ICUI - Earnings call transcript Q1 2024

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Operator

Good afternoon, ladies and gentlemen, and welcome to the ICU Medical, Inc.

First Quarter 2024 Earnings Conference Call. [Operator Instructions]. This call is being recorded on Tuesday, May 7, 2024. I would now like to turn the conference over to John Mills, ICR Managing Partner. Please go ahead.

John Mills

everyone. afternoon, Good joining for for discuss Medical's ICU Thank first us quarter results the of financial you to XXXX.

be Financial and and On our click the Chief Bonnell, let Chairman; Jain, prepared that accompanying to we To is Medical XXXX quarter it wanted have Events under Chief everyone on Brian a know call today go the Executive view and representing Officer the Investor ICU please Officer. will page to We first Calendar, today's presentation Vivek remarks. and presentation, events.

intended forward-looking transparency as as to on Such want they are Before with pleasure aware, also made we management and a are measures measures results not financial operating can remarks, the on bearing is beliefs today's SEC on differ We company's on of that, non-GAAP We prepared facilitate ICU to results that today's call, underlying statements results non-GAAP and subject that more in detail ongoing that the start added in over included note period. financial Vivek. including the Medical's from are and possible information you results be Please operations, these to particularly provided are we the during a results and and a assumptions financial our uncertainties analysis the and that based the will position. Please from it to to future call, and measures, comparing discuss I touch expectations future refer results. management's to about on results upon are period any basis. reconciliation addendums greater and call back. And been of also my may detailed an We've believe when the uncertainties. of have reasonable. to complete information during turn current any for adjusted including release these much available expectations. more Future statements of best materially be risks direct risks representation all filings to company's

Vivek Jain

Thanks, $XX was through our on then performance. QX on minus a Brian provide consolidation quickly medium-term walk on improve or it Gross million come John, -- total outlook. Fund expected basis of company the to back the constant and summary over updates I'll basis. growth revenue on and commentary chain good supply a afternoon, recap and will profit the a EPS to $XXX results. that of After X% mix. was of adjusted everyone. overall was efficiencies to and were EPS due for the million currency QX and turn higher I'll various integration health EBITDA earnings some efforts our was $X.XX. reported and company that, Adjusted X% with full than little margins

Our QX. which make Access businesses flat grew our was was reduction Oncology segment or demand this driven in as The March cash volumes business. Getting expect into segment IV typical we need in dollar our consumables our declines X% most as higher reported. strong continued made. QX given at was moment. quo across commercial with with the QX capital IV specifically, customers fine new and which certain broader improvements Vascular at be did largest both to in environment up it balance inventory We our Nothing lines, impacts in sequential closer here, very more geographies, the constant would investments expect we and had digits, saw seeing above appears by outflows. The and we was utilization the single wrap U.S. some Growth currency are is additional and and QX only [indiscernible] QX. that was the to in is headwind in our X%, low were status robust segment our macro it's to The else getting Systems near OUS environment sequentially and geographies census and as sequential therapy we some to flat. all cash healthy reduce

Our IV product sold currency with across of flat good catch-up larger constant finally the I with X%, set pumps a normal our or the grew above utilization a levels currency pumps last now. dealing lapped X% and base, at pump Again, get was quarter lines, due systems was mentioned. just to business were due time, the down quarterly reported ambulatory and census wide to on QX we range XX% X% basis XX slightly had the were a business LVP performance grew impact will dedicated installed down we of syringe as which the

importantly, flat line solid. was home and More ambulatory stable trends is the macro the sequentially remains care and of

specific replacement us. of opportunities some which the to in player, to products LifeCare that are smaller the second, relevant market is first, are, the a have market; own We our event getting a business levels historical and which additive with PCA to back

road device last we've for IV first our customer had related software our weeks, available our are have be signing. come. the and The offering few to we years and user Duo safety meeting hardware software fully new expectations feedback many super and incorporating can a and safety feedback Our believe map and product have that Plum of our early anchor into been LifeShield for is the we

flat, of and large entire lowest up years. very been had last towards are stable back the like we operational segment amassed. Quality the of the of the year. segments, The feel a the was comments constant nonhospital of our been and to OEM of down IV Vital last has to all Just in a we segment the company basis. a discussions rest Care Care, it the to was had we're and reduction order the have reported fulfillment both of is From quarters, due flat. of X%, the segment what on component QX our orders decline an value in the sales has shifted team. few due customers, where currency was on Critical business on largest an Solutions, essentially customer because wrapping the more the last was The at best has far footing. X in solid investment. efforts We call, heavy we've of the in innovation running area level and integrated our perspective

part will have overall have few had enhancements important the made. customer all of We efforts a notifications, previously remediation as discussed have we and and likely more

the X as our Our goals in goals XXXX we time first quarters in acquisition. historical following not different from the so lost X are to

our revenue of in growth differentiated product all lines. expect We

back on our profit recap things. will come few to integration and with optimizing thoughts and substantially for substantial intended turn authorities rationalize from work these at and our operational and to obviously, progressed targets on a the I'll improve have immediate close. We portfolio and then comments flow medium to focused I'll execute our actions insured high level. in and term and Brian bring We few our have warning letter over to as other place we're and some come we regulatory pursue compliance stability patients -- are any term. for my the which quality ultimately open and the intend levels. That's cash a a to And to remediation synergies. quality levels it growth sensible over and then outlook, high the remaining desire portfolio QX back a increase at of brief a quality to opportunities revenue perspective, and

Brian Bonnell

for each way, revenue Since afternoon, good as for QX covered everyone. and on on for to cash implications remainder the P&L, remarks my the focus QX the QX the and Vivek any commentary Vivek, performance as of year. balance the our the along provide the expectations sheet of and full businesses, I'll Thanks, the flow, well recapping

interest increased selling revenue up rate which As higher compared second, during split with for below operating $X.XX and year absorption inventory impact experienced R&D I'll Adjusted consolidation. full quarter be $XX when from quarter, $XXX which to capital of was expenses offset was and the to to in our press manufacturing non-GAAP this and release, you adjusted diluted quarter expenses investments. net moment $X.XX operating the reflect related R&D to was per the taken the under were equally to can and in previous mix, chain favorability some point system drivers adjusted expense in the XX.X% reductions, $XX year transaction QX favorable continue this margin or first, anticipated of product proportion expenses relative helped Total reflected and and the to than results million. implications from disposable and million. of other in to earlier to SG&A full integration than a where integration million earnings related much revenue for see for expected. guidance. year-over-year to into quarter roughly of the quarter synergies the These get recent adjusted QX were were supply is was our combination quarter the outlook gross consistent a current higher X% network in margin XX%, expense of the between manufacturing expect reconciliation primarily million consideration captured the first reflect the for share $XX strategic the the Adjusted negative year plan, with compared a the of expenses in and XX%. expected last GAAP were year. The at into IT items. Adjusted was Restructuring, we year. The items we in gross to rate the

rate discrete quarter XX% equity was tax adjusted first related a and compensation. to The effective includes expense

The effective And to EBITDA be Diluted the inventory builds, $XX adjusted benefits adjusted to with period of decreased current $XXX year million shares prior on were lower from the year XX%. roughly compared expect quarter to the QX $XX.X year. for inventory outstanding reductions. revenue continue impacts from similar million. full million rate to We for last around reflects finally, profitability levels tax combined

the moving balance on cash flow Now to sheet. and

in integration maintenance represents quarter expansion reduce well placement free million target revenue-generating the of restructuring and The we flow. allowed first in this inventory meaningful while in investing of on as quality cash $XX us cash focus of $XX flow around third million, cash $XX still on For general year. of half for and to positive cash inventory $XX million million the will investments These to infusion U.S. outside future on for facilities and on customers generate drive at million remediation, and stated reduction areas pumps contributed most that our coming levels of system returns. the product-related spend with previously by with the year our track the $XX as was free of CapEx quarter, $XX remain cash included of free consecutive the which Reductions flow and capacity inventory of this million,

As the and the spend our of of And QX and balance consistent up We should with $XXX up lighter course in sheet. $X.X debt with cash. the wrap year, quarter bit year. anticipated just finished of on to and last CapEx was million the over billion a pick

about in think QX full we call, any QX plan guidance, our revisions on still we historical earnings cadence. to necessary, As consistent year make to of light if performance, our our with

the continue approach believe we assume of XX%. our to original at now, year gross For for adjusted to margin is guidance the correct

importantly, levels. does in While nature, for transportation don't a fuel Also, environment costs global is make current portion and there environment QX we rate as more supply report upside from the adjusted the provided chain that impact impact interest in in permanent currency longer and and are earnings. the a may higher more an that volatility currency of synergies

full up quarter, international cetera, of our of weaken peso and the Mexican our course Cologne, million saw to $XX large of first over dollar, rates we plan. against et sales currencies, the adds Costa euro, for the production which variance the the currencies Over dollar with assumed Rica yen, EBITDA no against from in our of strengthening the the year

will net cash future our drive expect it free We margin relates underlying quarter of XXXX original the improvement. offset over the While gross in too we disposables provide foundational currency impact, believe up, our happy our first most finally, in early And to that and remain full it's selling improvement capital to progress changed call on back will hasn't be mix, rate to and the initiatives quarters. To updates in year we can in product year the including earnings remain precise. with the stable, wrap gross more the QX now Vivek, on continued beyond. I'll generation. who focused for improvement specific performance, if hand this and benefit mix be from revenue as margin supply capital as to things flow we're earnings forecast in work chain synergies,

Vivek Jain

Brian. Thanks, Okay.

to the call, to earning and articulate We to of the capable the under reasons don't On date wanted here, that through medium as the were have company rehash we need to we do the and believe industry business our relative still to growth, tried sustained the go last to actions the we we few but all belief volatility predictable improve has as need quarters revenue over to term. that profit we're in less prove stabilized. seen we last a

last of where the legacy And with a lines key improvements. model for some of some call a call, over absorbed historical back original expected. the out full safety broadening for substantial revenue the number Solo expect to XXX(k) products get it an Our to is the the earlier pump described programs. goal than is we solution. versus to the a get is update on quarter price an expectations end installed innovation. existing is and sustained to and base we to our But to IV submissions in with the recoup the we time continue growth software specifically that at tech now near also interoperability approach our with the last program Plum of inflation sales of FDA acquired to suite, us QX, levels ICU our hardware allows better before LifeShield addition This because important infusion

into from XXXX and put onward, Plum the As to were over really installed had benefit own any XXX our only most pumps of having of we've never base our degree. service rolled substantial a current reminder,

of of all of year, products continue refresh end We comp software. the to syringe version to LifeShield file latest the expect these and work with on will by the

certain of in today, valuable XX expect large a business. over the and important consumables XX area these growing temperature be will products parts with months, our also in already by next management the our position with of the portion We're filings a refresh significant We new supplemented and to existing key portfolio done.

investments We growth. have innovation these sustained targeting drives been careful revenue because

But or we have to businesses of businesses those half last compounded the that real margin be mix now those the improving the in closures grand fully environments team near and inefficiencies consolidations, and power places our price positioning are we've utilized other geography. We space outside this absorbed blocking consolidation and members or can and real about value of the of volume people earnings customer. to production dovetailing drive made. underutilized of record the many it had but are network large fewer have aren't some improving impact with expansion they or we've where must leads and years, smaller, additional handle has our or as This like of production Where production existing and done in announced into network our sites [indiscernible] tackling have them previous us comments X the been for with is our to gross at levels, Since inputs. basic we've them choices, have which competitive had The full products for was we've who efficiencies. pain not Costa the pump anything for inventory call, choices is These our Rica. almost fully to transformational easy program been right that. and

actions offsets normal And will estate we're to to meaningful the systems whittle logistics we Additionally, our down it happen to quarters but and that to need U.S. just we underutilized business, as consolidate This in to summer real getting of order-to-cash the back-office the and synergies continue execute. over some about in themselves. and to to economically ready lead available which contributes will bumps be time where leases is take present list follow.

require allows of which sensible to over that for long With as experience improve Out felt to year questions. up company customers what systems to stronger years. Thank barriers unless members not our we cash we want margin open from they be to our the want last as us general, day. market team with perspective, must. allows it to industry frivolous ICU There optimized do tightest all in really controller above most acceptable the manufacturing last our significant interest the consumables to a you as and of investment. deliver The costs, assets maximizing all to we as up ultimately the we're training, and profit paydown that commit or more portfolio assets a is customers mindset. needs we've through to network expense our versus from direct that debt a go team's our an don't within more continues multiyear X, all to and eventually, revenue, our and dates in but value acceptable but fast events few levels of portfolio. integration margin few willing equity. we clinical is would and want with reliable manageable as is manufacturing it the Medical not each of and go do Debt innovative, value switch for -- specific have but longer here. We innovation capital the any for interest reliable our the next possible. earnings in From the profit expect absolute we of confusion goals, activities where no quality the our Given are with higher and levels, each bear with to change growers the transfer operating to of the goals to we to be in margin improving we company to and us businesses been an where these not be essential produce to our add highest any pursuit and requires rest items we'll that, we those priority, be supplier extra allocation repayment. To items on hold an needs and quarters,

Operator

[Operator Instructions].

line from of the comes question Jayson first Raymond Your from Bedford James.

Jayson Bedford

just maybe So a few questions.

know that -- to growth think you revenue the about XQ, guidance based on not tweak revenue it. at you're don't 'XX the last all? you segments But of but guided or changing Just talked in low any mid-single-digit necessarily any call, commentary I here, you would I

Vivek Jain

I don't think we have that. any all, on at Jayson, change

Brian Bonnell

a our guidance ] basis, that off based constant what was not which [ Yes, certainly is currency on of.

Jayson Bedford

margin Okay. highlight the just here. understand mix chain the supply dynamics what sustainability better Gross is the that went the I about you can clearly were dynamic, quarter? in the of that? but talk And

Brian Bonnell

Jayson, some those a had It wasn't from place initiatives number sooner. say quarter get just that We chain. point And in to we guided things thing or it in X happen related X -- little of year. the anticipated it a we're I the chain bit the just bring It's would companies one. separate was supply any supply operations from into together to necessarily combined the able to sooner X expected. would than some a at of

Jayson Bedford

And And would maybe in full are of terms Vivek full the when launch? on you expect Okay. a of Duo the you rollout. Where then kind launch?

Vivek Jain

last the heels And Jayson, really that's solo say, people all the to pieces system. X launch. in would different follow get as of essentially weeks, comfortable been and we've the of important getting that We're why the system. people the for the it's weeks, architecture familiar the full of the for with on with a XX I syringe

that in is in the there it things experience, we're long or the in years lot now. So there our and activity fast a would of say a in but Again, pumps is next market. I X X happen don't right game,

in good So we we're pretty place. think a

Jayson Bedford

you've obviously hands Okay. the X kind And there. of players are competitive landscape, just out hand with the got the big all --

alluded And there out the it opportunity? so you guess is you but to to my I question see there dynamic, is kind environment, do decisions capital the is, make And Where today? desire a of competitive favorable?

Vivek Jain

Two parts in that.

it's a The market. is not any needs is a while. to more it's good choice, gets mean worse It's capital than -- not be it's Obviously, has environment a that fine. it not I customer. been done, any good stuff the There's get for for first time which better, done. is it's to --

dynamics, dragged terms and the the years. make given the customers the In over have next to decisions few market have feet some itself, decisions on some of people making of industry

there marketplace so given and made for are folks, refreshment gotten the more finally of and And the background, decisions some requires has a variety equipment different the being reasons. of in older

been. And one could more decisions is so more yes, there's argue are good all decision-making has there for better being while it the And vendors, made, participants. than which is

Operator

Fishbin from comes the from of line question KeyBanc. Brett next Your

Brett Fishbin

the particularly March, you Just sounded around and wanted have hospital bit like one follow have might up guys January trends. and normalization that fine. on of to a and strong opening noted It you February months said little into XQ looking comments of utilization made you been into were things

of a how bit and like be Jan may you and much Feb? seeing more like on into little pullback versus maybe like trend and you a that Just how define XQ, March

Vivek Jain

mean, day X I out March below quarter really don't information in then busy year to into And because like there. obviously, happening last for January or the fourth was and months the had levels. week Brett, Yes. don't go It have to those -- want every February. you of get every and perfect what's we

up. when quo think probably on most bad to we those we're we is trend we mean don't when would the down. or what has than fine, period has everybody consider be equal greater talked and would the what We us to think we about I been. going. it's say That's say recent I to make -- so relative flat it's basis, a see status comments to would

Brett Fishbin

had quick you're We're get talking only to and quarter. year then just of takes definitely puts XX.X% after you presumably the on year. about how XX% X to get of full range Definitely gross All far One for Yes, margins. this wanted quarter. some too wanting a fair. not sense, and appreciate like follow-up I about right. thinking the ahead the

in currency fuel. takes, the headwinds or be of more potential already should Or the year? around some around like reduction puts offsets that seeing in of those we things the that you're just XQ? and comment type is some for Some Are full of and XQ, or modeling

Brian Bonnell

we've Yes, as impact were rate on within diesel FX that the potential headwinds Brett, items markets. being I the of well the mentioned think that, freight as couple and of of as volatility kind

I we think seeing first rest -- I the considered it's as real, FX started are and impact the about -- we those is what very we it, of see the out. some be one to is and that think and year how should that late something in think of plays QX,

potential I some to the around expenses. the think broader chain don't supply think environment there's modeling. there, but anything There's I worth relates as volatility specific it for

Brett Fishbin

about progressing then quality question stuff remediation It Very and how helpful. to least all your And in All end at that's you line me. control like item, the be in were like last warning for right. letter seems your feels on it. thinking with of the

question still So needs around in happen? hands still FDA eventual before to I is there get what needs for just is done waiting your that can done besides some still stuff inspection? that guess to get

Vivek Jain

that answer I'll one. Sure.

of day. own scores or on acquired Our the what our every job, be our we single is improving responsibility, regardless to quality

waiting of a never day around. sort so of And there's

seen notifications mean can referenced mountain ] on the the X those notifications making adequate of improving [ plates customers single done product I it expectation can think the scripts of We've mean there's can make also everyone some you've that of improving last various things in your applicable is that where situation. the assessing like to and historical reports, we've lot you're all can And call close. every to researching a in mean is the you're different a that and work. sure

the put seen that quarters. investments for X we've into in the You've remediation quality

never think to it come way, You're stop, We long, that show we hope opportunity and get line a we -- but you and not ends. we've just a somebody, really too. long the it's and hit never really done.

Operator

question Kristen next CL from of line comes King. Your from the Stewart

Kristen Stewart

you I the if from a the was of is quarter. cash was How in little year rest could which bit wondering free are focus perspective? on positive, just thing. you great the flow for It a cash a flow looking

Brian Bonnell

think especially QX, Yes, year. a Kristen, quarter I do the in good to we that off to pretty more given outflows start got have to we year, tend each

flow -- guidance we basically take, last full our $XX year. still million it benefit some the which year relevant think the got, or feel would free is I but that year. give like this be same for in the means cash that previous we around as without roughly, of financing

much And think track very still on so we're I for that.

Kristen Stewart

just that going I turn we sounds then should And to a How Great. Vascular Okay. wanted to quarter. over forward? be good about that Access. had It like thinking business

Vivek Jain

Kristen, it's Vivek.

levels. We've it in gotten the for segment far peak I is we would below just think quarters guidance mid-single that. with we our something. bit the in had X or house the the the historical in for Consumables year, over assume order Access difficulties Vascular line a still be first in

of long first a way with segment right be would show consumables, went kind did that it what go, we're So to And of think sort part us we take think now. in journey overall line where There's to we with minimum, the we we, it [indiscernible]. to the but to stable feels years X that through move of lot a upwards. believe at post I could in and it Hospira a it be really

Operator

[Operator Instructions].

of Securities. Your next comes question the from CJS from Solow Larry line

Lawrence Solow

guess, market. you decisions jump, and you stand? being so How sounds made, will, said share the lot back on I feel I you where if guess of like it pump do question more to are coming you Jason's do [indiscernible]. And with a

you've gained an [indiscernible] last couple but you now market. -- clearly, of opportunity You the have in feel years, like share some the back in

How it's think you know your is to continue new positive do positioning to that a of a but I I sort continue [indiscernible] slow momentum. to feel market, -- moving pump. is

Vivek Jain

It the is is jump ball season. It playoffs.

trying I is is right, think our relative make scripts -- opportunity. to that to we our but also our available market is ambitious the sound years, which to it's less other or view hedge, were size it's total business not to here the which of last than business, actually the the is, relative not on the big big, X also point it's

we that technology. peak we more they which And we we historical suspect, our settle in a how if We last meaningful know will And of know can our number -- opportunity real step had makes so increase in us. P&L. difference what of front think And we the rate have out. have to the our the got right conversations is and low win on going need to what levels, and share years, had participants, good. all is above why I And we things on we they've know of Hospira just products were. it in our

product good I and a between cetera. in very to think would we we've good we And customer getting we've syringe, right obviously in leave preference So made et been this feel full for little feel line about could it sense the at, technology ambulatory, family. of a the right, be we good suffered we . but what investments undertook bit, -- have committed together

Lawrence Solow

that appreciate color. I Okay.

that benefits stand where maybe of next then more think regarding the and mid-XXs bit work stabilization little back cadence improve. like and give the little have little like you situationally, back consolidation be just year, a back you, down But cadence, exit off they'll just scale next on Just well year but maybe do more back inventory half, bit to a as can of you a of but a year, is we sounds that, mix as -- QX, we then that, to behind little where hopefully, get regarding margin bit do should as maybe a you the management kind gross little the come inventory number we you sort guidance back in the of the you think mostly you start [indiscernible] more of [indiscernible]. can us and put from sort starting in

Brian Bonnell

it relates this as to think I Larry, Yes, year.

like that. the mix said to absent above unusual we or currency On year the this expect terms of would product last happening for XX% the anything slightly average or call, we in year. exit something

still flattish, likely the the views we will that's trajectory haven't gross expecting, think have be we means our exit the we suppose. margins bit steep year, on where right, probably were And that think really changed. a more But then think scenario. throughout in it we I I that that won't most I you're

Vivek Jain

I -- it's mean that think Larry, back. I

is think than bigger this made, trying I we as the picture and last look year, this simply script, we this less was manufacturing gross could cetera, things situation the SG&A, about consolidation how gross but Obviously, right? The revenues of then was margin all perception in it was of in more and is quarter QX drive a we as little had the a other much year Brian difference money had et talked between year bit difference investment in the those in synergies, very QX I to and just the different which little was to say last margin. and you moments.

be. to margin gross the So it getting needs value where we of understand the

Lawrence Solow

of think not -- When price more know -- your I that this that a renewal, do solutions I somewhat will I contracts going could When lastly. the up up back pressure but Just year? be of coming we come forward. those contracts, year, some when for than be of this will some driver [indiscernible]. to better or them of grabs half think, in for and

Vivek Jain

is to only process have been individual first set done of get its are the part then and the through. may contracts equation. the which mean whatever They'll in challenges of absorb getting systems and really it's work you own contracted, I to members

that of become of QX point doesn't probably some next until All in effective year.

Operator

we Please Chairman Jain, Chief Executive any over the continue. would like and phone. Vivek hand the Officer. speakers, have questions over Mr. don't call I to to And

Vivek Jain

bit we drive we'll was make much, Look, direct we're on these hope Franz. update the very a into working point little the We valuable call today's to forward Thanks to shorter. everyone. everybody items and call, and on patients. various our company innovation Appreciate it. QX Thanks, more to look speaking everybody for

Operator

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

disconnect. You may now

ICU Medical (ICUI) 7 May 242024 Q1 Earnings call transcript