ATRC

AtriCure, Inc. (ATRC)

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AtriCure, Inc. (ATRC)

Q1 2010 Earnings Call Transcript

May 10, 2010 5:00 pm ET

Executives

David Drachman – President and CEO

Julie Piton – VP, Finance & Administration, and CFO

Analysts

Matt Dolan – Roth Capital Partners

Timothy Lee – Piper Jaffray

Jamar Ismail – Canaccord Adams

Larry Haimovitch – HMTC

Charley Jones – Barrington Research

Presentation

Operator

Good afternoon and welcome to AtriCure's first quarter 2010 earnings conference call. My name is Sally and I will be your coordinator for the call today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s call. (Operator instructions) And I would now like to turn the call over to Mr. David Drachman, President and Chief Executive Officer of AtriCure. Mr. Drachman, please proceed.

David Drachman

Thank you, Sally. Good morning and welcome to our first quarter earnings conference call. Joining me on the call today is Julie Piton, Vice President of Finance and Administration and Chief Financial Officer. At this time, I would like to turn the call over to Julie for a few introductory comments.

Julie Piton

Thank you, Dave. And good afternoon, everyone. By now, you should have received a copy of the earnings press release. If you have not received a copy, please call Sarah Wichman at 513-755-4136 and she will fax or email you a copy.

Before we begin, let me remind you that the company’s remarks today may include forward-looking statements. These statements include, but are not limited to, those that address activities, events or developments that AtriCure expects, believes or anticipates, will or may occur in the future, such as revenue and earning estimates, other predictions of financial performance, launches of new products, and market acceptance of new products.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond AtriCure’s control, including but not limited to the rate and degree of market acceptance of AtriCure’s products, governmental approvals, and other risks and uncertainties described from time to time in AtriCure’s SEC filings.

AtriCure’s results may differ materially from those projected on the call today, and AtriCure undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, we will refer to non-GAAP financial metrics. A reconciliation of these non-GAAP measures is included in our press release, which is available on our website.

I would like to remind everyone on the call today that the Food and Drug Administration, or the FDA, has not cleared our products for the treatment of atrial fibrillation or AF. The company and others acting on its behalf may not promote any of its products for the surgical treatment of AF or train doctors to use the products for the surgical treatment of AF. AtriCure has provided research grants to institutions for the purpose of conducting certain studies that may be referred to on this call. The primary offers of the papers referred to on this call may also be consultants to AtriCure.

With that, I would like to turn the call back to Dave.

David Drachman

Thank you, Julie, and welcome to members of the investment community who have joined us today. We will begin with a brief summary of our first quarter revenue results and then review our 2010 strategic priorities. Next, we will highlight our performance and ongoing opportunities for each of our three business sectors followed by a regulatory, clinical and product pipeline update. After my remarks, Julie will present a detailed review of our financial performance. I will then review our outlook and open the call for questions.

Consolidated first quarter revenues of $14 million grew 2% compared to the same period a year ago. Notably, international revenues grew 27%. While our growth was modest, our first quarter revenue performance represents our stronger sales results since the third quarter of 2008. This is important as it underscores the positive trend in our performance and from our perspective, indicates a turnaround from the challenging conditions we experienced throughout 2009.

We believe that our plans to strategically expand our US and international sales and marketing platforms is aligned with increasing sales momentum and the initial physician adoption of hybrid procedures. As a result, we are anticipating higher growth trends in the second half of 2010 and we project further acceleration in 2011.

We remain committed to growing our business and are poised to build on our market leadership position in cardiac arrhythmia surgery while increasing mind share and strengthening partnerships in the electrophysiology community. We continue to monitor and optimize our cost structure while enhancing our sales and marketing platform, launching several new products, advancing our pipeline, and investing in FDA clinical trials and atrial fibrillation approvals. We see positive indicators and growth opportunities across all business segments.

For 2010, our strategic priorities are growth, the successful execution of FDA regulatory and clinical milestones, and customer-valued innovation. To capitalize on our wide range of products, we began to strategically expand our US and international sales and marketing organizations during the fourth quarter of 2009. We believe that we have significantly strengthened our sales organization and are developing traction in new areas and building momentum.

Moreover, the additional sales resources are aligned with new product launches and growth platforms such as Cryo1, our FDA dual epicardial/endocardial persistent AF or DEEP AF clinical trial, and the physician adoption of hybrid procedures. Notwithstanding the seven new field sales positions we had in the US and the two new direct personnel in our international markets, our sales force headcount remains below third quarter 2008 levels prior to our restructuring.

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