Merit Medical Systems, Inc. · NASDAQ:MMSI
Merit Medical Systems — Q2 2020 Earnings Presentation
22 slides from Merit Medical Systems's earnings presentation, Jul 29, 2020
Slide 1: Second Quarter 2020 Results
Second Quarter 2020 Results 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 ~ 6,000 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 many of our target end markets Robust innovation engine driving substantial portfolio expansion and product growth Strong M&A track record to complement organic growth in our focused clinical end markets Dedic
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 Update on operational targets and other initiatives previously disclosed: • $6-10 million annualized cost savings: 14 product line transfers to Tijuana, Mexico and Pearland, Texas and site consolidations: – Update: Transfer of product lines is on track to be completed by en
Slide 8: COVID-19 Update – What we currently see
COVID-19 Update – What we currently see The decline in procedure volumes observed in the first half of 2020 is expected to continue to create a headwind throughout the year, but we are also seeing signs of recovery in some markets. Visibility for procedures continues to be limited, and we are not ab
Slide 9: COVID-19 Update – What we are doing
COVID-19 Update – What we are doing Given the impact of the COVID-19 pandemic on demand for procedures, we have taken and will continue to take the following actions to reduce operating expenses: • Continued execution on previously disclosed operational efficiencies. • Implemented salary reductions
Slide 10: Financial Summary GAAP
Financial Summary GAAP Q2 2020 Q2 2019 YTD 2020 YTD 2019 Revenues $218.4M $255.5M $461.9M $493.9M Gross Margin 38.6% 43.8% 40.7% 43.9% Operating Margin (8.7%) 4.8% (3.8%) 4.4% Net Income (Loss) ($19.1M) $6.9M ($22.2M) $13.1M Earnings (Loss) per Share ($0.34) $0.12 ($0.40) $0.23 10
Slide 11: Financial Summary Non-GAAP
* See "Notes to Non-GAAP Financial Measures" below for definition of Non-GAAP measures used in this presentation † Non-GAAP measure, representing net organic sales on a constant currency basis Financial Summary Non-GAAP* 11 Q2 2020 Q2 2019 YTD 2020 YTD 2019 Revenues (Core Constant Currency) † $220.7
Slide 12: Revenue by Geography - Q2
United States 54.1% International 29.0% EMEA 16.9% Revenue by Geography - Q2 12 * Non-GAAP measure, representing net organic sales on a constant currency basis See "Notes to Non-GAAP Financial Measures" below for definition of Non-GAAP measures used in this presentation GAAP Non-GAAP Core Constant C
Slide 13: Revenue by Geography - YTD
-8.3% -4.9% -2.7% -8.6% -2.1% -0.9% United States International EMEA United States 56.1% International 25.2% EMEA 18.7% Revenue by Geography - YTD 13 * Non-GAAP measure, representing net organic sales on a constant currency basis See "Notes to Non-GAAP Financial Measures" below for definition of Non
Slide 14: 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 15: 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 a currency other than the U.S. dollar at the applicable foreign exchange rat
Slide 16: Q2 GAAP to Non-GAAP Net Income Reconciliation
GAAP net income (loss) $ (22,300) $ 3,242 $ (19,058) $ (0.34) $ 8,999 $ (2,140) $ 6,859 $ 0.12 Non-GAAP adjustments: Cost of Sales Amortization of intangibles 12,807 (3,300) 9,507 0.17 12,178 (3,118) 9,060 0.16 Inventory write-off (b) 345 (104) 241 0.00 — — — — Inventory mark-up related to acquisiti
Slide 17: YTD GAAP to Non-GAAP Net Income Reconciliation
GAAP net income (loss) $ (24,292) $ 2,080 $ (22,212) $ (0.40) $ 15,845 $ (2,791) $ 13,054 $ 0.23 Non-GAAP adjustments: Cost of Sales Amortization of intangibles 25,624 (6,604) 19,020 0.34 24,157 (6,185) 17,972 0.32 Inventory write-off (b) 1,776 (472) 1,304 0.02 — — — — Inventory mark-up related to a
Slide 18: Reconciliation of GAAP Operating Income to Non-GAAP
18 Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Operating Income (Unaudited, in thousands except percentages) Net Sales as Reported $ 218,371 $ 255,532 $ 461,896 $ 493,881 GAAP Operating Income (Loss) (18,995) (8.7) % 12,201 4.8 %(17,633) (3.8) % 21,724 4.4 % Cost of Sales Amortization
Slide 19: Reconciliation footnotes
(a) Reflects the tax effect associated with pre-tax income (loss) and the non-GAAP adjustments. (b) Represents write-off of inventory related to the announced closure of the ITL Healthcare Pty Ltd. (“ITL”) procedure pack operations in Australia in Q2 2020 and our distribution agreement with NinePoin
Slide 20: Constant currency and core revenue reconciliation
(a) The constant currency revenue adjustments of $2.7 million and $5.5 million to reported revenue and to core revenue for the three and six months ended June 30, 2020, respectively, were calculated usingthe applicable average foreign exchange rates for the three and six months ended June 30, 2019,
Slide 21: Reconciliation of Reported Gross Margin to Non-GAAP Gross Margin
Reported Gross Margin 38.6 % 43.8 % 40.7 % 43.9 % Add back impact of: Amortization of intangibles 5.9 % 4.8 % 5.6 % 4.8 % Inventory write-off (a) 0.1 % — 0.4 % — Inventory mark-up related to acquisitions 0.1 % 0.1 % 0.0 % 0.2 % Non-GAAP Gross Margin 44.7 % 48.7 % 46.7 % 48.9 % Three Months Ended Six
Slide 22: Slide 22
Merit Medical Systems — Q2 2020 Earnings Presentation on 6ix