Merit Medical(MMSI)2025-04-25 04:05Financial Data and Key Metrics Changes - The company reported total revenue of $355.4 million, up 9.8% year-over-year on a GAAP basis and up 10.9% year-over-year on a constant currency basis, exceeding growth expectations [11][12] - Non-GAAP operating margin increased nearly 230 basis points year-over-year to 19.3%, representing a first quarter record for the company [12][29] - Non-GAAP EPS grew by 15%, exceeding the high end of expectations [12][30] Business Line Data and Key Metrics Changes - Cardiovascular segment sales grew by 9%, while Endoscopy segment sales surged by 64% [17][18] - Cardiac intervention product sales increased by 12%, driven primarily by the acquisition of Cook Medical Products [20] - Sales of OEM products increased by 21%, significantly outperforming guidance [21] Market Data and Key Metrics Changes - U.S. sales increased by 14% on a constant currency basis, exceeding expectations [23] - International sales grew by 6% year-over-year, with APAC and EMEA regions performing at the high end of expectations [24] - Sales in China decreased by 10%, attributed to broader macroeconomic conditions rather than specific demand issues [25][62] Company Strategy and Development Direction - The company remains focused on delivering strong execution, solid constant currency growth, and free cash flow generation in 2025 [15][37] - Updated financial guidance reflects the impact of tariffs and trade policies, with non-GAAP EPS expectations adjusted to $3.29 to $3.42 [34][37] - The company is implementing cost control measures and leveraging existing initiatives to mitigate tariff impacts [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges posed by tariffs and macroeconomic conditions [41][112] - The company is monitoring the tariff situation closely but is not making long-term decisions based on short-term fluctuations [110][112] - Management remains optimistic about the demand for products in China despite recent challenges [63][99] Other Important Information - The company generated $19.5 million of free cash flow in Q1 2025, down 20% year-over-year due to increased capital expenditures [32] - Total debt obligations stood at $747.5 million, with a net leverage ratio of 1.8x as of March 31, 2025 [33] Q&A Session Summary Question: Can you provide more color on mitigation efforts regarding tariffs? - Management indicated that mitigation efforts are centered around existing initiatives and operational efficiencies, with a focus on maintaining execution [54][56] Question: What is the outlook for demand in China? - Management noted that the softer revenue results in China were primarily due to macroeconomic factors, and they have not changed their full-year outlook for the region [62][99] Question: How is the company managing tariff impacts on free cash flow? - Management emphasized that they have a plan in place to manage working capital and mitigate tariff impacts, maintaining a free cash flow guidance of at least $150 million for 2025 [90][94] Question: What is driving the recent growth in the OEM business? - Management attributed the growth to new accounts and the company's longstanding reputation for quality and reliability, rather than inventory pull-forward due to tariffs [101][105]