LeMaitre Vascular, Inc.

Welcome to the Lemaitre Vascular Q3 2023 Financial Results Conference Call. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 11 again. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Mr. JJ Pellegrino, Chief Financial Officer of LeMaitre LeVasker. Please go ahead, sir.

Thank you, operator. Good afternoon, and thank you for joining us on our Q3 2023 conference call. With me on today's call is our CEO, George LeMaitre, and our president, Dave Roberts. Before we begin, I'll read our Safe Harbor Statement. Today, we will make some forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast, and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today, November 1, 2023, and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10 and subsequent SEC filings, including disclosure of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures which include organic sales growth, as well as operating income, operating expense, and EPS, excluding special charges. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and is available in the investor relations section of our website, www.lamate.com. I'll now turn the call over to George Lamate.

Thanks, JJ. Q3 was an excellent quarter. Q3 was similar to Q2 on the top line, with 16% organic sales growth. But it was better on the bottom line. Through the year, we've gained control of op expenses. Spending growth was 26% in Q1, 19% in Q2, and now 14% in Q3. As a result, op income grew 49% in Q3, and EPS was up 36%. Reported sales growth was 21% in Q3, spread across all geographies. APAC was up 30%, EMEA 24%, and the Americas 20%. By product, bovine patches were up 22%, Valvatone was 27%, bovine grafts 15%, and carotid shunts 24%. Our bovine patch and carotid shunt businesses continue to excel in Q3 as key competitors have left the market. Valvatone growth might be due to the recent publication of the best CLI trial, which showed superior results of vein bypass versus stents, angioplasty, and atherectomy. Hospital procedures remained elevated in Q3 as the 2023 return to hospital continued, and our January 1st price increase has largely been accepted. In a time of high inflation, supply chain disruptions, and the CE mark transition, hospitals are now more attracted to our longstanding no back orders promise, and price might have become a secondary topic. Our 16% organic sales growth in Q3 was 11% price and 5% units. Feed on the street and our growing international presence also helped. We ended Q3 with a record 136 sales reps, 15% more than a year ago. We generally have posted higher sales growth rates internationally as we keep entering new markets. LaMate's new Bangkok office opened in August and we began selling directly to Thai hostels. We also opened a new expanded Madrid office in September. And now we're planning a French sales office for H1 2024. France is our sixth largest market. For a company with a French name, it's a bit odd that we've never had a dedicated French sales office. Paris will be our 14th sales office and will now be able to serve the five largest European countries with dedicated customer service reps in their country and their languages. Previously, our European customer service reps were centralized in Frankfurt. This relocalization of customer service tightens our hospital relationships and likely increases sales. Important regulatory projects underway include our autographed and RFA filings in Europe, as well as our two Chinese Xenosure filings for cardiac and peripheral. It's likely that all four of these filings will be at their respective regulatory agencies by H1 2024 and would expect approvals two years after that. In H2 2024, we'll also file for autographed approval in Canada and Australia. These filings are in addition to the MDR CE transition in Europe. As you may know, Brussels has extended the MDR deadline to 2027. We have approximately 17 product categories needing this new CE stamp or letters to file, so this is a considerable undertaking. To conclude, 21% sales growth in Q3 and 49% op income growth resulted from price increases, restrained op expenses, and the continued return to hospital by patients and staff. Our profitability and $97 million of cash on hand provide safety and strategic optionality. With that, I'll turn it over to JJ.