LeMaitre Vascular, Inc. (LeMaitre), a cardiovascular devices company, has reported net sales of $11.3 million for the first quarter of 2009, down 4 %, compared with the net sales of $11.8 million in the year-ago quarter. It also reported a net loss of $1.88 million or $0.12 per share per share, for the first quarter of 2009, compared with the net loss of $2.56 million or $0.17 per share, in the year-ago quarter.
Looking forward, the company revised its 2009 sales guidance to $48.0 – $48.5 million from its previous outlook. Excluding foreign exchange and acquisitions, this implies year-over-year sales growth of 2% – 3%. The company also updated its 2009 operating income guidance to break-even from $1.5 million previously, which reflects the Q1 $1.8 million AlboGraft distribution termination charge and the company’s improved gross margin.
We believe that additional operating leverage is likely as we complete the AlboGraft-direct initiative and distributor sales normalize over the course of the year, said LeMaitre. Net of the Q1 AlboGraft termination charge, we are increasing our operating income guidance by $300,000.
Top- and bottom-line guidance excludes future acquisitions and changes in foreign exchange rates.
Foreign currency fluctuations negatively affected overall sales by 5%. Sales in the US increased 3% while sales in international direct-to-hospital markets increased 6%. Sales to international distributors decreased by 53%, reflecting the previously anticipated decrease in AlboGraft purchases by Edwards Lifesciences in advance of their termination, as well as distribution markets that were impacted by the economic downturn.
The company reported a gross margin of 72.8% in first quarter 2009, up from 71.7% in first quarter 2008 and 69.6% in Q4 2008. The quarter over quarter increase was driven by higher average selling prices across several product lines and an increase in the percentage of international sales made direct to hospital.
first quarter 2009 operating loss was $1.6 million versus $2.6 million in first quarter 2008. Excluding a one-time $1.8 million termination charge related to the AlboGraft-direct initiative, first quarter 2009 non-GAAP operating income was $211,000, as against first quarter 2008 non-GAAP operating loss of $1.5 million. The continuing benefits of the 2008 Expense Shave and the higher gross margin drove improved non-GAAP operating income. This was the company’s third consecutive quarter of non-GAAP operating profits.
George W. LeMaitre, chairman and chief executive officer said, We were pleased that our cost control initiatives allowed us to report an adjusted operating profit in the face of a challenging sales environment. Foreign exchange headwinds, the AlboGraft-direct initiative, and muted distributor sales led Q1 sales to fall short of our expectations. Nonetheless, we continued to control expenses and improve our gross margin. As a result, we posted an adjusted operating profit significantly ahead of first quarter 2008 and roughly in line with Q3 and Q4 of 2008.
I am excited by the future benefits of the AlboGraft-direct initiative, which we began on March 27, 2009. This should benefit our top and bottom lines, as well as our gross margin, continued LeMaitre. We also believe that sales to our international distributors will recover as several of our distributors complete the inventory reduction activities which they initiated in response to economic conditions.
The company’s cash and marketable securities decreased by $4.0 million during the quarter to $17.3 million, a result of $4.1 million in one-time cash payments primarily related to the early termination of our distribution agreement with Edwards Lifesciences.
Sales and marketing expenses decreased 29% to $4.1 million in first quarter 2009. Sales and marketing accounted for 37% of revenue in first quarter 2009, as against 49% in first quarter 2008, as the company benefited from increased efficiencies in its direct sales force and the strategic focusing of marketing resources. The company began and ended first quarter 2009 with 52 sales representatives.
General and administrative expenses decreased 11% to $2.5 million in first quarter 2009, the result of general belt-tightening.
R&D expenses decreased 3% to $1.3 million in first quarter 2009. Reduced process engineering and royalty costs offset an 8% increase in product development, clinical and regulatory spending.