LeMaitre Vascular, Inc. ( LMAT)

Q3 2011 Earnings Call

October 27, 2011 5:00 PM ET

Executives

J.J. Pellegrino – Chief Financial Officer

George LeMaitre – Chairman and CEO

Dave Roberts – President,

Analysts

Joshua Zable – WJB Capital

Jamar – Canaccord Genuity

Joe Munda – Sidoti & Company

Larry Hemowich – HMPC

Presentation

Operator

Good day, ladies and gentlemen. And welcome to the third quarter 2011 LeMaitre Vascular Earnings Conference Call. My name is Tania, and I will be your conference moderator for today. At this time, all participants are in a listen-only mode. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to hand the presentation over to our host for today, Mr. J.J. Pellegrino, Chief Financial Officer. Please proceed.

J.J. Pellegrino

Thank you, Tania. Good afternoon. And thank you for joining us for our Q3 2011 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 2010 10-K and subsequent SEC filings including disclosure of the factors that could cause the 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 and our website www.lemaitre.com for discussion and reconciliation of non-GAAP financial measures.

I’ll now turn the call over to George LeMaitre.

George LeMaitre

Thanks, J.J. I’d like to break my comments down into three headlines. First, Q3 was good quarter, sales were up 7%, operating profit was $2 million and cash increased by $1.7 million. Second, after three quarters of restructuring, LeMaitre Vascular is position to deliver higher growth rates and higher gross margin. And third, The UnBalloon and Over-the-Wire LeMaitre Valvulotome should launch in Q4 or Q1.

As to the first headline, in Q3 we posted 7% sales growth to $14.6 million and $2 million of operating profit. Some of the recent quarters, sales growth was strongest in the Americas and in our vascular category, LifeSpan, Valvulotomes and carotid patches produced a significant portion of our dollar sales growth.

In tight operating expense control which is flat to Q3 2010 enabled us to post a healthy 14% operating margin, cash also increased by $1.7 million in the quarter, despite $1 million of share repurchases and dividends.

As to our second headline, with our five initiatives behind us, we are reoriented our company to be more vascular, more direct-to-hospital and more efficient. As a reminder, the five initiatives were as follows.

We terminated Endologics Stent Graft distribution. We sold our TAArget and UniFit Stent Graft business. We closed our Italian factory. We closed our California factory. And finally, we went direct in Spain and Denmark.

In times these five initiatives will enable us to focus on our dominant vascular brand, widen our direct sales footprint, move to higher margin products, manufacture more efficiently and finally, post higher growth rate.

Our third headline is probably the most exciting. We have two upcoming new product launches, The UnBalloon Non-Occlusive Modeling Catheter and Over-the-Wire LeMaitre Valvulotome. We have our regulatory approvals for both devices in the U.S., as well as Europe. We are halfway through our post-approval data trials for both products and we are anticipating launches in Q4 2011 or Q1 2012 for one or both devices.

The UnBalloon is a catheter based expandable nitinol cage, which aids in aortic stent graft implantation, once the stent graft is been implanted The UnBalloon is delivered to the site over a guidewire and inflates like a balloon to tact down the edges of the stent graft.

Modeling as this is called prevents blood from leaking back into the weaken artery. Modeling is strictly performed using an exclusive latex balloon catheter. The problem is that blood pumping out of the heart jack-hammers the top of the balloon with every beat sometimes causing stent graft migration.

The UnBalloon eliminates jack-hammering because the blood passes straight through nitinol cage. The Non-Occlusive UnBalloon is an intuitive and elegant solution and we are seeing high physician interest. We have successfully completed 18 of our 30 data case.

The Over-the-Wire LeMaitre Valvulotome is the sixth generation our flagship device. As the name implies, our valvulotome has been redesigned to track over our guidewire allowing for easy access and repeatable device passage.

As you may know, the majority of vascular catheters have a central lumen and are inserted into the vasculature over a guidewire, guidewire facilitate initial access. The vascular catheter is then easily able to find its way back to its destination. Some people call guidewires the railroad tracks of vascular surgery.

The Over-the-Wire LeMaitre Valvulotome is the first valvulotome to ride over guidewire, given our leading share in this niche we plan to leave our current expandable valvulotome on the market and give vascular surgeons a choice. We have successfully completed 15 over-the-wire data case. Assuming these two data trials continue to go well, these launches could prove to be commercially significant.

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