Haemonetics Corporation

Good day and thank you for standing by. Welcome to the fourth quarter 2023 Humanities Corporation's earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, David Trink, Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining us for Humanetics' fourth quarter fiscal 2023 conference call and webcast. I'm joined today by Chris Simon, our CEO, and James Durecka, our CFO. This morning, we posted our fourth quarter fiscal 2023 results to our investor relations website, along with our fiscal 2024 guidance and the analytical tables with the information that we will refer to on this call. Additionally, we provided a complete P&L, balance sheet, summary statement of cash flows, as well as reconciliations of our GAAP to non-GAAP financial results and guidance. Unless otherwise noted, All revenue growth rates discussed today are organic and exclude the impact of currency fluctuation and strategic exits of product lines. As in the past, we'll refer to non-GAAP financial measures throughout this call to help investors understand Hemanetix's ongoing business performance. Please note that these measures exclude certain charges and income items. Please refer to this morning's earnings release for details on excluded items including comparisons with the same periods of fiscal 2022 and a reconciliation to our GAAP results. Our remarks today include forward-looking statements, and our actual results may differ materially from the anticipated results. Factors that may cause our results to differ include those referenced in the Safe Harbor Statement in today's earnings release and in our other SEC filings. We do not undertake any obligation to update these forward-looking statements. And now, I'd like to turn it over to Chris.

Thanks, David. Good morning, and thank you all for joining. Today, we reported organic revenue growth of 17% in fourth quarter and 21% in fiscal 2023. We reported adjusted earnings per diluted share of 77 cents in the fourth quarter and $3.03 in fiscal 23. increases of 18% and 17% respectively. For the first time, Humanetics eclipsed a billion dollars in annual revenue, a milestone in our transformational growth journey. Despite the challenging macroeconomic environment, we are delivering and building momentum by creating essential value for donors, patients, and caregivers around the world. Our consistently strong performance throughout fiscal 2023 marked an outstanding start to our long-range plan. Three value drivers are fueling our success. First, plasma volumes from unprecedented collections recovery coupled with the benefits of our successful technology upgrades. Second, accelerated vascular closure U.S. account penetration and performance in hemostasis management aided by improving budgets and staffing in hospitals across the world. operational excellence providing agile and resilient supply, capacity to meet robust demand, and greater productivity to offset inflation and fund our growth. We anticipate these unique value drivers will continue to distinguish Humanetics and drive our success moving forward. We are realizing transformational growth of our company and our businesses. Let's turn to our business unit results and revenue guidance. Plasma revenue grew 31% in the fourth quarter and 43% in fiscal 2023, driven by volume growth and price benefits. North America disposables represented 85% of our plasma revenue in fiscal 2023, growing 33% in the fourth quarter and 46% in fiscal 2023. It was a historic year as plasma fractionators strove to replenish safety stocks that were dangerously depleted during the pandemic. As a result, we saw record collection volumes throughout the year, and we don't expect any abatement of this trend in the near term. We also retain the majority of CSL US disposables business, which grew at a rate comparable to our overall US disposables business. Our global CSL business accounted for approximately 14% of our reported revenue in fiscal 2023. We increased production and strengthened our supply chain to meet heightened demand for plasma devices and disposables. These investments will also create meaningful operational efficiencies over time as demand normalizes. Nexus with Persona is enabling our customers to safely meet end market demand and lower their cost per liter. We are encouraged by their unrivaled successes and we will continue to advance and develop the Nexus platform as the industry standard. Hospital revenue grew 19% in Q4 and 18% in fiscal 2023, primarily driven by growth in vascular closure and hemostasis management. At the beginning of fiscal 2023, We guided 16 to 19% hospital growth for the year. In August, we raised that guidance to 19 to 22% after a strong Q1 in vascular closure. The COVID outbreak in China in Q3 negatively affected hemostasis management and self salvage revenue such that we did not meet our upwardly revised forecast. Trends improved globally in Q4, including significant improvements in hospital staffing and easing budgetary constraints. The hospital business unit had its first $100 million revenue quarter in Q4, and we are optimistic that these trends will continue in fiscal 2024. Hemostasis management revenue grew 22% in the quarter and 11% in fiscal 2023. North America, our largest market, delivered double-digit growth in Q4 and in fiscal 2023. Global growth was driven by strong adoption and utilization of PEG disposables in both periods. Vascular closure revenue grew 31% in the quarter and 35% in fiscal 2023. We realized this growth by opening new accounts and driving penetration to gain share in the top US EP hospitals. International commercialization of ASCADE is underway. utilizing hybrid sales models and leveraging existing back office infrastructure. We expect our first sales in Europe in Q1 fiscal 2024. Transfusion management revenue grew 8% in the quarter and 19% in fiscal 2023. Growth in the quarter and fiscal year was driven by expansion of our sales force and software implementations in the US and UK. Self salvage revenue grew 4% in the quarter and 3% in fiscal 2023. Fourth quarter benefited from one-time orders in North America. Fiscal 2023 benefited from strong capital sales and favorable order timing among EMEA distributors. The benefits in both periods were partially offset by large stocking orders in Japan last year. Blood center revenue declined 4% in the fourth quarter and 2% in fiscal 2023. Aporesis revenue was flat in the quarter and declined 4% in fiscal 23. In the fourth quarter, we grew Egyptian plasma collections and achieved red cell collection share gains in the U.S. that were offset by lower convalescent plasma revenue when compared with the prior year. Whole blood declined 9% in the quarter due to unfavorable order timing among APAC distributors and customers reducing safety stocks built during the pandemic. For fiscal 2023, whole blood revenue grew 5%, driven by share gains in North America as our resilient supply chain enabled us to serve customers when competitors could not. Now turning to fiscal 2024 revenue guidance. We are confident about our momentum going forward as we pursue opportunities to deliver our short and long-term goals. We expect total company organic revenue growth of 5% to 8% in fiscal 2024. We are enthusiastic about the opportunities in our plasma business and anticipate plasma revenue growth of 3 to 6% in fiscal 2024, with price and volume both contributing meaningfully. After exceptional recovery and growth in fiscal 2023, our plasma business forecast, excluding CSL, is in line with the mid-teens growth rate that we expect over the next several years as communicated in our LRP. Regarding CSL, we expect our share of their plasma business to decrease in the second half of fiscal 2024. Our guidance for fiscal 2024 includes a minimum purchase commitment from CSL under our non-exclusive supply agreement that is slightly in excess of $100 million. We expect that CSL will continue to provide a meaningful contribution to our plasma business revenue in fiscal 2025. We remain committed to providing CSL and all of our plasma customers with the highest level of service and support. We are excited about the future of hospital as a long-term growth driver for our business. Our clinical and commercial strategies are working, and we are tracking ahead of our long-range plan. In fiscal 2024, we expect the hospital business to deliver revenue growth of 16 to 18% driven by strength in vascular closure and hemostasis management. Our blood center revenue guidance is a year-over-year decline of 2% to flat. The pacing of revenue in this business is back-end loaded with unfavorable order timing impact in the first half of the year when compared with fiscal 2023. In summary, this is a very exciting time for hemonetics. and we are enthusiastic about our prospects for the new fiscal year. We are strengthening our competitiveness and capitalizing on opportunities in plasma while accelerating our pivot to higher growth, higher margin, innovative hospital-based opportunities, and improving productivity through operational excellence. We are using our momentum to sustain growth, improve margins, and advance our industry leadership, taking evolutionary steps to deliver revolutionary results. Now I'll turn the call over to James to discuss our financial results and earnings guidance.