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LeMaitre Vascular Q2 2011 Record Sales of $15.1mm, Up 7%

07/28/11
Sets Stent Graft Exit and California Factory Consolidation

BURLINGTON, Mass., Jul 28, 2011 (GlobeNewswire via COMTEX) --

LeMaitre Vascular, Inc. (Nasdaq:LMAT), a provider of peripheral vascular devices and implants, today reported Q2 2011 financial results. The Company posted record quarterly sales of $15.1mm, an operating profit of $0.9mm and an adjusted operating profit of $1.9mm. The Company also announced its exit from the stent graft business, and the relocation of its California factory. Separately, the Company declared a dividend of $0.02 per share, and provided Q3 2011 and full-year 2011 guidance.

Q2 2011 sales increased 7% versus Q2 2010. Sales in the Americas grew 6%, while international sales increased 8%. By category, Vascular grew 12% while Endovascular decreased 7%. Excluding stent grafts, the effects of a weaker U.S. dollar and acquired LifeSpan sales, organic sales growth in Q2 2011 was 3%.

The Company reported a gross margin of 68.6% in Q2 2011, versus 75.3% in Q2 2010. The decrease was largely due to the relocation of its Italian factory to Burlington, manufacturing inefficiencies, as well as the write-off of $0.4mm of stent graft inventory.

Excluding restructuring charges of $0.7mm, largely due to distributor termination costs (Spain/Denmark), as well as the stent graft inventory write-off, Q2 2011 operating income was $1.9mm. Reported Q2 2011 operating income was $0.9mm, versus $2.0mm in the year earlier period. Net income in Q2 2011 was $0.5mm or $0.03 per diluted share, versus $1.5mm, or $0.09 per diluted share, in Q2 2010.

Cash and marketable securities as of June 30, 2011 were $21.4mm, an increase of $2.3mm from $19.1mm at March 31, 2011. This increase included the effects of dividends of $0.3mm and share repurchases of $0.1mm during the quarter.

George W. LeMaitre, Chairman and CEO said, "The recent sale of our TAArget/UniFit stent grafts and our exit from Endologix European distribution will enable us to focus on our growing vascular business. During the quarter we also announced the closure of our California factory, which will consolidate all production into Burlington. Meanwhile, we generated $2.3mm in cash in Q2 while posting $1.9mm in adjusted operating income and record sales of $15.1mm. With a tighter focus on vascular and a single factory, we hope to begin posting cleaner quarters and better growth rates going forward."

Q2 2011 operating expenses were $9.5mm. Excluding distributor termination costs (Spain/Denmark), operating expenses in Q2 2011 were $8.8mm, up 3% from Q2 2010, as decreased R&D expenses and general cost control largely offset increased G&A costs and the effects of a weaker U.S. dollar.

Sales and marketing expenses increased 4% in Q2 2011 to $4.9mm. The Company ended Q2 2011 with 65 sales representatives, up from 61 at the end of Q2 2010.

General and administrative expenses increased 15% in Q2 2011 to $2.9mm. Increases were largely due to additional sales managers in Spain and France, a weaker U.S. dollar and amortization of intangible assets related to the LifeSpan acquisition.

R&D expenses decreased 22% to $1.0mm in Q2 2011, largely driven by a reduction in regulatory and clinical affairs costs, as stent graft clinical trial costs abated. The Company received its CE mark for The UnBalloon in Q2 2011.

Quarterly Dividend

The Company's Board of Directors approved the payment of a quarterly cash dividend on the Company's common stock of $0.02 per share, with payment to be made on September 6, 2011 to shareholders of record at the close of business on August 19, 2011. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to the final determination of the Company's Board of Directors.

Business Outlook

The Company expects Q3 2011 sales of $14.6mm (+7% versus Q3 2010), and reported operating income of $1.5mm. The Company also expects 2011 sales of $58.7mm (+5% versus 2010), and reported operating income of $4.0mm.

The Company is reducing its full-year 2011 sales guidance by $2.3mm due in large part to its exit from stent grafts. Full-year operating income guidance is after approximately $2.0mm of charges and special items associated with the five strategic initiatives detailed below.

Five 2011 Initiatives -- Focus on Vascular, Consolidate Production & Expand Footprint

1) Endologix Early Termination - On July 18, 2011, the Company announced the early termination of its Endologix stent graft distribution rights in Europe. Under the terms of the agreement, Endologix will pay LeMaitre $1.3 million, and begin selling direct on September 1, 2011.

2) Exit and Sale of TAArget/UniFit - On May 20, 2011, the Company announced that it would discontinue the manufacture and sale of its TAArget/UniFit stent grafts. On June 30, 2011, the Company divested these product lines to Duke Vascular.

3) Transfer of California Manufacturing - On May 20, 2011, the Company announced the closure of its California LifeSpan factory and the transfer of production to Burlington. Upon completion, the Company will have centralized all of its production activities into a single location. The transition is expected to be largely complete in 2012.

4) Direct in Spain and Denmark - On July 1, 2011, the Company began selling its devices directly to Spanish and Danish hospitals. The Company previously sold devices in Spain and Denmark through independent distributors, and in 2010 sold $0.7mm to these two customers.

5) Transfer of Italian Manufacturing - On December 31, 2010, the Company closed its Italian factory and began the transfer of production to Burlington. The transition is expected to be largely complete in 2011.

Conference Call Reminder

Management will conduct a conference call at 5:00 p.m. EDT 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 800-322-2803 (+1-617-614-4925 for international callers), using passcode 51869638. For individuals unable to join the live conference call, a replay will be available on the Company's website.

About LeMaitre Vascular

LeMaitre Vascular is a provider of devices for the treatment of peripheral vascular disease, a condition that affects more than 20 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.

Well-known to vascular surgeons, the Company's diversified product portfolio consists of brand name devices used in arteries and veins outside of the heart, including the Expandable LeMaitre Valvulotome and the Pruitt F3 Carotid Shunt.

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.

The LeMaitre Vascular, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10015

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 properly understand the Company's short-term and long-term financial trends, investors may wish to consider the impact of certain non-cash or non-recurring or infrequently-occurring items, when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in frequency and/or impact on continuing operations. In addition, management uses results of operations before such items to evaluate the operational performance of the Company and as a basis for strategic planning. Investors should consider these non-GAAP measures 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 a non-GAAP financial measure, adjusted operating income, which excludes certain expenses related to the exit of our stent graft business and the termination of our Spanish and Danish distributor agreements. During Q2 2011, the Company incurred $0.4mm of inventory write-offs related to its decision to discontinue its TAArget and UniFit stent grafts product lines, which were charged to cost of sales and are net of the Company's divestiture of these product lines, $0.6mm of restructuring charges in connection with transition payments to the Company's former distributors in Spain and Denmark, which was charged to restructuring, and $0.1mm of further costs related to the start-up of AlboGraft manufacturing in Burlington, Massachusetts, which was charged to restructuring. In Q2 2010, the Company incurred $0.1mm of impairment charges in connection with its intangibles.

In addition, this press release includes sales growth after adjusting for foreign exchange, business development transactions, and other events. The Company refers to this as "organic" sales growth. The Company analyzes net sales on a constant currency basis net of acquisitions and other non-recurring events 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 highly variable in sales impact, 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 both management and the Company's investors. During Q2 2010, the Company divested the OptiLock Implantable Port and discontinued sales of the aSpire Stent, and in Q4 2010, the Company acquired its LifeSpan Vascular Graft business and discontinued its Italian OEM manufacturing operations.

Forward-Looking Statements

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, statements regarding the Company's financial and operational guidance, its future sales growth, its plans to transition polyester graft manufacturing from Brindisi, Italy to Burlington, Massachusetts, its plans to transition LifeSpan graft manufacturing from California to Burlington, Massachusetts and the termination of its distribution of the Endologix stent graft, are forward-looking, involving risks and uncertainties. The Company's current quarterly financial results, as discussed in this release, are preliminary and unaudited, and subject to adjustment. 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 predicted. These risks and uncertainties include, but are not limited to, the risk that the Company is not successful in transitioning to a direct selling model in Spain and Denmark; the risk that the Company experiences production delays or quality difficulties in the consolidation of its manufacturing operations; the risk that the Company does not generate sufficient operating scale to maintain or increase profitability; risks related to product demand and market acceptance of the Company's products; the possibility that the Company's new products may fail to provide the desired safety and efficacy or may not be accepted by the market for other reasons; the significant competition the Company faces from other companies, technologies, and alternative medical procedures; the risk that the Company may fail to expand its product offerings through internal development or acquisition; the general uncertainty related to seeking regulatory approvals for the Company's products; 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.

Financial Statements


  LEMAITRE VASCULAR, INC. (NASDAQ: LMAT)
  CONDENSED CONSOLIDATED BALANCE SHEETS
  (amounts in thousands)


                                                           June 30,     December
                                                             2011       31, 2010
                                                          -----------  ---------
                                                          (unaudited)
  Assets

  Current assets:
                                Cash and cash
                                 equivalents                 $ 21,405   $ 22,614
                                Accounts receivable, net        9,066      8,475
                                Inventories                     7,811      8,375

                                Other current assets            3,334      3,447
                                                          -----------  ---------

  Total current assets                                         41,616     42,911

  Property and equipment, net                                   4,027      3,806
  Goodwill                                                     11,917     11,917
  Other intangibles, net                                        3,535      3,686
  Deferred tax assets                                             147        134

  Other assets                                                    449        820
                                                          -----------  ---------


  Total assets                                               $ 61,691   $ 63,274
                                                          ===========  =========


  Liabilities and stockholders' equity

  Current liabilities:
                                Accounts payable              $ 1,199    $ 1,320
                                Accrued expenses                6,474      8,628
                                Acquisition-related
                                 obligations                      689        441
  Total current liabilities                                     8,362     10,389

  Deferred tax liabilities                                        443        443

  Other long-term liabilities                                      82         86
                                                          -----------  ---------
                                Total liabilities               8,887     10,918

  Stockholders' equity
                                Common stock                      162        161
                                Additional paid-in
                                 capital                       64,605     64,642
                                Accumulated deficit           (8,000)    (8,583)
                                Accumulated other
                                 comprehensive loss               (6)      (429)

                                Less: treasury stock          (3,957)    (3,435)
                                                          -----------  ---------

  Total stockholders' equity                                   52,804     52,356
                                                          -----------  ---------


  Total liabilities and stockholders' equity                 $ 61,691   $ 63,274
                                                          ===========  =========


  LEMAITRE VASCULAR, INC.
   (NASDAQ: LMAT)
  CONDENSED CONSOLIDATED STATEMENT OF
   OPERATIONS
  (amounts in thousands,
   except per share amounts)
  (unaudited)


                              For the three months   For the six months
                                     ended                 ended
                              --------------------  --------------------

                               June 30,   June 30,   June 30,   June 30,
                                 2011       2010       2011       2010
                              ---------  ---------  ---------  ---------

  Net sales                    $ 15,112   $ 14,158   $ 29,710   $ 27,973

  Cost of sales                   4,742      3,502      9,189      6,999
                              ---------  ---------  ---------  ---------

  Gross profit                   10,370     10,656     20,521     20,974

  Operating expenses:
   Sales and marketing            4,916      4,747      9,889      9,641
   General and
    administrative                2,867      2,495      5,715      5,109
   Research and development       1,040      1,338      2,312      2,878
   Restructuring charges            650         --      1,655         --

   Impairment charge                 --         68         83         68
                              ---------  ---------  ---------  ---------


  Total operating expenses        9,473      8,648     19,654     17,696
                              ---------  ---------  ---------  ---------

  Income from operations            897      2,008        867      3,278

  Other income (loss):
   Interest income, net               2          9          3         12

   Other income, net                  5       (54)        152       (28)
                              ---------  ---------  ---------  ---------

   Total other income
    (loss), net                       7       (45)        155       (16)
                              ---------  ---------  ---------  ---------

  Income before income taxes        904      1,963      1,022      3,262


  Provision for income taxes        385        452        439        730
                              ---------  ---------  ---------  ---------


  Net income                      $ 519    $ 1,511      $ 583    $ 2,532
                              =========  =========  =========  =========

  Net income per share of
   common stock:

   Basic                         $ 0.03     $ 0.10     $ 0.04     $ 0.16
                              =========  =========  =========  =========

   Diluted                       $ 0.03     $ 0.09     $ 0.04     $ 0.16
                              =========  =========  =========  =========

  Weighted average shares
   outstanding:

   Basic                         15,470     15,613     15,468     15,646
                              =========  =========  =========  =========

   Diluted                       16,071     16,050     16,064     16,045
                              =========  =========  =========  =========


  Cash dividends declared
   per common share              $ 0.02       $ --     $ 0.04       $ --
                              =========  =========  =========  =========


  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, 2011    June 30, 2010    June 30, 2011    June 30, 2010
                        ---------------  ---------------  ---------------  ---------------

                            $       %        $       %        $       %        $       %
                        ---------  ----  ---------  ----  ---------  ----  ---------  ----

  Net Sales by Product
   Category:
  --------------------
   Vascular              $ 11,436   76%   $ 10,207   72%   $ 22,196   75%   $ 19,764   71%
   Endovascular             2,725   18%      2,944   21%      5,626   19%      6,236   22%

   Other                      951    6%      1,007    7%      1,888    6%      1,973    7%
                        ---------  ----  ---------  ----  ---------  ----  ---------  ----

  Total Net Sales        $ 15,112  100%   $ 14,158  100%   $ 29,710  100%   $ 27,973  100%
                        =========  ====  =========  ====  =========  ====  =========  ====



  Net Sales by
   Geography
  --------------------
   Americas               $ 9,415   62%    $ 8,872   63%   $ 18,417   62%   $ 16,920   60%

   International            5,697   38%      5,286   37%     11,293   38%     11,053   40%
                        ---------  ----  ---------  ----  ---------  ----  ---------  ----

  Total Net Sales        $ 15,112  100%   $ 14,158  100%   $ 29,710  100%   $ 27,973  100%
                        =========  ====  =========  ====  =========  ====  =========  ====


  LEMAITRE VASCULAR, INC. (NASDAQ:
   LMAT)
  IMPACT OF FOREIGN CURRENCY AND BUSINESS ACTIVITIES
  (amounts in thousands)
  (unaudited)

                                      2011                       2010                                2009
                                ----------------  ----------------------------------  ----------------------------------

                                   Q2       Q1       Q4       Q3       Q2       Q1       Q4       Q3       Q2       Q1
                                -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

  Total net sales                15,112   14,598   14,431   13,656   14,158   13,815   13,584   13,346   12,630   11,348
  Impact of currency exchange
   rate fluctuations (1)            669       10    (420)    (418)    (336)      314      613    (215)    (699)    (622)
   Net impact of acquisitions,
    distributed sales and
    discontinued products,
    excluding currency
    exchange rate fluctuations
    (2)                             259      283       56    (105)     (65)       95      397      333      234      101
                                -------  -------  -------  -------  -------  -------  -------  -------  -------  -------

  (1) Represents the impact of the change in foreign exchange rates compared to the corresponding quarter of the prior
   year based on the weighted average exchange rate for each quarter.
  (2) Represents the impact of sales of products of acquired businesses and distributed sales of other manufacturers'
   products, net of sales related to discontinued and divested products, based on 12 months' sales following the date of
   the event or transaction, for the current period only.



  LEMAITRE VASCULAR, INC. (NASDAQ: LMAT)
  NON-GAAP FINANCIAL MEASURES
  (amounts in thousands)
  (unaudited)

  Reconciliation between GAAP and Non-GAAP
   organic sales growth excluding stent grafts:
   For the three months ended June 30,
    2011
    Net sales as reported                $ 15,112
    Impact of currency exchange rate
     fluctuations                           (669)
    Net impact of stent graft sales           362
    Net impact of acquisitions,
     distributed sales and
     discontinued products, excluding
     currency                               (259)
                                        ---------
     Adjusted net sales                             $ 14,546

   For the three months ended June 30,
    2010

    Net Sales as reported                           $ 14,158
                                                   ---------

    Adjusted net sales increase for
     the three months ended June 30,
     2011                                              $ 388         3%
                                                   =========  =========




                                        For the three months   For the six months
                                               ended                 ended
                                        --------------------  --------------------

                                         June 30,   June 30,   June 30,   June 30,
                                           2011       2010       2011       2010
                                        ---------  ---------  ---------  ---------
  Reconciliation between GAAP and
   Non-GAAP income from operations:
   Income from operations as reported       $ 897    $ 2,008      $ 867    $ 3,278
   Inventory write-off from terminated
    product line                              361         --        361         --
   Restructuring charges                      650         --      1,655         --

   Impairment                                  --         68         83         68
                                        ---------  ---------  ---------  ---------


   Adjusted income from operations        $ 1,908    $ 2,076    $ 2,966    $ 3,346
                                        =========  =========  =========  =========




                                        For the three months   For the six months
                                               ended                 ended
                                        --------------------  --------------------

                                         June 30,   June 30,   June 30,   June 30,
                                           2011       2010       2011       2010
                                        ---------  ---------  ---------  ---------
  Reconciliation between GAAP and
   Non-GAAP operating expenses:
   Operating expenses as reported         $ 9,473    $ 8,648   $ 19,654   $ 17,696
   Restructuring charges                    (650)         --    (1,655)         --

   Impairment                                  --       (68)       (83)       (68)
                                        ---------  ---------  ---------  ---------


   Adjusted operating expenses            $ 8,823    $ 8,580   $ 17,916   $ 17,628
                                        =========  =========  =========  =========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: LeMaitre Vascular, Inc.

CONTACT: J.J. Pellegrino
Chief Financial Officer
LeMaitre Vascular Inc.
781.221.2266 x106
jpellegrino@lemaitre.com