CryoLife, Inc. ( CRY)

Q2 2011 Earnings Call

July 28, 2011 10:00 am ET

Executives

Steve Anderson - CEO

Ashley Lee- EVP, CFO and COO

Analysts

Brooks West - Piper Jaffray

Matt Dolan - Roth Capital Partners

Raymond Myers - Benchmark

Joe Mondillo - Sidoti & Company

Presentation

Operator

Greetings and welcome to the CryoLife Second Quarter 2011 Financial Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Steve Anderson, President and CEO for CryoLife. Thank you. Mr. Anderson, you may begin.

Steve Anderson

Good morning, everyone. This is Steve Anderson, CryoLife’s CEO, and I would like to welcome you to CryoLife’s Second Quarter Conference Call. With me today is Ashley Lee, the company’s Executive Vice President, Chief Financial Officer and Chief Operating Officer.

This morning we announced CryoLife's second quarter 2011 operating results. Revenues were a record $29.4 million. These results are in line with our expectation, importantly our growth was led by our new recently acquired and launch product. During the quarter, we also continued to execute on our new products initiatives and made strong progress on the integration on Cardiogenesis, positioning as well for on going success.

The agenda for the call this morning is as follows: Ashley will review this morning’s press release and with discuss revenues by product. He will also discuss the recent investment that the company made in ValveXchange, an early stage prosthetic heart valve company. I will discuss the first full quarter of BioGlue sales in Japan. I will also discuss our early sales progress with PerClot the powdered hemostat that we licenses from Starch Medical late last year and that is approved for sale in Europe. I will also discuss our recent acquisition of Cardiogenesis and the integration of that company into CryoLife. After my comments are completed Ashley will return to give you some financial guidance for the rest of the year. After Ashley’s guidance comments are completed, we will open the call up for questions.

At this time Ashley will review this mornings press release that discussed CryoLife’s second quarter in year to date results.

Ashley Lee

Thank you. Steve. To comply with the Safe Harbor requirements of the Private Securities Litigation Reform Act of 1995, I would like to make the following statement. Comments made in this call that look forward in time involve risks and uncertainties in our forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include the statements made as to the company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future, including the guidance for 2011 that I’ll provide in a moment.

Additional information concerning risks and uncertainties that may impact these forward-looking statements is contained from time-to-time in the company's SEC filings including the risk factors section of our previously filed Form 10-K for the year-ended December 31, 2010 and our Form 10-Qs for the quarter-ended March 31, 2011 and for the quarter ended June 30 2011, which we expect to file shortly and in the press release that went out this morning.

On the call today, I will discuss certain non-GAAP financial measures. You can also find the comparable GAAP measures and a reconciliation of these non-GAAP measures to the applicable GAAP measures in the press release that went out this morning. A copy of which is contained on the Investor Relations portion of our website.

This morning, we reported our results for the second quarter and first six months of 2011. We set an all time second quarter revenue record $29.4 million. Importantly, gross margins expanded to 65% in the second quarter of 2011, compared to 61% in the second quarter of 2010. I will have more on the improvement in margins later in my comments.

As of June 30 2011, we had $25.1 million in cash, cash equivalents and restricted securities. This includes $1.5 million received from the DOD for the development of BioFoam and $5.3 million in restricted securities. Our balance sheet is strong and we remain well positioned to leverage our capital resources and cash flow from our more matured business segments to invest in complimentary products and technologies and high growth areas of cardiovascular surgery.

Net income for the second quarter of 2011 was $1.8 million or $0.07 per basic and fully diluted common share compared to $2.9 million or $0.10 per basics and fully diluted common share for the second quarter of 2010. Excluding pretax transaction and integration expenses of $1.4 million related to our acquisition of Cardiogenesis and other business development activities, non-GAAP adjusted net income for the second quarter of 2011 was $3.3 million or $0.12 per basic and fully diluted common share.

Net income for the first six months of 2011 was $3.5 million or $0.13 per basic and fully diluted common share, compared to net income of $4.9 million or $0.17 per basic and fully diluted common share for the second quarter of 2010. Excluding pretax transaction and integration expenses of $2.6 million related to our acquisition of Cardiogenesis and other business development activities, non-GAAP adjusted net income for the first six months of 2011 was $5.7 million or $0.21 per basic and $0.20 for fully diluted common share.

Read the rest of this transcript for free on seekingalpha.com

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