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Press Release

LeMaitre Vascular Announces Preliminary Q3 2018 Results

October 4, 2018 at 4:48 PM EDT

BURLINGTON, Mass., Oct. 04, 2018 (GLOBE NEWSWIRE) -- LeMaitre Vascular, Inc. (Nasdaq:LMAT), a provider of vascular devices, implants and services, announced today Q3 2018 preliminary unaudited results, provided Q4 2018 and updated full year 2018 guidance, and announced a $0.07/share dividend.

Q3 2018 Preliminary Results

  • Sales of $24.2mm vs. $24.8mm in Q3 2017 (-3% reported, +1% organic)
  • Gross margin of 71.4% vs. 70.8%
  • Operating income of $4.6mm vs. $5.1mm, (-9%)
  • Operating margin of 19% versus 20%
  • Net income of $4.3mm vs. $5.0mm, (-14%)
  • Earnings of $0.21 per diluted share vs. $0.25, (-15%)
  • EBITDA of $5.5mm vs. $6.0mm, (-8%)
  • XenoSure sales of $5.7mm vs. $5.4mm (+6% reported, +7% organic)             

On an organic basis, sales in the Americas were up 2% in Q3 2018 vs. Q3 2017, flat in Europe and down 5% in Asia-Pac Rim. Product growth in the quarter was driven by XenoSure and carotid shunts.  The decline in reported sales was due in part to the April 2018 divestiture of the Reddick general surgery product lines, as well as the other factors described below.

Operating expenses increased 1% in Q3 2018 to $12.6mm. At quarter’s end the Company employed 106 sales reps, a 19% increase vs. 89 at September 30, 2017.  The Company recently hired a Vice President of Asia-Pac Rim, opened an Asia-Pac Rim sales office in Singapore and received Australian XenoSure approval.

Cash on hand at September 30, 2018 was $45.6mm, up $3.7mm from June 30, 2018 excluding the $11.0mm acquisition payment for Applied Medical’s clot management business.

George W. LeMaitre, Chairman and CEO, said, “Q3 was a frustrating and humbling quarter, and my often-stated 10/20 aspiration for our business is now incongruous with our 2018 results.  As a 16% shareholder, I know we need to do much better.  We owe our shareholders higher organic sales growth and growing profits.”

Acquisition of Clot Management Business from Applied Medical

On September 20, 2018, the Company acquired the clot management business of Applied Medical for $14.2mm; $11.0mm was paid at closing and $3.2mm will be paid in two post-closing installments.  The acquired business includes Syntel embolectomy and thrombectomy catheters, Python over-the-wire embolectomy catheters, Latis graft cleaning catheters, and irrigation catheters.  Sales of the acquired business during the latest 12-month period were $3.4mm.

The Company expects the acquired business to add $0.5mm to $0.6mm in Q4 2018 sales and to have no impact on Q4 2018 operating income due to short-term channel transition costs.  Following the acquisition, the Company believes it is now the second largest provider of embolectomy catheters worldwide. The acquired catheters feature latex-free balloons, complementing LeMaitre’s latex balloon catheters.

Quarterly Dividend

On October 4, 2018, the Company's Board of Directors approved a quarterly dividend of $0.07/share of common stock. The dividend will be paid December 6, 2018 to shareholders of record on November 20, 2018.

Q3 2018 Results Versus Prior Guidance

The following items contributed to the $1.8mm difference between the Company’s Q3 2018 preliminary sales results and the midpoint of the Company’s July 26, 2018 guidance:



Item
Actual Sales
Versus
Expected


Comment
Allografts ($0.7mm) WW allograft sales were down 5% in Q3 following record sales in Q2.  The Company lost some inherited customers in its transition to a direct-to-hospital model from agents/distributors; tissue supply also constrained sales.
Valvulotomes ($0.5mm) WW valvulotome sales were down 3% in Q3 following record sales in Q2.  Q3 sales were weak in direct European markets.
Export ($0.4mm) WW export sales to distributors were down 36% in Q3. Weakening currencies, economies and/or ordering patterns resulting in reduced orders from Turkey, Korea, Saudi Arabia, Russia, Greece, etc.
China Product Return ($0.1mm) Rationalizing China distribution channel
Hurricane Florence ($0.1mm) -
Stronger USD Since Guidance ($0.1mm) -
     

Q4 2018 and 2018 Business Outlook

  Previous Guidance (7/26/2018)   Current Guidance
Q4 2018 Sales NA   $25.6mm - $26.4mm
(Midpoint: -1% reported, +1% organic)
Q4 2018 Gross Margin NA
 
70.3%
Q4 2018 Operating Income NA   $4.8mm - $5.4mm
(Midpoint: -20%)
Q4 2018 Earnings Per Share NA   $0.18 - $0.20
(Midpoint: -12%)
2018 Sales $105.3mm - $107.9mm
(Midpoint: +6% reported, +7% organic)
  $102.8mm - $103.6mm
(Midpoint: +2% reported, +3% organic)
2018 Gross Margin 71.3%
 
70.7%
2018 Operating Income $27.6mm - $29.4mm
(Midpoint: +35%)
  $25.8mm - $26.4mm
(Midpoint: +24%)
2018 Earnings Per Share $1.04 - $1.11
(Midpoint: +25%)
  $1.01 - $1.03
(Midpoint: +19%)
       

Conference Call

Management will conduct a conference call tomorrow, October 5, 2018 at 8:00am ET to review the Company's financial results and discuss its business outlook for the remainder of the year. The conference call will be broadcast live over the Internet. Individuals who are interested in listening to the webcast should log on to the Company's website at www.lemaitre.com/investor. The conference call may also be accessed by dialing 844-239-5284 (+1 512-961-6497) for international callers), using passcode 8692409. For individuals unable to join the live conference call, a replay will be available on the Company's website.

A reconciliation of GAAP to non-GAAP results is included in the tables attached to this release.

About LeMaitre Vascular

LeMaitre Vascular is a provider of devices, implants and services for the treatment of peripheral vascular disease, a condition that affects more than 200 million people worldwide. The Company develops, manufactures and markets disposable and implantable vascular devices to address the needs of its core customer, the vascular surgeon.

LeMaitre and the LeMaitre Vascular logo are registered trademarks of LeMaitre Vascular, Inc. This press release contains other trademarks and trade names of the Company.

For more information about the Company, please visit http://www.lemaitre.com.

Use of Non-GAAP Financial Measures

LeMaitre Vascular management believes that in order to better understand the Company's short-term and long-term financial trends, investors may wish to consider certain non-GAAP financial measures as a supplement to financial performance measures prepared in accordance with GAAP. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and do not have standardized meanings. These non-GAAP measures result from facts and circumstances that may vary in frequency and/or impact on continuing operations. Non-GAAP measures should be considered in addition to, and not as a substitute for, financial performance measures in accordance with GAAP. In addition to the description provided below, reconciliation of GAAP to non-GAAP results is provided in the financial statement tables included in this press release.

In this press release, the Company has reported non-GAAP sales growth percentages after adjusting for the impact of foreign currency exchange, business development transactions, and/or other events as well as EBITDA or earnings before interest, taxes, depreciation and amortization. The Company refers to the calculation of non-GAAP sales percentages as "organic." The Company analyzes non-GAAP sales on a constant currency basis, net of acquisitions, divestitures and other non-recurring events, and EBITDA to better measure the comparability of results between periods. Because changes in foreign currency exchange rates have a non-operating impact on net sales, and acquisitions, product discontinuations, and other strategic transactions are episodic in nature and are highly variable to the reported sales results, the Company believes that evaluating growth in sales on a constant currency basis net of such transactions provides an additional and meaningful assessment of sales to management. The Company believes that evaluating EBITDA provides an approximation of the cash generating ability of its operations.

Forward-Looking Statements

The Company's current financial results, as discussed in this release, are preliminary and unaudited, and subject to adjustment. This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements in this press release regarding the Company's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. Specifically, forward-looking statements in this release include, but are not limited to, statements about the Company's expectations regarding Q4 2018 and 2018 sales, gross margin, operating income and earnings per share as well as the potential contributions of the acquired clot management business. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties that could cause actual results to differ from the results expected, including, but not limited to, the risk of significant fluctuations in our quarterly and annual results due to numerous factors; the risk that we may not be able to maintain our recent levels of profitability; the risk that the Company may not realize the anticipated benefits of its strategic activities; the risk that assumptions about the market for the Company's products and the productivity of the Company's direct sales force and distributors may not be correct; risks related to the integration of acquisition targets; risks related to product demand and market acceptance of the Company's products and pricing; the risk that a recall of our products could result in significant costs or negative publicity; the risk that the Company is not successful in transitioning to a direct-selling model in new territories; and other risks and uncertainties included under the heading "Risk Factors" in our most recent Annual Report on Form 10-K, as updated by our subsequent filings with the SEC, which are all available on the Company's investor relations website at http://www.lemaitre.com and on the SEC's website at http://www.sec.gov. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events, or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.

CONTACT: J.J. Pellegrino, CFO
LeMaitre Vascular
781-425-1691
jjpellegrino@lemaitre.com


       
       
LEMAITRE VASCULAR, INC (NASDAQ: LMAT)      
CONDENSED CONSOLIDATED BALANCE SHEETS       
(amounts in thousands)      
       
       
  September 30, 2018   December 31, 2017
  (unaudited)    
Assets      
       
Current assets:      
Cash and cash equivalents $ 20,104     $ 19,096  
Short-term marketable securities   25,523       22,564  
Accounts receivable, net   13,015       15,000  
Inventory and other deferred costs   23,876       21,046  
Prepaid expenses and other current assets   4,293       2,605  
Total current assets   86,811       80,311  
       
Property and equipment, net   12,197         12,378  
Goodwill   31,544       23,844  
Other intangibles, net   12,248       8,234  
Deferred tax assets   1,336       1,378  
Other assets   191       178  
       
Total assets $ 144,327     $ 126,323  
       
       
Liabilities and stockholders' equity      
       
Current liabilities:      
Accounts payable $ 1,627     $ 1,543  
Accrued expenses   11,006       9,770  
Acquisition-related obligations   3,121       1,876  
Total current liabilities   15,754       13,189  
       
Deferred tax liabilities   2,174       2,176  
Other long-term liabilities   1,052       1,188  
Total liabilities   18,980       16,553  
       
Stockholders' equity      
Common stock   211       207  
Additional paid-in capital   97,727       93,127  
Retained earnings   41,178       28,333  
Accumulated other comprehensive loss   (3,482 )     (2,289 )
Treasury stock   (10,287 )     (9,608 )
Total stockholders' equity   125,347       109,770  
       
Total liabilities and stockholders' equity $ 144,327     $ 126,323  
       


               
                     
LEMAITRE VASCULAR, INC (NASDAQ: LMAT)              
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS            
(amounts in thousands, except per share amounts)              
(unaudited)              
               
  For the three months ended   For the nine months ended
  September 30, 2018   September 30, 2017   September 30, 2018   September 30, 2017
               
Net sales $ 24,165   $ 24,822   $ 77,179     $ 74,714  
Cost of sales   6,910     7,245     22,458       22,269  
               
Gross profit   17,255     17,577     54,721       52,445  
               
Operating expenses:              
Sales and marketing   6,622     6,201     20,504       19,754  
General and administrative   3,983     4,562     13,227       12,857  
Research and development   2,037     1,761     5,850       5,053  
Gain on divestiture   -     -     (5,876 )     -  
               
               
Total operating expenses   12,642     12,524     33,705       37,664  
               
Income from operations   4,613     5,053     21,016       14,781  
               
Other income:              
Other income (loss), net   117     20     177       (3 )
               
Income before income taxes   4,730     5,073     21,193       14,778  
               
Provision for income taxes   416     31     4,275       1,885  
               
Net income $ 4,314   $ 5,042   $ 16,918     $ 12,893  
               
Earnings per share of common stock              
Basic $ 0.22   $ 0.26   $ 0.87     $ 0.68  
Diluted $ 0.21   $ 0.25   $ 0.84     $ 0.65  
               
Weighted - average shares outstanding:              
Basic   19,503     19,124     19,369       18,859  
Diluted   20,293     20,147     20,258       19,970  
               
               
Cash dividends declared per common share $ 0.070   $ 0.055   $ 0.210     $ 0.165  
               


                               
                               
LEMAITRE VASCULAR, INC (NASDAQ: LMAT)
SELECTED NET SALES INFORMATION
(amounts in thousands)
(unaudited)
                               
                               
  For the three months ended    For the nine months ended 
  September 30, 2018   September 30, 2017   September 30, 2018   September 30, 2017
  $   %   $   %   $   %   $   %
Net Sales by Geography                              
Americas $ 14,943   62 %   $ 15,439   62 %   $ 46,885   61 %   $ 46,508   62 %
Europe/Middle East/Africa   7,856   32 %     7,926   32 %     25,685   33 %     23,660   32 %
Asia/Pacific Rim   1,366   6 %     1,457   6 %     4,609   6 %     4,546   6 %
Total Net Sales $ 24,165   100 %   $ 24,822   100 %   $ 77,179   100 %   $ 74,714   100 %
                               


               
LEMAITRE VASCULAR, INC (NASDAQ: LMAT)        
NON-GAAP FINANCIAL MEASURES            
(amounts in thousands)            
(unaudited)              
               
               
Reconciliation between GAAP and Non-GAAP sales growth:              
For the three months ended September 30, 2018              
Net sales as reported $ 24,165              
Impact of currency exchange rate fluctuations   134              
Net impact of acquisitions excluding currency   (34 )            
Adjusted net sales     $ 24,265          
               
For the three months ended September 30, 2017              
Net sales as reported $ 24,822              
Net impact of divestitures excluding currency   (830 )            
Adjusted net sales     $ 23,992          
               
Adjusted net sales increase for the three months ended September 30, 2018   $ 273       1 %    
               
               
Reconciliation between GAAP and Non-GAAP sales growth:              
For the three months ended December 31, 2018              
Net sales per guidance $ 26,000              
Impact of currency exchange rate fluctuations   184              
Net impact of acquisitions excluding currency   (500 )            
Adjusted net sales     $ 25,684          
               
For the three months ended December 31, 2017              
Net sales as reported $ 26,153              
Net impact of divestitures excluding currency   (810 )            
Adjusted net sales     $ 25,343          
               
Adjusted net sales increase for the three months ended December 31, 2018   $ 341       1 %    
               
               
Reconciliation between GAAP and Non-GAAP sales growth:              
For the year ended December 31, 2018              
Net sales per guidance $ 103,179              
Impact of currency exchange rate fluctuations   (1,587 )            
Net impact of acquisitions excluding currency   (534 )            
Adjusted net sales     $ 101,058          
               
For the year ended December 31, 2017              
Net sales as reported $ 100,867              
Net impact of divestitures excluding currency   (2,447 )            
Adjusted net sales     $ 98,420          
               
Adjusted net sales increase for the year ended December 31, 2018     $ 2,638       3 %    
               
               
Reconciliation between GAAP and Non-GAAP sales growth of Xenosure:              
For the three months ending September 30, 2018              
XenoSure net sales as reported $ 5,706              
Impact of currency exchange rate fluctuations   29              
Adjusted XenoSure net sales     $ 5,735          
               
For the three months ending September 30, 2017              
XenoSure net sales as reported     $ 5,376          
               
Adjusted net sales increase for the three months ending September 30, 2018   $ 359       7 %    
               
               
Reconciliation between GAAP and Non-GAAP sales growth by geography:              
For the three months ending September 30, 2018 Americas   Europe   Asia-Pacific Rim    
Net sales by geography as reported $ 14,943     $ 7,856     $ 1,366      
Impact of currency exchange rate fluctuations   39       76       19      
Net impact of acquisitions excluding currency   (34 )     -       -      
               
Adjusted net sales by geography $ 14,948     $ 7,932     $ 1,385      
               
For the three months ending September 30, 2017              
Net sales by geography as reported   15,439       7,926       1,457      
Net impact of divestitures excluding currency   (807 )     (19 )     (4 )    
Adjusted net sales by geography   14,632       7,907       1,453      
               
Adjusted net sales increase for the three months ending September 30, 2018 $ 316     $ 25     $ (68 )    
Percentage increase (decrease)   2 %     0 %     -5 %    
               
               
  For the three months ended   For the nine months ended
  September 30, 2018   September 30, 2017   September 30,
2018
  September 30,
2017
Reconciliation between GAAP and Non-GAAP EBITDA              
Net income as reported $ 4,314     $ 5,042     $ 16,918     $ 12,893  
Interest (income) expense, net   (192 )     (48 )     (452 )     (100 )
Amortization and depreciation expense   1,006       1,004       3,108       2,966  
Provision for income taxes   416       31       4,275       1,885  
               
EBITDA $ 5,544     $ 6,029     $ 23,849     $ 17,644  
               
EBITDA percentage increase       -8 %         35 %
               

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Source: LeMaitre Vascular, Inc.