LeMaitre Vascular (NSDQ:LMAT) missed Wall Street’s expectations for the 4th quarter, as sales dropped 7%, a slide the company ascribed to its departure from the stent graft market.
The Burlington, Mass.-based device maker posted profits of $346,000, or 2 cents per diluted share, on sales of $13.4 million during the 3 months ended Dec. 31, 2011. That represents a 71% slide compared with profits of $2 million, or 12 cents diluted EPS, on sales of $14.4 million during the same period in 2010.
For the full year, LeMaitre posted a modest 2.9% bump in revenues, to $57.7 million, compared to $56.1 million in 2010, but full-year profits sank 65%, to $2.1 million, or 13 cents diluted EPS, from last year’s $6 million, or 37 cents diluted EPS.
Both Q4 and full-year 2011 earnings reflected a 1-time, non-cash tax benefit of $3.2 million, according to regulatory filings.
"Due to our exit from stent grafts, reported sales declined 7% from Q4 2010 to $13.4 million in Q4 2011," CFO Joseph Pellegrino said during a conference call with analysts this week. "But this masks a number of positive trends. Organic revenues in Q4 2011 were up 5% over the prior-year period, our best quarterly growth rate of the year. Sales at our European subsidiaries increased 7% on an organic basis, as our more focused non-stent graft sales force as well as our newly direct efforts in Spain and Denmark gained traction."
The company exited the stent graft market in July 2011, spiking a distribution deal with Endologix (NSDQ:ELGX) and selling a pair of brands to Duke Vascular in the process.
LeMaitre chairman & CEO George LeMaitre was optimistic about the company’s progress in its 5 strategic initiatives for the 2011, including shifting its vascular products to direct sales in Spain and Denmark.
"This strategic shift was intended to increase our focus on our core vascular devices and to extricate from the hyper competitive stent graft business," LeMaitre said. "As you may recall, the lion’s share of our stent graft business was in Europe."
Other initiatives included swapping European clinical specialists for less expensive sales reps and closing 2 factories.
"Financially, though, the projects are slow in reach maturity than I had anticipated," LeMaitre said. "Throughout 2011 these closures cost us gross margin points. I expect the opposite as time goes by."
Amid the paradigm shift, the company lowered its 2012 sales guidance to $57.5 million for the year, down from $59 million.
George LeMaitre explained the lowered guidance as an consequence of missing expectations for Q4.
"As you know our quarter was $800,000 short of our guidance and so our starting point for next year is $800,000 short," he said. "It is worth pointing out that we still feel real good about the business, because we were giving you an 8% organic growth number before the full-year 2012 and now we are giving you a 9% organic growth [number] for the business for full-year 2012. "