LeMaitre Vascular(LMAT) - 2024 Q2 - Quarterly Report

Part I. Financial Information Financial Statements This section presents LeMaitre Vascular's unaudited consolidated financial statements for Q2 and H1 2024, detailing financial position, operational performance, and cash flows Consolidated Balance Sheets As of June 30, 2024, total assets increased to $363.1 million, driven by marketable securities, receivables, and inventory, while liabilities decreased and stockholders' equity grew to $319.5 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $212,811 | $194,598 | | Total Assets | $363,079 | $346,778 | | Total Current Liabilities | $25,446 | $29,879 | | Total Liabilities | $43,547 | $48,878 | | Total Stockholders' Equity | $319,532 | $297,900 | Consolidated Statements of Operations The company reported significant profitability growth in Q2 and H1 2024, with net sales increasing 11.5% and 12.5% respectively, and net income rising 46.0% and 53.6% Q2 & H1 2024 vs 2023 Performance (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | Change | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales | $55,849 | $50,115 | +11.5% | $109,327 | $97,190 | +12.5% | | Gross Profit | $38,468 | $32,086 | +19.9% | $75,133 | $62,969 | +19.3% | | Income from Operations | $14,380 | $9,452 | +52.1% | $26,254 | $17,326 | +51.5% | | Net Income | $11,826 | $8,098 | +46.0% | $21,713 | $14,138 | +53.6% | | Diluted EPS | $0.52 | $0.36 | +44.4% | $0.96 | $0.63 | +52.4% | Consolidated Statements of Cash Flows Net cash from operations slightly increased to $14.7 million for H1 2024, while investing activities used $13.4 million and financing activities used $2.8 million, resulting in a net cash decrease of $2.0 million Six-Month Cash Flow Summary (in thousands) | Activity | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $14,696 | $14,182 | | Net Cash used in Investing Activities | ($13,364) | ($12,603) | | Net Cash used in Financing Activities | ($2,831) | ($1,323) | | Net (Decrease) in Cash | ($2,001) | $354 | Notes to Consolidated Financial Statements The notes detail accounting policies, revenue recognition, geographic revenue, and financial components, confirming the company operates as a single segment selling vascular medical devices directly to hospitals - Revenue is primarily derived from the sale of disposable or implantable devices used during vascular surgery, sold directly to hospitals and recognized at the time of shipment or when consigned inventory is consumed[18][19][21] Revenue by Geography - Six Months Ended June 30 (in thousands) | Region | 2024 | 2023 | | :--- | :--- | :--- | | Americas | $72,152 | $65,633 | | Europe, Middle East and Africa | $29,693 | $25,857 | | Asia Pacific | $7,482 | $5,700 | | Total | $109,327 | $97,190 | - On February 21, 2024, the Board authorized a new share repurchase program of up to $50.0 million, though no repurchases have been made under this program to date[52] - The company paid quarterly cash dividends of $0.16 per share in Q1 and Q2 2024, an increase from $0.14 per share in the prior year, with a further dividend of $0.16 per share approved for Q3 2024[53] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2024 financial results, highlighting strong net sales growth, expanded gross margins, and a robust liquidity position, alongside strategic initiatives like sales force expansion and ERP system implementation Overview LeMaitre, a global medical device provider, outlines its strategy focusing on vascular surgeons, niche products, and direct sales force expansion, supported by recent MDR CE marks and ERP system implementation - The company's three-pronged growth strategy includes: 1) a focused call point on vascular surgeons, 2) competing in low-rivalry, niche product markets, and 3) expanding its worldwide direct sales force while acquiring complementary devices[64] - As of June 30, 2024, the sales force comprised 144 representatives, and approximately 95% of net sales were generated through direct sales channels[68] - In July 2024, the company received MDR CE marks for 10 devices, adding to 4 previously obtained, with a goal of 22 total marks by the end of 2025[71] - The company began implementing a new Microsoft Dynamics D365 ERP system in the U.S. in Q1 2024, with European implementation planned for 2025[78] Results of Operations Net sales grew 11% in Q2 and 12% in H1 2024 across all regions, with gross margin improving to 68.9% due to efficiencies and favorable mix, while operating expenses increased 6% Net Sales Growth by Geography (Q2 2024 vs Q2 2023) | Geography | Q2 2024 Sales ($M) | Q2 2023 Sales ($M) | % Change | | :--- | :--- | :--- | :--- | | Americas | $36.9 | $33.5 | 10% | | Europe, Middle East and Africa | $15.3 | $13.6 | 13% | | Asia Pacific | $3.6 | $3.0 | 20% | | Total | $55.8 | $50.1 | 11% | - Q2 2024 gross margin increased to 68.9% from 64.0% in Q2 2023, a 490 basis point improvement driven by greater manufacturing efficiencies, sales price increases, and favorable product mix[89] - Sales and marketing expenses increased 8% in Q2 2024 due to an 8% increase in sales rep headcount (144 vs. 133 YoY)[93] - General and administrative expenses rose 14% in Q2 2024, primarily due to higher outside services, professional fees, and compensation[95] Liquidity and Capital Resources The company maintains a strong liquidity position with $22.3 million in cash and $90.8 million in marketable securities, sufficient to fund operations, capital expenditures, and dividends for the next twelve months - As of June 30, 2024, the company held $22.3 million in cash and cash equivalents and $90.8 million in short-term marketable securities[103] - The Board of Directors authorized a $50.0 million share repurchase program effective until February 21, 2025; no repurchases have been made to date[104] - The company expects to fund its operations, potential acquisitions, dividends, and share repurchases from existing cash and future funds from operations[105][106] Quantitative and Qualitative Disclosures About Market Risk The company's market risks primarily stem from currency exchange and interest rate fluctuations, with no material changes reported since the 2023 Annual Report on Form 10-K - The company's primary market risks are associated with changes in foreign currency exchange rates and interest rates[114] - No material changes to quantitative and qualitative market risks were reported compared to the 2023 Form 10-K[114] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2024, noting that the ongoing ERP system implementation will lead to changes in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective at reasonable assurance levels as of June 30, 2024[116] - The company began implementing a new ERP system in February 2024, which is expected to cause changes to internal controls over financial reporting as the implementation progresses[117] Part II. Other Information Legal Proceedings The company is involved in routine legal matters, none of which are expected to have a material adverse effect on its financial position, results, or cash flows - There are no legal proceedings that management believes would have a material adverse effect on the company's financial condition or results of operations[121] Risk Factors No material changes to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K have been reported - No material changes to the risk factors disclosed in the 2023 Form 10-K have been reported[122] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered equity sales, with 95 shares repurchased during the quarter solely to cover employee tax withholding on vested restricted stock units - For the three months ended June 30, 2024, the company repurchased 95 shares of its common stock to satisfy employees' minimum statutory withholding tax obligations in connection with vested restricted stock units[122] Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers reported the adoption, modification, or termination of a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[123] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The report includes required certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL data files[123][124]