LeMaitre Vascular Announces Q2 2020 Financial Results

Rhea-AI Summary

LeMaitre Vascular, Inc. (LMAT) reported Q2 2020 results, with sales of $24.9 million, a decline of 16% year-over-year. Operating income fell 18% to $4.9 million, while net income decreased by 24% to $3.5 million, resulting in earnings of $0.17 per diluted share, down 25%. Despite a 20% operating margin, sales declined significantly due to the COVID-19 pandemic, particularly in the Americas and Europe. The company announced a quarterly dividend of $0.095 per share and provided limited Q3 guidance, projecting sales between $30.5 million and $34.5 million.

Positive

• Operating margin remained robust at 20%.
• Operating expenses decreased by 16% to $12.2 million.
• Acquisition of Artegraft, a product with $15.6 million in annual sales.

Negative

• Sales declined 16% year-over-year, with significant drops in April and May due to COVID-19.
• Gross margin decreased to 68.5% from 68.9% in Q2 2019.
• Limited financial guidance due to pandemic uncertainty.

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.

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	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.

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LEMAITRE VASCULAR, INC (NASDAQ: LMAT)
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
			June 30, 2020		December 31, 2019
			(unaudited)
Assets
Current assets:
1%; width:1%; min-width:1%;">	69%; width:69%; min-width:69%;">Cash and cash equivalents	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	12%; width:12%; min-width:12%;">19,976	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	12%; width:12%; min-width:12%;">11,786	1%; width:1%; min-width:1%;">
	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

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	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:
1%; width:1%; min-width:1%;">	49%; width:49%; min-width:49%;">Sales and marketing	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">4,686	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">7,613	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">12,631	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">15,458	1%; width:1%; min-width:1%;">
	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

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	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
1%; width:1%; min-width:1%;">	27%; width:27%; min-width:27%;">Americas	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">14,942	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">60	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">17,511	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">59	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">33,278	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">60	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">33,886	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">58	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">
	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	%

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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
1%; width:1%; min-width:1%;">	54%; width:54%; min-width:54%;">Net income as reported	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">3,500	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">4,624	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">6,674	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">8,137	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">
	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

FAQ

What were LeMaitre Vascular's Q2 2020 sales figures?

LeMaitre Vascular reported Q2 2020 sales of $24.9 million, a 16% decline year-over-year.

What is the guidance for Q3 2020 sales from LeMaitre Vascular?

The company's Q3 2020 sales guidance is between $30.5 million and $34.5 million.

How did the COVID-19 pandemic affect LeMaitre Vascular's sales?

Sales were significantly impacted by COVID-19, declining 33% in April and 21% in May.

What is the quarterly dividend announced by LeMaitre Vascular?

LeMaitre Vascular announced a quarterly dividend of $0.095 per share.

What was the operating margin for LeMaitre Vascular in Q2 2020?

LeMaitre Vascular reported an operating margin of 20% in Q2 2020.