LEMAITRE VASCULAR INC Q3 FY2024 earnings call

• Top line: 16% sales growth in Q3, led by specific products and regions. - RSM team: Now has 28 RSMs, ASMs, and managers, up 17% year-over-year. - Brick-and-mortar sales offices: Continuing to hire staff in Paris office (contributed 21% French sales growth in Q3) and set to lease Swiss office; in China, signed lease for larger facility. - Go Direct efforts: Pushing forward with projects in Portugal and Czechia, expecting hospital sales in 2025. - MDR/CE Mark progress: Received 15 of 22 MDR CE marks sought, with remaining seven expected in 2025; allograft approved in multiple regions, with more approvals expected in 2025. - Gross margin: Q3 gross margin was 67.8%, guided Q4 gross margin of 68%, full-year expected at 68.3%. - Headcount: Worldwide headcount up 4% to 637, with focus on higher offshore and conservative hiring.

In Q3 2024, LeMaitre Vascular achieved 16% sales growth. The growth was led by graphs (up 24%), patches (13%), and carotid shunts (18%). Geographically, APAC was the strongest region with 24% growth, EMEA saw 22% growth, and the Americas had 12% growth. The 16% sales growth was composed of 10% pricing and 6% unit growth. Revenue contribution from product segments: graphs, patches, and carotid shunts were key drivers with respective growth rates of 24%, 13%, and 18%.

• Raised Q4 sales and bottom line estimates, with Q4 sales growth expected at 14% (reported) and 15% organic, gross margin of 68%, operating income of $13.3 million, and EPS of $0.14 per share. - Full-year expected gross margin of 68.3% and operating margin of 24%.

• Regulatory delays: Uncertainties around MDR/CE Mark approvals, including a delay in Germany factory audit and complexities with Ireland approvals. - Factory audit issues: Hiccup in Germany factory audit rescheduling. - Market dynamics: Potential impact of other companies exiting the market in certain product categories affecting business.

Q: Suraj Kalia asked about granularity of OUS price increases vs unit increases.

A: George LeMaitre said they looked at it globally, not by major geography buckets and couldn't provide live granularity.

Q: Rick Wise asked about unit and price growth driver and mix for 2025.

A: J.J. Pellegrino discussed pricing strategy and gross margin drivers, while George LeMaitre talked about sales expansion goals.

Q: Brett Fishbin asked about R&D line and permanent reduction in spending.

A: J.J. Pellegrino said R&D had lighter quarter with regulatory spend, and benefits may be seen going forward.

Q: Jason Wittes asked about brick-and-mortar building OUS and pricing sustainability.

A: George LeMaitre explained distributor buyouts and that price floors are working and sustainable.

Q: Danny Stauder asked about top line drivers and tailwinds.

A: George LeMaitre and J.J. Pellegrino discussed allograft growth, market exits in Europe, and geographic contributions.

Q: Michael Petusky asked about XenoSure submission and new CFO search.

A: George LeMaitre talked about XenoSure submission delay and CFO search, while J.J. Pellegrino discussed gross margin sustainability.

Q: Frank Takkinen asked about price floor rollout and allograft approvals.

A: George LeMaitre said price floors rolled out in major geographies and there were delays in allograft approvals.

Q: James Sidoti asked about price floor rollout and discipline in deals.

A: David Roberts talked about discipline in deals and George LeMaitre discussed price floor rollout.

Q: Ross Osborn asked about progressing with cardiac surgeons and cross-selling.

A: George LeMaitre discussed cardiac sales percentage and consideration of dedicated cardiac reps, and cross-selling opportunities in the US.