Q3 2024 LeMaitre Vascular Inc Earnings Call
Welcome to the Lameet Baskiller Q3204 Financial Results Conference call.
Speaker Change: As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Mr. JJ Pellegrino, Chief Financial Officer of the Lumeit Baskiller. Please go ahead, sir.
Thank you, operator. Good afternoon and thank you for joining us on our Q3 2024 Conference call. Let's be on today's call as our CEO George LeMaitre and our President Dave Roberts. 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.
or ever possible we will try to identify those forward-looking statements by using words such as the leave, expect, anticipate, pursue, forecast and similar expressions.
Our forward-looking statements are based on our estimates and assumptions as of today October 31, 2024 and should not be relied upon as representing our estimates reviews on any subsequent date.
Please refer to the cautionary statement regarding forward-looking information on the risk factors in our most recent 10K and subsequent SEC filings, including disclosure of the factors that could cause results to differ materialy from those expressed or implied.
During this call we will discuss non-gap financial measures, which include organic sales growth as well as operating income, operating expense, and EPS excluding special charges.
A reconciliation of gaps to non-gap measures discussed in this call as contained in the Associated Press release and is available in the Investor Relations section of our website I'll now turn the call over to George LeMaitre
Thanks, JJ. I believe this is our first ever Halloween earnings call, so I'll start my remarks appropriately. If we shareholder rang our doorbell tonight, we would have a few treats for their bag, 16% sales growth and 49% EPS growth.
Speaker Change: With that out of the way, I'll focus on five topics.
Number one, our top line. Number two, the growth of our RSM team. Number three, our brick and mortar international sales offices. Number four, our latest go direct efforts. And finally, number five, our MDR CE Mark Progress.
16% sales growth in Q3 was led by graphs, patches and crowded chunks of 24% 13% and 18% respectively.
A pack was our strongest region again, up 24% thanks to Thailand and Korea, our two newest direct markets. A Mia sales were up 22% in Q3 while the Americas were up 12%.
Our 16% sales growth in Q3 was comprised of 10% pricing and 6% unit growth.
We added two three with 146 sales reps as of today we're 149 and we're still targeting 155-5-160 for year-end.
Speaker Change: and of course as we increase rep head count we need to build out our sales management team. We now have 28, RSM's ASM's and country managers, up 17% year over year.
As for our brick and mortar sales offices, we continue to hire staff in a new Paris office, which contributed to 21% French sales growth in Q3. And we're set to lease our first ever Swiss office near the Zurich Airport.
Speaker Change: in China we recently signed a lease which will bring together our Shanghai sales office and our Shanghai warehouse into a new larger facility.
While we continue to wait, the Venusia cardiac patch approval, our efforts in China are starting to bear fruit. Today, as we're up 62% into three.
We've also begun to push forward with GoDirect projects in Portugal and Czechia, where we expect the pastoral fails to begin in 2025.
Speaker Change: These will be LeMaitre's first European Go Direct Projects in 2016. Both countries utilize the CE mark and are members of the EU, making the transition less complex.
Attorney's Regulatory, we've now received 15 of the 22 MDRCE marks were currently seeking. The seven remaining MDRs should be received in 2025.
One of these approvals is autographed, our largest U.S. product. The now receives our EGRAF approval in New Zealand, South Africa, Thailand, and Malaysia. And we expect to receive approvals in Singapore, Australia, Canada, and Korea in 2025.
Bringing this device to international markets was a key consideration at the time of the 2020 Artigraph Dacquisition.
I'd also like to begin to thank JJ for his 19 years at LeMaitre as discussed in our August 8th K, he'll be hanging up his CFO cleats in March 2025 after a fantastic career.
K.J. was elected to our Board of Directors in June 2024 for another three-year term.
JJ is also helping to select and train the next CFO. We retain Russell Reynolds for the search and interviews are ongoing. In conclusion, 2024 is shaping up to be another year of healthy sales and profit growth. With that, I'll turn the call over to JJ.
Thanks George, in Q3 pricing and operational execution continue to drive our story. Our differentiated product portfolio enabled a 10% pricing increase which helped improve both sales and the gross margin while we continue to restrain operating expenses.
In Q3 we posted a gross margin of 67.8% up 280 basis points a year over year. The increase was a result of higher ASPs, direct labor efficiencies, and improved restore flow on the graph field.
Speaker Change: Hi, our ASPs were driven by our differentiated autographed, valvila-tone, restore flow, and shunt devices.
The year guiding a Q4 gross margin of 68% as direct labor efficiencies continue. For the full year, we expect a gross margin of 68.3% up 260 basis points year over year.
Operating expenses in Q3, 2020, 4, 24 million dollars, an increase of 11% versus Q3, 2020, 3.
The year to date, our worldwide headcount is up only 4% to 637. Reflecting our ship from significant post-COVID-REHiring to a more conservative hiring posture.
Speaker Change: As a result, Q32024 operating income increased 43% year over year, but 13.1 million dollars, and operating margin of 24%.
For the full year, we also expect an operating margin of 24 percent, up significantly from 19 percent in 2023.
Speaker Change: We ended Q3 2024 with $124 million in cash and securities and increase of $10.8 million in the quarter.
On the August 1st earnings call, we fielded pricing floor questions.
Over time, our executive team has become more responsible for pricing decisions, as reps have sometimes cut prices on their own. In 2020, we began installing pricing floors in key European sales managers bonus plans.
In 2021, we began printing USA Price Flores on our company wide Gold Tarts.
and in 2024 we began printing price floors for Europe, Canada and Japan on these gold cards.
As a result from 2021 to 2024, our average annual price increase has been 9%.
For comparison from 2015 to 2020, our average annual price increase was 3%.
We will continue to use this tool as an effective way to realize annual price increases.
In general, this pricing strategy is consistent with our small niche market business plan.
With regard to guidance, we are raising our Q4 sales and bottom line estimates, which are also reflected in our updated full year outlook.
For more details, please see today's press release, but a few Q4 highlights include sales growth of 14% on a reported basis and 14% organically.
Gross margin of 68%
operating income of 13.3 million dollars up to 30%.
Speaker Change: and EPS of 49 cents per share up to 30%.
Separately, we would like to welcome Ross Osborn from Canterford's Sheryls, who initiated coverage on us earlier in October.
with that I'll turn it back over to the operator for questions.
Thank you. As a reminder, task a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.
Speaker Change: [inaudible]
Speaker Change: Our first question comes from Suraj Kaliyo with Oppenheimer, you may proceed.
Suraj Kaliyo: I George, can you hear me alright?
Yes, George, how are you doing?
I'm doing wonderful hope all as well. That's George.
splitting out the different geographies by growth rates, right? US was approximately 10% and I'm here was about 22, 8% was 24.
and the composite growth rate was 16% fine.
and 10% of ASP, 6% of units, can you help give us a little more granularity on OEOS price increases versus unit increases? How does that split work out?
I don't know if we're going to be able to do that for your live here, Surage and I apologize. We've looked at it globally, not by major geography buckets. So I think, unless I get it.
Yes, from JJ over here who usually has more technical answers than me. I'm going to have to say we can pass on that question and sounds like a reasonable question ask maybe at the next meeting we should be prepared for that.
Fair enough. I appreciate that. George, in terms of an EI impact, as your ramp up, your direct distribution, how should we think about inventory?
Obviously, there are going to be fear and fear of distributors, right? It's a logical way just to think about it that...
The inventory currently is not a factor to be considered as we look forward to 2025.
Speaker Change: Yeah, certainly I would say we have so much inventory because we focus on this no-back order promise.
Speaker Change: to our hospital and distributor customers. But yes, in short, we've got plenty of inventory and we're really only running effectively one shift worldwide right now. So if you really wanted to, you could triple the output at the factory. So inventory is not a problem for us.
Okay, fair enough. George, my final question. I'll hop back in Q and let others have a chance. You know, your off-marchen growth has been pretty steady in attractive. Can you understand the puts and takes as we ended 2025?
It's best to in terms of op margins. What are the levers you obviously depricings floors are one, right? They will float through in one form of the other. But just help us understand a little more additional colour on op margins.
You'll see expanding in 25 and what are the different levers? Gentlemen, thank you for taking my questions.
The Rise of the JJ thanks for the question.
So he don't give guidance obviously on the upcoming year and we haven't done that yet. I would say at a high level you can think of last year and the year before at the re-hiring years.
and so you saw Opx Benz grow pretty quickly I think it was 20% last year and 16 or 17% that year before.
and that flow down this year nicely and so we're looking at
Suraj Kaliyo: 11% in the recent Q3 and then maybe around 10% ish for the full year and so we've done a nice job bringing op-expens growth in line.
So you can sort of think about that as you move forward. The gross margin line you've seen that be in the 65% range.
In the rear view mirror and more recently over the last three or four quarters coming up into the 68% range.
and we're not telling you anything about going forward, hopefully we can keep up the direct labor efficiencies that are driving that largely. And if you do that and you grow the top line nicely, then maybe you get a nice answer on the bottom line, we'll see where that goes.
Speaker Change: Thank you.
Suraj Kaliyo: You know they're a rarge.
Speaker Change: Thank you and as a reminder, ask a question, please press star-11 on your telephone. Our next question comes from Rick Wise with Steve Ful, he may proceed.
Good afternoon George and Congrats JJ on amazing run here. Just I guess I'll start off, but
Thinking about some of the key drivers as you highlight them in no particular order.
As we contemplate the 25th and I know you're not ready to do games.
Speaker Change: Good day. What kind of bands should we start to think about in terms of...
Speaker Change: that unit and Christ's growth driver and Mexican.
Speaker Change: is there, Jay Jay highlighted what happened in what you did in 20 and 21 and 22 etc. What's the next lever that's going to keep the price story going for example?
Speaker Change: I'm in heart-lake, I'm a little sure on that.
Speaker Change: and Rex the DM.
Speaker Change: The strategy itself, I think, is conducive to nice price-like, generally speaking. So the niche product element to our story, where else are you going to get a valvial tone part of the story, is a nice piece of the ASP driver. In fact, that we're sort of $200 or $2,000-ish devices and not $30,000 devices is a nice...
Part of the story that doesn't break the bank if you will of the hospital systems.
Speaker Change: and then the fact that there's no directory in births went really for our devices. We live under DRG codes for procedures.
Speaker Change: I think that helps that as well and then as we said in the script
We've now sort of oddly took us this long, we were little chagrin that took us this long but we were like, okay, we've got this tool now called the...
Speaker Change: the pricing floors.
Speaker Change: And so we think we can use that going forward to be more precise and more directed about the hikes that we get. Used to be adapt for 8% hikes and you actually got a 4% hiker, whatever the number was, because reps are out there discounting. And maybe we can be a little more precise with that. I don't know George, if you got other.
comments around that. No, that's pretty good. That's about what I would say, JJ.
and Sanca Gigi and George, maybe expand on your...
Speaker Change: Phil's...
Extension, Goals.
I might have thought.
You would have been able to add more this quarter. I mean, it's an ambitious goal to...
and that number maybe by year and I don't know if it is.
I'm curious if you're perspective, but how confident are you that you can get there? And do we expect the more kind of expansion numbers or, as we think about next year?
Speaker Change: So I'll handle the back of the question first and say, yeah, you can. We're not guiding it in the next year, but we know we have a lot of people lined up currently to be hired. And you know, if every last one of them got hired, we would be above that 160 number. So yeah, I would say you can't expect further. I mean, I think we...
T.R. cells more and more as a sales channel and that's what sales channels do is they acquire stuff and put stuff through themselves
and they have to keep growing the sales channel. That's a little bit why you see us focusing all this chatter on the brick and mortar offices and you know, check it and port you go sort of.
Korea and Thailand a few last year, so yes.
Speaker Change: and as asked you a question, can we get to 155? You know, it is I agree it's a little bit slower than we had thought, but 155 is a very reasonable goal. We called out for you today, we're at 149 right this second.
and I have someone else whispering in my other head, we're about to bring on five more people in the month of November. So I feel comfortable, get there, I also keep telling my team.
We're not going to get thrown in jail if we don't get to the 155 or what is it?
is a quote guidance for sales reps. We've been talking about a lot, but we feel like it's a goal, we shouldn't make it, but if we don't make it, I think you guys will be happy if we make our sales numbers in our EPS numbers first, and then this will be a secondary thing. I'm not that worried, but I think we will make it.
Speaker Change: Yes, I'll stop there. It's great to see another terrific quarter. Thank you.
Thanks for watching.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Brett Fishman with Keybank you may proceed.
Hey guys, thanks for taking the questions. Just wanted to ask one on the R&D line, which came in lower relative to the past several quarters and was curious if there was any type of...
Speaker Change: You know, trying to to benefit that you may have seen there, or if you're starting to see more of a permanent reduction around some of the higher spending around that you are P implementations and regulatory costs that you've been absorbing for the last few years.
Speaker Change: Yes, it's a good catch and a great question.
Yeah, I think on the R&D line the regulatory piece.
I'm have a lighter quarter.
and I think you guys know we've talked about this before I think we've been spending 4 plus million a year or so for the last two, two-ish years, three-ish years. Maybe we're sort of 12 or 13 million dollars in to this.
Speaker Change: Spend for MDDMBR and it's sort of coming to some kind of conclusion if you will. And so maybe we're going to get some benefit to that going forward. We'll see we certainly did in this quarter.
Alright, super helpful and then just one follow up.
Speaker Change: Maybe I guess the question was kind of asked earlier, but if we take it on a global basis, the 6% volume growth for the total portfolio was pretty impressive and was just wondering if there was any products that you could call out from purely a unit volume growth perspective, that supported that level of performance this quarter. Thanks very much.
Sure, thanks a lot for the question, Brett. And that answer I think is pretty simple. The RFA, the Allograph product was up 26% in units and the Zena's share of product line was up 10% in units and that kind of gets you to that six.
Speaker Change: Thank you.
Our next question comes from Jason White's with Ross he may proceed.
Hi, thank you. You guys mentioned some brick and mortar building OUS. Is that also include buying out of distributors or is that truly denobo in your part in terms of the whole distribution? I guess changes are up our investment.
Hi, Jason. Yeah, you know, I think the way we awarded an order it might have been a little bit confusing, so to decompose everyone here. We are trying to do two distributor buyouts.
1 in Czechia and 1 in Portugal
That's new to you on this call, we sort of
Speaker Change: mentioned at the last call, but now it's real, and we have had discussions with those distributors. So you'll see us by Portugal and Czechia, and then somewhat separately in these other markets like China and France and Switzerland.
We've been direct for a very long time and we're doing some...
You know, in France we did open up an office about three months ago or four months ago. In Switzerland we're about to rent an office by the Zurich Airport and in China we're bringing our warehouse and our office together in a newly enlarged facility in Shanghai. So two of the first two distributor buyers and then three brick and mortar changes that you're hearing about on this call.
Speaker Change: Okay, that's helpful. And then I know we're always asking about pricing because it's impressive. And I understand you're positioning as a niche and sort of the only provider in a lot of these unique products.
But you know, based on what JJ said, it sounds like you also feel that sort of the change in approach limiting the self forces ability to discount.
is really what's behind this and from that, it sounds like you also think there's a firm sustainability in the kind of momentum we see not necessarily, you know, the absolute numbers, but in terms of the least seeing some sort of impressive pricing is that, is that the right way to think about it?
Yes, I think it is. I think in the last six months we've come to a realization that those price floors that we started three and a half years ago are real and they work.
and I don't think we quite understood the full scope of that until we started studying it. Shame on us for not really figuring out what we were doing well a year and a half ago. But yes, I think you're on to it.
Speaker Change: Okay, that's good to hear. And then I get related to that. If I can push you, you may not want to answer this. But if I think about your pricing increases, are they cross the board? Or do you mention 303 lead products which are definitely, you know?
Leadership Products for you for the market itself are that's where most of the price increasing is happening or is it really just something across the board.
Jason's good question and no it's not across the board. Roughly speaking it's in about 50% of the categories.
Speaker Change: and its places where we sort of have higher market share and where we have very distinct devices that are different from other products. As you might expect, so value atomes.
Shunt some of the latex-free catheters and also these bovine and ovine graphs are sort of the picture of the products that are...
Speaker Change: Priceable, as you will, and then stuff like PTFE and background graphs where we're number three and number four in the market. You know, the price is not set in Burlington, Massachusetts. It's set elsewhere.
Speaker Change: Okay great. And JJ, yes congratulations on a great run. I agree with some other comments there. I just joined again and I'll miss you, but all that said I gotta go to church.
Speaker Change: Thank you, I thank very much.
Speaker Change: Thank you.
Speaker Change: Our next question goes from Danny Souter with Citizens JMP, he may proceed.
Yeah, great thanks. So it's one of those stars on the top line. So 16% growth in your hardest comp of the year.
He talked about some of the drivers for your product categories and regions, but you know, is there anything else you can point to or provide a color on that supporting this progress?
The progress you're seeing throughout this whole year, are there any unexpected tailwinds in the market in terms of demand? Or is this just really just a blocking and tackling story broadly? Thanks.
Okay, so underneath that graph category, Danny, thanks for the great question. Underneath that graph category, we're quoting you in the press release and also on this earnings call, graphed group 24 percent. One subcategory of graphs that was particularly standing out was the allographed.
Speaker Change: P.C. of our business, it was up to 47%. So that we call that very early RFA and Alograft, and we build those products out in Chicago, so you've got to go.
Speaker Change: I've heard us talk about that, so I would say that's a big topic. And then also maybe sort of structurally over in Europe, I think we keep feeling, and we've been talking about this for almost 24 months on these calls now, so this is not new, but
We keep feeling the exit of companies that are standing down and deciding not to file their MDRs and just said, hey, this product category is not large enough and not exciting enough, we're not going to fall through.
Speaker Change: So we keep feeling that over in Europe in certain categories, notably the shunt. And then I think there's also a couple.
Patch Company, some biologic patch companies that are retreating from the market and decided they didn't want to participate. So maybe, allographs are at a big time this year and then continuation of this exit from the market in Europe from some of these companies.
Now let's rate it into one name.
Speaker Change: Sorry, I'm sorry, but I was just gonna say a good tossing
Korea and Thailand, geographically doing really nicely and contributing to grow smaller, yes I know, but stories that have been growing pretty nicely. And even like we haven't talked about China that much over the last year and a half and on these calls and now the words start to come back in so there's a little...
So again, small base here, but some nice answers coming out of China in terms of gaining some momentum. So nice to your graphic answers as well. In Danny, this is Dave. I normally don't jump in on these topics, but...
You heard George talk about, we've increased the number of sales managers in the company.
We shuffled some of the upper management organization and our sales managers. We now have 28. These are country managers, VPs, area sales managers, regional sales managers. They're up 17%.
So I think the ratio of reps to managers is going down, the reps are probably being managed a little bit more tightly as well.
and Grace, appreciate the answer. Just want to follow for me and more on the sales website.
Speaker Change: Do you be plans to add more sales reps in Europe just given some of the regular story updates and progress there? I think when you...
Speaker Change: updated your range last quarter was more North America focused but
How many of these are your marks for the EU and do you feel you need to put more bodies on the field of the products you've had there?
Speaker Change: Thank you. That's a good insight. And yeah, I guess we had chances to say yeah, I think we've morphed a little bit.
Maybe in...
May and June we were thinking this is all about making this a big giant surge in the Americas and I think what our opinion has evolved and I think we've added on and I think right now if I think about my hiring board I think there's about nine open European territories and then of course you're hearing us talk about Czechia We'll need two reps and Paul and we're excuse me Portugal we're gonna need one rep in Lisbon so yes to that and it's getting a little bit more European It's not necessarily getting a little bit more apac right now We feel like we've got a lot of reps over there for the size of the business but in the US and Europe we could certainly use more reps
Great, thanks a lot, you're a great quarter.
Thank you.
Speaker Change: Thank you.
Our next question comes from Michael Patuski with Berington Research You May Proceed.
Hey, good evening guys. I'm wondering, I have a note that you guys would make a final submission for the UNISHOR, the Cardiac Education in China in November. That's still teed up to go here next 30 days.
Yeah, that's a good question that is done. The final submission is in and now we just await our regulatory folks Yeah, it'll be about six months, but you've heard that same story for six years on these phone calls So if I were you, I wouldn't believe me on that
Speaker Change: Fair enough. I'm curious in terms of, you know, as JJ transitions to the board here the next six months or so.
What are you looking for in terms of potential new CFI? It is important that you have public company experience, med tech, experience with M&A. What are some of the things you are looking for? Thanks.
Speaker Change: Okay, so are you- is this a- are you asking me where the holes in JJ's game here? I don't think you are. I was not getting it. I know that. I know. I know. I'm all getting aside. You know, we're blessed here a little bit at LeMaitre and I think a lot of companies go at it with a CFO and a CEO.
Speaker Change: and we're blessed in the we have CEO CFO and mega VP of Business Development named Dave Roberts so they sort of a try add here rather than two people at most companies.
So we don't have to chase down all the acquisition side of that of the portfolio. We can go ahead a little bit more technically. We're still trying to figure out what split to make with the IR and things like that. We'll figure that out based on who shows up for these interviews and which ones we decide to pursue. So it's a good question. I think...
We're lucky that most companies, when they lose their CFO, they're losing one of the top two people, and here we are, we're losing one of the top three people. And it's a little bit helpful as we go in, it's nerve wracking, obviously, but we think we'll get through it.
and I guess a quick one for JJ. This is the subject era of last question. In terms of the gross margin, I keep writing, I think these gross margin are sustainable. I'd much rather hear you say that than be right at what do your thoughts.
Well, Mike, I'll tell you they're sustainable through Q4 because that's what we got in 68.0 so you got that out of me. Going forward, we'll see. We've priced obviously a big driver for the gross margin going forward. And so to the extent that we can continue to benefit from that, that'll benefit the gross margin. The other hand, the store flow is growing like crazy and that's got a lower gross margin than corporate.
and so that's the action down a little bit and then we've got the big piece around manufacturing and efficiencies and can we keep those up and quality expense can we keep that increased muted and have that get a little leverage on that over time the sales grow around it.
So I mean there's a lot of moving pieces and we'll see where we go but I think those are some of the bigger drivers for you.
Speaker Change: Ok.
and then let me ask the last one to make a VP safe.
Speaker Change: What are you saying out there? I've seen some of what I would consider in the public markets you may get compared to America's got more active in M&A and some others. I mean, what are you seeing out there and valuations and just anything you can talk about in terms of the assets that's...
that you at least may thank our someone in play. Thanks.
Thanks Mike, we do see some activity you mentioned, Maris, also a course-phos and scientific.
Speaker Change: I acquired silk road medical for six times sales not too long ago and exonics for nine times sales but I would say no those are higher figures higher revenue multiple
Small Cat Med device, it's only training about two times forward revenues, so that's down from the COVID-19 where it's larger companies. I think there's a benefit to scale.
of the trading about five times. So, you know, we're out hunting as always. And I would say at the margin we're generally looking a little bit bigger, as I've said, on previous calls.
and we've worked in the past because
Obviously we're more profitable, we have a larger balance sheet.
Thanks for going well for us. Yeah, so there are targets out there where...
at various stages of discussions, et cetera, with some of them. And in the meantime, we feel good about our ability to reach for larger acquisitions.
Okay, could I have the part B to my last question? I guess it's maybe the JJ, but maybe the everybody.
Speaker Change: If you found that deal, that larger deal, I mean, one of the bigger, or probably the biggest deal you've ever done, I mean, how clever that you guys will into to get the more interest rates aren't all the rest of it, how deep would you go on a transaction if you all felt like it was the right one.
I think we might need to keep our counsel on that when it sounds like any answer we could give my scare people off either way, whatever we say. So I don't know that maybe a hypothetical there that we probably shouldn't step into unless one of you guys feels you want to go at this thing, generically I guess. I don't know.
Speaker Change: I mean the easiest part of that is...
Thanks for lending you up to 3.5 times combined you've got to do.
Speaker Change: Right, now beyond that, then you start to get into George's area here of what are you willing to be comfortable with, so maybe we just...
Say that's like that's certainly a comfort zone up to that and then after that you know
Speaker Change: depends on the circumstance. Right, so if I ever does 60, 3.5 turns of that, you're looking at it.
200 million or whatever. And then we have excess cash on the balance sheet as well. So, I think even without getting into more complicated discussions, we're looking upwards of.
300 million, just purely financial without worrying about the eat-a-dive target, etc.
Speaker Change: are there deals out there like that there?
Speaker Change: Yeah, I mean look, there are fields as small as $5 million and deals with our hundreds of millions of dollars.
Speaker Change: and for me always just because I have very long term viewpoint on this company, I focus on the strategic fit first.
and then if their targets which are equally meritorious strategically, then of course we rather do the larger deal but that's just not how it works. I mean so, but answer your question yes, there are larger deals out there.
Speaker Change: Thanks guys, another such great core thanks.
Speaker Change: Thanks for watching.
Thank you.
Speaker Change: Our next question comes from Frank Tagan with Lake Street Capital Market, C. May proceed.
Thanks, thank you, thank you for your time. When you're explaining kind of place, price floor roll out, I think you're going by geography. Are there any geographies that you haven't rolled out that price floor strategy or at this point? Is it pretty much rolled out company by world line?
I think we've gotten to the bigger ones. Let's let's enumerate here. We have Australia. We have Japan. We have Canada. We have UK and Europe and we have the USA. There might be a couple more to do.
and then there might be a couple more to do elsewhere but I think that's the larger chunk of our company. When we think about what we do next year, we're always sort of testing which product line should we apply to and which geography. So if there's a place to go, we will go there.
Speaker Change: with the divorce.
and then we just declared fire and I may have missed it in the prepared remarks, but Al Graft, I think in previous calls you said Ireland in Germany 2025, 2026, were speculated that still remain the case in expectation.
Speaker Change: Actually, no, there's a little bit of a hiccup on both sides of that and it's a very small hiccup in Germany, which is the more important one, which is...
The regulator was supposed to be in our building in Chicago October 15th or so.
and called a week earlier and said, hey, I'm going to be sick a week from now and so they still haven't rescheduled their audit of the factory out there and so that one's held up only by a man's sickness schedule.
Speaker Change: and so that I don't know what that means for the year, maybe we leave that one alone as still a 2025 or a 2022.
With Ireland something different's cropped up which is the state of Ireland or the country violent his jumped in and said, pay we're excited you want to do all of our apps and we had previously intended just to do it as a paperwork exercise through Ireland.
and now they're asking us to set up a facility there and to stock the product in Dublin and to give the state of Ireland and healthcare system of Ireland right or first refusal on the devices.
All of which got hairy and complicated pretty fast so I would say we're taking step back a little bit with Ireland and we're thinking about what our next move should be and we haven't really sorted it out ourselves yet. That's all breaking news as of I don't know 15 or 30 days ago so we're still trying to figure out what to do.
Speaker Change: So little delay over there was still, you know, really excited about pursuing our FA approvals in Europe, but a little bit of a discipline on those two devices.
are these two paths.
Janet, okay, I'll stop there. Thanks.
Thanks for our Frank.
Speaker Change: Thank you.
Our next question comes from Jim Sedori with Sedori and Company Emaiprasid.
Hi, good afternoon and thanks for taking the questions. So of the seven NDR PRODUCTION waiting for, there are one or two that you think will be more impactful, or you think they're all about the same.
Speaker Change: No, in fact, I would say the only one that's really a game changer and I'll explain why in a second is this this autograph device because it's a brand new one we've never had to prove in Europe. With the other ones, Jim, the other six.
Speaker Change: We have current
Speaker Change: EUDC E-Marks, which are durable through 2027, so we don't have to worry about whether we're being stopped or not to sell those devices. The MDR is the way you're supposed to go and once you get them the arts, then changeable, and you're not sort of an astray jacket product wise, but only one really counts its really graft.
Speaker Change: Okay and when did you expect that one?
Speaker Change: 225 and I think we're starting to see each one 2025.
Speaker Change: Alright, and you know, Dave's even pretty disciplined, you know, the parents couple years. I mean, there are any reason why you need to do it deal with 16% top line growth. You know, can you continue to be disciplined, gone forward?
Yeah, I mean, Jim, it's a good question. We haven't done a deal since June of 2020. And I would say, um...
We just were waiting for the right deal at the right price we have.
Speaker Change: We have been on a few different deals and for various reasons that hasn't come together.
Speaker Change: and rather than...
Speaker Change: Chase deals up in price or whatever.
We, as you mentioned, we have been disciplined. So in a funny way, I do think that even though, you know, I personally would like to do a deal. You know, I feel like I'm slowing this down way for the right deal. In the meantime,
Speaker Change: It allows the rest of the company to keep getting the house in order really, really nice way. And I think...
I have the ability to focus on pricing and these pricing floors is a great example of that.
Ability to consolidate factories like Cardioselle and focus on Gross Margin and higher manufacturing engineers. A lot of good things are happening, you know, while we hunt for the next acquisition. So I think we will be disciplined and we won't hold the trigger until we find something that we believe is really right.
Alright, and just JJ, I just want to say whoever does replace you, they're going to have some big shoes to fill. You've been one of those. There you go. Thank you.
and those five or six people on the call will be happy to take their job as you guys want to take a foot.
Speaker Change: I'm gonna miss talking to you on these calls.
Alright, thank you guys.
Speaker Change: Thank you all.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Ross Osborne with Canterbury Gerald, you may proceed.
Speaker Change: Hi guys, I'm Drath on this short quarter and thanks for taking your questions. So starting off would be curious to hear how you are progressing and targeting cardiac surgeons. And as a follow-up to that, to the make sense at cardiac-plokus reps.
Okay, so it's a great question. I think we're up to about 14% of our sales are now cardiac sales as opposed to a vascular and you know still some intervention radiologists up like that. So 14% we do not have any dedicated cardiac reps right now. I think the back party of question is are you considering cardiac reps dedicated cardiac reps?
Speaker Change: It's certainly something we think about, we haven't gone forward with it yet, I still feel like I always say today, I'm in JJ, the world, the big place, and filling out a peripheral massacre of Salesforce for the world.
It's not 145 reps, it's a lot more than that. We have that imperative and we're already got nine products for the Vascular Surgeon. We only have two or three products, if you will, for the cardiac surgeon. I think it's a more efficient call point, but it certainly is something we have to think about, particularly since...
I would say, you know, the targets that we see, the acquisition targets we see, as something like 60% of them seem to be cardiac and 40% of them seem to be peripheral vascular. And so at some point here, the company is going to need two distinct sales channels. That's almost inevitable in my opinion, but we shall see.
Speaker Change: Okay, great. And I'll stick in with your cells for us with Headcount growing. Would you walk through some of the low hanging fruit and where you can leverage cross-selling?
Sure, I would say the lowest hang fruit is in the United States where still because of that 2020 acquisition.
Speaker Change: We have really large sales per sales rep. I think in the US it's something like $1.7 or something, a million dollars per sales rep.
And as a result, I would say the easiest thing to do is to, as a for instance, this isn't true, but you know, if I were, we only have one rep and I got four million dollars with a sales, let's say that would true. The low-hanging fruit is split Iowa up and have two reps there and have two of them with two million dollars in sales. And I think that's where we keep going, we keep...
Speaker Change: going after the really full sales reps who've got too much sales, they can't handle $3 million of the sales.
Speaker Change: Got it. Thanks for taking our questions.
Thank you very much and welcome.
Thank you. Ladies and gentlemen, that concludes today's conference. I would like to thank you for your participation and you may now disconnect. Have a great day.
Speaker Change: The
Speaker Change: [inaudible]
Speaker Change: Joseph LeMaitre, Joseph Pellegrino Joseph Pellegrino, Joseph Pellegrino
Speaker Change: Mon Saturday, July 22, 1988