Q2 2024 LeMaitre Vascular Inc Earnings Call
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Operator: Welcome to the LeMaitre Vascular Q2 2024 Financial Results Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Mr. J.J. Pellegrino, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir.
J.J. Pellegrino: Welcome to the LeMaitre Vascular Q2 2024 Financial Results Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Mr. J.J. Pellegrino, Chief Financial Officer for LeMaitre Vascular. Please go ahead, sir.
Joseph Pellegrino: Good afternoon, and thank you for joining us on our Q2 2024 conference call. With me on today's call is our CEO, George LeMaitre, and our president, Dave Roberts.
Speaker Change: Good afternoon, and thank you for joining us on our Q2 2024 conference call. With me on today's call is our CEO, George LeMaitre, and our President, Dave Roberts.
Joseph Pellegrino: Before we begin, I'll read our Safe Harbor Statement. Today, we will make some forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risk and uncertainty. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast, and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today, August 1, 2024, and should not be relied upon as representing our estimates or views on any subsequent date.
Speaker Change: Before we begin, I'll read our Safe Harbor Statement. Today we will make some forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties.
Speaker Change: Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast, and similar expressions.
Speaker Change: Our forward-looking statements are based on our estimates and assumptions as of today, August 1, 2024, and should not be relied upon as representing our estimates or views on any subsequent date.
Joseph Pellegrino: Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-K and subsequent SEC filings, including disclosure of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures, which include organic sales growth, as well as operating income, operating expense, and EPS, excluding special charges. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and is available in the Investor Relations section of our website, www.lemaitre.com. I'll now turn the call over to George LeMaitre.
Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-K and subsequent SEC filings, including disclosure of the factors that could cause results to differ materially from those expressed or implied.
Speaker Change: During this call, we will discuss non-GAAP financial measures, which include organic sales growth, as well as operating income, operating expense, and EPS, excluding special charges.
Speaker Change: A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and is available in the Investor Relations section of our website www.lemaitre.com. I will now turn the call over to George LeMaitre.
George LeMaitre: Thanks, J.J. Q2 was an excellent quarter featuring 12% organic sales growth and 44% EPS growth. I'll focus my remarks on our top line, Salesforce, and the MDRCE mark. Our 12% organic growth in Q2 was broad-based, with 7 of our 12 product lines posting records. RestoreFlow allografts were up 30%, bovine patches 12%, and shunts 22%. APAC was our strongest region again, up 20% thanks to Thailand and Korea, our recently converted direct market.
George LeMaitre: EMEA sales were up 13% in Q2, while the Americas were up 10%. Two of our larger subsidiaries continue to excel in Q2. Canada was up 33% and the UK was up 27%, both benefited from exceptional RestoreFlow growth. We added 7 reps in Q2, ending the quarter with 144, and we're now targeting 155 to 168 by year end. This mid-year expansion is largely about North America, where the territories remain too
George LeMaitre: As for our international sales offices, we continue to hire staff for the new Paris office, and we've begun scouting for an office in Zurich. We also continue to evaluate Go Direct opportunities in Europe, including Portugal, Czechia, Poland, and Greece. Turning to regulatory affairs, since our last call, we've received 11 more MDR-CE marks, bringing our total to 14 of the 22 approvals received. These eight remaining CE marks should be received in 2025. Some analysts believe that only 70% of all MDD-cleared devices industry-wide will eventually receive MDR-CE marks. Europe's regulatory barriers have been lifted, and it's allowing us to capture a share. As an example, we now have approximately 90% of the European shunt market due to BARD's CE-driven exit.
Speaker Change: As for our international sales offices, we continue to hire staff into the new Paris office and we've begun scouting for an office in Zurich.
Speaker Change: We also continue to evaluate Go Direct opportunities in Europe , including Portugal, Czechia, Poland, and Greece.
Speaker Change: Turning to regulatory, since our last call we've received 11 more MDR CE marks bringing our total to 14 of the 22 approvals we're seeking. These eight remaining CE marks should be received in 2025.
Speaker Change: Some analysts believe that only 70% of all MDD-cleared devices industry-wide will eventually receive MDR-CE marks.
Speaker Change: Europe's regulatory barriers have been raised and it's allowing us to capture share. As an example, we now have approximately 90% of the European chunk market due to BARD's CE-driven exit.
George LeMaitre: One of the CE marks which we expect to receive in 2025 is autographed, our largest American product. We have also submitted autographed applications in Thailand, Malaysia, and Singapore, and we plan to make filings by year-end in Australia, Canada, and Korea. Bringing this device to international markets was a key consideration at the time of the 2020 autographed acquisition. With respect to RestoreFlow, we now believe our Irish and German approvals will be received in 2025 and 2026, respectively. Your SOFLO needs to be approved by each individual country as there is no pan-European approval.
Speaker Change: One of the CE marks which we expect to receive in 2025 is Artigraft, our largest American product. We have also submitted Artigraft applications in Thailand, Malaysia, and Singapore, and we plan to make filings by year-end in Australia, Canada, and Korea.
Speaker Change: With respect to RestoreFlow, we now believe our Irish and German approvals will be received in 2025 and 2026, respectively.
Speaker Change: RestoreFlow needs to be approved by each individual country, as there is no pan-European approval. We currently have approvals in just three countries, the U.S., the U.K., and Canada, where the combined sales CAGR has been 23% since the 2016 RestoreFlow acquisition.
George LeMaitre: We currently have approvals in just three countries, the U.S., the U.K., and Canada, where the combined sales CAGR has been 23% since the 2016 RestoreFlow acquisition. I'd like to welcome back analyst Jason Whitties of Roth Capital, who re-initiated coverage in May of this year. In 2014, Jason initiated LeMaitre coverage while at another firm with an $11 target and three headlines, Owning a Niche, Disciplined Acquisitions, and International Expansion. To conclude, 2024 is shaping up to be another year of healthy sales and profit growth. With that, I'll turn the call over to JJ.
Speaker Change: I'd like to welcome back analyst Jason Witte of Roth Capital, who re-initiated coverage in May of this year.
Speaker Change: To conclude my remarks, 2024 is shaping up to be another year of healthy sales and profit growth. With that, I'll turn the call over to JJ.
Joseph Pellegrino: Thanks, George. In Q2 2024, we continue to execute the LeMaitre playbook, a targeted call point, niche markets, and a focus on the bottom line. We posted a gross margin of 68.9%, up 490 basis points year-over-year. The increase was driven by productivity improvements and higher ASPs. Productivity improvements were driven by higher direct labor utilization, lower times to build, and lower quality costs.
JJ: Productivity improvements were driven by higher direct labor utilization, lower times to build, and lower quality costs. ASP increased 10% in Q2, driven by our highly differentiated autograft, valvulatome, and shunt devices, as well as our supply-constrained restore flow.
Joseph Pellegrino: ASP increased 10% in Q2, driven by our highly differentiated aortograft, valviotome, and shunt devices, as well as our supply-constrained restore flow. Our gross margin was 68.1% in Q4, 68.6% in Q1, and now 68.9% in Q2. Operating expenses in Q2 2024 were $24.1 million, an increase of just 6% versus Q2 2023. This compares favorably to last year's 20% operating expense increase, reflecting our shift from significant post-COVID rehiring to a more restrained hiring posture.
JJ: Our gross margin was 68.1% in Q4, 68.6% in Q1, and now 68.9% in Q2.
Speaker Change: Operating expenses in Q2 2024 were $24.1 million, an increase of just 6% versus Q2 2023.
Joseph Pellegrino: As a result, our Q2 2024 operating income increased 52% year-over-year to $14.4 million, an operating margin of 26%. Our operating income was $10.1 million in Q4, $11.9 million in Q1, and now $14.4 million in Q2. We ended Q2 2024 with $113 million in cash and securities, an increase of $4.8 million in the quarter. The increase was driven by cash from operations of $9.6 million and was partially offset by dividends of $3.6 million.
Speaker Change: As a result, Q2 2024 operating income increased 52% year-over-year to $14.4 million, an operating margin of 26%.
Joseph Pellegrino: With regard to guidance, sales growth in the back half of 2024 should accelerate into the mid-teens while operating expenses increase moderately as we continue to build out the sales channel and invest in new regulatory approvals. As a result, we have increased our full year 2024 sales guidance by $3.8 million and our full year EPS guidance by $0.07 per share. Our guidance implies an operating margin of 23% for 2024 and 19% versus 19% in 2023.
JJ: With regard to guidance, sales growth in the back half of 2024 should accelerate into the mid-teens, while operating expenses increase moderately as we continue to build out the sales channel and invest in new regulatory approvals.
JJ: As a result, we have increased our full-year 2024 sales guidance by $3.8 million and our full-year EPS guidance by 7 cents per share.
JJ: Our guidance implies an operating margin of 23% for 2024 and 19% versus 19% in 2023.
Joseph Pellegrino: For more details, please see today's press release. A few Q3 highlights include sales growth of 14% organically, gross margin of 68%, operating income of $12 million, up 31%, and EPS of $0.44 per share, up 32%. With that, I'll turn it back over to the operator for questions.
Speaker Change: For more details, please see today's press release, but a few Q3 highlights include sales growth of 14% organically, gross margin of 68%.
JJ: operating income of $12 million, up 31%, and EPS of 44 cents per share, up 32%.
Operator: Certainly. As a reminder, to ask a question, please press star 11 on your telephone. To remove yourself from that queue, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question will be from Rick Wise of STFL. Your line is open, Rick.
Speaker Change: Certainly. As a reminder, to ask a question, please press star 11 on your telephone. To remove yourself from that queue, please press star 11 again. Please stand by while we compile the Q&A roster.
Speaker Change: And our first question will be coming from Rick Wise of Stiefel. Your line is open, Rick.
Frederick Wise: Thank you and good afternoon, George. It's great to see this excellent quarter.
Rick Wise: Thank you and good afternoon, George. Great to see this excellent quarter. Thank you.
George LeMaitre: Thank you. Let me start off. There's a lot to chew on here, but I think I'll start off with the Salesforce expansion. I mean, this is a meaningful step up, and you're raising the bar again. Just a couple of questions surrounding it, and I'll let you take it away. Just help us understand your thinking behind raising that bar for the rest of the year. And you were particularly emphatic about North America and the territories being too large, implying, I assume, the opportunity to split them and help drive increased sales. Just talk us through some of those factors in your thinking.
Rick Wise: Let me start off, there's a lot to chew on here, I think, let me start off with the
Rick Wise: Sales Force Expansion. I mean, this is a meaningful step up and you're raising the bar again.
Speaker Change: Just a couple of questions surrounding it, and I'll let you take it away.
Speaker Change: implying, I assume, the opportunity to split them and help drive increased sales. Just talk us through some of those factors in your thinking.
George LeMaitre: Okay, thanks for the question, Rick. It's George.
George LeMaitre: Yeah, and I got at a little bit of this last time, and as you're pointing out correctly, I feel like there's an expanded feeling of that on this call, where we really have opened up a bunch of new territories. It's the same thing, which is, you know, the years go by, and you get this 10, 12, 14 percent organic growth, and I feel like we never really, not recovered because it's a good thing, but we never really got the sizes down following the autographed acquisition in 2020. So, we're still playing around with these two million dollar territories in the U.S., and they're just too big geographically and financially.
Speaker Change: It's the same thing, which is, you know, the years go by and you get this 10, 12, 14 percent organic growth, and I feel like we never really...
Speaker Change: not recovered because it's a good thing, but we never really got the sizes down following the autographed acquisition in 2020.
Joseph Pellegrino: So, about 12 months ago, we teed ourselves up for all this by having a sort of reorg in the sales force, where we got four area sales managers. We had never had those before, watching over what was then 10 or 11 regional managers, and before that, it was just a BP of sales and then nine regional managers. So, I think we're better equipped structurally to handle it now, and so, yeah, we launched a bunch of these things, and we'll see, you know, when they come on board.
Speaker Change: So we're still playing around with these $2 million territories in the U.S.
Speaker Change: geographically and financially, so about...
Speaker Change: For area sales managers, we had never had those before, watching over what was then 10 or 11 regional managers.
Speaker Change: and before that it was just a VP of sales and then nine regional managers so I think we're better equipped structurally to handle it now and so yeah we launched a bunch of these things and we'll see you know when they come on board it's I interestingly enough the hiring is you know you read in the newspaper you know it's easier to hire these days we're not exactly finding that it's still it's still hard to hire for us
Joseph Pellegrino: Interestingly enough, the hiring is, you know, you read in the newspaper that it's easier to hire these days. But we're not exactly finding that. It's still hard to hire for us in the sales. And Rick, this is JJ. From a financial perspective as well, I mean, it's a nice time to fit them into the P&L, and you can see operating income going to $12 million in Q1 and $14.4 million in Q2, up $50,000.
JJ: Rick, this is JJ. From a financial perspective as well, I mean, it's a nice time to fit them into the P&L, and you can see op income going to $12 million in Q1 and $14.4 million in Q2, up 50%, 52% for both quarters year over year. And so it's just a nice time to slot those investments also into the P&L story that we have going on.
Joseph Pellegrino: That's great. And turning to operating margins, JJ, you were very clear in reminding us, and you're basically assuming you hit your targets, approaching a 400 basis point step-up year-over-year, 24 versus 23 in operating margins. A couple of things. I guess I have two questions related to that. One, help us think about the sustainable drivers there. Obviously, volume makes price. You talked about gross margin productivity, but how do we start thinking about 25, 26, and beyond in terms of where, you know, gosh, what kind of operating margin potential is left, and how do we think about it? And is it just doing what you're doing? And just help us think through that.
Speaker Change: step up year-over-year 24 versus 23 in operating margins.
Speaker Change: A couple things. I guess two questions related to that. One, help us think about the sustainable drivers there, obviously volume, mix, price. You talked about the gross margin productivity, but
Speaker Change: How do we start thinking about 25, 26, and beyond in terms of...
Speaker Change: We're, you know...
Speaker Change: That's a good thing.
Speaker Change: potential is left and how do we think about it and
Joseph Pellegrino: Yeah, yeah, no, that's a tough one, obviously, because you're looking way out there, and we don't give guidance that far out. But I would say, if you remember from way back when, we used to say 10-20 a lot. We're going to grow the top line 10 percent and the bottom line 20 percent. And if you do that, you get leverage on the bottom line in terms of an operating margin story. Now, I'm not saying we're 10-20 anymore, and we've certainly been beating that recently, and who knows where we're going to go beyond this year? Because we haven't talked about that.
Speaker Change: is it just doing what you're doing and just help us think through that. Yeah yeah no that's a tough one obviously because you're looking way out there and we don't
Speaker Change: We're going to grow the top line 10% and the bottom line 20%. And if you do that, you get leverage on the bottom line in terms of an up-margin story.
Joseph Pellegrino: But I would say, if you keep having nice top-line growth numbers and keep a lid on op-ex, you're probably going to get a good answer there. That said, I mean, you know, if you have a 30 percent operating margin number that you're thinking of way out there, I'd be like, no, I don't think that's who we want to be, really. Maybe we could, if you said to us, do that tomorrow and do it for a year and a half, we could certainly do that by pulling back on expenses.
Speaker Change: you're probably going to get a good answer there.
Speaker Change: I mean, you know, if you have a 30% op margin number that you're thinking of way out there, I'd be like, no, I don't think that's who we want to be, really. Maybe we could, if you said to us, do that tomorrow and do it for a year and a half, we could certainly do that by pulling back on expenses, but if we want to keep investing in the medium term and long term of the business, which we do, obviously, then you're going to sort of stay range bound to some extent.
Joseph Pellegrino: But if we want to keep investing in the medium term and long term of the business, which we do, obviously, then you're going to sort of stay range bound to some extent. So I would say that, without totally answering your question, that's sort of a bench post for you.
Speaker Change: So I would say that's, without totally answering your question, that's sort of a bench post for you.
George LeMaitre: Thank you so much, and thanks again for the quarter.
Speaker Change: Thank you so much and thanks again for the quarter.
Operator: One moment for our next question, which will come from Suraj Kalia of Oppenheimer & Co.
Speaker Change: Thanks Rick. One moment for our next question.
Speaker Change: Our next question will come from Suraj Kalia of Oppenheimer & Company, Illinois.
Shane Masson: Hi, this is Shane Masson for Suraj. Thank you for taking our question. Just looking at the gross margin guidance for 3Q and for the full year, just kind of wondering, you know, put up a very nice quarter there, about 69%. It looks like a little step down in 3Q, and I think the full year was lowered a little bit, but you guys raised... You know, revenue guidance, increased EPS guidance, just looking to understand the puts and takes there, if you could.
Speaker Change: Hi, this is Seymour Sanford-Sarraj. Thank you for taking our questions.
Seamus: Just looking at the gross margin guidance for 3Q and for the full year, just kind of wondering, you know, put up a very nice quarter there, about 69%. It looks like a little step down in 3Q, and I think the full year was lowered a little bit, but you guys raised
Speaker Change: You know, revenue guidance, increased EPS guidance, just looking to understand the puts and takes there, if you could.
Joseph Pellegrino: Yeah, so if you look at our Q3 guidance of 68%, then you can sort of impute a little step up in Q4 to, you know, 68, 2, or 3, or 4, or something like that. And so that's the cadence for you.
Speaker Change: Yeah so if you if you look at our Q3 guidance
Joseph Pellegrino: I think the Q3 step down is a number of things. One is that our manufacturing team has been doing an awesome job, and they've been really pulling through a lot of efficiencies. And I'm sort of trying to out-guess that and say maybe that doesn't continue sort of steadily throughout the rest of the year, so maybe that's thing one. Thing two is we know we have some higher costs coming at us on the restore flow side, so we take that into account.
Speaker Change: One is our manufacturing team has been doing an awesome job, and they've been really pulling through a lot of efficiencies.
Speaker Change: And I'm sort of trying to outguess that and say maybe that...
Seamus: that doesn't continue sort of steadily throughout the rest of the year. So maybe that's thing one.
Speaker Change: I think, too, is...
Joseph Pellegrino: And maybe some E&O topics outside the U.S. coming up for the back half of the year, so I'll take that into account. And then, seasonally, oddly, generally speaking, Q3 is lower in the year than sort of the other quarters in the year, so it would make sense that you would step down in Q3 maybe and then move back up in Q4. I don't know if that totally answers or gets at what you're asking.
Speaker Change: And then seasonally, oddly, generally speaking, Q3 is lower in the year than sort of the other quarters in the year, so it would make sense that you would step down in Q3 maybe and then move back up in Q4. I don't know if that totally answers and gets at what you're asking.
Shane Masson: No, that helps. Thank you. And just kind of two more from my end, and I'll just kind of throw them together. Any latest updates on M&A? I know you said last quarter you were talking about two different companies, just kind of wondering what the – any updates that you can give there. And then secondly, you guys have seen – sorry, we've seen you take a lot of price, so to speak, in terms of this past year.
Speaker Change: No, that helps. Thank you.
Speaker Change: And just kind of two more from my end, and I'll just kind of throw them together. Any latest updates on M&A? I know I think you said last quarter you were talking about two different companies. Just kind of wondering what the, any updates that you can give there.
Speaker Change: And then secondly, you know, you guys have seen, sorry, we've seen you take a lot of
Speaker Change: Price, so to speak, in terms of this past year, kind of as we start to firm up our models for 25, you know, where is there still up where you can take price? You know, what do you think kind of what numbers are you looking at? Any color there would be helpful. Thank you.
Shane Masson: Kind of as we start to firm up our models for 2025, you know, where is there still room where you can take a price? You know, what do you think, kind of what numbers are you looking at? Any color there would be helpful. Thank you.
David Roberts: Hey Seamus, it's Dave. I'll take the acquisitions question, and maybe I'll turn it over to George on price. But on acquisitions, yeah, I mean obviously, there's nothing too specific that I can share with you. You know we have an acquisitions department that is healthy and busy. We just added another person to the department, and you know we continue to seek out the same targets with the same criteria. Of course, what's nice is that our cash balance is growing, our EBITDA is growing, so the size of the deals we can look at is increasing.
Dave Roberts: Hey Seamus, it's Dave. I'll take the acquisitions question and maybe I'll turn it over to George on price. But on acquisitions, yeah, I mean obviously there's nothing too specific that I can share with you. You know, we've, the acquisitions department is healthy, it's busy, we just added another person to the department, and we continue to seek out the same targets with the same criteria. Of course, what's nice is that our cash balance is growing, our EBITDA is growing, so the size of deal we can look at is increasing. And I'd say everything else equal, we would prefer
David Roberts: And I'd say, if everything else was equal, we would prefer to do a larger deal. So, you know, there are various active targets at various stages, and you know when I can disclose more, I will. Sometimes you think things are moving along, and they don't, but we continue to be active, and you know I do expect at some point, I don't know exactly when we'll be able to, you know, announce something, but I don't know if it'll be this year, next year, whenever, but you know we're not sitting on our thumbs. And Seamus on
Speaker Change: So, you know, there are various active targets at various stages, and, you know, when I can disclose more, I will. Sometimes you think things are moving along and they don't, but we continue to be active, and, you know, I do expect at some point, you know, I don't know exactly when we'll be able to, you know, announce something, but I don't know if it'll be this year, next year, whenever, but, you know, we're not setting our thumbs. And Seamus, on pricing, I would say, concretely...
George LeMaitre: And Seamus, on pricing, I would say concretely for 2025, we're not going to try to set our prices until November or December. So there's that a little bit. If you wanted to get some insight into how we price, I think we've updated our slide show on the internet, on our website, and it shows the last four years of pricing. I think they were 8, 8, 12, and 8, or something like that.
Seamus: For 2025, you won't, you know, we're not going to try to set our prices until November or December . So there's that a little bit. If you wanted to get some insight into
Seamus: You know, how we price. I think we've updated our slideshow on the internet, on our website, and it shows the last four years of pricing.
Operator: And also, it puts it up against the CPI to sort of see what kind of price it is. So you could look at that, and you could make your own inferences about where you think we're going. A couple of the things I would say is that the two items really help us with doing more price hikes. When we expand the sales force, a lot of the responsibility that we put in the hands of a sales rep is to get that price hike.
Seamus: I think there were eight.
Dave Roberts: 12 and 8 or something like that, and also it puts it up against the CPI to sort of see what kind of price. So you could look at that and you could make your own inferences about where you think we're going.
Dave Roberts: A couple of the things I would say is that...
Speaker Change: When we expand the sales force, a lot of the responsibility that we put in the hands of the sales rep is to go get that price hike. So when you see us expanding the sales force, that's our army to get price hikes, of course. And then also in Europe , where the CE mark, the transition of the MDR.
Operator: So when you see us expanding the sales force, that's our army to get price hikes, of course. And then also in Europe, where the CE mark, the transition, and the MDR are putting up a lot of barriers. And I think they're making it significantly easier to pass along price increases as long as you stay in your segment because a lot of the other companies are electing not to stay in the segment and to just not file for the MDR CE mark. So barriers to entry help us, sales force expansion helps us, and then the record's fairly clear over the last four years. If you could surmise what you think we might do next year,
Dave Roberts: Significantly easier to pass along price increases.
Dave Roberts: as long as you stay in your segment, because...
Speaker Change: A lot of the other companies are electing not to stay in the segment and to just not file for the MDR-CE mark. So barriers to entry help us. Salesforce expansion helps us. And then, you know, the record's fairly clear over the last four years. If you could summarize what you think we might do next year.
Jason Witts: And one moment for our next question. Our next question comes from Jason Witts of Roth. Your line is open.
Speaker Change: Thank you.
Speaker Change: And one moment for our next question.
Joseph Pellegrino: Hi, thanks for taking the question and wrapping up a solid quarter here, and I also, thanks for the mention at the beginning. I guess if $11 was my target, you guys have done great on execution since I last looked at you guys, so congrats on that as well. Sure, and so a couple of questions. One, I apologize if this was mentioned already, but can you break out what price and volume were in the quarter for revenues?
Speaker Change: Hi, thanks for taking the question. We're at a solid quarter here and I guess also thanks for the mention at the beginning. I guess if $11 was my target, you guys have...
Joseph Pellegrino: Sure, sure, so organic growth was 12, and 10 was price, and 2 was units.
Jason Witts: Okay, that's helpful. And then you mentioned shunts are benefiting from the bar dropping out. I'm wondering if there are other large product lines that are also seeing competition drop out, especially on the biologic fronts over in Europe. Yeah.
George LeMaitre: Yeah, yeah, interesting you mentioned biologics, the first place I would go to, which is we've seen patches, biological patches by Abbott, and then I think BioIntegral, a Canadian company, dropped out of the European markets. That's helped us a lot with Zenasur over in Europe as well as CardioCell over in Europe.
Jason Witts: Are these, I mean, is this driving the upside to the year, or is this the sales force additions that you've recently added?
George LeMaitre: I would say over the last two or three years, we felt the dropping out of competition, allowing us to set prices and give us a better unit share. And then I think the European rep surge, if you will, came a little bit earlier than the American rep surge. So I feel like they picked up a bunch of reps. I can do the numbers. We had 47 reps a year ago, and now we have 52 in Europe. And so they've had a bit of a surge in Europe, and that's helping us as well.
Speaker Change: We had 47 reps a year ago, now we have 52 over in Europe . And so they've had a bit of a surge in Europe , and that's helping us as well.
Jason Witts: Okay. Got it. No, very helpful. And then just, I don't know if you also break out gross margins between biologists and, and I guess non-biological implants, if there's a breakout there that we could track. Jason, right, so we don't do that. I think sometimes we answer, "Are they above corporate or below corporate, and which particular brand are you interested in?".
Jason Wittes: Jason, right, so we don't do that, we just give one number. I think sometimes we answer are they above corporate or below corporate and if, you know, if you ask, which particular brand are you interested in?
Jason Witts: Well, I'm just, you know, the bovine patches and the allografts. I imagine they're a little bit different, but, you know, you've had a nice rise in gross margin. I always thought part of that was due to the fact that you've improved your yields dramatically on the biological front. I thought that was a major driver. I don't know if that's the case.
Speaker Change: Well, I'm just, you know, the bovine patches and the allografts I imagine are a little bit different, but, you know, you've had a nice rise in gross margin. I always thought part of that was due to the fact that you've improved your yields.
Joseph Pellegrino: Jason, this is JJ. So generally, when we say RestoreFlow's done well and Dacron's done well, that's going to hurt the margin. And generally, when we say Xenasur's doing well and Artigraf's doing well, that's generally going to help the margin. That's helpful directionally for you. Okay, cool. Great. Thanks. I'll jump back in. Oh, sorry, JJ. Well, great. Thank you. I'll jump back in the queue.
Speaker Change: Okay, well, great. Thanks. I'll jump back in. Oh, sorry, JJ. Well, great. Thank you. I'll jump back in queue.
JJ: Thanks, Jason.
Jason Witts: I know there are a couple other questioners out there, but I don't really know how to get to them. Would the operator want to introduce the next questioner?
JJ: Okay.
Speaker Change: I know there's a couple other questioners out there. I don't really know how to get to them.
Operator: Certainly. The next question is coming from Danny Stauder of Citizens JMP. He's on the stage.
Danny Stauder: Yeah, great. Thanks, guys.
Danny Stauder: So I guess just first, real quick, the sales rep ad. I know you upped your full-year target, but could you just give any color on your plans or your expected cadence for adding these new reps? And with that, how long does it typically take for these new reps to ramp up to the corporate average or, you know, even above the corporate average?
Speaker Change: Yeah, great. Thanks, guys.
Speaker Change: So I guess just first, real quick, on the sales rep ads.
Speaker Change: I know you upped your full year target, but could you just give any color on your plans or your expected cadence for adding these new reps and with that, how long does it typically take for these new reps to ramp up to the corporate average or even above the corporate average typically?
George LeMaitre: Sure. And Danny, I've handled this question a number of ways over the years, and I always give an unsatisfactory answer, but I'll try it again. I'll try something different here, maybe.
Speaker Change: Sure, and Danny, I've handled this question a number of ways over the years, and I always give an unsatisfactory answer, but I'll try it again. I'll try something different here maybe. The cadence for hiring is we put a lot of approvals out there, and, you know, our guests
George LeMaitre: The cadence for hiring is we put a lot of approvals out there, and our guess that we're trying to do for you guys right now is that we'll have 155 or 160 reps by the end of this year. And I think what happens after that, I don't know, but it feels like we'll get there. So there's the timing of that, and then the second question you're asking is when will they get up to snuff?
George LeMaitre: And I would say we've done a couple of studies around here lately, and oddly, the good ones get up to snuff right away, and the ones that aren't going to make it don't get up to snuff. And so it's not really that much about time. I think in the old days, the answer we would give to everyone, the generic answer was about nine months to really get going and understand everything. But in terms of if you really look at and study quota for all these reps that come on board, it happens pretty quickly for a good guy, or a good woman who's doing a good job at the sales position.
JJ: When do they get up to snuff? And I would say, we've done a couple studies around here lately, and oddly, the good ones get up to snuff right away, and the ones that aren't going to make it don't get up to snuff. And so it's.
Speaker Change: It's not really that much about time. I think in the old days, the answer we would give to everyone, the generic answer was about nine months.
George LeMaitre: Great. And then just one more for me, you know, Asia Pacific. Really strong again. You talked about some of the drivers there. But you know, as we look out for the rest of the year, I guess in the back half and into 2025, how much of a runway is there for this outsized growth?
George LeMaitre: I think the runway there, I never guide past the year that we're in, so we're in 2024. For these six months, I think there's terrific runway and space for APAC. We're on fire over there. We're starting all these new entities. And I said on the last call, it's just an old-fashioned virgin territory game where we didn't exist in Asia, except for Japan, until about 10 years ago. So I feel really excited about what's going on over there.
JJ: I think the runway there, I never guide past the year that we're in, so we're in 2024. For these six months, I think there's terrific runway and space for the APAC. We're on fire over there.
JJ: We're starting all these new entities, and I said on the last call, it's just simply an old-fashioned Virgin Territory play where we didn't exist in Asia except for Japan until about 10 years ago. So I feel really excited about what's going on over there. And they also have, you know, half of the approvals.
George LeMaitre: And they also have half of the approvals that they need over there. Whereas, in Western Europe and North America, you largely have all the approvals that you need right now. And in Asia, that's not true. You're 50%-ish.
Speaker Change: We have not gotten half of the approvals that we need over there, whereas in Western Europe and North America, you largely have all the approvals that you need right now. And in Asia, that's not true. You're 50%-ish.
Danny Stauder: That's great and very helpful. Thanks for the questions and great quarter. Thank you.
Speaker Change: That's great, very helpful. Thanks for the questions and great quarter.
Operator: Thank you. One moment for our next question, and our next question will be coming from Michael Sarcone of Jeffrey's. Your line is open.
JJ: Thank you.
Michael Sarcone: Hey, good afternoon, and thanks for taking the question. I'm just sorry.
Michael Sarcone: You talked about, you know, adding reps, particularly in North America, and some of these territories getting up to $2 million. So, you know, sometimes we do see potential for disruption when you do split sales territories. I guess, how confident are you that you can split some of these territories and not cause any disruption? And, you know, basically, how do you plan to mitigate the risks there?
Speaker Change: I'm just sorry.
Speaker Change: Hi. You talked about, you know, adding reps, particularly in North America and, you know, some of these territories getting up to $2 million.
Speaker Change: So, you know, sometimes we do see potential for disruption when you do split sales territories. I guess, how confident are you that you can split some of these territories and not cause any disruption? And, you know, basically, how do you plan to mitigate the risks there?
George LeMaitre: Right. It's true. Sometimes there is a kerfuffle when you break up a territory. The person doesn't want it to happen, but the person does want it to happen.
Speaker Change: Right. It's true. Sometimes there is a kerfuffle when you break up a territory. The person doesn't want it to happen. The person does want it to happen.
George LeMaitre: So, yes, that's true. But I would say, you know, we've been doing this for years and years and years in Europe and the U.S., and so how we do it, I think, is I think we do it the right way, which is we announce it early. We're very open about it.
George LeMaitre: And we pay double commissions for the back half of the year after the person gets hired in the new territory. So the person who was previously running the territory is getting full commissions the whole time. And then when the new person comes on, let's say in October, they're getting commissions on the smaller territory that's been split off. And so is the sort of legacy rep there. So we try to do it like that.
Speaker Change: for the back of the year after the person gets hired in the new territory.
Speaker Change: The person who was previously running the territory is getting full commissions the whole time, and then when the new person comes on, let's say in October , they're getting commissions on the smaller territory that's been split off, and so is the sort of legacy rep there. So we try to do it like that, and we always tell the reps that...
George LeMaitre: And we always tell the reps that we believe the way it will be set up, year W-2 will go up next year. So, you know, we have a new plan every year. And it takes into account what their base quota was with the new smaller territory.
Speaker Change: We believe the way it will be set up, year W-2 will go up next year. So, you know, we have a new plan every year, and it takes into account what their base quota was with the new smaller territory.
Michael Sarcone: Got it. That's very helpful. Thank you.
Joseph Pellegrino: And just one on 2Q, really strong gross margin expansion there. And I know JJ mentioned, you know, on the manufacturing side, your team is doing great work. I was just curious if you could help parse out how much of that year-over-year expansion was related to these solid productivity improvements versus price taking?
Speaker Change: Got it. That's very helpful. Thank you. And just one on 2Q, really strong gross margin expansion there.
Speaker Change: I know JJ mentioned, you know, on the manufacturing side, you know, your team has been doing great work.
Speaker Change: I was just curious if you could help parse out, you know, how much of that year-over-year expansion was related to these solid productivity improvements versus the price taking?
Joseph Pellegrino: Yeah, Mike, so about half of that was the ASP, so a 9-10% ASP increase sort of equates to 2.3-2.4%, which is a good guy on the gross margin, which is nice. And then the rest of it basically sort of manufacturing improvements around, yes, the manufacturing team being more efficient, being more utilized, reducing their times to build, but also, our quality costs have been flat now for a little while, and I think it's a nice story within the company that we don't really see too much outside of it, but it's popping through now in the gross margin line and helping about 0.3% or so year over year, just keeping
Speaker Change: So about half of that was the ASP, so 9-10% ASP increase sort of equates to 2.3-2.4% good guy on the gross margin, which is nice. And then the rest of it basically sort of manufacturing improvements.
Speaker Change: around, yes, manufacturing team being more efficient, being more utilized, reducing their times to build, but also our quality costs have been...
Speaker Change: It's flat now for a little while, and I think it's a nice story within the company that we don't really see too much outside of it, but it's popping through now in the gross margin line and helping about 0.3% or so year over year, just keeping that sort of constant.
Joseph Pellegrino: Great. Thanks, JJ. And if I could just squeeze in one more. Just on pricing, you know, averaging about 9% for the first half of this year, do you feel like that's sustainable through the back half? And, you know, is that what's baked into the guidance?
Speaker Change: Great. Thanks, JJ. And if I could just squeeze in one more. Just on pricing, you know, averaging about 9% for the first half of this year, you know, do you feel like that's sustainable through the back half and, you know, is that what's baked into the guidance?
Joseph Pellegrino: Yeah, so we have, I think, 14% organic in Q3 and implied 14% organic in Q4. We try not to split out what of that is going to be units and what is going to be pricing, but it seems like you've got a couple quarters that you can run with and figure it out, right?
Speaker Change: Yeah, so we have, I think, 14% organic in Q3 and implied 14% organic in Q4. We try not to split out what of that is going to be units and what is going to be pricing,
Speaker Change: You know, it seems like you've got a couple quarters that you can run with and figure it out, right?
George LeMaitre: Mike, as I was trying to say in my script portion, you know, these differentiated devices in these categories with lower rivalry where you have a big market share really allow you to sort of take advantage of some of that to some extent, and it's sort of a nice tailwind there. And then on the supply side, there's a supply constraint issue, and so if we can make them, we can generally sell them. They're really in high demand in the marketplace, and that helps as well. So some nice dynamics as tailwinds for pricing.
Speaker Change: And Mike, as I was trying to say in my script...
Mike: portion, you know, these differentiated devices.
Mike: In these categories with lower rivalry, where you have big market share, really allow you to sort of take advantage of some of that to some extent, and it's sort of a nice tailwind there. And then on the restore flow side, there's the supply constraint issue, and so if we can make them, we can generally sell them. They're really in high demand in the marketplace, and that helps as well. So some nice dynamics as tailwinds for pricing. Great. Thanks, guys.
Operator: One moment for our next question. Our next question will be coming from Michael Petusky of Barrington Research. Your line is open.
Speaker Change: And one moment for our next question.
Michael Petusky: Good evening. So, George, I'm just curious, you know, with the positive comments around AIPAC: is there anything new in China worth talking about, or is that just not a market that is worth the time and energy when you've got everything else going on over there?
Speaker Change: Our next question will be coming from Michael Petusky of Barrington Research. Your line is open.
Michael Potesky: Good evening.
Michael Potesky: So, George, I'm just curious, you know, with the positive comments around AIPAC, anything new in China worth talking about, or is that just not a market that is worth the time and energy when you've got everything else going on?
George LeMaitre: Okay, so we've been up and down on this one. We were all excited about it for five years. And then I think we tried to make it sort of a four-letter word on these conference calls for the last five years. Sorry, and I feel like I feel like this is the right thing to do. Okay, and I feel like two good things are happening here. One is the small organic business that we do have of about five different products approved.
George LeMaitre: Okay, so we've been we've been up and down on this one. We're all excited about it for five years. And then I think we tried to make it sort of a four-letter word on these conference calls for the last five years. Sorry. And I feel like I feel is the right one to do. Okay. And I feel like
Speaker Change: Two good things are happening here. One is the small organic business that we do have of about five different products approved. It's hard to get approvals over there.
George LeMaitre: It's hard to get approvals over there, but that business is really doing well right now. It's small. I think it's about a $1.3 or $1.4 million run rate business right now. But I think I mentioned this on the last call. We had a 93% growth rate in Q1. And then in this quarter, Q2, we had a 35% growth rate. And I don't see that slowing down. I mean, it's a big country, as you know, and we have four sales reps right now.
George LeMaitre: That business is really doing well right now. It's small. I think it's about a $1.3 or $1.4 million run rate business right now. But I think I mentioned this on the last call, we had a 93% growth rate in Q1. And then in this quarter, Q2, we had a 35% growth rate.
George LeMaitre: And I don't see that slowing down. I mean, it's a big country, as you know, and we have four sales reps right now. So to say that we've only scratched the surface would be the understatement of the universe. So that's one thing. The second thing that's probably more exciting is this.
George LeMaitre: So to say that we've only scratched the surface would be the understatement of the universe. So that's one thing. The second thing that's probably more exciting is this crazy eight-year clinical trial that we're involved in. Again, we don't bring it up much, maybe we're doing it now in response to a question, but it's just been this long, long thing. It does feel like, you know, if you can believe me now, which I've been a liar for the last seven years, so if you can believe me now, we're making our final submission in November, and we believe we'll have the approval for Xenasur next year.
George LeMaitre: This crazy eight-year clinical trial that we're involved in, again, we don't bring it up much, maybe we're doing it now on a response to a question, but it's just been this long, long thing, and it does feel like, you know, if you can believe me now, which you...
George LeMaitre: So, you know, let's see. But that is the... Cardiac. What's that? Cardiac. Excuse me. For the cardiac Xenasur, and we also have the peripheral Xenasur, but we're sort of thinking maybe we'll wait until we get the cardiac approval and then do that as a submission change or a change to the submission. It feels really good right now on those two fronts, but it is quite small for what our guidance is $218 million for this business this year. And you know, it's a $1.4 million business, so I guess it's pretty small.
George LeMaitre: And we believe we'll have the approval for ZenaSure in next year.
George LeMaitre: What's the turnaround time for a regulatory body over there on a trial where you've submitted the data in like November? I mean, is it six months? Is it 12 months? What's the turnaround time for a potential approval?
George LeMaitre: Right, so and when I say this submission is the quote final submission. We've had two or three other final submissions which came back with data requests and things like that. So the word out of my regulatory group is, okay, this is the last final question that they want, and then in six or twelve months, you're going to get your approval. So supposedly, it's Q2 to Q4 next year we get ZenaSure in China. But yeah, we'll see. We've lost faith in the timing on this topic a long time ago.
Speaker Change: The word out of my regulatory group is, okay, this is the last final questions that they want, and then in six or twelve months you're going to get your approval. So, supposedly it's, you know, Q2 to Q4 next year we get ZenaSure in China.
George LeMaitre: That's the don't.
George LeMaitre: I would. No, I would bet your house on organic growth and other markets, but not in this one.
Speaker Change: Okay, so don't vet my house.
Michael Petusky: Absolutely. Okay, just real quick. You guys talk fast on Artigraph. You may have mentioned it. Thank you. OUS on autographs.
George LeMaitre: I actually, yeah. Okay, so that's the big good question. I'm glad you're asking that.
George LeMaitre: Maybe we glossed over it quickly, which is, yeah, so we're applying in seven different places, Europe as a whole, let's call it, and then in the prepared remarks, we're talking about Thailand, Malaysia, Singapore, which have already been approved, excuse me, have been applied for, and then Australia, Canada, and Korea will go in by the end of this year. One positive thing that happened in the last, I don't know, three or six months here has been that we had previously been thinking that Artigraf was a late, late 2025 approval, and we're now thinking it's more like a June 2025 approval in Europe. Sorry about that, thanks Dave. In Europe, the CE mark, we feel really good about that. And so that's why it's been drawn forward a little bit. Usually, you don't hear us do that.
Ian O'Neill: and Ian O'Neill.
Speaker Change: Robert Roberts, George LeMaitre, Joseph Pellegrino
Speaker Change: Okay, so that's the big good question. I'm glad you're asking that. Maybe we glossed over it quickly, which is, yeah, so we're applying in seven different places.
George LeMaitre: And that's the biggie because, you know, this is our largest American product. I think sales are approximately 33 million dollars this year annualized for Artigraft. And we talked on the last call that maybe there's an eight million dollar market in Europe, and then maybe we, you know, we were just sort of, this is very high-level stuff, but maybe there's another eight million dollar market over in APAC or something like that. So this is, this is the big one that we want to get approved, and things are going well in the approval process in Europe.
David Roberts: If I could just sneak one last one in for Dave. In terms of M&A, obviously, this is probably the longest period of time that, at least since I've been around, that I can remember you guys not doing anything, like, super meaningful in terms of external growth opportunities. What are the hang-ups? I mean, is it just a lot of valuation? Are you not seeing the assets that really make sense strategically? Like, what are you, I guess, coming up against in terms of just this sort of gap in closing a meaningful deal in the last few years?
Speaker Change: This is the longest period of time that, at least since I've been around, that I can remember you guys not doing anything super meaningful in terms of external growth opportunities. What are the hangups? I mean, is it just a lot of valuation? Are you not seeing the assets that really strategically make sense? What are the setbacks? Are you not seeing the value?
David Roberts: Thanks Mike. Yeah I mean some of it's the the target pool where you know if we stick very close to our call point which is open vascular surgery there are 25 targets with more than five or ten million of revenue and so you know we obviously know who they all are, we have ongoing dialogue, those those targets product lines are owned by about 18 companies and some of those companies have never done a divestiture so you know we've been we've been very close to those targets etc but we've also expanded a little bit we've we've looked in an adjacent field cardiac surgery I think you know some cardiac surgery products are would work better inside LeMaitre than others because some are crossover used by vascular surgeons and others aren't but you know there's a strategic question there about you know do you want to get in a cardiac surgery and and how much in which products and then also you know on the other side another immediately adjacent market is endovascular and you know while some of the products there are dozens of products that are endovascular some are more used by our physician specialty the vascular surgeon than others but what you run up against there is much more competitive markets you know a lot of bigger players in that space and then also endovascular products get used by other specialties like interventional cardiologists and radiologists so strategically you know we're factoring all of those things in the good news is I think as I mentioned on previous calls we've been active with letters of intent over the last couple few years yeah sometimes it's valuation sometimes there's a divestiture from a large company and they want to sell us a bundle of products and we we want some but we don't want others so we might bid just for what we want but they don't want to sell the garage without the house etc so I think that's some of what we're up against but I would say we're not discouraged at all I mean to state it positively we're waiting for our pitch you know and I've done this long enough that I know doing a doing an acquisition that isn't strategically on is very painful it takes a long time to unwind that and you're much better off just waiting for the right strategic target and at the right price and so in the meanwhile we're just building our cash and I'd say I just had one more idea it's been a nice opportunity for the company if you will you know really get the house in order with respect to regulatory and quality and and you know Salesforce optimization and all that so you see the company performing well while we're building the bank account at some point you'll get news from LaMate but that I hope answers your question
Speaker Change: And so, you know, we obviously know who they all are, we have ongoing dialogue. Those targets, product lines, are owned by about 18 companies, and some of those companies have never done divestiture. So, you know, we've been very close to those targets, et cetera, but we've also expanded a little bit.
Speaker Change: [inaudible] there
Speaker Change: some of what we're up against, but I would say we're not discouraged at all. I mean...
Speaker Change: To state it positively, we're waiting for our pitch, you know, and I've done this long enough that I know doing an acquisition that isn't strategically on is very painful. It takes a long time to unwind that, and you're much better off just waiting for the right strategic target and at the right price. And so in the meanwhile, we're just building our cash, and I'd say, if I could just add one more idea, it's been a nice opportunity for the company, if you will, you know, really get the house in order with respect to regulatory and quality and, you know, sales force optimization and all that. So you see the company performing well.
Speaker Change: While we're building the bank account. At some point, you'll get news from LeMaitre, but that, I hope, answers your question. Thank you so much. Thanks, guys.
Michael Petusky: Thank you so much. Thanks, guys.
Operator: And one moment for our next question. Our next question will be from Frank Takinen of Lake Street Capital Markets. Your line is
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Frank Takinen of Lake Street Capital Markets. Your line is open.
Frank Takinen: Great, thanks for taking the questions. Congratulations on all the progress. Maybe I'll start by kind of following up with what you were alluding to right at the end of that last question, Dave. Maybe it is the sales force and kind of double down in a way expanded hiring goals for the year, a function of the right acquisition not showing up and, in turn, saying we have the right product portfolio right now; let's maybe double down a little bit more on the sales force and get prepared in that way instead of kind of going down the wrong avenue with the wrong acquisition.
Frank Takinen: Great, thanks for taking the questions. Congrats on all the progress. Maybe I'll start with kind of following up with what you were alluding to right at the end of that last question, Dave. Maybe is the sales force kind of doubled down in a way, expanded hiring goals for the year, a function of the right acquisition not showing up and in turn saying we have the right product portfolio right now, let's maybe double down a little bit more on the sales force and get prepared in that way instead of kind of going down the wrong avenue with the wrong acquisition.
David Roberts: Yeah, I mean, for sure. You can grow two ways in this life. You can grow organically or inorganically. And, you know, what I focus on a lot for the company is inorganic growth. And sometimes, you know, that's only so much within your control. On the organic side, there are buttons you can push.
Dave Roberts: Yeah, I mean, for sure. I mean, look, we, you know, you can grow two ways in this life. You can grow organically or inorganically.
Speaker Change: What I focus on a lot for the company is the inorganic growth. And sometimes, you know, that's only so much within your control. On the organic side, there are buttons you can push. And clearly for us...
David Roberts: And clearly, for us, adding sales reps is a critical growth driver, expanding the channel, not just filling in reps in the United States and other markets where we're already direct, but investing in new countries like Korea and Thailand. And as George mentioned on this call, there could be others in Europe maybe next year. And so that's really important. Getting regulatory approvals in new markets is really important. Getting and supporting price increases is really important.
George LeMaitre: Adding sales reps is a critical growth driver, expanding the channel, not just filling in reps in the United States and other markets where we're already direct, but investing in new countries like Korea and Thailand, and as George mentioned on this call, there could be others in Europe maybe next year. And so that's really important. Getting the regulatory approvals in new markets, that's really important. Getting and supporting price increases, that's really important. So there are a bunch of things we can do to accelerate organic growth, and I would say at a high level, it feels like that's been working. So while me and my team, while we've been off hunting for the next deal, I would say the organic growth...
David Roberts: So there are a bunch of things we can do to accelerate organic growth, and I would say, at a high level, it feels like that's been working. So, you know, while my team and I have been off, you know, hunting for the next deal, I would say the organic growth team and the organic operations team here are doing a really excellent job, you know, pushing the business forward. And we're getting stronger in all departments. So, you know, the day when we do an acquisition, I think, you know, our ability to integrate is just that much stronger. So I guess that's how I would answer that question.
George LeMaitre: team and the organic operations team here is doing a really excellent job you know pushing the business forward and we're getting stronger in all departments so you know the day when we do an acquisition I think you know our ability to integrate is just that much more strengthened so
George LeMaitre: Okay, that makes sense. And maybe a little bit bigger picture question on Salesforce productivity. I think you alluded to it on this call, the US reps at over 2 million. I think, in previous calls, you kind of said EMEA reps in the just over a million range, and then APAC reps, a little below a million, I think around 700,000. Where can those international reps really mature from a utilization standpoint?
Frank Takinen: I guess that's how I would answer that question.
Speaker Change: Okay, that makes sense. And maybe a little bit bigger picture question on Salesforce productivity. I think you alluded to it on this call, the US reps over over 2 million. I think in previous calls you kind of said EMEA reps in the just over a million range and then APAC reps a little below a million, I think around 700,000. Where can those international reps really mature from a utilization standpoint?
George LeMaitre: That's a good question, and Frank, thanks for remembering the figures from the last phone call. You know, so we actually have answers to that already, which are in Germany and the U.K. You have reps pushing 1.1, 1.4 million euros or pounds in those respective markets. So there's no reason they can't get a larger size and control more revenues than what they are right now. And that does happen overseas. And I think I have one example over here. I think the Nagoya rep is making something like $800,000 in revenue. So it does happen over there. It's taking longer, and, of course, pricing is lower in all those places, so, you know, it takes more units to get there.
Frank Takinen: Okay, that's helpful. And then last one, maybe just a housekeeping item. I heard 144 reps plus seven, mostly from the U.S. Can you give us that breakdown, US, EM, EA, and APEC?
Speaker Change: That's a good question, and Frank, thanks for remembering the figures from the last phone call.
Speaker Change: You know, so we actually have answers to that already, which is in Germany and the U.K., you have reps pushing 1.1, 1.4 million euros or pounds in those respective markets. So there's no reason they can't get...
Speaker Change: larger size and can control more revenues than what they are right now so it does happen overseas and I think I have one example over in I think the Nagoya rep is something like
Speaker Change: $800,000 in revenue. So it does happen over there. It's taking longer. And, of course, pricing is lower in all those places. So, you know, it takes more units to get there.
George LeMaitre: Sure, so right now we have 67 North American reps, 52 European reps, and 25 Asia Pacific reps, and that should get you to 144.
Speaker Change: Okay, that's helpful. And then last one, maybe just a housekeeping item. I heard 144 reps plus seven, mostly U.S. Can you give us that breakout U.S., EM, EA, and APEC?
Speaker Change: Sure, so right now we have 67 North American reps, 52 European reps, and 25 Asia-PAC reps, and that should get you to 144.
Frank Takinen: Perfect. Thanks for taking the question.
Operator: As a reminder, if you would like to ask a question, please press star 11 on your telephone. Please wait for your name to be announced. Our next question will come from Brett Fishbin of KeyBank Capital Markets. Your line is open.
Speaker Change: Perfect. Thanks for taking the questions.
Frank: Thanks, Frank.
Speaker Change: As a reminder, if you would like to ask a question, please press star 11 on your telephone.
Frank: And please wait for your name to be announced.
Speaker Change: Our next question will come from Brett Fishbin of KeyBank Capital Markets. Your line is open.
Elizabeth Bui: Hi, this is actually Liz on for Brett. Thanks so much for taking the questions. If I could just start a little bit more broadly, could you share what you've been seeing in regards to procedural trends in the US and Europe? We've gotten some mixed commentary so far and would just love to get your take.
Speaker Change: Hi, this is actually Liz on for Brett. Thanks so much for taking the questions. If I could just start a little bit more broadly, could you share what you've been seeing in regards to procedural trends in the US and Europe ? We've gotten some mixed commentary so far and would just love to get your take.
George LeMaitre: Sure, and interestingly enough, it's your data that we go to for a lot of this with those credit card swipes, and so beyond what we see for our sales units and dollar growth, we then go back to the KeyBank capital markets data, and we try to figure out what's going on. I think you'd corroborate this, which is that it's been a very healthy six months of staffing inside the hospitals, which we get from the Bureau of Labor Statistics, and then also our credit card swipes. General credit card swipes in the hospitals are up, and that's indicating full hospitals. So, ironically, you're asking that question to me, but I'd flash it right back at you.
Speaker Change: Sure, and interestingly enough, it's your data that we go to for a lot of this with those credit card swipes.
Frank: And so beyond what we see for our sales units and dollar growth.
Speaker Change: We then go back to the KeyBank Capital Markets data, and we try to figure out what's going on. I think you'd corroborate this, which is...
Speaker Change: It's been a very healthy six months of staffing inside the hospitals, which we get from the Bureau of Labor Statistics. And then also credit card swipes, general credit card swipes in the hospitals are up, and it's indicating full hospitals. So, ironically, you're asking that question to me, but I'd flash it right back at you.
George LeMaitre: Well, I'm glad we can be of use to you guys. Could you also update us on where you are with the new ERP implementation and what that timeline looks like? Yeah, but we...
Speaker Change: Well I'm glad we can be of use to you guys. Could you also update us on where you're at with the new ERP implementation and what that timeline looks like?
George LeMaitre: Yeah, so we implemented in the U.S. on February 1st, and then spent the next two months putting out fires and keeping the business functioning, and we've sort of started to settle down on that topic, and we've started looking towards Europe, and so we recently signed an agreement to start our implementation in the U.K. as our first European geography, and we'll create a template of sort of what Europe needs from an ERP perspective, and then we'll roll that out to the other geographies in Europe, maybe Germany next, and then Italy and France, etc.
Speaker Change: Yeah, so we implemented in the U.S.
Elizabeth Bui: Okay, great. That's super helpful. Thanks for taking the questions.
Speaker Change: on February 1st.
Speaker Change: and then spent the next two months putting out fires and keeping the business functioning. And we've sort of started to settle down on that topic, and we've started looking towards Europe .
Frank: And so we recently signed an agreement to start our implementation in the UK as our first European geography.
Frank: And we'll create a template of sort of what Europe needs from an ERP perspective, and then we'll roll that out to the other geographies in Europe , maybe Germany next, and then Italy and France, et cetera.
Frank: So it's ongoing.
Speaker Change: Okay, great, that's super helpful. Thanks for taking the questions.
Operator: Ladies and gentlemen, that concludes today's conference. I would like to thank you for your participation. You may now disconnect. Thank you, and have a great day.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, that concludes today's conference. I would like to thank you for your participation. You may now disconnect. Thank you and have a great day.