Merit Medical Systems, Inc. · NASDAQ:MMSI
Merit Medical Systems — Q4 2019 Earnings Presentation
21 slides from Merit Medical Systems's earnings presentation, Feb 24, 2020
Slide 1: Fourth Quarter and Full Year 2019 Results, 2020 Guidance
Fourth Quarter and Full Year 2019 Results 2020 Guidance FRED LAMPROPOULOS Chairman & CEO Raul Parra CFO
Slide 2: Disclosure Regarding Forward-Looking Statements
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This presentation and any accompanying management commentary include “forward-looking statements,” as defined within applicable securities laws and regulations. All statements in this presentation, other than statements of historical fact, are “forward
Slide 3: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES Although Merit’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), Merit’s management believes that certain non-GAAP financial measures provide investors with useful information regardin
Slide 4: Merit Medical Systems at a Glance
Merit Medical Systems at a Glance 4 PROVEN INTERNATIONAL SCALE AND GROWTH NIMBLE & POSITIONED FOR CONTINUED GROWTH DIVERSIFIED PORTFOLIO AND MANUFACTURING FOOTPRINT $995M ~ 6,400 Employees ~ 300 Sales Reps Manufacturing facilities > 1.3M Sq. Ft. 66% 34% 58% 42% Proprietary Disposable Medical Product
Slide 5: Merit's Investment Highlights
Merit’s Investment Highlights Leading disposable medical product solutions provider across all of our target end markets Robust innovation engine driving substantial portfolio expansion and product growth Consistent M&A track record to complement organic growth in our focused clinical end markets De
Slide 6: Multiple Drivers of Sustainable Growth
Multiple Drivers of Sustainable Growth Domestic Market International Markets Innovation Expand Served Markets Opportunistic M&A ▪ Driven by our long history of R&D ▪ Several recent product launches ▪ Product line extensions and innovations ▪ Opportunistic acquisitions ▪ Distribution deals Distributo
Slide 7: Key Merit Medical Updates
Key Merit Medical Updates ▪ Several key product regulatory approvals: – SwiftNINJA® Steerable Microcatheter (China) – InQwire® Amplatz Guide Wire (China) – Merit SureCross® Support Catheter (China) – CE mark for Cianna Scout® Surgical Guidance System (Europe) – De Novo classification order for Surfa
Slide 8: FY20 Revenue Reporting Changes
FY20 Revenue Reporting Changes Merit is providing new revenue reporting alignment beginning in 2020 to provide better visibility to investors Prior Reporting Cardiovascular – CRM / EP – Stand-Alone Devices – Cianna Medical – Custom Kits and Procedure Trays – Inflation Devices – Catheters – Embolizat
Slide 9: Financial Summary GAAP
Financial Summary GAAP Q4 2019 Q4 2018 FY 2019 FY 2018 Revenues $257.9M $233.2M $994.9M $882.8M Gross Margin 43.3% 44.9% 43.5% 44.7% Operating Margin (1.3%) 5.9% 1.6% 6.6% Net Income (Loss) ($4.2M) $9.2M $5.5M $42.0M EPS ($0.08) $0.16 $0.10 $0.78 9
Slide 10: Financial Summary Non-GAAP
Q4 2019 Q4 2018 FY 2019 FY 2018 Revenues (Core Constant Currency)† $253.2M $233.2M $954.3M $882.8M Gross Margin 48.3% 49.4% 48.6% 48.9% Operating Margin 12.7% 14.2% 11.8% 13.6% Net Income $22.1M $27.0M $82.1M $91.3M EPS $0.40 $0.48 $1.46 $1.69 Financial Summary Non-GAAP* * See "Notes to Non-GAAP Fin
Slide 11: Revenue by Geography
United States 57.9% International 24.6% EMEA 17.5% Revenue by Geography 11 2019 (YoY) Q4 2019 (QoQ) * Non-GAAP measure, representing net organic sales on a constant currency basis See "Notes to Non-GAAP Financial Measures" below for full definition of all Non-GAAP measures GAAP Non-GAAP Core Constan
Slide 12: 2020 Guidance
2020 Guidance Financial Measure 2020 Guidance (Pre-Coronavirus) Net Sales $1,044 – $1,064 million Earnings Per Share (GAAP) $0.62 – $0.72 Operating Margin (GAAP) 6% – 7% Earnings Per Share (Non-GAAP) $1.58 – $1.68 Operating Margin (Non-GAAP) 13% – 14% Merit’s financial guidance for the year ending D
Slide 13: Notes to Non-GAAP Financial Measures
NOTES TO NON-GAAP FINANCIAL MEASURES For additional details, please see the accompanying press release and forward-looking statement disclosure. These presentation materials and associated commentary from Merit’s management, as well as the press release issued today, use non-GAAP financial measures,
Slide 14: Notes to Non-GAAP Financial Measures (cont.)
NOTES TO NON-GAAP FINANCIAL MEASURES (cont.) Constant Currency Revenue Merit’s revenue on a constant currency basis is prepared by translating the current-period reported revenue of subsidiaries whose functional currency is other than the U.S. dollar at the applicable foreign exchange rates in effec
Slide 15: Q4 GAAP to Non-GAAP Net Income Reconciliation
GAAP net income (loss) $ (7,962) $ 3,757 $ (4,205) $ (0.08) $ 12,210 $ (3,022) $ 9,188 $ 0.16 Non-GAAP adjustments: Cost of Sales Amortization of intangibles 12,825 (3,285) 9,540 0.17 9,245 (2,365) 6,880 0.13 Inventory mark-up related to acquisitions 183 (47) 136 0.00 1,255 (323) 932 0.02 Operating
Slide 16: Full Year GAAP to Non-GAAP Net Income Reconciliation
GAAP net income $ 2,193 $ 3,258 $ 5,451 $ 0.10 $ 49,519 $ (7,502) $ 42,017 $ 0.78 Non-GAAP adjustments: Cost of Sales Amortization of intangibles 49,707 (12,730) 36,977 0.66 31,795 (8,123) 23,672 0.43 Inventory mark-up related to acquisitions 1,122 (289) 833 0.01 5,233 (1,347) 3,886 0.07 Operating e
Slide 17: GAAP to Non-GAAP Operating Margin Reconciliation
Net Sales as Reported $ 257,922 $ 233,249 $ 994,852 $ 882,753 GAAP Operating income (loss) (3,409) (1.3) % 13,661 5.9 % 15,434 1.6 % 58,617 6.6 % Cost of Sales Amortization of intangibles 12,825 5.0 % 9,245 4.0 % 49,707 5.0 % 31,795 3.6 % Inventory mark-up related to acquisitions 183 0.1 % 1,255 0.5
Slide 18: Reconciliation Footnotes
(a) Reflects the tax effect associated with pre-tax income and the non-GAAP adjustments. (b) Represents transaction costs and certain integration costs, including travel, related to acquisitions. (c) Represents incremental expenses incurred to comply with the Medical Device Regulation (MDR) in Europ
Slide 19: Reconciliation of Reported Revenue to Core and Constant Currency Revenue
% Change % Change Reported Revenue 10.6 % $ 257,922 $ 233,249 12.7 % $ 994,852 $ 882,753 Add: Impact of foreign exchange (a) 1,694 — 13,521 — Constant Currency Revenue 11.3 % $ 259,616 $ 233,249 14.2 % $ 1,008,373 $ 882,753 % Change % Change Reported Revenue 10.6 % $ 257,922 $ 233,249 12.7 % $ 994,8
Slide 20: Reconciliation of Reported Gross Margin to Non-GAAP Gross Margin
20 Reconciliation of Reported Gross Margin to Non-GAAP Gross Margin (Unaudited, in thousands except per share amounts) 2019 2018 2019 2018 Reported Gross Margin 43.3 % 44.9 % 43.5 % 44.7 % Add back impact of: Amortization of intangibles 5.0 % 4.0 % 5.0 % 3.6 % Inventory mark-up related to acquisitio
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