CryoLife's CEO Discusses Q4 2011 Results - Earnings Call Transcript

CryoLife, Inc. ( CRY)

Q4 2011 Earnings Call

February 16, 2012 10:00 am ET

Executives

Steve Anderson - President & CEO

Ashley Lee - EVP, CFO & COO

Analysts

Chris York - Roth Capital Partners

Raymond Myers - Benchmark

Presentation

Operator

Greetings, and welcome to the CryoLife Fourth Quarter and Year-End 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, and welcome you to CryoLife’s Q4 and fiscal year 2011 conference call. This is Steve Anderson, CryoLife's President and CEO, and with me today is Ashley Lee, the company's Executive Vice President, CFO and COO.

This morning, we reported record revenues of $119.6 million and earnings $0.26 for the year ended December 31, 2011. We achieved these results while also making substantial investments in business development and in our share buyback program, and we still achieved our sixth consecutive year of solid profitability.

The agenda for today's call is as follows: Ashley will discuss this year's financial performance in detail. He will comment on the progress being made in the stock buyback program. I will comment on the technology and corporate acquisition that we made during the year. After my comments have been completed Ashley will return with financial guidance for 2012 that will include top line and bottom-line projections for this year.

At this time, Ashley will discuss this morning's Q4 and year-end 2011 earnings release.

Ashley Lee

Thanks, 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 risk and uncertainties and are 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 2012 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, our subsequently filed Form 10-Qs, our Form 10-K for the year ended 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 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 fourth quarter and full year of 2011. Before getting into the details a few highlights of the quarter and year. We continued executing on our strategy to position the company in higher growth in larger addressable market opportunities. Achievements to this end include the launch of BioGlue in Japan, our ongoing integration of the Cardiogenesis acquisition completed in May 2011, our investment in ValveXchange and continued progress in rolling out PerClot in international markets, while preparing for our IDE to being U.S. clinical trails.

We achieved an all-time revenue record of $30.4 million, driven by strength in the BioGlue business and the recent acquisition of Cardiogenesis. Our gross margins for the fourth quarter expanded approximately 350 basis points compared to the prior year, which combined with prudent expense management contributed to solid bottom-line results and our strong balance sheet continues to position us to pursue business development opportunities to potentially accelerate the growth of our business while at the same time repurchase shares of our common stock.

As I previously mentioned, we set an all-time quarterly revenue record of $30.4 million. The following factors influenced our revenue performance. Total international revenues were up 6% in the fourth quarter compared to the prior year and up 21% for the full year compared to the prior year. We saw strength across all parts of our international business on a full year basis compared to the prior year, with tissue processing revenues increasing 17%, combined BioGlue and BioFoam revenues increasing 19%, and powdered hemostat revenues increasing 23%.

Worldwide BioGlue revenues were up 3% for the fourth quarter and up 4% for the year. These increases were predominantly driven by volume increases, particularly in Japan, due to the recent launch of the product in April 2011. We continue to remain enthusiastic about the opportunity in Japan. Total sales in the fourth quarter in Japan were $869,000 and 2011 sales in Japan were approximately $2 million.

PerClot sales for the fourth quarter were $617,000 and were $2.5 million in 2011. We will continue to expect growth in PerClot revenues in international markets over the coming years, as new international markets are opened up. Based on the feedback we’ve received from customers, we are optimistic that PerClot will be favorably received once we complete the registration and approval process in other countries. Additionally, we are working towards a potential PMA approval, which we continue to expect no later than 2014.

Revenues from the Cardiogenesis product line were $2.4 million for the quarter and $5.7 million since we acquired the product line in mid May this year. We held our first TMR training session in November of 2011, and showcased the product line at the recent STS Meeting in Fort Lauderdale. Based on the feedback we’ve received, we continue to remain excited about this opportunity, and believe that as we’re able to conduct more training sessions later this year, we will be able to achieve the low double-digit growth on an annualized basis that we predicted when we acquired Cardiogenesis.

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