LeMaitre Vascular(LMAT) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements This section presents the unaudited consolidated financial statements for LeMaitre Vascular, Inc., covering key financial periods and detailed accounting notes Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Assets | | | | | | Total current assets | $430,126 | $402,192 | $27,934 | 6.9% | | Total assets | $577,591 | $551,817 | $25,774 | 4.7% | | Liabilities & Equity | | | | | | Total current liabilities | $30,816 | $30,607 | $209 | 0.7% | | Convertible senior notes, net | $168,205 | $167,772 | $433 | 0.3% | | Total liabilities | $214,905 | $214,527 | $378 | 0.2% | | Total stockholders' equity | $362,686 | $337,290 | $25,396 | 7.5% | Unaudited Consolidated Statements of Operations This section details the company's revenues, expenses, and net income over specific reporting periods | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | % Change (YoY) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | % Change (YoY) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------- | :------------------------------------------- | :------------------------------------------- | :------------- | | Net sales | $64,232 | $55,849 | 15.0% | $124,103 | $109,327 | 13.5% | | Gross profit | $44,974 | $38,468 | 16.9% | $86,394 | $75,133 | 15.0% | | Income from operations | $16,142 | $14,380 | 12.2% | $28,768 | $26,254 | 9.6% | | Net income | $13,779 | $11,826 | 16.5% | $24,790 | $21,713 | 14.2% | | Basic EPS | $0.61 | $0.53 | 15.1% | $1.10 | $0.97 | 13.4% | | Diluted EPS | $0.60 | $0.52 | 15.4% | $1.08 | $0.96 | 12.5% | | Cash dividends declared per common share | $0.20 | $0.16 | 25.0% | $0.40 | $0.32 | 25.0% | Unaudited Consolidated Statements of Comprehensive Income This section presents net income and other comprehensive income items, reflecting changes in equity from non-owner sources | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $13,779 | $11,826 | $24,790 | $21,713 | | Foreign currency translation adjustment, net | $2,011 | $451 | $2,839 | $(380) | | Unrealized gain (loss) on short-term marketable securities | $144 | $13 | $347 | $(89) | | Total other comprehensive income (loss) | $2,155 | $464 | $3,186 | $(469) | | Comprehensive income | $15,934 | $12,290 | $27,976 | $21,244 | Unaudited Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity accounts, including retained earnings and additional paid-in capital | Metric | Balance at Dec 31, 2024 (in thousands) | Balance at June 30, 2025 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :------------------------------------- | :------------------------------------ | :-------------------- | :------- | | Total Stockholders' Equity | $337,290 | $362,686 | $25,396 | 7.5% | | Retained Earnings | $145,090 | $160,843 | $15,753 | 10.9% | | Additional Paid-in Capital | $213,760 | $220,822 | $7,062 | 3.3% | - Net income for the six months ended June 30, 2025, contributed $24.79 million to retained earnings, while common stock dividends paid reduced retained earnings by $9.037 million[15][16] Unaudited Consolidated Statements of Cash Flows This section reports on cash generated and used by operating, investing, and financing activities | Cash Flow Activity | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | Change (in thousands) | | :----------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | | Operating activities | $29,330 | $14,696 | $14,634 | | Investing activities | $(20,669) | $(13,364) | $(7,305) | | Financing activities | $(8,003) | $(2,831) | $(5,172) | | Net increase (decrease) in cash and cash equivalents | $1,567 | $(2,001) | $3,568 | | Cash and cash equivalents at end of period | $27,177 | $22,268 | $4,909 | - Net cash provided by operating activities significantly increased by $14.6 million, driven by higher net income and non-cash adjustments, despite a net use of working capital[131][132] - Net cash used in investing activities increased by $7.3 million, primarily due to higher purchases of marketable securities[133][134] - Net cash used in financing activities increased by $5.2 million, mainly due to higher dividend payments and deferred payments for acquisitions, partially offset by stock option exercises[135][136] Notes to Unaudited Consolidated Financial Statements This section provides detailed explanations and additional information supporting the consolidated financial statements Note 1. Nature of the Business and Basis of Presentation This note describes the company's core business, product lines, and the foundational principles for financial statement preparation - LeMaitre Vascular, Inc. develops, manufactures, and markets medical devices and implants for vascular surgery, and processes/cryopreserves human tissues. Key product lines include anastomotic clips, various grafts and patches, carotid shunts, catheters, and valvulotomes[20] - The company operates in a single segment and has offices and production facilities across North America, Europe, and Asia[20] Note 2. Summary of Significant Accounting Policies This note outlines the key accounting principles, methods, and estimates used in preparing the financial statements - The interim financial statements are unaudited and prepared in conformity with GAAP, with certain disclosures condensed or omitted per SEC rules. Management's estimates are used for items like credit losses, inventories, and income taxes[22][23] - Fair value measurements are classified into Level 1, 2, or 3 hierarchy. The company's Convertible Senior Notes are a Level 2 measurement[24][25][26][27][28] - The company has not recognized any amounts related to the Employee Retention Credit (ERC) claim for 2021, as there is no reasonable assurance of receipt[29][30] - ASU 2023-07 (Segment Reporting) was adopted retrospectively effective December 31, 2024, with no material impact on segment disclosures. ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation) are being evaluated for future impact[31][32][33] Note 3. Inventory and Other Deferred Costs This note details the composition and valuation of inventory and other deferred costs, including human tissue processing expenses | Inventory Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Raw materials | $21,721 | $19,109 | $2,612 | 13.7% | | Work-in-process | $2,251 | $2,157 | $94 | 4.4% | | Finished products | $33,488 | $34,676 | $(1,188) | -3.4% | | Other deferred costs | $10,925 | $8,985 | $1,940 | 21.6% | | Total inventory and other deferred costs | $68,385 | $64,927 | $3,458 | 5.3% | - Other deferred costs primarily relate to the RestoreFlow allograft business, accumulating costs for human tissue preservation and processing, which are not held as inventory due to federal law[36] Note 4. Goodwill and Other Intangible Assets This note provides information on the company's goodwill and identifiable intangible assets, including their amortization - Goodwill remained unchanged during the six months ended June 30, 2025[37] | Intangible Asset Category | June 30, 2025 Net Carrying Value (in thousands) | December 31, 2024 Net Carrying Value (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------------------------- | :------------------------------------------------ | :-------------------- | :------- | | Product technology and intellectual property | $9,511 | $10,840 | $(1,329) | -12.3% | | Trademarks, tradenames and licenses | $1,330 | $1,506 | $(176) | -11.7% | | Customer relationships | $22,232 | $23,462 | $(1,230) | -5.2% | | Other intangible assets | $79 | $11 | $68 | 618.2% | | Total identifiable intangible assets | $33,152 | $35,819 | $(2,667) | -7.4% | | Amortization Expense | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Amortization expense | $1,437 | $1,472 | $2,857 | $2,944 | - The weighted-average amortization period for intangibles as of June 30, 2025, is 8.6 years. Estimated amortization expense for the remainder of 2025 is $2.78 million, and for 2026 is $5.163 million[37][38] Note 5. Accrued Expenses and Other Long-term Liabilities This note details the breakdown of current accrued expenses and other non-current liabilities | Accrued Expense Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Compensation and related taxes | $12,176 | $15,117 | $(2,941) | -19.5% | | Accrued purchases | $4,525 | $4,463 | $62 | 1.4% | | Accrued expenses | $2,429 | $3,852 | $(1,423) | -36.9% | | Accrued interest | $2,300 | $86 | $2,214 | 2574.4% | | Income and other taxes | $1,094 | $639 | $455 | 71.2% | | Professional fees | $74 | $144 | $(70) | -48.6% | | Other | $380 | $431 | $(51) | -11.8% | | Total Accrued Expenses | $22,978 | $24,732 | $(1,754) | -7.1% | | Other Long-term Liabilities | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Income taxes | $623 | $572 | $51 | 8.9% | | Other | $311 | $259 | $52 | 20.1% | | Total Other Long-term Liabilities | $934 | $831 | $103 | 12.4% | Note 6. Income Taxes This note explains the components of income tax expense, effective tax rates, and unrecognized tax benefits - The company's income tax expense is influenced by estimates for current tax, deferred tax assets/liabilities, valuation allowances, and uncertain tax positions across multiple jurisdictions[40][41] - The 2025 income tax expense deviates from the statutory rate due to federal and state tax credits, permanent items, varying foreign statutory rates, and discrete stock option exercises[42] | Unrecognized Tax Benefits | Six months ended June 30, 2025 (in thousands) | | :------------------------------------------ | :-------------------------------------------- | | Unrecognized tax benefits as of December 31, 2024 | $515 | | Additions/adjustments for tax positions of prior years | $22 | | Reductions for lapses of the applicable statutes of limitations | $(114) | | Unrecognized tax benefits as of June 30, 2025 | $423 | - The company remains subject to examination for U.S. tax years 2021 and forward, and foreign tax years 2016 and forward[43] Note 7. Convertible Senior Notes This note describes the terms, accounting treatment, and fair value of the company's convertible senior notes | Convertible Senior Notes | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | | Principal amount | $172,500 | $172,500 | $0 | | Debt discount, net of accretion | $(4,295) | $(4,728) | $433 | | Convertible senior notes, net | $168,205 | $167,772 | $433 | - The company issued $172.5 million aggregate principal amount of 2.50% convertible senior notes due 2030 on December 19, 2024, with net proceeds of approximately $167.7 million[44][45][46] - The initial conversion rate was 8.3521 shares per $1,000 principal, adjusted to 8.3602 shares due to a quarterly cash dividend increase to $0.20 per share in May 2025[46] - Noteholders can convert under specific conditions, and the company can settle in cash, stock, or a combination. The notes are not redeemable before February 5, 2028[47][48][50] - Interest expense for the six months ended June 30, 2025, was $2.2 million for the cash coupon and $0.4 million for debt issuance cost amortization. The estimated fair value of the notes was $172.7 million as of June 30, 2025[51] Note 8. Stock-Based Compensation This note details the types and amounts of stock-based compensation expense recognized by the company | Stock-Based Compensation Type | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Stock option awards | $910 | $732 | $1,810 | $1,473 | | Restricted stock units | $634 | $573 | $1,320 | $1,134 | | Performance-based restricted stock units | $400 | $304 | $860 | $612 | | Total stock-based compensation | $1,944 | $1,609 | $3,990 | $3,219 | | Expense Category | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :----------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Cost of sales | $266 | $228 | $552 | $439 | | Sales and marketing | $349 | $274 | $725 | $545 | | General and administrative | $1,140 | $943 | $2,316 | $1,908 | | Research and development | $189 | $164 | $397 | $327 | | Total stock-based compensation | $1,944 | $1,609 | $3,990 | $3,219 | - The company granted 741 stock options, 1,521 restricted stock units, and 129 performance-based restricted stock units during the six months ended June 30, 2025[53] Note 9. Net Income per Share This note presents the calculation of basic and diluted net income per common share | EPS Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.61 | $0.53 | $1.10 | $0.97 | | Diluted EPS | $0.60 | $0.52 | $1.08 | $0.96 | | Weighted average basic common shares outstanding (thousands) | 22,614 | 22,458 | 22,592 | 22,412 | | Weighted average dilutive common shares outstanding (thousands) | 22,892 | 22,725 | 22,896 | 22,657 | - The company excluded 1,610 thousand common shares (primarily convertible senior notes) from diluted EPS computation for the six months ended June 30, 2025, as their inclusion would have been anti-dilutive[56] Note 10. Stockholders' Equity This note provides information on changes in stockholders' equity, including share repurchases and dividend declarations - On February 18, 2025, the Board authorized a repurchase program of up to $75.0 million of common stock until February 17, 2026; no repurchases have been made under this program to date[57] | Dividend Record Date | Payment Date | Per Share Amount | Dividend Payment (in thousands) | | :------------------- | :----------- | :--------------- | :------------------------------ | | Fiscal Year 2025 | | | | | March 13, 2025 | March 27, 2025 | $0.20 | $4,517 | | May 15, 2025 | May 29, 2025 | $0.20 | $4,520 | | Fiscal Year 2024 | | | | | March 14, 2024 | March 28, 2024 | $0.16 | $3,589 | | May 16, 2024 | May 30, 2024 | $0.16 | $3,593 | - On July 30, 2025, the Board approved a quarterly cash dividend of $0.20 per share payable on September 4, 2025[58] Note 11. Commitments and Contingencies This note outlines the company's operating lease commitments and potential contingent liabilities - The company has operating leases for buildings (office, manufacturing, distribution) and equipment, with ROU assets and liabilities recognized based on present value of future lease payments[59] | Lease Metric | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Weighted average remaining lease term - operating leases (in years) | 6.9 | 7.8 | | Weighted average discount rate - operating leases | 6.62% | 6.60% | | Minimum Noncancelable Operating Lease Rental Commitments | Amount (in thousands) | | :------------------------------------------------------- | :-------------------- | | Remainder of 2025 | $2,035 | | Year ending December 31, 2026 | $3,612 | | Year ending December 31, 2027 | $3,030 | | Year ending December 31, 2028 | $2,759 | | Year ending December 31, 2029 | $2,695 | | Year ending December 31, 2030 | $2,186 | | Thereafter | $6,420 | | Adjustment to net present value as of June 30, 2025 | $(5,053) | | Minimum noncancelable lease liability | $17,684 | - In June 2025, the company executed a new building lease agreement in Billerica, Massachusetts, for U.S. distribution, commencing January 1, 2026, with a primary term through December 31, 2032[64] Note 12. Segment and Geographic Information This note provides details on the company's single operating segment and net sales broken down by geographic region - The company operates as a single operating segment, with the CEO (CODM) evaluating performance and allocating resources based on net income and total consolidated assets[65][66][67] | Net Sales by Geography | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :--------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | United States | $36,656 | $32,798 | $71,284 | $63,923 | | Germany | $4,458 | $3,509 | $8,435 | $7,027 | | Canada | $3,955 | $3,618 | $7,676 | $7,230 | | United Kingdom | $3,296 | $2,718 | $6,445 | $5,246 | | Other countries | $15,867 | $13,206 | $30,263 | $25,901 | | Total Net Sales | $64,232 | $55,849 | $124,103 | $109,327 | Note 13. Subsequent Event This note discloses significant events occurring after the balance sheet date, such as new legislation impacts - On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, impacting corporate tax provisions like bonus depreciation and R&E expensing. The company is evaluating its impact but does not expect a material effect on financial statements[70] - The OBBBA removed claims filed after January 31, 2024, for the Employee Retention Credit (ERC) for the period July 1, 2021, through September 30, 2021. The company had filed amended Forms 941-X in April 2025 for $2.2 million for this period[71] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed discussion and analysis of the company's financial condition, results of operations, and cash flows Overview This section provides a high-level summary of the company's business, strategic initiatives, and recent operational highlights - LeMaitre Vascular is a global provider of medical devices and human tissue cryopreservation services for peripheral vascular, end-stage renal, and cardiovascular diseases, with a diversified portfolio of brand-name products[73][75] - The company's strategy includes a focused call point (vascular surgeons), competing for low-rivalry niche products, expanding its direct sales force, and acquiring complementary devices. Biologics represented 51% of worldwide sales in Q2 2025[73][76] - Recent regulatory approvals include Artegraft bovine graft in EU and Australia (April/June 2025) and Pruitt Aortic Occlusion Catheter in EU (May 2025). The company has 19 MDR CE marks and UKCA approvals as of June 30, 2025, expecting 22 by year-end 2025[82][83] - The company ended its cardiovascular porcine patch distribution agreement with Elutia in 2025, which contributed $1.8 million in 2025 revenues[84] - The company is implementing a new Microsoft Dynamics D365 ERP system, with US transition in February 2024 and UK in February 2025, capitalizing $4.9 million in costs as of June 30, 2025[87] - The company is actively transitioning from distributors to direct sales in various countries, including Portugal (May 2025) and Czechia (Q3 2025), incurring distribution termination fees[89] Net Sales and Expense Components This section defines the key revenue and expense categories and their drivers within the company's financial statements - Net sales are derived from product and service sales, less discounts and returns, primarily through a direct sales force to hospitals or clinics. Revenue for consigned products is recognized upon surgical use[90] - Cost of sales includes manufacturing personnel, raw materials, depreciation, allocated overhead, and freight. Operating expenses comprise sales and marketing, general and administrative, and research and development, with specific cost drivers for each[91][92][93][94] - Other income (expense) includes interest income/expense and foreign currency gains/losses. Income tax expense is affected by the mix of taxable income, tax credits, permanent items, and foreign statutory rates[95][96] Results of Operations This section analyzes the company's financial performance, including net sales, gross profit, and operating expenses Net Sales This section analyzes the company's revenue performance, highlighting key drivers of sales growth | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | % Change (YoY) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | % Change (YoY) | | :------- | :-------------------------------------------- | :-------------------------------------------- | :------------- | :------------------------------------------- | :------------------------------------------- | :------------- | | Net sales | $64,232 | $55,849 | 15% | $124,103 | $109,327 | 14% | - The increase in net sales for both periods was primarily driven by higher average selling prices, increased unit volumes, and additional sales representatives. A weaker U.S. dollar also contributed to the increase[97][99] - Direct-to-hospital net sales remained high, at 95% for the three months ended June 30, 2025 and 2024, and 94% and 95% for the six months ended June 30, 2025 and 2024, respectively[98][100] Net Sales by Geography This section breaks down the company's net sales performance across different geographic regions | Geography | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | % Change (YoY) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | % Change (YoY) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------- | :------------------------------------------- | :------------------------------------------- | :------------- | | Americas | $41,321 | $36,907 | 12% | $80,279 | $72,152 | 11% | | Europe, Middle East and Africa (EMEA) | $18,840 | $15,298 | 23% | $35,799 | $29,693 | 21% | | Asia Pacific (APAC) | $4,071 | $3,644 | 12% | $8,025 | $7,482 | 7% | - Americas sales growth was primarily driven by grafts, catheters, and valvulotomes. EMEA saw strong growth from catheters, patches, shunts, and valvulotomes. APAC growth was mainly from grafts, patches, and valvulotomes[100][101][102][103][104][105] Gross Profit This section examines the company's gross profit and gross margin, analyzing factors influencing profitability | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | % Change (YoY) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | % Change (YoY) | | :----------- | :-------------------------------------------- | :-------------------------------------------- | :------------- | :------------------------------------------- | :------------------------------------------- | :------------- | | Gross profit | $44,974 | $38,468 | 17% | $86,394 | $75,133 | 15% | | Gross margin | 70.0% | 68.9% | 1.1% pts | 69.6% | 68.7% | 0.9% pts | - Gross profit increase was driven by higher sales, especially from grafts, catheters, and valvulotomes. Gross margin improved due to greater manufacturing efficiencies, sales price increases, and favorable product mix (e.g., decreased lower-margin porcine patches)[107][108] Operating Expenses This section details the trends and drivers of the company's sales and marketing, general and administrative, and R&D expenses | Expense Category | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | % Change (YoY) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | % Change (YoY) | | :----------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------- | :------------------------------------------- | :------------------------------------------- | :------------- | | Sales and marketing | $14,895 | $10,984 | 36% | $29,107 | $22,670 | 28% | | General and administrative | $10,396 | $8,820 | 18% | $20,883 | $17,833 | 17% | | Research and development | $3,541 | $4,284 | -17% | $7,636 | $8,376 | -9% | | Total operating expenses | $28,832 | $24,088 | 20% | $57,626 | $48,879 | 18% | - Sales and marketing expenses increased significantly due to higher sales representative headcount, wage increases, and increased travel/training. R&D expenses decreased due to lower third-party service fees related to MDR activities[110][111][112][113][114][115] Income Tax Expense This section analyzes the company's income tax provision and effective tax rate, including influencing factors | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Pre-tax income | $18,070 | $15,506 | $32,311 | $28,303 | | Tax provision | $4,291 | $3,680 | $7,521 | $6,590 | | Effective income tax rate | 23.7% | 23.7% | 23.3% | 23.3% | - The effective income tax rate for the three and six months ended June 30, 2025, was 23.7% and 23.3%, respectively, primarily influenced by federal/state tax credits, permanent items, foreign statutory rates, and discrete stock option exercises[117] - A valuation allowance of $1.7 million has been provided for deferred tax assets related to Australian net operating loss and capital loss carry forwards and Massachusetts tax credit carry forwards not expected to be realized[120] Liquidity and Capital Resources This section discusses the company's ability to meet its short-term and long-term financial obligations and funding sources Convertible Senior Notes This section details the company's convertible senior notes, their terms, and their impact on liquidity - The company issued $172.5 million in 2.50% convertible senior notes due 2030 on December 19, 2024, with net proceeds of approximately $167.7 million. Interest is payable semi-annually[123][124] - The conversion rate was adjusted from 8.3521 to 8.3602 shares per $1,000 principal due to an increase in quarterly cash dividends to $0.20 per share in May 2025[124] - Noteholders can convert under specific conditions, and the company can settle conversions in cash, shares, or a combination. The notes are not redeemable before February 5, 2028[125][126] Operating and Capital Expenditure Requirements This section outlines the company's expected funding needs for ongoing operations and capital investments - The company expects to fund operating expenses, capital expenditures, and Convertible Note payments for at least twelve months using existing cash, cash equivalents, investments, and anticipated future cash flows[128] - Future capital requirements depend on factors such as revenues, dividend payments, acquisition-related payments, tax payments, expansion costs, regulatory clearance costs, and potential share repurchases[130] Cash Flows This section analyzes the company's cash generation and usage from operating, investing, and financing activities | Cash Flow Activity | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | Net Change (in thousands) | | :----------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------ | | Operating activities | $29,330 | $14,696 | $14,634 | | Investing activities | $(20,669) | $(13,364) | $(7,305) | | Financing activities | $(8,003) | $(2,831) | $(5,172) | | Net increase (decrease) in cash and cash equivalents | $1,567 | $(2,001) | $3,568 | - Net cash from operating activities increased by $14.6 million, driven by higher net income and non-cash adjustments, despite increased working capital use[131][132] - Net cash used in investing activities increased by $7.3 million, primarily due to higher purchases of marketable securities[133][134] - Net cash used in financing activities increased by $5.2 million, mainly due to higher dividend payments and deferred acquisition payments, partially offset by stock option exercises[135][136] Dividends This section provides information on the company's dividend policy and recent dividend payments | Record Date | Payment Date | Per Share Amount | Dividend Payment (in thousands) | | :------------------- | :----------- | :--------------- | :------------------------------ | | Fiscal Year 2025 | | | | | March 13, 2025 | March 27, 2025 | $0.20 | $4,517 | | May 15, 2025 | May 29, 2025 | $0.20 | $4,520 | | Fiscal Year 2024 | | | | | March 14, 2024 | March 28, 2024 | $0.16 | $3,589 | | May 16, 2024 | May 30, 2024 | $0.16 | $3,593 | - The Board approved a quarterly cash dividend of $0.20 per share payable on September 4, 2025, continuing the policy of quarterly cash dividends approved in February 2011[137][138] Critical Accounting Policies and Significant Judgments and Estimates This section highlights the accounting policies requiring significant management judgment and estimation - The preparation of consolidated financial statements requires management to make estimates, assumptions, and judgments that affect reported amounts. No material changes to critical accounting policies and estimates were reported from the 2024 Form 10-K[139][140] Recent Accounting Pronouncements This section discusses the potential impact of newly issued accounting standards on the company's financial reporting - Information on recently issued accounting pronouncements that may impact financial position, results of operations, or cash flows is disclosed in Note 2 to the consolidated financial statements[141] Item 3. Quantitative and Qualitative Disclosure about Market Risk The company is exposed to market risks from changes in interest rates and foreign currency exchange rates, which are managed through normal operating and financing activities - The company is exposed to market risks from changes in interest rates and foreign currency exchange rates, which are managed through normal operating and financing activities[142] - No material changes in foreign currency risk or interest rate risk were reported compared to the 2024 Form 10-K[142] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and reports on changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section assesses the effectiveness of the company's controls designed to ensure timely and accurate financial disclosures - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective at a reasonable assurance level[143][144] Changes in Internal Control over Financial Reporting This section reports on any material changes in the company's internal control over financial reporting during the period - The ongoing implementation of a new ERP system, which began in February 2024, is expected to result in changes to internal control over financial reporting as processes and procedures evolve[145] - Other than the ERP system implementation, there have been no material changes to internal control over financial reporting during the quarter ended June 30, 2025[146] Part II. Other Information Item 1. Legal Proceedings The company is involved in various lawsuits, claims, and investigations in the ordinary course of business, but management does not believe any currently pending matters would have a material adverse effect on its financial position, results of operations, or cash flows - The company is routinely involved in legal proceedings related to employment, product liability, commercial arrangements, and intellectual property[148] - Management believes no current legal matters will have a material adverse effect on the company's financial position, results of operations, or cash flows[148] Item 1A. Risk Factors This section supplements and updates the risk factors from the 2024 Form 10-K, highlighting potential negative impacts from adverse global economic conditions and the risks associated with product recalls or regulatory non-compliance - Adverse global economic conditions, including tariffs and trade tensions, could negatively impact demand for products, sales growth, and margins, though the U.S. domestic business is less likely to be affected by tariffs due to domestic manufacturing[150] - Products and services are subject to extensive regulation, and approvals could be withdrawn or suspended due to non-compliance or unforeseen problems, potentially leading to significant costs and adverse publicity from recalls[151][152] - In April 2025, the company voluntarily notified regulatory bodies of an inadequate seal on certain catheter packaging, which may compromise sterility, but the financial impact is not expected to be material[152] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on the company's equity security transactions, noting no recent unregistered sales and detailing common stock repurchases made to satisfy employee tax obligations related to equity awards - No unregistered sales of equity securities were reported[153] | Period | Number of Shares Purchased (1) | Average Price Paid Per Share | Maximum Dollar Value of Shares that may yet be Purchased under the Plans or Program (2) | | :------------------------------------ | :----------------------------- | :--------------------------- | :------------------------------------------------------------------------------------ | | April 1, 2025 through April 30, 2025 | 33 | $85.16 | $75,000,000 | | May 1, 2025 through May 31, 2025 | 19 | $80.26 | $75,000,000 | | June 1, 2025 through June 30, 2025 | - | - | $75,000,000 | | Total (for Q2 2025) | 52 | $83.37 | $75,000,000 | - The repurchased shares were used to satisfy employees' minimum statutory withholding taxes in connection with the vesting of restricted stock units and performance-based restricted stock units[154] - The Board authorized a $75.0 million common stock repurchase program on February 18, 2025, valid until February 17, 2026, but no repurchases have been made under this specific program to date[155] Item 5. Other Information This section details recent amendments to the company's By-laws, including updates to advance notice provisions for stockholder nominations, clarification on special meeting proposals, proxy card color requirements, and designation of exclusive forums for legal claims Amendments to By-laws This section describes recent changes to the company's By-laws, affecting corporate governance and stockholder rights - On August 4, 2025, the Board approved Second Amended and Restated By-laws, updating advance notice provisions for director nominations and other stockholder business, including compliance with Rule 14a-19 of the Exchange Act[157] - New By-laws clarify special meeting proposals, require non-white proxy cards for soliciting stockholders, and designate the Delaware Court of Chancery and U.S. federal district courts as exclusive forums for certain legal claims[157][160] Rule 10b5-1 and non-Rule 10b5-1 trading arrangements This section reports on any Rule 10b5-1 or non-Rule 10b5-1 trading plans established by company insiders - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were reported[159] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to By-laws, certifications from the CEO and CFO, and Inline XBRL documents - Exhibits include amendments to the Second Amended and Restated By-laws (3.1, 3.2), CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[163] Signatures The report is duly signed on behalf of LeMaitre Vascular, Inc. by its Chairman and Chief Executive Officer, George W. LeMaitre, and Chief Financial Officer, Dorian P. LeBlanc, on August 6, 2025 - The report was signed on August 6, 2025, by George W. LeMaitre (Chairman and CEO) and Dorian P. LeBlanc (CFO)[165][166]