Michael Sarcone: Very helpful. Thank you.
Operator: Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Daniel Stauder with JMP Securities. Your line is open. Please go ahead.
George LeMaitre: Hi, Daniel. You’re up. If you want to ask us a question, it’s George. Operator, they might have bad phones out in San Francisco. Why don’t we move along?
Operator: All right. Just one moment, please. And our next question is going to come from the line of Scott Henry with ROTH Capital. Your line is open. Please go ahead.
Scott Henry: Thank you. Good afternoon. Just a couple very quick questions. First, if you don’t mind, could you give me the mix between biologics and non-biologics?
Joseph Pellegrino: Biologics was 51% of sales in the quarter.
Scott Henry: Okay. Thank you. And then looking at the numbers, sales and marketing was kind of down sequentially with employees up. Any thoughts of why, and even on similar revenues to Q1, it was down significantly from Q1. How should I think about sales and marketing in Q3 and how that should be indicative going forward? Thank you.
Joseph Pellegrino: Yeah, so one of the reasons selling and marketing has been elevated in the first part of the year is because sales results were so strong versus quotas. And I think as we get through the year a little bit, quotas start to ramp up a little bit. And so, even with the 16% consistent organic growth in each of the quarters, the answer versus quota changed a little bit. And so commissions and contests were down a little bit. Q3 is also seasonally a time where selling and marketing goes down a little bit. There’s a little bit of a travel and conferences, and all that kind of stuff, and so down there as well. And so, I think there’s a couple of good reasons for that. And then in Q1, the weird answer there is we had a sales meeting.
And so that’s sort of a, I don’t know, a $600,000 or $700,000 event globally, there’s one for each of the main geographies. And so you can see an absolute dollar sort of coming down from $10.9 million to the $10.2 from Q1 to Q2. So maybe that’s how that cadence works throughout the year.
Scott Henry: Okay. Great. Thanks for the color. And final question, you mentioned how you were losing some competitors in some international areas and it benefited some of the products. Are there any new product launches internationally into any specific countries that we should be factoring into our model going forward? Any levers that would kind of change the trajectory of any of the lines in the near-term? Thank you.
George LeMaitre: Right. Scott, it’s George, I’ll take this great question. I’ll take that. We read out in the script these regulatory approvals, but they’re kind of longer in the – they take a while to get through there. But, RFA in Europe at some point will add something. We don’t know when we’ll get the approval outside of the UK. So we don’t want to get on the hook for changing anyone’s model here, as you’re suggesting. Artegraft is a biggie in Europe, maybe 2 years from now, 3 years from now, but I wouldn’t, until – we haven’t even filed for the regulatory approval. When we get that in, maybe we’ll have more details on timing and things like that. And then, of course, Artegraft in Canada and Australia.
But in short answer, I’d say, no, there’s nothing that I’d changed my model for here. Things are going along. We’re getting tons of little regulatory approvals over in Asia-Pac that we don’t talk about on these calls, because they’re kind of smallish, but the machine keeps going.
Scott Henry: Okay. Great. Thank you for taking the questions.
George LeMaitre: Thanks a lot, Scott.
Operator: Thank you. And one moment as we move on to our next question. And our next question is a follow-up question from the line of Michael Petusky with Barrington Research. Your line is open. Please go ahead.
Michael Petusky: Thanks. Yeah, a few quick ones. George, I didn’t catch this if you said this earlier, forgive me, but the CE mark filing for Artegraft, is that targeted by year-ends still, or I think at one point it was?
George LeMaitre: Yeah, it has been for a long time. It’s on one of our quote planks for this year is to put it in by December 31, so definitely that will go in by December 31, and it’s been on our radar screen for 2 years or so. Yes.
Michael Petusky: Okay. Great. And then, I want to – just make sure I understand what you’re doing in Paris. That’s the first time you’ve had direct sales folks in France, is that correct?
George LeMaitre: I’m glad you’re asking is so we can sort of re-distinguish it for everyone. No, we’ve had sales reps in France since I think 2007, but this is the first time we’re going to have an actual customer service office with French customer service reps, and all that to give the hospitals a little more hand treatment. We have 8 reps in France, and I would say that’s on the high end of what we usually have, maybe we’ve had 6 or 7, but we always have them.
Michael Petusky: Okay. Yeah, because when you said that, it was sort of confusing to me that that was the case. Okay. Got it. And then just last one for J.J…
Joseph Pellegrino: Yeah. Depreciation and amortization, $2.395 million, SBC $1.313 million, CapEx $1.053 million. [It’s just usual things.] [ph]
Michael Petusky: Okay. Yeah, thank you. And then just J.J., on gross margin and one quarter, I know, does not make necessarily a trend, but I think you and probably investors are really hoping that it is. I mean, do you feel like, it looks like gross margin may end up being flat for this year. I mean, do you feel like you guys have sort of hit bottom on this and are sort of on the right side of momentum here, I guess, as we look forward?
Joseph Pellegrino: Yeah. No, it’s a great question. I mean, of course, I want that to be the answer, but I’ll give you some more color behind that, I would say the manufacturing efficiencies from the folks getting more efficient in the seats making devices, that’s been super helpful and it’s started to come through the P&L. Obviously, price increases help a lot. That’s sort of a 3% benefit year-over-year with these nice price hikes coming through. And I would say those two things are sort of fighting against I would say one quality cost historically. Those increased a lot over the last 4 years, but I would say we’ve really started focusing on those. Maybe we can make some headway on that topic as we move forward.
