LEMAITRE VASCULAR INC Q4 FY2024 earnings call

• Growth: Q4 featured 14% sales growth, 26% op income growth, and 30% EPS growth. Sales growth led by grafts, shunts, and catheters. Geographically, APAC, EMEA, and Americas showed growth.
• Sales team: Ended Q4 with 152 reps, up 12% YOY, targeting 165 reps by 12/31/25. Building sales management team with 31 managers, up 29% YOY.
• International offices: Began shipping from new Shanghai office, leased Swiss office, and推进 GO Direct projects in Portugal and Czechia.
• Regulatory: Received 16 of 23 MDR CE marks, expecting 7 more in 2025; Artegraft expected to get CE Mark in H1 2025, XenoSure cardiac approved in December 2024.
• Financials: Q4 operating expenses $25.7M, up 12% YOY due to sales team investments. Ended Q4 with $300M in cash and securities, up $176M in the quarter. Q1 2025 gross margin guided at 69.7%.

In Q4, sales grew 14%, op income 26%, and EPS 30%. Sales growth was led by grafts (+23%), shunts (+14%), and catheters (+12%). By geography, APAC was up 21%, EMEA 18%, and the Americas 12%. Gross margin increased 120 basis points year-over-year to 69.3% in Q4 2024, and Q1 2025 gross margin is guided at 69.7%.

• Full year 2025 guidance: Organic sales growth 10%, gross margin 69.7%, operating income $59.8M (up 15% with 25% operating margin), EPS $2.24 (up 16%).
• Q1 2025: Benefits from January 2025 price increases and manufacturing efficiencies, guiding gross margin at 69.7%.
• Pricing: U.S. list prices increased 6% in '22, '23, '24, resulting in actual worldwide price increases of 8%, 12%, 9%; January 2025 U.S. list price increase 8%, actual worldwide price increase to be seen.

• Regulatory risks: Delays in MDR CE mark approvals, challenges with reimbursement and provincial listings in new markets like China.
• Tariff risks: Potential tariffs on imports affecting sourcing and costs, though most raw materials sourced in U.S.
• Market risks: Competition from companies not applying for MDR, which could impact market share; variability in pricing translation from list prices to actual prices.

Q: Can you talk about what's implied from a pricing and volume perspective based on guidance?

A: Dave Roberts mentioned historical pricing trends and that worldwide pricing increase is lower than U.S. and varies; volume depends on rep hiring and productivity.

Q: Can you break out salesforce expansion plans between International and U.S.?

A: Dave Roberts said two-thirds of expected rep additions are for North America, with territory splitting in U.S. and some international growth in new markets like Portugal, Czechia, and Switzerland.

Q: What's contemplated for the high and low ends of guidance and potential upside/downside?

A: George LeMaitre and Dave Roberts discussed ASP variability by geography and product, rep hiring cadence, and product line stories as potential drivers of upside/downside.

Q: Walk through operating margin progression for 2025 and phasing?

A: Dave Roberts mentioned sales growth, OpEx phasing with Q1 impacted by sales meetings, and various cost factors like direct labor efficiencies, quality costs, and manufacturing transitions affecting margin.

Q: Initial commercial rollout of XenoSure in China and needed reps?

A: Dave Roberts said XenoSure approved in December 2024, working on reimbursement and provincial/listings; currently 4 reps in China, hiring 5th, with small sales force in large market.

Q: Implications of MDR CE marks and potential upside?

A: George LeMaitre explained most MDR CE marks are reapprovals, with Artegraft being a key exception with potential upside but no specific numbers given.

Q: M&A strategy and focus?

A: Dave Roberts said agnostic to approval locations, focusing on strategically sound small acquisitions rather than large ones, with extra cash enabling larger acquisitions but waiting for right pitch.

Q: Update on Ireland facility and German inspection?

A: George LeMaitre discussed German audit went well, Ireland needing brick and mortar office for RFA approval, expecting one approval in 2025 for RFA product line.

Q: Salesforce headcount by geography and longer term hiring plans?

A: George LeMaitre said larger hiring in U.S., territories still large, focusing on splitting territories and increasing reps to reduce burden.

Q: Strength of shunts in 2024 and outlook for 2025?

A: George LeMaitre said shunts were up 14% in 2024, benefiting from competitors leaving market, with hope for continuation in 2025.

Q: Convertible offering rationale and interest income/expense?

A: Dave Roberts explained rationale was pipeline, core business momentum, receptive convert market; interest income and expense in Q1 are GAAP numbers including amortization of deal fees.

Q: Operating cash flow for the quarter and convert impact?

A: Dave Roberts said operating cash flow was $14.6M, largely from net income, with convert impact included in GAAP forecasts.