LeMaitre Vascular, Inc. (LMAT)
Q1 2012 Earnings Conference Call
May 2, 2012 05:00 pm ET
George W. LeMaitre – Chairman & Chief Executive Officer
Joseph P. Pellegrino, Jr. – Chief Financial Officer
Jamar Ismail – Canaccord Genuity
Larry Hemowich – HMPC
Previous Statements by LMAT
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» LeMaitre Vascular CEO Discusses Q1 2011 Results - Earnings Call Transcript
Welcome to the LeMaitre Vascular, Q1 2012 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. JJ Pellegrino, Chief Financial Officer of LeMaitre Vascular. Please go ahead sir.
Joseph P. Pellegrino, Jr.
Thank you, Larry. Good afternoon. And thank you for joining us for our Q1, 2012 conference call. Joining me on today’s call is our Chairman and CEO, George LeMaitre and our President, Dave Roberts.
Before we begin, I would like to read our Safe Harbor Statement. Today, we will discuss some forward-looking statements, the accuracy of which are subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as belief, expect, anticipate, forecast and similar expressions. Please note these words are not the exclusive means for identifying such statements.
Please refer to the cautionary statements regarding forward-looking information and the information under the caption Risk Factors in our 2011 10-K and subsequent SEC filings including disclosure of factors that could cause actual results to differ materially from those expressed or implied.
During this call, we may discuss non-GAAP financial measures. Please refer to our earnings release in our website www.lemaitre.com for a discussion and reconciliation of non-GAAP financial measures.
I’ll now turn the call over to George LeMaitre.
George W. LeMaitre
Thanks, JJ. I’d like to begin with our Q1 2012 results. Then I will discuss the growth drivers emerging in our business. I will finish with some remarks about the AlboGraft notices we received from U.K. and France.
I am pleased to report that sales were up 8% organically in Q1. This growth is a result of our 2011 restructuring programs as well as our significantly larger worldwide sales force. Organic growth was led by Japan, up 19% and Europe up 13%. The turn around which we were to engineer in 2011 is now taking root in 2012.
In 2011 most of our challenges were in Europe as we struggled to sell both stent grafts and open vascular devices through one combined sales channel. To sort out this mismatch we [adjacent] our stent grafts platforms and replaced stent grafts reps with Vascular reps. With our strategy more crystallized, and our sales bag more coherent, we also elected to build out our European sales force (inaudible) from 24 reps a year ago to 31 at the end of Q1 2012.
Another piece of the sales force ramp was our newly direct efforts in Spain and Denmark, which combined to nearly double sales. Globally we have grown our sales force by 20% in the last year and all this has been done economically as sales and marketing expenses increased just 5% in Q1 2012 versus the year earlier quarter. LeMaitre Vascular now has 79 (inaudible) in 13 countries.
In addition to our accelerating geographic penetration, I would like to highlight a few of our product growth drivers. In Q1, 2012 we brought in a XenoSure distribution agreement to include Canada. Prior to this expansion, XenoSure had been posting growth rates in excess of 40%. My initial sales growth rate will accelerate beyond this 40% rate in 2012 due to the late 2011 European launch and the recent expansion to Canada.
As XenoSure begins to account for a bigger slice of our revenue, this product’s growth rate will take on increasing importance to our overall growth rate. As a reminder, we own an exclusive option to acquire XenoSure in January (inaudible). Other product launches that contributing growth also. UnBalloon and the Over-the-Wire LeMaitre Valvulotome launched in Q4, Q1 and are now running at about $600,000 a year in sales.
We also continue to uncover a significant growth opportunity in our embolectomy balloon catheters. Balloon catheter sales were up 14% in Q1, 2012, as the number one competitor Edwards Lifesciences effectively dismantled its vascular sales force in 2009, 2010 in order to concentrate on heart valves. We believe we are the second or third player in this market and we are beginning to fill the Edwards void with our own high-quality balloons and our focused vascular sales force.
Amidst these opportunities, in April, the British and French regulators issued Prohibition Notices preventing AlboGraft sales in their countries, of a total of eight worldwide complaints
alleging porous devices, four came from Britain and not led to a serious injury. It strikes me as a statistical anomaly, the 50% of the complaints were in the U.K., were just 15% of AlboGraft sales happened.
At the time of the eighth complaint, 6,000 plus Burlington manufactured devices had already been shipped. This complaint rate is in line with AlboGrafts according to U.S. public data. We remain confident that AlboGraft meets our high-quality standards and those are the markets we serve.
These notices are not recalls and devices already sold in our household sales in Britain and France maybe used. We also continue to sell in all previously approved geographies including the U.S., Germany and Europe. The German regulator has verbally confirmed its support of AlboGraft use. And in February, the U.S. FDA completed their routine (inaudible) made including AlboGraft manufacturing with zero observations. To context, these are the first two sets notices in our 29-year history.