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Press Release

LeMaitre Vascular Announces Q2 2020 Financial Results

July 23, 2020 at 4:25 PM EDT

BURLINGTON, Mass., July 23, 2020 (GLOBE NEWSWIRE) -- LeMaitre Vascular, Inc. (Nasdaq:LMAT), a provider of vascular devices, implants and services, today reported Q2 2020 results and announced a $0.095/share quarterly dividend.

Q2 2020 Results

  • Sales of $24.9mm, -16% (-24% organic) vs. Q2 2019
  • Op. income of $4.9mm, -18%
  • Adjusted op. income of $6.1mm, +3% (excludes acquisition-related special items)
  • Operating margin of 20%
  • Net income of $3.5mm, -24%
  • Earnings of $0.17 per diluted share, -25%
  • EBITDA of $6.4mm, -11%

Sales declined in the Americas (-15%) and Europe/Middle East/Africa (-21%), while Asia/Pac was flat.  Sales of nearly all products declined in Q2, largely due to the COVID-19 pandemic. Sales were down 33% in April, down 21% in May and up 7% in June.

Gross margin decreased to 68.5% in Q2 2020 (vs. 68.9% in Q2 2019) primarily due to manufacturing inefficiencies offset by favorable product mix.

Operating expenses in Q2 2020 decreased 16% to $12.2mm (vs. $14.4mm) driven by headcount reductions, temporary salary cuts and general belt-tightening.  Excluding $1.2mm of special items related to the Artegraft transaction, operating expenses were $11.0mm, down 24% vs. Q2 2019.

Chairman and CEO George LeMaitre said, “Although COVID-19 cut into sales, we right-sized expenses and posted a 20% operating margin. During the quarter we also acquired Artegraft, a dialysis access graft implanted primarily by vascular surgeons.”

Business Outlook

Due to the uncertainties driven by the COVID-19 pandemic, financial guidance is limited to Q3 2020.

  Guidance
Q3 2020 Sales $30.5mm - $34.5mm
(Midpoint:+12%)
Q3 2020 Gross Margin 62.8%
Q3 2020 Operating Income $5.3mm - $7.8mm
(Midpoint:+11%)
Q3 2020 Earnings Per Share $0.17 - $0.26
(Midpoint: -15%)

Acquisition of Artegraft

On June 22, 2020 LeMaitre Vascular acquired Artegraft, Inc. for $90.0 million, including $72.5 million in cash at closing and $17.5mm of potential earnouts. The acquisition was financed with a $65.0mm bank loan and cash on hand. Artegraft is a vascular graft derived from bovine carotid arteries, used primarily in dialysis access. In the twelve months ended May 31, 2020, Artegraft’s sales were $15.6mm and estimated hospital-level sales were $18.6mm. Unit sales grew 10% in 2019. LeMaitre Vascular also agreed to operate Artegraft’s NJ production facility for at least 3.5 years and retain most of its employees.

Quarterly Dividend

On July 21, 2020, the Company's Board of Directors approved a quarterly dividend of $0.095/share of common stock. The dividend will be paid on September 10, 2020 to shareholders of record on August 27, 2020.

Share Repurchase Program

On February 13, 2020, 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, 2021, unless extended by the Board.

Conference Call Reminder

Management will conduct a conference call at 5:00 p.m. ET today to review the Company's Q2 2020 financial results. The conference call will be broadcast live over the Internet. Individuals interested in listening to the webcast can 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 1390218. 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 may include 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 growth 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, divestitures, 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 also reported “adjusted operating income,” which excludes acquisition-related costs. Because acquisitions are episodic in nature and are highly variable to the Company’s results, the Company believes that evaluating its profitability net of the expenses of such transactions provides an additional and meaningful assessment of profitability to management.

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. 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 duration and severity of the impact of COVID-19 on the global economy, our customers, our suppliers and our company; compliance with foreign regulatory requirements to market our products outside the United States; the risk of significant fluctuations in our quarterly and annual results due to numerous factors; 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; 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; risks related to the integration of acquisition targets; the acceleration or deceleration of product growth rates; 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.

           
LEMAITRE VASCULAR, INC (NASDAQ: LMAT)        
CONDENSED CONSOLIDATED BALANCE SHEETS      
(amounts in thousands)        
           
           
      June 30, 2020   December 31, 2019
      (unaudited)    
Assets        
           
Current assets:        
  Cash and cash equivalents   $ 19,976     $ 11,786  
  Short-term marketable securities     5,074       20,895  
  Accounts receivable, net     17,696       16,572  
  Inventory and other deferred costs     46,340       39,527  
  Prepaid expenses and other current assets     2,783       3,312  
Total current assets     91,869       92,092  
           
Property and equipment, net     15,685       14,854  
Right-of-use leased assets     16,734       15,208  
Goodwill     66,151       39,951  
Other intangibles, net     63,165       24,893  
Deferred tax assets     1,086       1,084  
Other assets     1,027       259  
           
Total assets   $ 255,717     $ 188,341  
           
           
Liabilities and stockholders' equity        
           
Current liabilities:        
  Current portion of long-term debt   $ 2,000     $ -  
  Revolving line of credit     25,000       -  
  Accounts payable     1,237       2,604  
  Accrued expenses     11,836       14,014  
  Acquisition-related obligations     2,517       2,476  
  Lease liabilities - short-term     1,767       1,757  
Total current liabilities     44,357       20,851  
           
Long-term debt     36,990       -  
Lease liabilities - long-term     15,547       13,955  
Deferred tax liabilities     1,178       1,179  
Other long-term liabilities     5,016       4,215  
Total liabilities     103,088       40,200  
           
Stockholders' equity        
  Common stock     217       217  
  Additional paid-in capital     107,791       105,934  
  Retained earnings     59,869       57,029  
  Accumulated other comprehensive loss     (4,159 )     (4,007 )
  Treasury stock     (11,089 )     (11,032 )
Total stockholders' equity     152,629       148,141  
           
Total liabilities and stockholders' equity   $ 255,717     $ 188,341  
           



  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, 2020   June 30, 2019   June 30, 2020   June 30, 2019  
                   
Net sales $ 24,851     $ 29,483   $ 55,402     $ 57,962  
Cost of sales   7,822       9,168     17,890       18,183  
                   
Gross profit   17,029       20,315     37,512       39,779  
                   
Operating expenses:                
  Sales and marketing   4,686       7,613     12,631       15,458  
  General and administrative   5,332       4,531     10,523       9,475  
  Research and development   2,139       2,256     5,133       4,496  
                   
                   
Total operating expenses   12,157       14,400     28,287       29,429  
                   
Income from operations   4,872       5,915     9,225       10,350  
                   
Other income:                
  Other income (loss), net   (105 )     173     (178 )     251  
                   
Income before income taxes   4,767       6,088     9,047       10,601  
                   
Provision for income taxes   1,267       1,464     2,373       2,464  
                   
Net income $ 3,500     $ 4,624   $ 6,674     $ 8,137  
                   
Earnings per share of common stock                
  Basic $ 0.17     $ 0.23   $ 0.33     $ 0.41  
  Diluted $ 0.17     $ 0.23   $ 0.33     $ 0.40  
                   
Weighted - average shares outstanding:                
  Basic   20,180       19,680     20,174       19,660  
  Diluted   20,399       20,246     20,415       20,226  
                   
                   
Cash dividends declared per common share $ 0.095     $ 0.085   $ 0.190     $ 0.170  
                   



                                   
  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, 2020   June 30, 2019   June 30, 2020   June 30, 2019  
    $   %   $   %   $   %   $   %  
Net Sales by Geography                                
  Americas $ 14,942   60 %   $ 17,511   59 %   $ 33,278   60 %   $ 33,886   58 %  
  Europe/Middle East/Africa   7,950   32 %     10,014   34 %     18,300   33 %     20,027   35 %  
  Asia/Pacific Rim   1,959   8 %     1,958   7 %     3,824   7 %     4,049   7 %  
Total Net Sales $ 24,851   100 %   $ 29,483   100 %   $ 55,402   100 %   $ 57,962   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, 2020                  
    Net sales as reported   $ 24,851                
    Impact of currency exchange rate fluctuations     193                
    Net impact of acquisitions excluding currency     (2,505 )              
    Adjusted net sales       $ 22,539            
                       
  For the three months ended June 30, 2019                  
    Net sales as reported   $ 29,483                
    Adjusted net sales       $ 29,483            
                       
    Adjusted net sales decrease for the three months ended June 30, 2020   $ (6,944 )     -24 %      
                       
                       
                       
Reconciliation between GAAP and Non-GAAP operating income:                  
  For the three months ended June 30, 2020                  
    Operating income as reported   $ 4,872                
    Add back acquisition-related charges     1,199                
    Adjusted operating income       $ 6,071            
                       
  For the three months ended June 30, 2019                  
    Operating income as reported   $ 5,915                
    Adjusted operating income       $ 5,915            
                       
    Adjusted operating income increase for the three months ended June 30, 2020       $ 156       3 %      
                       
                       
                       
        For the three months ended   For the six months ended  
        June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019  
Reconciliation between GAAP and Non-GAAP EBITDA                  
  Net income as reported   $ 3,500     $ 4,624     $ 6,674     $ 8,137    
  Interest (income) expense, net     (8 )     (224 )     (113 )     (381 )  
  Amortization and depreciation expense     1,639       1,346       3,177       2,630    
  Provision for income taxes     1,267       1,464       2,373       2,464    
                       
  EBITDA   $ 6,398     $ 7,210     $ 12,111     $ 12,850    
                       
  EBITDA percentage increase         -11 %         -6 %  
                       

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

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