Artivion(US:AORT)2019-07-31 02:11Financial Data and Key Metrics Changes - Total revenue for Q2 2019 was $71.1 million, reflecting a 4% increase on a GAAP basis and a 7% increase on a non-GAAP constant currency basis compared to Q2 2018 [7][15] - GAAP net income was approximately $2.8 million or $0.07 per fully diluted share, while non-GAAP net income was $4.1 million or $0.11 per share [19] - Gross margins were 66% for Q2, which was about 40 basis points higher than Q1 [18] Business Line Data and Key Metrics Changes - JOTEC revenue increased 8% on a non-GAAP constant currency basis, with a potential growth rate of approximately 11% if not for a sterilization issue [8][16] - On-X revenue increased 5% on a non-GAAP constant currency basis, with North America growing 6% [8][16] - BioGlue revenue increased 7% on a non-GAAP constant currency basis, driven by strong sales in Europe and Asia-Pacific [9][16] - Tissue processing revenues increased by 4%, with cardiac tissue processing revenues up 16% and vascular tissue processing revenues down 7% [17] Market Data and Key Metrics Changes - International markets saw a 20% year-over-year increase in revenues on a constant currency basis [17] - The company is expanding its sales operations in Asia Pacific and Latin America, with plans to migrate towards direct sales in selective territories [13] Company Strategy and Development Direction - The company plans to launch three next-generation JOTEC products in European markets by the end of 2019 [10][22] - The PROACT 10A trial is expected to start in Q3, which aims to demonstrate the benefits of the On-X mechanical valve [11][22] - The company is focusing on cost-down initiatives and enhancing distributor networks to improve margins [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth despite temporary supply issues and currency impacts, expecting a strong Q4 and a positive outlook for 2020 [20][72] - The company is addressing sterilization and supply challenges to improve JOTEC product availability [21][49] Other Important Information - The company maintains its full-year 2019 financial guidance, expecting Q3 revenues between $67.5 million and $68.5 million [20] - As of July 26, 2019, the company had approximately $44 million in cash and equivalents, with a gross leverage of approximately 4.2 times [19] Q&A Session Summary Question: Can you provide insights on JOTEC product rollouts in Europe? - Management expects CE mark approvals for two JOTEC devices in Q3 and anticipates significant growth from these launches [27][29] Question: What initiatives are in place to boost margins? - The company is focusing on cost-down initiatives, enhancing direct sales strategies, and optimizing distributor networks to improve margins [31][32] Question: What caused the slower growth in On-X? - Management noted that competitive pressure from tissue valves targeting younger patients and currency issues impacted growth, but they remain optimistic about future trials [36][66] Question: What is the status of the BioGlue application in China? - The approval timeline is uncertain, but initial feedback is expected in Q4 [42] Question: How much impact would resolving JOTEC supply issues have on Q3? - Management estimates a potential impact of $1.5 million to $2 million if supply issues were resolved [62]