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Press Release

LeMaitre Q2 2018 Record Sales $27.0mm (+5%), Record EPS $0.43 (+86%)

July 26, 2018 at 4:05 PM EDT

BURLINGTON, Mass., July 26, 2018 (GLOBE NEWSWIRE) -- LeMaitre Vascular, Inc. (Nasdaq:LMAT), a provider of vascular devices, implants and services, today reported Q2 2018 results, provided guidance and announced a $0.07/share dividend.

Q2 2018 Results 

  • Record sales of $27.0mm, +5% vs. Q2 2017
  • Record operating income of $11.5mm vs. $5.5mm, +108%
  • Record net income of $8.8mm vs. $4.6mm, +89%
  • Record earnings of $0.43 per diluted share vs. $0.23, +86%
  • Record EBITDA of $12.4mm vs. $6.4mm, +94% 

Q2 2018 sales of $27.0mm increased 5% (+6% organic) vs. Q2 2017.  Patches, shunts and allografts led growth.  Sales in Europe/Middle East/Africa and Asia/Pac Rim were up 12% and 21% respectively, while sales in the Americas were flat, due in part to the Reddick divestiture.

Gross margin increased to 70.3% in Q2 2018 from 68.0% in Q2 2017, primarily due to product mix.

Operating income in Q2 2018 was $11.5mm, a 108% increase vs. the year-earlier quarter.  Excluding the one-time gain from the Reddick divestiture, operating income in the quarter was $5.7mm, a 2% increase.  Had the Reddick product lines not been divested, the Company estimates adjusted operating income would have been $6.3mm, a 13% increase vs. the year-earlier quarter (reconciliation below).

George W. LeMaitre, Chairman and CEO said, “We continue to pursue 10% annual reported sales growth and 20% annual operating income growth.”             

Business Outlook 

  Previous Guidance (4/25/2018) Current Guidance
Q3 2018 Sales N/A $25.6mm - $26.4mm
(Midpoint: +5% reported, +9% organic)
Q3 2018 Gross Margin N/A 72.0%
Q3 2018 Operating Income N/A $5.3mm - $5.9mm
(Midpoint: +10%)
Q3 2018 Earnings Per Share N/A $0.20 - $0.22
(Midpoint: -17%)
2018 Sales $106.0mm - $109.0mm
(Midpoint: +7% reported, +6% organic)
$105.3mm - $107.9mm
(Midpoint: +6% reported, +7% organic)
2018 Gross Margin 71.0% 71.3%
2018 Operating Income $27.9mm - $30.0mm
(Midpoint: +37%)
$27.6mm - $29.4mm
(Midpoint: +35%)
2018 Earnings Per Share $1.05 - $1.13
(Midpoint: +27%)
$1.04 - $1.11
(Midpoint: +25%)
     

Changes to 2018 guidance since the Company’s April 25, 2018 conference call were primarily driven by fluctuations in foreign currency exchange rates.

Divestiture of General Surgery Product Lines

On April 5, 2018, the Company divested its general surgery product lines to Symmetry Surgical, Inc. for $7.4 million, which resulted in a $5.9mm gain.  Included in the divestiture were the Reddick Cholangiogram Catheter and Reddick Saye-Screw, neither of which were sold to the company’s core customer, the vascular surgeon.  In 2017, these product lines accounted for $3.3 million in revenue and $2.5 million in gross profit.

Quarterly Dividend

On July 23, 2018, the Company's Board of Directors approved a quarterly dividend of $0.07/share of common stock. The dividend will be paid September 6, 2018 to shareholders of record on August 22, 2018.

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 6679847. 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.

In addition, the Company has presented in this press release two additional non-GAAP measures.  The first presents operating income excluding the one-time gain from the Reddick divestiture.  The second non-GAAP measure, "adjusted operating income," was calculated by approximating the Company’s operating income had the divestiture of the Reddick product lines not occurred.  In order to do so, the Company i) excluded the one-time gain resulting from the sale of the assets as well as gross profits associated with contract services to Symmetry Surgical, Inc. and ii) added back estimated lost gross profits from the product lines divested as well as transaction costs.  You should not view operating income excluding the one-time gain or adjusted operating income as a substitute for operating income determined in accordance with GAAP.  However, Company management believes that the presentation of operating income excluding the one-time gain provides a view of the Company’s results of operations excluding a non-recurring event and adjusted operating income provides an understanding of the Company’s results of operations in the absence of the Reddick divestiture.

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 Q3 2018 and 2018 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; 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, all of which are 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)            
             
             
    June 30, 2018     December 31, 2017  
    (unaudited)        
Assets            
             
Current assets:            
Cash and cash equivalents   $   19,638     $   19,096  
Short-term marketable securities     33,298       22,564  
Accounts receivable, net     15,230       15,000  
Inventory and other deferred costs     21,669       21,046  
Prepaid expenses and other current assets     2,529       2,605  
Total current assets     92,364       80,311  
             
Property and equipment, net     12,235       12,378  
Goodwill     23,602       23,844  
Other intangibles, net     7,358       8,234  
Deferred tax assets     1,347       1,378  
Other assets     194       178  
             
Total assets   $   137,100     $   126,323  
             
             
Liabilities and stockholders' equity            
             
Current liabilities:            
Accounts payable   $   1,657     $   1,543  
Accrued expenses     11,286       9,770  
Acquisition-related obligations      172       1,876  
Total current liabilities     13,115       13,189  
             
Deferred tax liabilities     2,175       2,176  
Other long-term liabilities     1,066       1,188  
Total liabilities     16,356       16,553  
             
Stockholders' equity            
Common stock     208       207  
Additional paid-in capital     95,122       93,127  
Retained earnings      38,234       28,333  
Accumulated other comprehensive loss     (3,207 )     (2,289 )
Treasury stock     (9,613 )     (9,608 )
Total stockholders' equity     120,744       109,770  
             
Total liabilities and stockholders' equity   $   137,100     $   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 six months ended
 
  June 30, 2018     June 30, 2017       June 30, 2018     June 30, 2017  
                         
Net sales $   27,020     $   25,753       $   53,014     $   49,892  
Cost of sales   8,028       8,237         15,548       15,023  
                         
Gross profit   18,992       17,516         37,466       34,869  
                         
Operating expenses:                        
Sales and marketing   6,792       6,599         13,882       13,553  
General and administrative   4,547       3,747         9,244       8,295  
Research and development   1,988       1,634         3,813       3,292  
Gain on divestiture   (5,876 )     -         (5,876 )     -  
                         
                         
Total operating expenses   7,451       11,980         21,063       25,140  
                         
Income from operations   11,541       5,536         16,403       9,729  
                         
Other income:                        
Other income (loss), net   6       (70 )       60       (24 )
                         
Income before income taxes   11,547       5,466         16,463       9,705  
                         
Provision for income taxes   2,796       834         3,859       1,854  
                         
Net income  $   8,751     $   4,632       $   12,604     $   7,851  
                         
Earnings per share of common stock                        
Basic $   0.45     $   0.25       $   0.65     $   0.42  
Diluted $   0.43     $   0.23       $   0.62     $   0.40  
                         
Weighted - average shares outstanding:                        
Basic   19,320       18,816         19,301       18,724  
Diluted   20,260       19,975         20,243       19,855  
                         
                         
Cash dividends declared per common share  $   0.070     $   0.055       $   0.140     $   0.110  
                         


                                 
LEMAITRE VASCULAR, INC (NASDAQ: LMAT)                          
SELECTED NET SALES INFORMATION                              
(amounts in thousands)                                
(unaudited)                                
                                 
                                 
  For the three months ended      For the six months ended 
  June 30, 2018   June 30, 2017     June 30, 2018   June 30, 2017
  $   %   $   %     $   %   $   %
Net Sales by Geography                                
Americas $   16,082   59%   $   16,088   62%     $   31,942   60%   $   31,069   62%
Europe/Middle East/Africa   9,074   34%     8,121   32%       17,829   34%     15,734   32%
Asia/Pacific Rim   1,864   7%     1,544   6%       3,243   6%     3,089   6%
Total Net Sales $   27,020   100%   $   25,753   100%     $   53,014   100%   $   49,892   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 June 30, 2018                        
Net sales as reported   $   27,020                    
Impact of currency exchange rate fluctuations     (701 )                  
Net impact of acquisitions excluding currency     -                    
Adjusted net sales         $   26,319              
                         
For the three months ended June 30, 2017                        
Net sales as reported   $   25,753                    
Net impact of divestitures excluding currency     (807 )                  
Adjusted net sales         $   24,946              
                         
Adjusted net sales increase for the three months ended June 30, 2018      $   1,373     6%        
                         
                         
Reconciliation between GAAP and Non-GAAP sales growth:                        
For the three months ended September 30, 2018                        
Net sales per guidance   $   26,000                    
Impact of currency exchange rate fluctuations     90                    
Net impact of acquisitions excluding currency     -                    
Adjusted net sales         $   26,090              
                         
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      $   2,098     9%        
                         
                         
Reconciliation between GAAP and Non-GAAP sales growth:                        
For the year ended December 31, 2018                        
Net sales per guidance   $   106,614                    
Impact of currency exchange rate fluctuations     (1,728 )                  
Net impact of acquisitions excluding currency     -                    
Adjusted net sales         $   104,886              
                         
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        $   6,466     7%        
                         
                         
                         
    For the three months ended
    For the six months ended
 
    June 30, 2018     June 30, 2017     June 30, 2018     June 30, 2017  
Reconciliation between GAAP and Non-GAAP EBITDA                        
Net income as reported   $   8,751     $   4,632     $   12,604     $   7,851  
Interest (income) expense, net     (164 )     (32 )     (260 )     (52 )
Amortization and depreciation expense     1,066       983       2,102       1,962  
Provision for income taxes     2,796       834       3,859       1,854  
                         
EBITDA   $   12,449     $   6,417     $   18,305     $   11,615  
                         
EBITDA percentage increase         94%           58%  
                         


               
LEMAITRE VASCULAR, INC (NASDAQ: LMAT)              
NON-GAAP FINANCIAL MEASURES              
(amounts in thousands)              
(unaudited)              
               
               
Reconciliation between GAAP and Non-GAAP operating income excluding Reddick divestiture gain:              
For the three months ended June 30, 2018              
Operating income as reported   $   11,541          
Impact of Reddick divestiture gain     (5,876 )        
Operating income adjusted for divestiture gain         $   5,665    
               
For the three months ended June 30, 2017              
Operating income as reported   $   5,536          
Operating income         $   5,536    
               
Operating income increase for the three months ended June 30, 2018 adjusted for divesture gain          $   129   2%
               
               
Reconciliation between GAAP and Non-GAAP operating income excluding all effects of Reddick divestiture:            
For the three months ended June 30, 2018              
Operating income as reported   $   11,541          
Impact of Reddick divestiture gain     (5,876 )        
Net impact of gross profit from Reddick divestiture     415          
Net impact of Reddick transaction costs     170          
Adjusted operating income         $   6,250    
               
For the three months ended June 30, 2017              
Operating income as reported   $   5,536          
Operating income         $   5,536    
               
Adjusted operating income increase for the three months ended June 30, 2018          $   714   13%
               

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Source: LeMaitre Vascular, Inc.