX.X% increase QX margin a OpEx driven prior was period. non-GAAP period. compared year compared in in by prior an in was XXX margin, basis for The increase our point basis partially by XX.X% to XXX our the to

other expense primarily assumed was the compared was million other last to from realized expense interest foreign by to gain related year expense as period, compared what a on loss in The expense change and unrealized decreased foreign the to million was quarter prior higher net currency lower $X rate period. $X.X result our than to First of guidance $X.X offset million Note expense losses realized increased other lower year. currency had non-cash net net partially line in our expense roughly interest effective year-over-year. due

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

XX% share, expectations. performance the per are where delivered diluted year-over-year pleased profitability income exceeding in high with and our we non-GAAP our growth in first the We non-GAAP XX% in year-over-year quarter, end net growth of earnings

$XXX total cash March of we approximately Turning obligations and debt borrowing cash had million, $XX.X total of cash, capacity obligations and our of condition, equivalents $XXX.X to available XX, and balance $XXX to $XX.X and XXXX, equivalents a of review sheet million, as XXXX. of of debt capacity approximately financial as million, of borrowing of million of million, compared XX, available cash million December $XXX.X

balances, Our flow the in March X.Xx year-over-year, was levels. XX% net by year-over-year cash customer from of the In strong invest we offset ratio increase adjusted safety the partially the net and build cash quarter. of ensure as of basis. on XX% working free have quarter, Cash generated improvements operations the increased to to and $X.X year-over-year requisite in by Use discussed XX quarters, Capital. strategy income recent in We leverage service our inventory our for GAAP driven an million in stock first proactively high first

cash in impacted generation XX% expenditures. by was capital increase in invested year-over-year flow cash Our free a also

and to to year items guidance prior Turning now press XXX GAAP year-over-year approximately to period. points million details compared to release a for headwind growth in of guidance approximately of points our previously. our compared $X XX revenue to guidance expect revenues have $XX to compared ranges we growth assumed forecasted our updated our $XX financial X% net representing X% to respectively. XX which GAAP range, million rate the ranges those included million our and XXXX financial prior prior fiscal of range rates to to the a a to $X.X basis We million, which assumes net The XX and how both each GAAP to year formal currency guidance, basis the updated foreign earnings X% in changes X% review headwind table of now updated of a exchange from

now higher range growth in low Both increase approximately revenue ranges The XXXX first assumptions, first XX% the And expectations XXX guidance than approximately assumes of expected growth segment. revenue expectations approximate in net are revenue year-over-year our in our of The to the of growth midpoint constant o-US results from in basis assumes than segment stronger X% of and reflects net our year-over-year growth guidance stronger approximately again GAAP the X% revenue our markets. which from results US. both than the of quarter. points roughly sales X% net cardiovascular now growth revenue Note currency in these reflect XX% the growth the expected X% end endoscopy the these prior quarter. to

million compared and million $X.XX diluted $XXX $XXX or diluted per of million prior $XXX With diluted the income a respect approximately versus $X.XX profitability share to of to to to XXXX, to for in $X.XX income $X.XX to $XXX $X.XX we expect a share now $XXX share unchanged previously. earnings guidance per GAAP range net $X.XX net to in previously, million $X.XX and GAAP to diluted range share the to $X.XX from million or $XXX non-GAAP a per of million guidance a approximately per

our XX% basis approximately earlier. which and first to and of $X.X XX.X%, that margins of XX.X% non- reflecting guidance gross modeling approximately other range $X to $X assumes versus quarter discussed expense at XX%, versus end point year respectively, fiscal million low the For the GAAP a expense both our guidance GAAP I the approximately in of lower non-GAAP in range prior margins guidance XX results of purposes, which benefited million Non-GAAP reflect million assumptions. XXXX operating increase a financial

approximately diluted Non-GAAP previously million. XX.X% outstanding XX.X% approximately shares range tax and to rate the in of of versus $XX XX%

and $XX a million in CapEx range $XX flow $XXX expect approximately million free million. cash to to of continue of We

related of provide XXXX. for expectations Lastly, we the would and transparency quarter growth to our second profitability to additional like

our up X% X% basis to currency a expectations year-over-year o-US expect of X% we increase non-GAAP GAAP of basis constant quarter expectations the we second year-over-year to on our on approximately expect markets. to that our Note the gross the approximately year-over-year X% in growth quarter, assumes of And total midpoint approximately US. constant in year-over-year to second range year-over-year Specifically, . X% a range in in sales respect X% basis. revenue and approximately to XXX currency to increase margins points With the XX for the growth see profitability growth

expect digits see in year-over-year to expense XX basis are the up to mid-single points on down non-GAAP in low to in interest basis of higher a the flat range. non-GAAP EPS of the margin margin These a on points year-over-year down operating We range with also expectations, drive XX year-over-year range expected end to year-over-year. change year-over-year high combined end the of

we now questions. our up would for wraps up That line remarks. to the like open Operator, prepared

Operator

Instructions] [Operator

of Our first Lichtman Steve comes line the question Oppenheimer. from

Steve Lichtman

evening, guys. Thank Good you.

So top first the in quarter. line on really the balanced strength here

my the I sustainable again, and guess the on up growth, talk you ahead question can of drivers and that just OEM looking areas. you solid a just touching follow there my One think segment. very couple a for front different for here, about what is

secondly, then the overall on you your in feeling how strength the in just are business think outlook given China, about Thanks. geographically, March, we as And for China?

Fred Lampropoulos

Steve, much. issue mean, reliability. OEM comes to we you, buy down to the with product. Yes, can the deliver growth procedural very thank rate the people very increased product be Listen, because you think I candid I hey, really and

take those and OEM the really is. what two think factors those spell out opportunity I So you

see, to stay OEM. there see that other In within pleased the terms if our and the as question? things, China is very business we're well just of But and sustainability, you further want calls. we're can the up the discuss forecast Raul, do we'll pick year, in doing to going for we you with

Raul Parra

international Essentially X% above up the Yes, of major o-US up I the were expect, headwinds on international three we China, call saying off constant think in were end start on XX% constant I'll grew And our which expectations, a high will excluding a we as I think just expected. out our which excited posted basis. nearly was really impacted growth our our COVID about. currency that I by of China, look, related our all sales basis. regions currency sales with

how excluding So sales back in excited how pans our impact. we're we'll I year the came China about out. But of excited did, think March. international how And rest see that the

Operator

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

Jayson Bedford

good Hi, here. and on the success afternoon congrats

kind for are you a you've couple, what a out just March, the particularly perhaps just US. or comments maybe procedure even think a strong there? of was March you're there curious, So Fred, and seeing do I'm the you so this on gaining specific why Are on a than in few your strength doing from that years, been others? in standpoint share more standpoint company bit a

Fred Lampropoulos

I I lot previous reliability listen, on it's Yes, my comments in mentioned think of as Jayson, OEM, a

as it's are to kind to ability to of mean, across procedural those take trying Merit's still rate. vertical And while that ability deliver the catch future go and others our ahead. other consistent things past board as business playing the is globally things, the that the well up Yes, I maybe and I will do in we the integration, well. have well in think play we are think growth a you do

Jayson Bedford

of perspective, it down wondering, macro where there's do to to what's driving? hospitals of situation here I'm a I'm these just of perform come out there? Is curious catch guess up kind an I a procedures has procedures? kind from more staffing hospital allow you access think

Fred Lampropoulos

was to in question executive some a and senior talking We were of the large all trends of device time. still staffing. the staffing. another company about issues get It’s of medical the the I see they We day. talking this

to are that there On of there's out for it's be demand I a think the some the clearly, coin, while. I out there think pent-up other side you going seeing

all macro are view think in So factors, a think my company, Merit's I all the of of in paying factors our as view, the I favor.

Jayson Bedford

Okay.

it margin, was strong clearly gross quarter. on in first the quite Just

margin for You really the lifted change the year. gross operating margin guide, the but assumption didn't

reinvestment going. where as curious is incremental just I'm So to the

Fred Lampropoulos

sales and through talking phone calls that's saying COVID comes up I'm meetings, that is unwrapped. sales just and all about just this things. to we talked couple my investments camaraderie organization. shows getting my those with talked in it let trade situation important so and talked you we part? coming their trade want Listen, were trade Raul, team pick the the And about meetings, shows those making on the gross and meetings. the it's to our previous in we is successes, a in type and week, this they front about together, any about sales end have going the career them, really of their calls I in up it like nothing pick shows Raul And the Yes, business in fact, back. briefly talk as exactly And previous about opportunities, attended margin of career. of that I've military and seen we

Raul Parra

margin, Yes. think the to cover gross our allowed us the Look, I sales coverage. strong on fixed clearly better

of level making in. kind the where margin to kind we So Foundations out, a is as that helped There investment I'll of I exceed gross thought margin growth right. this prudent the it's Look, about the that operating Growth, of the call that, talk think one gross initiatives. in specifically on business continued we'd about investment of that comes targets. in things margin additionally end, for that We've we're

about success Jayson, that we're increased that on seeing, just we and find balancing, profitability the seeing, in And profitability we're I have sure that making just really the we continued delivering and between think right making growth balance that growth the gross it's sure side. the margin then so our just

Operator

our comes from from Needham. of question And next Mike line Matson the

Mike Matson

of just my obviously Good if questions. the maybe I'll that was there growing lower driving faster and benefit. strong are ones that taking higher maybe margin the really you Yes. was and afternoon. that maybe slower guess I seeing margin and are product you you're out called versus growing what kind wondering Thanks mix. could the start gross about I categories mixed with talk for margin

Fred Lampropoulos

we Obviously, is distribution couple to as ocean of right. the from a saw improved freight things I'll shift Yes. obsolescence helping. out expense. Well, first, air call and We

initiatives that are some that us. through have also flowing helping related are FFG We

to line, strong peripheral OEM increased side, areas. mix we growth our has our in On which mark product [inaudible] the continue too, margins. in intervention player, see product gross was a

just a of things, kind So different Mike. of mix

Fred Lampropoulos

I our business plays Officer that's and all everybody also is with Can could I initiatives of if global and that Chief something for add Raul think overall well the just, support just aligning something, Commercial our I and I his team. more tied, Joe drives side company we're is in cohesive Wright commercial unit because and it's think And a this in the effective much remember, all that

to that And line to when margins just really happens. results. and you what all see up, interesting it's

Mike Matson

Yes.

Okay.

this effort kind a your you. more just So of of as happened part is to that of a deliberate to on something kind opposed

product. powering deliberately You're this

Fred Lampropoulos

Yes.

deliberate. in me got it's them everything is mine. just I deliberate, some somebody we There going here in deliberate. I tell their Let to is got you, out mean, office, very

Raul Parra

lastly, just of I margin guidance I And were that think Mike, mean, right. expecting, Yes. kind our previewed gross we the

the in leverage thought ahead but cost generally fixed slightly a within from we've that just of where we QX, guidance So given

Mike Matson

of I an effect that. margin there. having on kind effect and get maybe or things wanted that related about just has started a is thanks. product I sort I feel program, Has think that for an of lower things some the Growth SKU And of you Okay, one kind rationalization rationalization then I you question, some when talked was Foundations just that the to and guess, like categories been gross of an margins? on or had like accomplished, of update

Raul Parra

a accretion, gone you if Yes, quite gotten than rid by shouldn't a successful, program. look, we've program. we're Ireland, PAC some It's notice, also, frankly, kind that'll be And is in PAC multiyear some of gross business mid-year. here businesses fully Australia, of SKU margin in rationalization in Europe other

of continue it and the higher we replace on. again, that work margin Most gross So multiyear products it's it better, to want of that approach. is got it a quality higher we with. to And we've one generally, initiatives is,

Fred Lampropoulos

be longer efficiency comes we it hundreds we and shorter. we that might or too, them something month where we that And thousands cm month And, we're X sell catheter a might and some Mike, of be, over. of a it have then of tens we in move have a selling

not the low but in efficiency in So of rationalization products low comes also that manufacturing there, runners. just SKU in runners. low but Yes, only margins

keep work out I thrilled think we have them we transition. and happy. with that this talked customers They're our and this

you So this that's a to well to have has sequence. in be do disciplined. it why And

instead other a knock want customers with or do That's out this someone. tried And just upset with They just just we've players. way happen business. that. of to I've something seen You to customers. they happy And what not and no off to your go smart their keep this input It's do.

Operator

line comes from question of Our next from Sidoti the Jim Sidoti.

Jim Sidoti

common, Hi, good questions. looked thanks very when it been afternoon, you and COVID. for a a especially exceeded I in years of There's couple But to isn't QX QX. taking the have where back slowdown China due

or are quarter, impressive come just one things the procedures starting is back. it time this any the in year. especially there So it's Were to

Fred Lampropoulos

execution. it's think I Listen,

later it's but nothing we I of aware those Raul, Jim, one throughout I anything. of seeing that growth things, I'm rates quarter. think think procedure particularly not organizations talked of. of part is first it and We're the of kinds increased the in aware selling coordination And world I'm time the that messaging. any about,

Raul Parra

No. of mean, our built I over is opening on year. guidance kind things up the

So we'll so stuff, about excited the one the see how have March things but month rest see we're how is the We'll quarter and month. far. is of one trended

Jim Sidoti

of growth factor? would increase you been pricing? hard of much to say how price average it's And estimate the your know you so but a has have in what from products, pricing came thousands I

Raul Parra

growth actually call a that That's benefit get. question, volume, say not our we're a but on continue and Jim, and disclose publicly. most that or of getting don't great is But that to the we're to be I to expect we that going to discuss pricing will continues

Jim Sidoti

the trials to million to what's or Okay. $X that? on Then into going that due in R&D million $X quarter, on the up is expense

Raul Parra

but just about also trials way we're sure is in trying making Yes, sure think invest, continue profits, and that we do Again, continue in the to make business. what the we the deliver I to business. that we're prudent invest to invest

Jim Sidoti

the Okay. for last And me, inventory. then one

year. increased strong noted all what the that from out of beginning stock? that? year Is safety of the of read year? rest You how of over in And can anticipation the growth the continued that in Is we

Raul Parra

be just been to look, expect kind make been our is that that and levels of can we've it able a our good continue large service maintain of Yes, want customers the deliver position we of We've product, to strategy us. that. that able we sure part a to to to customer in really do

air does the got which a inventory. little bit we've require from ocean, more to shift Secondarily,

Fred Lampropoulos

the In lag.

Raul Parra

lag the then also product transfers site and in of have. and consolidations just some Yes, we that line the

So it's it's just few customers’ making combination of things, can sure about our we that needs. really a but meet a mostly

Jim Sidoti

similar going Do see increase? a the you've think think built the up already increase you'll quarter, point do slower it you where to to more in it's second you or a be of

Raul Parra

of intra give timing intra don't on flow the quarter or month free of guidance because We just cash things.

that. We cash if at so with leave you're haven't free going Jim, it changed million, okay of our to flow I'm target that, $XXX

Operator

line Our next Bednar from Jason will Sandler. question of come Piper from

Jason Bednar

the the got Raul, components just here, calls me XQ at the full hopping in a the line. afternoon. books. advance couple to you year Thanks really year, nice start start just really understand the Apologies taking in in the covered. to questions. We've if trying with for to guide a that's been guys. And of I've of been revenue good Hey, congrats to between

formal XQ about that's the now. informal there out of want however to kind or have you it, guidance, We think

the through but the this and I the of I second still in growth some need I the slight of when model, year. together half of again, think put the this work to think implies in the elements desell I

easier, a in though, better bit actually China getting Pricing the is are the probably in half the comps probably in second better. is the bit think a half. little first I second half. than

help maybe with that So we growth. just organic the the as through factors the think sequencing cadence influencing of

Raul Parra

want the strong line strong Yes, really or Jason. out from is to guidance our from we to in guidance really saw go a any January, of a seeing change in. don't and what didn't expectations you're updated QX. a February get QX. Again, March ourselves, and with assumptions It's then we QX very of perspective the what We ahead is

if want and this a I year. three see think we then and turns into full is months to six month months one see let's what then

think not I at. half. that's Again, the So changed has in we're much where back

Jason Bednar

cash down way think we year? allocation little Okay. the free air here working outlook, there assumption? of of capital a all then previously, towards but the Yes, to through, versus building pay bit debt? on enough. it question And how still do on cadence we just the back of think You this million moving $XXX coming working then And should how Jim's that fair the flow the to Is about freight? continue ocean about

Raul Parra

think I see our flow yet, target hopefully the Yes, we we of pay debt. just because We about timing on a tricky $XXX free so our we'll continue don't to it's talk down still to months give but that couple again, think did here. changed I related items the intra on in for you we our confidence year. call QX cash But, target timing so QX, million gives is haven't in information And quarter a based base. ago that look, some just

Jason Bednar

Yes, definitely.

maybe it And Fred multiple picking Raul, today. Okay. then or but Have years share stands you're now, clearly market. up like competitive landscape the the as been for seems talk in about here

As changes your the we shifts calling that look and geographies, any out? worth are out or Europe across US, key China,

Fred Lampropoulos

the comes and the for improve reliability. talked for out same all real the things to it goes technicians is and fighting reliability. you've to times there the we've the on the also, as that of their product be health our invest to long that Raul getting this need, out, and for dollar, opportunity Jason, it in is, care ability several to say think, the And Everybody's new and is is to easier Merit’s business to does I call provide our able really vertical make heard that about just was continually do It's pointed the question to And time. back core a and goal job. is the from. That's to where for very integration, physicians customers business product factor that who meet this the products better?

with a of time, same little So we've it's more long been focus. bit maybe for doing kind sharpened but a of a thing the

Operator

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

Michael Petusky

free Good evening, be in QX to relatively even but generation and lowest. flow going was the soft cash little in quarter, that to slightly to the guys. just want the I beating the certainly guess or actually internal, I did that mean, the I always line? ask dead I relative understand horse, is first in But, come a

Raul Parra

being QX. it I we soft in talked about Again, think Mike,

call flow QX As fact, free lighter what is the some I I'll again, you a believe year, we cadence where just Hey, the the at that cash so and question, of confidence gives it flow? what's And so target for always we're cash changed you haven't Again, I expect, out asked of than it because right. at. of leave matter our free we hopefully that.

Michael Petusky

or March. enough. It got the like got China you it quantify And hey, China better, catch you sounded March? better fair didn't just Okay, but said about commentary that I did in in essentially say,

Raul Parra

no quantification. Yes,

It better, will Hopefully Just our exceeded China right. expectations. got that continue.

Michael Petusky

I what of that interest guys they seeing I your out of guess terms assets. mean how Fred, about you there valuations I are seeing Are thinking terms and of in landscape? with more assets? you And kind I seeing has where rates in are? changed you are the mean what guess,

If you that. Thanks. talk could just about

Fred Lampropoulos

think it's like Listen, I what necessarily to to changed Not enough we'd substantially. see.

are for sales we there. look it, Mike, fit we best profitability, a that foundations complementary We We channels, a all growth is coming are the our and that see things them. our put across that for talked out But are we the desk. expectations things lot the that about. high things to way very things our at again, I think of of lot looking may there

you seeing mean these expensive. too are to sense I It didn't getting know. talked be were to us without And things, that's And though, we up, on as just prophetic simply before, calls, here, think too that. things loosen previous make I We about we've said just on prices.

So are still to and same of up they meet them starting things or see are are loosening, at making show look there those much criteria. there's more availability. if A we'll and that Raul? startups the those not that's our assets are lot time, them interest. at companies not money But of

Raul Parra

look at I our Yes, strong growth, that pretty I'll growth. add just display to I we mean continue if think you

to from And think exercise we we're continue so and we I patience anything can growth. don't our have suffering do to because

Fred Lampropoulos

It's we don't opportunistic. a Raul. really have We good to do be can anything, point, but

Raul Parra

That's right.

Michael Petusky

think from is target on understand will questions out had multiyear some multiple any put Merit. two over. something have think similar little one me months more, do do I likely do after for a Thanks. focused thirds of you've you're on it’s is about more I've compliment in increasingly quick, Foundations the other going sort whether sneak what of I way do focused, investors Merit but you've I been hyper this way real thirds And guys a executing the last truly you you'll super gotten that of Just on that let there, the ‘XX I've or you few it's how regarding plan comment two question and one to executed in forward? Growth.

Fred Lampropoulos

like duet do and can sounds I a this exactly you on and would it that tell Yes, that. I Raul

Raul So of same because the given part your I answer. the have duet

Raul Parra

hyper think way look that we at it at wide be that to and past at. I I sure ‘XX. But want drops at I line. way focused everybody’s the and internally the ball the we we that on we understand score we're mean, cross line, that's to look where is touchdown is that don't are X-yard Yes, is focus making it we receiver finish the open just

Fred Lampropoulos

all so goal. company so Every and forth. are baseball in talk we football. compensation last That's aligned got the company, and Series. And Mike, person in that goals, and to a in the on ball that about get we World single is on you this aligned mean, on goal a individual we guy. the then inning, I'm Xth to eye may the I and win out departments

it if we'll And what extra inning. you had finish inning. you'll it then very it win Xth where And [inaudible] so four in It's from the to We're consistent. hear guess about don't innings, playing up. talk XXth say. us want I there. we we go You the just that's be would

Michael Petusky

on I still the given of good have the luck. but baseball state Fred, that I'm is Thank Sox, only a you. fan, surprised comment you're the Red

Fred Lampropoulos

very a got over comment. won me. guy with hurt cheap that, sitting not an to two I'm very, hurt. only They that, Orioles in shot, today. six That's really I the And Mike. here room I'm

Michael Petusky

I'm sorry. Sorry, Fred.

Fred Lampropoulos

Especially Chicago. a guy from Come on.

Operator

from of the Plovanic question line next comes Canaccord. from William Our

William Plovanic

business everything Great. do is is, just XXs. questions. and for second is the my Thanks I'll my think question and then for then this have the what two. looking done, operating business mute taking And be it understanding Fred, since company at questions peak I One you've go you've today this you eventually? could built from that on give one the I of margins I'll get investors

Thanks for should some done down? about taking about, there point a we how that? phenomenal How Is which think planning succession think step my is job. there you do we or You've question.

Fred Lampropoulos

Yes.

You're welcome, Bill.

Listen, hit a one have program. me formal there. we Let The that. last

second a the announcement to out by an it that of half everybody. have in year, in release year public the will We this lays

the You shouldn't end. that's read into that,

the ESG comp our But program by to want being sure I our out succession make spell committee. that's So run it'll clear. that's and

out will your formally So question. and that'll that come answer

line, cross of Touchdown. bridge want consistent. was terms we time goal that it. In net. this cross, It's talk silence. it's peak the Yes. at Remember play, just stay the it's Bill. to We'll not performance, the point, don't home line, there that. when about we and goal And that to That's

Operator

questions to And any back further not queue. I'd in Fred Thank you. the for call turn closing over any remarks. like to showing right. All the I'm

Fred Lampropoulos

again. I much very I know you out thank lot and be We'll now time. for Salt you to you busy, We we'll your hours questions, you, just available good the evening. gentlemen, City. very will few it. appreciate talk of and thank Raul next off for from calls you're There's once again, a there. answer Thank and much and then. we'll Lake Ladies so sign to

Operator

That great Everyone a our today. Thank for call have does conclude conference for day. participation. you your

Merit Medical Systems (MMSI) 26 Apr 232023 Q1 Earnings call transcript