Q4 2024 LeMaitre Vascular Inc Earnings Call

Welcome to the LeMaitre Vascular Q4 2024 Financial Results Conference Call. As a reminder, today's conference 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.

Speaker Change: Good afternoon and thank you for joining us on our Q4 2024 conference call. With me on today's call is 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 with the meaning of the U.S. 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, February 27, 2025.

Speaker Change: and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-K and subsequent SEC filings.

Speaker Change: 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, such as organic sales growth.

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. Q4 featured growth in sales of 14%, op income of 26%, and EPS of 30%.

George LeMaitre: Sales growth was led by grafts, shunts, and catheters, up 23%, 14%, and 12% respectively. By geography, APAC was up 21% in Q4, EMEA 18%, and the Americas 12%.

George LeMaitre: I'll focus my remarks on three topics, the growth of our sales team, our new international sales offices, and our MDRCE mark in regulatory progress.

George LeMaitre: We ended Q4 with 152 reps, up 12% year-over-year, and we're targeting 165 at 1231.25.

George LeMaitre: As rep headcount has increased, we've been building out our sales management team. We now have 31 managers, up 29%. We believe the sales force is our number one asset, and we will continue to invest in sales managers and offices.

George LeMaitre: Just last week we began shipping products from our new Shanghai office to Chinese customers. The timing of the Shanghai move is appropriate as sales were up 48% in Q4 and we received our Chinese XenaSure cardiac approval in December.

George LeMaitre: We look forward to launching one of our most important products in the number two medical device market.

We should begin selling ZenaSure in age 2.

George LeMaitre: As for Europe, in December we leased a Swiss office and we plan to begin shipping products to Swiss hospitals in June.

George LeMaitre: Shipping from this office should reduce customs complexity and help increase sales.

Switzerland is LeMaitre's sixth-largest European

George LeMaitre: We also continue to push forward with Go Direct projects in Portugal and Czechia, where we believe direct-to-hospital sales will begin in H2. Both countries utilize the CE mark and are members of the EU. Poland might be a next logical step.

George LeMaitre: Attorney Regulatory, we've now received 16 of our 23 MDR CE marks. The seven remaining MDRs should be received in 2025.

George LeMaitre: One of these approvals is Artographed, our largest U.S. product, which we believe will receive its inaugural CRE mark in H1.

George LeMaitre: We've already received autographed approvals in New Zealand, South Africa, Thailand, and Malaysia, and we expect to receive approvals in Australia, Canada, Singapore, and Korea by H1 2026.

George LeMaitre: Also, the Irish and German RestoreFlow allograft approvals are in process, and we anticipate at least one approval in 2025. These approvals will expedite approvals in other European countries.

George LeMaitre: I'd like to thank J.J. Pellegrino for his exceptional service to LeMaitre Vascular. This is a bittersweet moment for all of us LeMaitres. We're happy to watch J.J. begin to enjoy retirement, but we'll miss him.

George LeMaitre: For the last 19 years, we've been able to enjoy his smarts, honesty, humor, and warmth. JJ has been one of the key architects of LeMaitre's success and will continue on as a board director for the foreseeable future.

George LeMaitre: As the saying goes, when one door closes, another door opens. Dorian LeBlanc will step in as our new CFO starting March 10. Dorian has previously served as CFO at LumiraDX and VP of Finance at Aaliyah and we're excited to welcome him.

J.J. Pellegrino: With that, I'll turn the call over to J.J. for the 73rd and final time.

Speaker Change: Thanks, George. In Q4, our differentiated product portfolio, direct-to-hospital model, and larger sales team produced 8% price and 6% unit growth. By product, ArtoGraft, Valveotome, and RestoreFlow led the price improvement.

We're often asked about pricing, so here's some additional detail.

Speaker Change: U.S. list prices increased 6%, going into 2022, 2023, and 2024. These list prices resulted in actual worldwide price increases of 8%, 12%, and 9%.

Speaker Change: For reference, the recent January 2025 U.S. list price increase was 8 percent. The actual 2025 worldwide price increase remains to be seen, as many factors influence the translation of list prices into actual prices.

Speaker Change: In Q4, our gross margin increased 120 basis points year-over-year to 69.3%. The increase was a result of higher ASPs, direct labor efficiencies, improved restore flow allograft yields, and restrained quality expenses.

Speaker Change: We are guiding a Q1 gross margin of 69.7% as we benefit from our January 2025 price increases as well as continued manufacturing efficiencies.

Operating expenses in Q4 2024 were $25.7 million.

A 12% year-over-year increase.

Speaker Change: The increase was largely driven by investments in our sales team. However, hiring outside of the sales force was muted, and our worldwide headcount was up only 6% in the quarter versus the prior year.

Speaker Change: As a result, Q4 2024 operating income increased 26% year-over-year to $12.9 million, an operating margin of 23%.

Speaker Change: We ended Q4 2024 with $300 million in cash and securities, an increase of $176 million in the quarter.

Speaker Change: The increase was driven by net proceeds of the convertible offering of approximately $168 million, as well as $10 million in cash from operations.

Speaker Change: The impact to our P&L in Q4 was minimal. Interest income from the invested proceeds was $430,000, while interest expense was $205,000, which improved EPS by one cent per share.

Speaker Change: In Q1 2025, we expect total interest income of $3.1 million and total interest expense of $1.3 million, which improves EPS by two cents per share.

Speaker Change: As you recall, we installed the Microsoft D365 ERP system in the US in Q1 of last year. Two weeks ago, we installed D365 at our UK subsidiary.

Speaker Change: Due on 2026, we plan to do installations in Germany and Sweden.

Speaker Change: And another important IT initiative, we will begin to convert our Burlington manufacturing operations to paperless manufacturing and expect several product lines to be paperless by year end.

Speaker Change: Separately, on February 18, the Board of Directors approved a cash dividend of $0.20 per share per quarter, an increase of 25%. Our increasing dividend underscores our focus on the bottom line.

Speaker Change: Turning to guidance, please see today's press release, although the full year 2025 highlights include organic sales growth of 10 percent, gross margin of 69.7 percent.

Speaker Change: Operating income of $59.8 million, up 15%, reflecting a 25% operating margin. And EPS of $2.24 per share, up 16%.

Speaker Change: Separately, we would like to welcome Nathan Trabeck and Larry Bigelson from Wells Fargo Securities who initiated coverage on us a few weeks ago. With that, I'll turn the call back over to the operator for questions.

Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Thank you.

Speaker Change: And our first question comes from Nathan Trabeck of Wells Fargo. Your line is open.

Nathan Trabeck: Hey guys, thanks for taking my question and congrats on a great quarter. I guess if we could just start with a guidance. Can you talk about what's implied from a pricing and a volume perspective? You talked about the 8% list price increase in January. I guess based on history, how much of the list price increase actually flows through to, you know, pricing increase in the year? Thanks.

Yeah, Nathan, so we gave you some historical info there.

Nathan Trabeck: You can sort of guess for yourselves, you know, what actually happens, but as we said, in the U.S. we're looking for sort of 8% as of Jan 1 this year.

Nathan Trabeck: Worldwide, it's lower outside the U.S., so blended, you can think of it as a lower number.

Nathan Trabeck: And then the question is, what are you going to get if you ask for 6 or 7% blended globally, 8% in the U.S.?

What are you gonna get?

Nathan Trabeck: In reality, and historically over the last two or three years, it's been a bit higher than what we've asked for, but I think that assumption is probably, you know, a little aggressive. You might wind up thinking you're just going to get what you ask for.

Nathan Trabeck: And so maybe you're at sort of, I don't know, 6%-ish pricing and a 4% unit, who knows, we'll see. We'll see what that story winds up being, but it's going to play out over time. And historically, you've now got the answer that you can use to try and impute for RQ1.

Speaker Change: Okay, good. Is there any data you could share with us that could say, like, how many of your US and European accounts have already been repriced to date?

Speaker Change: Hey Nathan, this is George. I apologize, it's tough to hear something about the the phone here. Could you try that one more time, maybe closer to the phone or something?

Speaker Change: Can you give us a detail in terms of how many European and U.S. accounts have already been repriced and how many are left to be repriced?

Speaker Change: Sure, yeah this is George again. Yeah, all the repricing starts on, except for Japan which is April 1, everything starts January 1st. They've all been repriced.

Okay, thank you.

Speaker Change: Thank you. And as a reminder, if you have a question, please press star 11. One moment.

Speaker Change: And our next question comes from Rick Wise of Stiefel, your line is open.

Speaker Change: Hi, this is Annie. I'm for Rick. Thanks for taking our questions.

Speaker Change: So first, I was hoping you could just talk a bit more about your Salesforce expansion plans. I think you said you're expecting about 165 reps by year-end 2025, which is about 13 ads for the year.

Speaker Change: Could you kind of like break that out between International and the US and is this more territory splitting? Are you opening up in new areas? And then one more follow-up. Thanks

Speaker Change: Okay, hi Annie, thanks a lot for that great question. Yeah, so you're right We're we're thinking about 165 for the end of the year also more sales management folks as well here You're thinking geographically. Where should it play out most and I would say

Speaker Change: sort of two-thirds of that feels like it's a USA thing, the territories are still too large, and then that leads to the next answer to your question which is...

Speaker Change: Yes, in the U.S. it's largely about just splitting things in half.

Speaker Change: and having two reps in, let's say, Nebraska instead of one rep in Nebraska. There is, though, some, you know, international growth with new markets, like we've talked a lot about Portugal and Czechia. There's three more reps that are going in during the year because of these expansion things. And also Switzerland, we put the office in there. Of course, when you put the office in there, you'd grow the sales force as well. So you got one or two more going in there and so on and so forth. So, but I'd say two-thirds about USA.

North America, I should say. North America.

Speaker Change: Okay, great. Thank you. And then, just on the autographed opportunity,

Speaker Change: I heard you highlight articraft that's key among your remaining MDR-CE marks and that you're kind of expecting this approval still in the first half.

Speaker Change: So once approved, kind of what are you expecting in terms of physician reaction and the speed of adoption and how will this $8 million European market opportunity for Artigraph contribute to 2025 growth?

Speaker Change: So, real high level, we try not, I mean, guidance is so hard for the whole year, you know that, so we don't even have the approval yet, and maybe we'll have it in H-1, so with guidance we really don't break out the guidance by product line. You're right to be quoting that $8 million number, that's what we've come up with on these phone calls, is what the market opportunity is.

Speaker Change: and I would say we'll see. We have great faith and hope in this product line. We bought it as a $15 million device back in 2020 and it's already something like last year, something like a $35 or $36 million device, Dave.

Speaker Change: something like that yeah 36 so we've doubled it over five years here for four years of full results I think yeah for you four and a half years of full results so we have high hopes but I wouldn't I wouldn't even hazard a guess we'll see what happens it's gonna it should be nice but we'll see what happens

All right, thank you

Thank you.

Speaker Change: And our next question comes from Danny Sautter of Citizens JMP. Your line is open.

Danny Sautter: Yeah, great. Thanks for the question. Just first on guidance, you know, we appreciate all the color, but could you give us a sense of what is contemplated here for both the high and low end to the range, you know, maybe in terms of expected ASP bans or product launches in new regions?

Danny Sautter: What do you feel could be the most likely candidate for upside or downside of these numbers? Thanks

Speaker Change: I'm scratching around for how to answer this question here. Maybe start with an ASP part of it.

Speaker Change: Like I said, we gave you some data, but ASPs vary a lot by geography, and they vary by product, and they vary by manager in those geographies who have different...

Speaker Change: So, the ASP thing, I think when you see our band standing of high and low sales of guidance, that's kind of your answer. Within that, there is this concept, which is ASPs could come out wherever they come out. In terms of other stories...

Danny Sautter: I was going to go at, Danny, with additional data here that might help you sort of, I think we've taken the approach on this call, because the pricing has become a topic that you guys all want to know about.

Danny Sautter: We guided 9%. Again, these are full year guidance at the beginning of the year. We guided 9%, we got 17%. The next year in 24%, we guided 9%, and we got 13%.

Danny Sautter: And here we are with our highest guidance in a very long time. I don't think we've ever guided double digits, so it might give you an indication of where we're going, but...

Danny Sautter: Again, guiding for a whole year at a medical device company, we're learning, is a difficult thing. So I, you know, it's a, we, I guess you could say we haven't underperformed our guidance in the last three years, four years, that we've been giving you full year guidance organically. So that's a nice fact you could take with you. But, you know, we've overperformed it by eight in one year and four in one year and one in the other year. Maybe another place to go for highs and lows is

Danny Sautter: the rep hiring and the cadence of that and the productivity of the reps.

Danny Sautter: as they come on board, and so you can think of that as a story that might get you higher or lower than you think in that range. And I think you hear us being pretty bullish about rep hiring and continuing apace with the growth of the sales team, and not just reps, Danny, but area and country managers as well. And so we're investing nicely in all of those groups, and hopefully that pushes us.

Danny Sautter: And then maybe a third area to go after is the sort of the five key product lines, Artograph, Xenasur, RestoreFlow, and a couple others if you want to choose. You know, and those all have individual stories that have been pretty robust this year and more recently in the more recent quarters, and so those have been good stories too.

Speaker Change: I really appreciate the in-depth answer and that's a lot of color and I appreciate it.

Danny Sautter: My next one will be a little bit more straightforward, I guess, just on the operating margin progression for 2025.

Danny Sautter: First quarter guide is 23%, full year 25 is 25%. Any more color on how we should think about the phasing throughout the year? Is it a consistent build or just any puts and takes there? Thank you for the question. I mean, yeah, the high level is, you know, sales going up.

Danny Sautter: you know, call it 10% and OPEX may be a little slower than that and with a gross margin improvement. And so I think it's sort of, maybe in my mind, I don't know, we'll see how this plays out and obviously we're not guiding on these pieces, but Q1's typically a little lower number because of the sales meetings that we have.

Danny Sautter: and they're pretty expensive and they're a million dollars plus, and so you get whacked with that in a good way in Q1 and then you sort of don't in the following three quarters. So maybe you think about it sort of a little more binary like that.

Great. Thanks so much for the questions.

Thank you. Thanks, Danny.

Speaker Change: And our next question comes from Ross Osborne of Cantor Fitzgerald. Your line is open.

Speaker Change: Hey guys, this is Matthew Park on for Ross today. Thanks for taking the questions. I guess starting with gross margin, you called out improved restore flow yields in the quarter. I guess I'm thinking about 2025. Can you kind of walk us through the puts and takes to get to that 69.7% level and any potential areas where you can get leverage?

Speaker Change: Yeah I mean so there's lots and lots that goes through this one number as you know and and maybe some of the good guys

Speaker Change: are sort of that direct labor efficiency piece. The ops team has been doing a really nice job keeping headcount sort of flat but producing more units.

and so their times to build have improved and they're...

Speaker Change: Their utilization has improved and all the nitty-gritty stuff that we sort of manage and monitor every day has been doing really nicely. I think that continues, I don't know that...

Speaker Change: why I wouldn't it's probably part of our answer in the guidance piece.

Speaker Change: The ASP topic we've talked about a lot now, and that obviously helps the margin, and that's a steady answer over the year. Quality costs are one we don't talk about all that much, but they're pretty important, and they make up a decent amount of our costs, but we've been doing a nice job keeping those.

Speaker Change: Growth rates of quality expense is pretty muted over time, so that's a good guy. We've done a couple transitions of manufacturing and product lines.

Speaker Change: from somewhere else to here. One was OmniFlow product line, and then CardioCell more recently. And so as we work through those, and those get more efficient, that'll help us out.

Speaker Change: And then RestoreFlow, as you know, has been doing really well, both sales overall, but also units are up really nicely, and that helps.

Speaker Change: manufacturing costs for restore flow. And then there's some just sort of meat and potatoes cost cutting that's really important to us as well that we've been having some success with.

Speaker Change: So I would say those are the good guys. On the other side of the ledger, you can think of all the things you think about raises and maybe building new clean rooms. You get some more depreciation coming at you. You know, maybe a little incremental hiring around management as opposed to direct labor folks.

Speaker Change: You know, some of those pieces. So, materials costs, maybe there's an inflation topic that we went through that's sort of slowing down now, so that's okay. So, I would say maybe those are most of the good guys and a few bad guys.

Speaker Change: Got it. That was super helpful. And then I guess just one more for me on China. With Xenoshare receiving approval in December, can you just walk us through what the initial commercial rollout will look like and any incremental reps you'll need to hire to, I guess, support the launch? Thanks.

Speaker Change: Okay, great, so I'll go to the rep part of the question first. Obviously, it's just China. We have four reps in China I think we're in the middle of hiring a fifth rep. So this is still

Speaker Change: Quite a small sales force for a 1.5 billion person country you can understand that so it's just getting started over there for us It's always been a sore spot. I think it's finally turned the corner. It's a good thing now As far as the commercial rollout, so you get the approval in December There's there is a lot of football to be played between then and when you get to make your first sale You have to get your reimbursement which is happening this month going on right now And then you have to get provincial listings and all the provinces I think there's either 36 or 39

Speaker Change: I forget, I should know that, and then you have to get your hospital listings.

Speaker Change: So, there's a lot of bureaucracy, it's completely normal bureaucracy, there's nothing...

Speaker Change: worse for this product than any other product, but again this is

Speaker Change: to focus on the positive rather than that six-month window where we have to wait. This is a big, you know, we've been waiting for this for a long time, we're real excited about it. We're not guiding in 20, we're not making a call out about what it should be in 2025. Probably have better ideas as to what to understand about this product for 2026 as the year goes on. But July is probably ish when you're going to start selling that in China.

Got it. That makes sense. Thanks for taking the questions.

Speaker Change: And our next question comes from Suraj Kalia of Oppenheimer & Company. Your line is open.

Hi George, JJ, Dave, this is Seamus on for Siraj.

Speaker Change: Thanks for taking our questions, and I just, you know, want to say to start, kind of, what are, you know, any implications from tariffs? I know you guys manufacture most of this stuff within the U.S., but I guess.

Speaker Change: Any potential, you know, anything you can walk us through on that, whether you guys are looking at mitigation strategies or it's just not going to be relevant or whatnot.

Seamus, it's Dave Roberts. Thanks for the question.

Speaker Change: Yeah, I mean, I think tariffs are a little bit of a moving target. I think presently there's only the 10% tariff on China that I heard.

Speaker Change: I'm saying maybe by March 4th that tariffs in Mexico and Canada would kick in. Who knows? You're right in pointing out that

Speaker Change: We, most of our products, almost all the products that we purchase, the raw materials

Speaker Change: come from inside the United States, and we obviously manufacture here. So, you know, for us, maybe some of our suppliers source components outside the United States, but really, from that standpoint, the tariffs are going to be fairly light for us.

In terms of, you know, China...

You know, if...

If China retaliates and medical devices are included in that...

Speaker Change: China accounts for less than 1% of our worldwide sales, so...

Speaker Change: I would say at a very high level, we're fortunate that we're a very U.S. based company in terms of how we source our products and in that respect we're quite protected.

Speaker Change: Got that, thank you. One kind of quick one in here just on the on the guidance I guess you noted I think six or seven more

Speaker Change: MDRC marks are expected through the year, you know, if those kind of come through quicker those potential like I guess

Speaker Change: kind of, if you can, what's contemplated within the guide and is there potential upside if those kind of come through?

Speaker Change: you know. Right, of course. Yeah. So with these, the first round of these MDR-CE marks, the 23 that we're talking about, with the exception of autographed...

Speaker Change: All of them are just re-approvals of the old CE marks we had. So, unfortunately, there's no real upside, except we'll stay on the market and many of our competitors will leave the market because they didn't apply for MDR. But no, not really, minus the autograph question, which...

Speaker Change: which we were asked about at the beginning of this call, where, you know, something good is going to happen, we're not putting numbers on it.

Speaker Change: Mm-hmm, got it, completely understand. And then just one last one from our side, you know, M&A, I know you guys have been looking at, you know, some cardiac and vascular companies. I guess just to

Speaker Change: Well, I know you guys haven't announced anything yet, but just trying to think, are you looking for something that potentially is approval in the U.S., worldwide approval, or you'd have to take it, you know, country by country, similar to an autograph, you know, if you can give us a little more color there. Thank you again.

Our sales channel is so broad right now, we're directing...

OUS, it doesn't matter too much.

Speaker Change: Of course, you know, we do like it occasionally when, if the sales are focused in one country, then eventually we get approvals in other markets and that can be upside, but, you know, that's an investment as well. But I would say, not a particular focus with hunting for acquisitions which are, which have revenue concentration in the U.S. versus Europe versus APAC.

Thank you.

Brett Fishman: And our next question comes from Brett Fishman of Key Bend Capital Markets. Your line is open.

Speaker Change: Hi, this is Will Longford-Brett. Thank you for taking the question. Last quarter you spoke about the hiccup you had with the Ireland facility being held up. Could you provide any detail on the strategy for that going forward and any updates on that? Thank you.

Speaker Change: Sure, and maybe, are you talking about the German inspection of our facility, or are you talking about, you're specifically on Ireland right now?

Yes, specifically on Ireland.

Okay.

Thank you. Bye-bye.

Speaker Change: There's two stories here that are both parallel. I don't really know exactly what Irish story you're talking about, but I'll give you what our Irish approval strategy is now and what our German approval strategy is.

Speaker Change: So, the hiccup I thought you were talking about was the German auditor that didn't show up in the middle of October last year because he was sick for two weeks.

Speaker Change: and so we had to wait until that German auditor came to our factory in Chicago in February. The audit has come and gone and went very well. We feel good, feel like we're on track.

Speaker Change: We sort of think, we don't know this, you can't ever know with an approval, we sort of think this is a 2025 approval.

Speaker Change: As it relates to Ireland, maybe the hiccup you're talking about is at first they were just saying, oh, you can just have a virtual office and we'll give an approval. And then the state of Ireland came back and said, gee, we want you to have an actual brick and mortar office before we grant you approval. And again, just to catch everyone else up on this, this is all about RFA, the allograft product line.

Speaker Change: We have only a UK approval in Europe right now, and we're trying to get Irish and German approvals.

Speaker Change: Will, on that score, we definitely feel like we're getting more and more committed to have an Irish brick-and-mortar office.

Speaker Change: with all the cryotanks, etc., in order to pursue Irish approval and German approval.

Speaker Change: Both of those approvals, I don't know, maybe got a 50-50 chance at getting each one of them this year. So in all, we wrapped it all together in the guidance today and we said, we're probably gonna get one approval this year either Ireland or Germany for RFA. And then of course, the upside here is.

Speaker Change: approvals in either of those countries could then lead or will likely then lead to places like Holland, Spain, France accepting the Irish approval or accepting the German approval and giving us an approval in their country.

Do you think I got the question well?

Yeah, thank you. I appreciate the color on that.

Thank you. Thanks for the question.

Thank you.

Frank Takinen: And our next question comes from Frank Takinen of Lake Street Capital Markets. Your line is open.

Frank Takinen: All right, thanks for taking the questions. Congrats on all the progress. I was hoping to hop back to the Salesforce a little bit. Could you refresh us on the headcount by geography and then maybe talk a little bit more about U.S. kind of longer-term hiring plans? Do you feel this cadence of hiring is one that continues for a number of years? Or do you eventually feel like there's going to be a spot where you plateau and you really focus down on to utilization?

Frank Takinen: Right, and maybe to get to the end of that question, it all depends if we get into cardiac or not. If we stay with vascular, it's a different story. If we get into cardiac with a big acquisition, obviously we're going to be doing a lot more cardiac hiring because we're sort of starting from...

from scratch here, but...

Frank Takinen: I would say in general I think the cadence continues for what I'll call the foreseeable future.

Frank Takinen: with the U.S. being a lot larger than some of the Asia-Pacific and European countries. So, to get back to the question I was asked at the beginning by Annie, I think that the hiring is more of a U.S. thing and I think it's more about splitting these territories and we keep chasing this number which is...

Frank Takinen: Maybe a regular rep should be carrying 1.2 or 1.0 million dollars of revenues. It's just too much for them to carry 2 million, and a lot of Americans right now are carrying 2 million. It's too big of a burden for them, and they can't go chase new business if that's the case.

Speaker Change: Okay, that's helpful. And then maybe just for my second one, I was hoping you could talk a little bit about Karate Chunts. Obviously, that was really strong throughout all of 2024. If I remember correctly, I think there was a competitor that exited the market. Maybe kind of refresh us on the strength behind Chunts in the year, and then is that something you think can continue in 2025?

Speaker Change: Right, yeah, the shunts were great this year. They're up 14%. We call them out on the press release as the second best category. It's not our largest category. I think we have five categories right now and it's one of the smaller categories, but it had a fantastic year, sort of wire to wire, and a lot of it, as you're pointing out, was

Speaker Change: It was nice to see the competitors leave and, you know, we've worked hard to take advantage of that and keep on making the product and some of the pricing maneuvers that we've been doing have been helpful as well.

Perfect, thanks for answering the questions.

Thanks a lot Frank. Thank you.

Speaker Change: And our next question comes from Michael Petusky of Barrington Research. Your line is open.

Good evening.

Speaker Change: So, David, on the, you know, the balance sheet that's sort of been bolstered by the cap raise in late in 24. I mean, has that has that changed at all the assets that that you have sort of.

Speaker Change: you know, been looking at or maybe new assets that you're looking at as a result of the increased firepower. I'm just curious if that's changed your focus at all, just in terms of sizing, I guess.

David: Yeah, Mike, nice to hear your voice. It's funny, I feel like assets change the balance sheet insofar as last year we had put out a term sheet, I'll just say in excess of five hundred million dollars.

David: And obviously, you know, that didn't come to pass, but it really highlighted the importance for us of, you know, adding capital to the balance sheet.

You know, in addition, there have been a couple.

David: Sales of Businesses, which took place where I think LeMaitre wasn't considered.

David: as a part of the process, because before the convertible bond issuance that you're referring to in December, you know, we just didn't have as much cash as a lot of other larger companies.

is it does enable larger acquisitions.

David: I'll also say that, and I think I've said this before in these calls,

David: I'd rather do a strategically sound, good, small acquisition than a large acquisition where my resolve isn't quite so high and the company's resolve.

David: We're very much waiting for our pitch. We love having the optionality of more cash on the balance sheet.

but we are waiting for our pitch.

Speaker Change: George, what you shared in terms of list price and then sort of how things how things played out. I am curious though, because

David: It felt like, sort of during that time period, you gave us...

Speaker Change: you had started to introduce those pricing floors. I'm just wondering if sort of the bump that you got is less likely to repeat, at least in terms of the amount.

Speaker Change: relative to the list price because the pricing floors have, you know, you've gone down that track for a few years now and I would think there would be less opportunity there. I was just wondering if you could comment on that.

J.J. Pellegrino: put across a, what do we say, JJ, 8% list price in the U.S., sort of higher than the sixes that you heard about in 22, 23, and 24, so...

J.J. Pellegrino: Yeah, you do have the pricing discipline looking backwards, but with the whole company coalescing on these pricing floors, and then the management puts out an 8% price increase in the U.S.

J.J. Pellegrino: You would think, you know, you would think that that would give you something going forward. It's it's going to be seen We're going to see you know It's like I said, it's really hard to do guidance at a medical device company for a whole year on organic growth But you know, it feels like we've been pretty good about keeping our promises with the guidance around here sales-wise for the last four years

Speaker Change: Mike, I'd say something a little more, maybe, I don't know if the word systemic is the right word, but high level certainly about it, which is if you're in niche markets and you're owning your niche markets and you've got differentiated devices that sell at a premium, there's always going to be stories.

Speaker Change: around pricing that's probably a little bit more favorable than we see at our peers.

And so...

For now, it might be a floor story.

Speaker Change: For a while it was an autograph story, remember we bought those devices and we brought those prices up. I think it was a healthy increase in the first year and then healthy increases after that. It slowed down.

Speaker Change: And so that was like a two-and-a-half-year story. And then before that, you were around, you remember, we did a valvulatome sort of next-gen device some years before that, and that was a two-year good story. And so we give you the five...

Speaker Change: previous years in the corporate presentation. They're not all the same, they're jumping around. Over time, it's what, Mike, six to eight percent or whatever it is, and it's going to bounce around depending on the stores, but it all lives under, I think, a nice strategy for pricing, which is small niche markets with differentiated devices.

Speaker Change: All right, well I'm glad JJ weighed in there. Congratulations on your 73rd and final conference call. I think I've been around for just a little over half of them. Congratulations. Mike, can I give you three numbers before you get off the call? Absolutely.

2.478 depreciation amortization million, 1.739 stock based comp

and 2.044 Kappa.

J.D. you're a pro. Thank you.

There you go.

Speaker Change: Mike, thanks a lot. Is that it Mike from you? Yeah, that's all I have. Thanks.

Thanks for your question.

Thank you.

Speaker Change: And our next question comes from Jim Sidoti of Sidoti and Company. Your line is open.

Jim Sidoti: Hey, JJ, I don't think I want to admit how many of the calls I've been on, but you will be missed. Yeah, I know. I was trying to get George not to put the number down, but he did it anyway.

Um, you know...

Speaker Change: Dave, I'm sure you've had bankers coming in, you know, for the past three or four years trying to sell you a convert deal. What made you decide to do it in December?

Well, hi Jim. I would say...

Speaker Change: When I look at our pipeline, going to the back half of last year, thinking about the larger deal that we took a run at, but also other deals in the pipeline.

Speaker Change: It just felt like there were more larger acquisition targets in or around the pipeline.

Speaker Change: And then on top of that, LeMaitre obviously has a lot of business momentum.

Speaker Change: And, you know, the cost of capital is always lower when you don't need the money. And we didn't like, you know, we didn't have our backs against the wall, so we could be deliberate about it.

Speaker Change: And then also, I guess the third piece was the convert market.

Speaker Change: earned that, but you know we got the convert convertible notes we issued have a two and a half percent coupon, and that's just much lower than we could get as we, you know, considered other forms of financing. It's less diluted than equity, etc. So it seemed to make a lot of sense to us, and we're delighted we did it.

Speaker Change: and the numbers that George put out in terms of, or maybe JJ put them out in terms of interest income, interest expense going forward, was those gap numbers or were those cash numbers and will the gap numbers be different from the cash numbers because of the convert?

Speaker Change: Yeah, so that's what's in our forecast for Q1, Jim. Total interest income of 3.1 or so, and total interest expense of 1.3. That includes amortization of the deal fees themselves.

So those are gap numbers.

Speaker Change: Those are gap numbers and the reason I was hesitating is because I think as you know, we have to do...

Speaker Change: two EPS calcs, blah, blah, blah, to satisfy the requirements of GAP and figure out which one to use, but yes, those are GAP numbers, essentially.

Thank you.

Speaker Change: All right, and then last one, what was the operating cash flow for the quarter?

The operating cash flow was $14.6 million.

Largely on that income level of C of 11 too.

Speaker Change: All right, thank you and once again, JJ, you will be missed.

Speaker Change: Thanks very much, Jim. I appreciate it. It's been fun working with you.

Thank you.

Ladies and gentlemen, that concludes today's conference.