James Sidoti: Okay. And you mentioned you opened offices in Korea and Thailand, what were you doing this year with those folks just working into their home? Or what’s changed?
George LeMaitre: Okay. So — and 2023 was our first year of full year of operations in Korea. No, we were going through a distributor, and we sold items to that distributor, and then she passed them along to Korean hospitals for — actually from before I started, Jim, four years later, she was still doing that. And we finally bought out her distributorship. We set up an office, hired a general manager and then hired three sales reps for Korea. And now they’re in our Seoul office, and they’ve been operating for one year, same drill in Thailand.
James Sidoti: Okay. All right. And for 2024, you guided for about 9% organic growth. Is it fair to say that a significant portion of that is from pricing?
George LeMaitre: I would say we try not to guide on pricing, because it’s so variable what’s happening. But if you look back to the 12% and 5% this past year in 2023, 12% price, 5% units, maybe that relationship holds until we all know differently.
James Sidoti: Okay. And then the last one, can you — JJ, can you tell me what you’re assuming the tax rate will be for 2024?
J.J. Pellegrino: For Q1 or a 2024, let’s see, we I put it, Jim, 24.3% and then for the full year, 24.1%.
James Sidoti: Well, can you be a little more specific?
J.J. Pellegrino: You ask?
James Sidoti: Okay. 2024 would have been good. All right. Thanks.
George LeMaitre: Thanks, Jim.
Operator: Your next question comes from the line of Brooks O’Neil with Lake Street Capital Markets. Your line is now open.
Aaron Wukmir: Hey, good afternoon guys. This is Aaron on the line for Brooks. So most of my questions have been addressed. But — so I guess for 2024, we’re sensing solid pricing and mainly solid volume and tight expense control remain key priorities for you guys. Can you just give us a little more color and an updated sense for the general environment in these areas?
George LeMaitre: Sure. And one of the folks on this call from KeyBank, Brett, I would see them up on he screen. KeyBank just published a really nice report about credit card swipes in USA hospitals. And also we’re studying staffing in USA hospitals. And I would say it feels good from all the stuff we read, we’re not revealing what’s going on in the business for the first eight weeks of the year, but it feels good from all the stuff we read that this “return to hospital of staff and patients seems to be stretching out into 2024, and we were happy to see it take place in 2023, and I feel like it really helped the business in 2023, so maybe more of the same procedure-wise.
Aaron Wukmir: Great. Yeah, that’s helpful. And then last one for me. So you hired aggressively in sales and manufacturing last year, and this has been brought up, but you plan to add 14-ish reps. So if you could just outline some of the priorities for 2024 and how you’re thinking about those? Thank you.
J.J. Pellegrino: So priorities in terms of hiring, is that where we’re going, Aaron?
Aaron Wukmir: Correct. Yeah.
J.J. Pellegrino: Okay. Great. So — and just to sort of getting there on the beginning of that question. The big hiring spur took place at this business in 2022. We put on 141 new headcount. And then in 2023, we really slowed down a lot. We only put in 23 new headcount. So we really put on the brakes last year. We wanted to catch up to all that post-COVID hiring. We think we did that. And now we’re back at it a little bit. And of the people we plan to hire this year, it feels like maybe we talked about 15 reps, you add 5 sales managers, there’s 20 in the sales department, maybe and maybe there’s 2025 elsewhere. And maybe the biggest bucket of that is operations and manufacturing. There’s something like 40-ish, 50-ish. We’re still working that out. But we’re pretty tight fit. We’re on a pay-as-you-go plan here. Our number one goal here is op income and then stuff come fill in after that.
Aaron Wukmir: Great. Very helpful. Thanks for that clarification and congrats on the quarter. I’ll hand over guys
George LeMaitre: Thanks a lot Aaron.
Operator: Your last question comes from the line of Brett Fishbin with KeyBanc Capital Markets. Your line is now open
Q – Unidentified Analyst: Hi. This is actually Liz [ph] on for Brad. Thanks for taking the question. Just to start off with the 9% growth for the year, how should we think about that amongst the different regions? And where do you expect to drive the most growth?
George LeMaitre: Well, that’s a good question. I would say, generically, we always think Asia-Pac is going to grow faster. Europe is going to grow second fastest and North America is going to be a little bit slower. So that’s generically — we don’t really make guidance based on which region is going to happen. We’ll be thrilled when we show up with that 9% organic growth, regardless of how it happens, 10% reported for the year, is also what we guided. Does that get some of your question, Liz?
Q – Unidentified Analyst: Yes, that was really helpful. And then if I could ask on the op leverage side, how are you thinking of balancing our R&D investments versus SG&A? And how should we think about this going forward?
George LeMaitre: Right. So sort of all balancing down as some kind of op margin numbers or something like that. I mean R&D, we’ve been kind of building a little bit on a percent spend. I think we’re up at 9% of sales on that. Maybe historically, we were sort of in the 8s and now we’re in the 9s. So maybe we’ve been cranking up a little bit on the R&D side. And specifically, for us, R&D really means expanded regulatory and clinical efforts, not so much old-fashioned R&D with new products. We tend to try to bring the products in through acquisitions. So that may cover your R&D thing is a small part of your question, but — the bigger part of the question is, I think our guidance is implying 21% op margin for the year. Am I getting that right?
21% op margin for the year. And I think in 2023, that same figure was 19%. And the year before that, it was 17%. So I think we’re seeing a little bit of operational leverage here. Of course, we’re helped out in a big way by that gross margin number. If that sticks around, should make things pretty easy — not easy but more doable around here. So a little bit of leverage coming from gross margin and still growing the sales force.
Q – Unidentified Analyst: Okay. Great. Thanks for taking the question.
George LeMaitre: Thanks a lot, Liz
Operator: Ladies and gentlemen, that concludes today’s conference. I would like to thank you for your participation, and you may now disconnect. Have a great day.
