Merit Medical Systems, Inc. (MMSI)

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Merit Medical Systems Inc. (MMSI)

Q3 2008 Earnings Call

October 23, 2008 5:00 pm ET


Fred Lampropoulos - Chairman, President and Chief Executive Officer

Rashelle Perry - General Counsel

Kent Stanger - Chief Financial Officer and Secretary/Treasurer


Shawn Fitz - Stephens Inc

Sean Bibic - SIG

Christopher Warren - Caris & Company

[Jason Jenford] - Raymond James

James Sidoti - Sidoti & Company

[Ken Grossman] - SG Capital



Good evening, ladies and gentlemen, thank you for standing by. Welcome to the Merit Medical’s Third Quarter Earnings Conference Call. During today’s presentation all participants will be in a listen-only mode. [Operator Instructions]. This conference is being recorded Thursday 23, October 2008.

I would like to turn the conference over to Mr. Fred Lampropoulos, CEO of Merit Medical. Please go ahead, sir.

Fred Lampropoulos - Chairman, President and Chief Executive Officer

Good afternoon, ladies and gentlemen. We are delighted to be with you, we are broadcasting from Salt Lake City.

With us today we have our Operating Officers and Members of our Staff and we appreciate your attendance. Before we get started we would like to turn just a moment over to our General Counsel, Rashelle Perry, Rashelle?

Rashelle Perry - General Counsel

Thank you, Fred. In the course of our discussion today, reference may be made to projections, anticipated events or other information which is not purely historical. Please be aware that statements made in this call, which are not purely historical, may be considered forward-looking statements.

We caution you that all forward-looking statements involve risks, unanticipated events, uncertainties and other factors that could cause our actual results to differ materially from those anticipated in such statements. Many of these risks, events, uncertainties and other factors are discussed in our Annual Report on Form 10-K and other reports and filings with the SEC which are available on our website.

To the extent any forward-looking statements are made in this call, such statements are made only as of today’s date, and we do not assume any obligation to update any such statements.

Fred Lampropoulos - Chairman, President and Chief Executive Officer

Thank you, Rashelle. Ladies and gentlemen, we’re delighted to report the results of our third quarter in this press release which is somewhat lengthy, we also offer an update about the outcome and status of our Angleton, Texas Facility.

Let’s start out with the performance of the company in the third quarter. As some of you will recall, historically we guide down both in terms of earnings and revenues in the third quarter. We were pleased and I don’t want to say surprised but very pleased and I guess surprises is a fair word, that our revenues hit a record $58.2 million in the third quarter up 15%.

You will recall in the first quarter of this year we were up 5%, second quarter 10% and in the third quarter 15%, bringing to us overall effective 10% for the year and we are pleased with that. We are also pleased that our net income was $5.2 million, up 18% and that was the $0.18 a share, which I believe was at the consensus level compared to 4.03 last year.

As we look at the year and I think these are the things that we as a business try to concentrate on although we are aware that many of you look at quarters and look at the progress of the business, I think it’s important to know that our earnings are up over 40% from last year. Now, in this period we also took a charge of approximately $0.02 after tax for expenses associated with hurricane hike and about a $300,000 for an impairment charge for the discontinuation of a product line. Had we not done yet of course on the earning for a been $0.20, But all in all, I think we are very, very pleased with the overall performance of the company in a time when we spent a lot of time worrying about and trying to get our facility up in Angleton where there was a lot of attention diverted to that.

Briefly on the Angleton issue we had, I’m going to say minor to moderate damage as we made the assessment, we had some glass, we had some wind damage in which part of the roof was pulled back. We had water damage and just in a matter of a few days in fact we were on the ground in just a few days after that Houston was mess it was difficult to get in there. But, I’m very pleased that within a few days we had 353 foot tractor trailers heading down there were supplies and supplies were not available in the general area. And the net of the whole thing is this, we are up and operating partially within a few days or a week or so and we are now back into full production with all the repairs made. I will give you a little of idea of the extent of the work, we had to pull up 18 inches above the wall board and cut it out replacing the entire facility because of water damage even though there was only inter two but because of mould and that sort of thing and had to recertify the facility. None of our employees was harmed, there was a lot of, of course, climate attention that they had to spend on their own circumstances, we had some people that without power for as long as three weeks.

But all in all I thought we handled it well, in fact, the insurance company came to us and said if everybody else did the way you guys did it our claims would be about half, in fact, at one point they said to us, I hope you guys have pictures because most people are still standing around looking at this stuff, we need to make sure that you have pictures to support the damage that took place. They didn’t get there until the third week. And, we are able to support that. There is some insurance coverage, there is some stuff that this will have to be gone through a process of being adjudicated and then we will look at how this all shakes out in terms of any loss of business or business continuation. We are insured to those effects. We do have a deductible but we thought it was appropriate that we take this charge based on the expenses that we had and then there could be some adjustments relative to insurance down the road.

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