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LeMaitre Vascular Announces Q4 2018 Financial Results

BURLINGTON, Mass., Feb. 19, 2019 (GLOBE NEWSWIRE) -- LeMaitre Vascular, Inc. (LMAT), a provider of vascular devices, implants and services, today reported Q4 2018 results, provided guidance, announced a 21% dividend increase to $0.085/share and announced a share repurchase program.

Q4 2018 Results

  • Record sales of $28.4mm, +9% (+6% organic) vs. Q4 2017
  • Operating income of $7.2mm vs. $6.3mm, +14%
  • Net income of $6.0mm vs. $4.3mm, +41%
  • Earnings of $0.30 per diluted share vs. $0.21, +41%
  • EBITDA of $8.3mm vs. $7.4mm, +13%        

Q4 2018 sales were driven by embolectomy catheters, surgical glue and carotid shunts.  Sales in the Americas were up 4%, Europe/Middle East/Africa up 9% and Asia/Pac Rim up 79%. Sales from the two recent acquisitions described below totaled $1.9 million in the quarter.

Gross margin decreased to 67.7% in Q4 2018 from 69.8% in Q4 2017, primarily due to the two recent acquisitions.

Operating expenses in Q4 2018 were $12.0mm, a 1% increase vs. Q4 2017.  Excluding the $1.6mm gain from the Cardial acquisition, operating expenses were up 14% to $13.6mm, driven by increased rep headcount (to 108) as well as increased R&D. Operating income excluding the $1.6 million Cardial gain was $5.6 million, a decrease of 11% versus the prior year.

George W. LeMaitre, Chairman and CEO said, “I expect our 9% Q4 sales growth to extend into 2019, as reflected in our 8% guidance. This growth stems from the rep surge, the two acquisitions, and our new Singapore office which should support APAC expansion.”

Business Outlook

Guidance Summary
Q1 2019 Sales $27.7mm - $28.5mm
  (Midpoint: +8% reported, +7% organic)
Q1 2019 Gross Margin 68.7%
Q1 2019 Operating Income $4.6mm - $5.1mm
(Midpoint: +0%)
Q1 2019 Earnings Per Diluted Share $0.18 - $0.20
(Midpoint: 0% )
2019 Sales $113.0mm - $114.4mm
(Midpoint: +8% reported, +5% organic)
2019 Gross Margin 69.5%
2019 Operating Income $22.1mm - $23.1mm
(Midpoint: -20%)
(Midpoint Ex-Special Items: +9%)
2019 Earnings Per Diluted Share $0.82 - $0.86
(Midpoint: -26%)
(Midpoint Ex-Special Items: +1%)

Quarterly Dividend

On February 14, 2019, the Company's Board of Directors approved an increased quarterly dividend of $0.085/share of common stock. The dividend will be paid April 5, 2019 to shareholders of record on March 22, 2019.

Share Repurchase Program

On February 14, 2019, the Company's Board of Directors authorized the repurchase of up to $10.0mm of the Company’s common stock.  The repurchase program may be suspended or discontinued at any time and will conclude on February 14, 2020, unless extended by the Board.

Acquisition of Embolectomy Catheter Business from Applied Medical

On September 26, 2018, the Company acquired Applied Medical’s embolectomy catheter business for $14.2mm.  The acquired business includes Syntel embolectomy catheters, Python over-the-wire embolectomy catheters and Latis graft cleaning catheters.  Sales of the acquired business during the 12-months prior to the acquisition were $3.4mm. The Company believes it is now the second largest provider of embolectomy catheters worldwide.

Acquisition of Cardial Business from Becton, Dickinson

On October 22, 2018, the Company acquired the assets of Cardial, a subsidiary of Becton, Dickinson. The total purchase price was €2.0 million. Cardial is based in St. Etienne, France and its product lines include vascular grafts, valvulotomes and surgical glue. Sales of the acquired business during the 12-months prior to the acquisition were €2.9mm, concentrated mostly in Europe.   

Conference Call Reminder

Management will conduct a conference call at 5:00pm ET today 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 3777964. 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 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.

The Company has presented in this press release several additional non-GAAP measures. The first presents Q4 2018 operating expenses excluding the one-time gain from the Cardial acquisition. The second presents Q4 2018 operating income excluding the one-time gain from the Cardial acquisition. The third presents the year over year percentage change in operating income by using the midpoint of our 2019 operating income guidance compared to our 2018 operating income from which we subtracted the following one-time (“special”) items: the gain resulting from the divestiture of the Reddick product lines and the gain resulting from the acquisition of the Cardial business.  The fourth presents the year over year percentage change in earnings per diluted share by using the midpoint of our 2019 earnings per diluted share guidance compared to our 2018 earnings per diluted share from which we also subtracted the special items described in the prior sentence. You should not view these measures as substitutes for measures determined in accordance with GAAP. However, Company management believes that the presentation of these measures excluding the gains provides a view of the Company results in the absence of these variable transactions.

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 may be "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 Q1 2019 and 2019 sales, gross margin, operating income and earnings per share. 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 including the acceleration or deceleration of product growth rates; 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 the Company’s ability to attain or maintain regulatory approvals for its products; 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 (LMAT)        
CONDENSED CONSOLIDATED BALANCE SHEETS         
(amounts in thousands)        
           
           
      December 31, 2018   December 31, 2017
      (unaudited)    
Assets        
           
Current assets:        
  Cash and cash equivalents   $   26,318   $   19,096
  Short-term marketable securities   21,668   22,564
  Accounts receivable, net   15,721   15,000
  Inventory and other deferred costs   27,388   21,046
  Prepaid expenses and other current assets   2,922   2,605
Total current assets   94,017   80,311
           
Property and equipment, net   14,102   12,378
Goodwill   29,868   23,844
Other intangibles, net   13,692   8,234
Deferred tax assets   1,215   1,378
Other assets   194   178
           
Total assets   $   153,088   $   126,323
           
           
Liabilities and stockholders' equity        
           
Current liabilities:        
  Accounts payable   $   1,732   $   1,543
  Accrued expenses   15,847   9,770
  Acquisition-related obligations   2,179   1,876
Total current liabilities   19,758   13,189
           
Deferred tax liabilities   484   2,176
Other long-term liabilities   2,611   1,188
Total liabilities   22,853   16,553
           
Stockholders' equity        
  Common stock   211   207
  Additional paid-in capital   98,442   93,127
  Retained earnings   45,831   28,333
  Accumulated other comprehensive loss   (3,900)   (2,289)
  Treasury stock   (10,349)   (9,608)
Total stockholders' equity   130,235   109,770
           
Total liabilities and stockholders' equity   $   153,088   $   126,323
           

 

                 
  LEMAITRE VASCULAR, INC (LMAT)              
  CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS            
  (amounts in thousands, except per share amounts)              
  (unaudited)              
                 
    For the three months ended   For the year ended
    December 31, 2018   December 31, 2017   December 31, 2018   December 31, 2017
                 
Net sales $   28,389   $   26,153   $   105,568   $   100,867
Cost of sales 9,171   7,901   31,629   30,170
                 
Gross profit 19,218   18,252   73,939   70,697
                 
Operating expenses:              
  Sales and marketing 6,814   6,194   27,318   25,948
  General and administrative 4,462   4,153   17,689   17,010
  Research and development 2,347   1,583   8,197   6,636
  Gains on divestiture and acquisition (1,598)   -   (7,474)   -
                 
                 
Total operating expenses 12,025   11,930   45,730   49,594
                 
Income from operations 7,193   6,322   28,209   21,103
                 
Other income:              
  Other income (loss), net 58   6   235   3
                 
Income before income taxes 7,251   6,328   28,444   21,106
                 
Provision for income taxes 1,226   2,044   5,501   3,929
                 
Net income $   6,025   $   4,284   $   22,943   $   17,177
                 
Earnings per share of common stock              
  Basic $   0.31   $   0.22   $   1.18   $   0.91
  Diluted $   0.30   $   0.21   $   1.13   $   0.86
                 
Weighted - average shares outstanding:              
  Basic 19,596   19,264   19,426   18,961
  Diluted 20,179   20,191   20,242   20,033
                 
                 
Cash dividends declared per common share $   0.070   $   0.055   $   0.280   $   0.220
                 

 

                                 
  LEMAITRE VASCULAR, INC (LMAT)                        
  SELECTED NET SALES INFORMATION                            
  (amounts in thousands)                              
  (unaudited)                              
                                 
                                 
    For the three months ended    For the year ended 
    December 31, 2018   December 31, 2017   December 31, 2018   December 31, 2017
    $   %   $   %   $   %   $   %
Net Sales by Geography                              
  Americas $ 16,764   59%   $ 16,186   62%   $ 63,649   60%   $ 62,696   62%
  Europe/Middle East/Africa 9,634   34%   8,856   34%   35,319   33%   32,516   32%
  Asia/Pacific Rim 1,991   7%   1,111   4%   6,600   6%   5,655   6%
Total Net Sales $ 28,389   100%   $ 26,153   100%   $ 105,568   100%   $ 100,867   100%
                                 

 

                     
LEMAITRE VASCULAR, INC (LMAT)                
NON-GAAP FINANCIAL MEASURES                
(amounts in thousands)                
(unaudited)                
                     
                     
Reconciliation between GAAP and Non-GAAP sales growth:                
  For the three months ended December 31, 2018                
    Net sales as reported   $   28,389            
    Impact of currency exchange rate fluctuations   366            
    Net impact of acquisitions excluding currency   (1,980)            
    Adjusted net sales       $   26,775        
                     
  For the three months ended December 31, 2017                
    Net sales as reported   $   26,153            
    Net impact of divestitures excluding currency   (811)            
    Adjusted net sales       $   25,342        
                     
    Adjusted net sales increase for the three months ended December 31, 2018       $   1,433   6%    
                     
                     
Reconciliation between GAAP and Non-GAAP sales growth:                
  For the year ended December 31, 2018                
    Net sales as reported   $   105,568            
    Impact of currency exchange rate fluctuations   (1,398)            
    Net impact of acquisitions and divestitures excluding currency   (2,014)            
    Adjusted net sales       $   102,156        
                     
  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       $   3,736   4%    
                     
                     
Reconciliation between GAAP and Non-GAAP projected sales growth:                
  For the three months ended March 31, 2019                
    Net sales per guidance   $   28,100            
    Impact of currency exchange rate fluctuations   834            
    Net impact of acquisitions excluding currency   (2,000)            
    Adjusted projected net sales       $   26,934        
                     
  For the three months ended March 31, 2018                
    Net sales as reported   $   25,994            
    Net impact of divestitures excluding currency   (735)            
    Adjusted net sales       $   25,259        
                     
    Adjusted projected net sales increase for the three months ended March 31, 2019       $   1,675   7%    
                     
                     
Reconciliation between GAAP and Non-GAAP projected sales growth:                
  For the year ended December 31, 2019                
    Net sales per guidance   $   113,700            
    Impact of currency exchange rate fluctuations   1,705            
    Net impact of acquisitions excluding currency   (5,300)            
    Adjusted projected net sales       $   110,105        
                     
  For the year ended December 31, 2018                
    Net sales as reported   $   105,568            
    Net impact of divestitures excluding currency   (786)            
    Adjusted net sales       $   104,782        
                     
    Adjusted projected net sales increase for the year ended December 31, 2019     $   5,323   5%    
                     
Reconciliation between GAAP and Non-GAAP operating expense:                
  For the three months ended December 31, 2018                
    Operating expense as reported   $   12,025            
    Less gain on acquisition   (1,598)            
    Adjusted operating expense       $   13,623        
                     
  For the three months December 31, 2017                
    Operating expense as reported       11,930        
                     
    Adjusted increase in operating expense for the three months ended December 31, 2018       $   1,693   14%    
                     
Reconciliation between GAAP and Non-GAAP operating income:                
  For the three months ended December 31, 2018                
    Operating income as reported   $   7,193            
    Impact of gain on acquisition   1,598            
    Adjusted operating income       $   5,595        
                     
  For the three months December 31, 2017                
    Operating income as reported       6,322        
                     
    Adjusted decrease in operating income for the three months ended December 31, 2018       $   (727)   -11%    
                     
                     
Reconciliation between GAAP and Non-GAAP projected operating income:                
  For the year ended December 31, 2019                
    Operating income per guidance       $   22,600        
                     
  For the year ended December 31, 2018                
    Operating income as reported   $   28,209            
    Impact of gains on acquisitions and divestitures, net of tax   (7,474)            
    Adjusted operating income       $   20,735        
                     
    Adjusted projected operating income increase for the year ended December 31, 2019       $   1,865   9%    
                     
                     
Reconciliation between GAAP and Non-GAAP projected earnings per share:                
  For the year ended December 31, 2019                
    Earnings per share per guidance       $   0.84        
                     
  For the year ended December 31, 2018                
    Earnings per share as reported   $   1.13            
    Less earnings per share from gains on acquisitions and divestitures, net of tax   (0.30)            
    Adjusted earnings per share       $   0.83        
                     
    Adjusted projected earnings per share increase for the year ended December 31, 2019       $   0.01   1%    
                     
                     
                     
                     
                     
                     
                     
        For the three months ended   For the year ended
        December 31, 2018   December 31, 2017   December 31, 2018   December 31, 2017
Reconciliation between GAAP and Non-GAAP EBITDA                
  Net income as reported   $   6,025   $   4,284   $   22,943   $   17,177
  Interest (income) expense, net   (177)   (58)   (629)   (158)
  Amortization and depreciation expense   1,216   1,088   4,324   4,055
  Provision for income taxes   1,226   2,044   5,501   3,929
                     
  EBITDA   $   8,290   $   7,358   $   32,139   $   25,003
                     
  EBITDA percentage increase       13%       29%