Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LeMaitre Vascular Inc (LMAT, Financial) reported a strong 16% sales growth in Q3 2024, driven by significant increases in grafts, patches, and carotid shunts.
- The company achieved a 49% EPS growth, showcasing robust profitability.
- APAC region led the growth with a 24% increase, particularly in Thailand and Korea, which are new direct markets.
- Gross margin improved to 67.8%, up 280 basis points year-over-year, driven by higher ASPs and direct labor efficiencies.
- LeMaitre Vascular Inc (LMAT) is expanding its sales force, aiming to reach 155 to 160 sales reps by year-end, indicating a strong focus on market penetration.
Negative Points
- Operating expenses increased by 11% in Q3 2024 compared to the previous year, which could impact future profitability if not managed.
- The company is still awaiting approval for seven MDR CE marks, which could delay market expansion in certain regions.
- There is uncertainty regarding the final submission and approval timeline for the XenoSure cardiac indication in China.
- The transition of CFO Joseph Pellegrino, who will retire in March 2025, may lead to temporary disruptions in financial leadership.
- Challenges in regulatory processes in Ireland and Germany for allograft approvals could delay product availability in these markets.
Q & A Highlights
Q: Can you provide more granularity on OUS price increases versus unit increases?
A: George LeMaitre, CEO: We don't have that data live, but we generally look at it globally rather than by major geography buckets. We can prepare for this question in future meetings.
Q: As you ramp up direct distribution in EMEA and APAC, how should we think about inventory?
A: George LeMaitre, CEO: We have plenty of inventory due to our no backorder promise. We are effectively running one shift worldwide, so inventory is not a problem.
Q: What are the levers for operating margin growth as we enter 2025?
A: Joseph Pellegrino, CFO: We don't give guidance for the upcoming year, but we've slowed down op expense growth. Gross margin has improved due to direct labor efficiencies. If these trends continue, we may see positive results on the bottom line.
Q: How confident are you in achieving your sales expansion goals by year-end?
A: George LeMaitre, CEO: We are confident in reaching our target of 155 sales reps by year-end. We have several hires lined up, and while it's slower than expected, we prioritize meeting sales and EPS numbers.
Q: Are there any transitory benefits seen in the R&D line, or is there a permanent reduction in spending?
A: Joseph Pellegrino, CFO: The regulatory piece had a lighter quarter. We've been spending significantly on MDD and MDR, and this is coming to a conclusion, which may benefit us going forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
