Welcome to the LeMaitre Vascular Q4 2020 Financial Results Conference Call. As a reminder, today’s call is being recorded. At this time, I would like to turn the call over to Mr. JJ Pellegrino, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir.

Thank you, Linda. Good afternoon, and thank you for joining us on our Q4 2020 conference call. With me on today’s call are Chairman and CEO, George LeMaitre; and our President, Dave Roberts. Before we begin, I’ll read our safe harbor statement. Today, we will make some forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast, and similar expressions. Our forward-looking statements are based on our estimates and assumptions of today, February 25, 2021, and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information on the risk factors in our most recent 10-K and subsequent SEC filings, including disclosure of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures, which include EBITDA and organic sales growth. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and is available in the Investor Relations section of our website, www.lemaitre.com. I’ll now turn the call over to George LeMaitre.

Thanks, JJ. On today’s call, I’d like to review a few topics: COVID’s impact on our employees, COVID’s impact on our company, our Q4 2020 sales and profits, our tenth straight year of annual dividend increases, and our recent branding change. Surges in COVID infection rates in November, December, and January correlated with our experience at LeMaitre. When I last spoke with you in October, we knew of 12 employees who had contracted the virus. That number has increased to 32 now, which is 8% of our employees, with 31 having fully recovered and one still recovering. During this recent surge, we began to discourage non-essential employees from on-campus work as an additional way to reduce the spread. As of February 15, though, our employees are once again being told that on-campus work is voluntary and not discouraged. We’ve also deployed distance-sensing wristwatches in 100% of our buildings worldwide where we require masks and physical distancing. Because vaccine administration may not be fully implemented until the summer or fall, we expect that COVID and the measures we’ve implemented to mitigate its spread will remain with us for some time. With regard to COVID’s impact on the company, this recent wave was likely impactful on our sales, so there’s no real way to calculate the exact financial effects. Looking at a basket of our peers, however, we saw a 2% decline in their organic sales growth in Q4 2020. Perhaps this is a general proxy for the impact of COVID on peripheral vascular sales. One would expect that the current declines in COVID, as well as increasing vaccine rates, will start to positively impact hospital-based businesses. Though I have found it hard to predict much of anything in the COVID era, indeed, the guidance we’re giving you today is limited to the current quarter, similar to the short guidance we provided at the start of both Q3 2020 and Q4 2020. As for our financial results, we posted record sales of $37.5 million in Q4 2020, up 24% versus the year-ago quarter. Geographically, sales were up 35% in the Americas, 12% in Asia Pac, and 9% in Europe. The company’s reported sales growth was driven largely by the Artegraft acquisition, while the organic growth came from aggressive valvulotome pricing and embolectomy catheters. More channel loading than normal probably also took place in December 2020 due to various year-end sales rep contests. In Q3, XenoSure approval in Japan contributed some sales growth in Q4, and we’ve increased our expectations around this launch. Record sales in Q4 and light operating expenses combined to produce strong bottom line results. We generated $9.5 million of operating income in Q4, EBITDA of $11.9 million, and EPS of $0.34 a share. This 94% growth in quarterly profitability allowed us to pay down our long-term debt by $21.5 million and increased our quarterly dividend by 16% to $0.11 per share. With 10 straight years of dividend increases, we believe we’re now positioned to enter the various 10-year dividend achiever indices. Finally, you may notice that our corporate logo has changed. By dropping the word vascular from our name and eliminating our tagline, we’ve tightened our branding to just its pure essence and have also left the door open to more work in spaces adjacent to vascular surgery, perhaps cardiac surgery or interventional radiology. In some ways, we had already made this move years ago by choosing our ticker LMAT and our website, lemaitre.com. With that, I’ll turn the call over to JJ.

Thanks, George. I’d like to say a few words about our gross margin, operating expenses, Artegraft results, debt pay down, European regulatory status, and close with our Q1 financial guidance. Gross margin in Q4 was 65%, down 1% from 66% in Q4 2019. The decrease was driven largely by Artegraft purchase price accounting as well as lower margins in our CardioCel and embolectomy catheter businesses. We do expect our gross margin to increase to 66.7% in Q1 2021 as Artegraft accounting normalizes and price increases are implemented. Operating expenses in Q4 were $14.9 million, down 1% versus Q4 2019. Selling and marketing expenses were down 21% year-over-year, driven by fewer reps and less travel. This decline was offset by a 21% increase in G&A expenses largely due to Artegraft amortization, as well as a 15% increase in the R&D expenses, driven by MDD and CE mark initiatives. We began releasing hiring or acquisitions in the latter part of the year as we started to unwind COVID-related cost cutting. We will remain cautious on this front, however, as we try to manage additional resources with sales. As of today, we now have 86 sales reps, with the increase coming largely in the U.S. as a natural complement to the Artegraft acquisition. At the end of Q4, we had 386 employees, down from 454 a year earlier. The newly acquired Artegraft product line continues to perform above expectations and generated $5.5 million in Q4 revenue and $1.2 million of net income after interest expense and taxes, which equates to $0.06 per share. In addition, we raised Artegraft selling prices on January 1. We ended Q4 2020 with $27 million in cash, a decrease of $7.4 million versus Q3 2020. The decrease was driven largely by the repayment of $21.5 million in debt. Excluding this debt repayment, cash increased by $14.1 million in this quarter. In relation to our European CE mark, due to the abrupt exit by our prior notified body from CE marking, we needed six CE marks. In Q3 2020, we engaged two new notified bodies to accelerate the CE marking process. In February, one of these notified bodies, SGS, issued a CE mark for LifeSpan as well as an Annex II certificate. We now expect SGS will issue three additional CE marks by May 2021 for our FlexCel carotid shunts, Pruitt F3 carotid shunts, and AnastoClips. We continue to pursue the other two CE marks for XenoSure and AlboGraft in the hopes that they will issue by May 2021. Devices representing 99% of Q4 2020 sales in the EMEA are currently available to EMEA hospitals via valid CE marks, temporary country-specific derogations, or sufficient CE mark inventory. In Q4 2020, EMEA sales accounted for 29% of worldwide sales and 26% of our gross profit. Separately, we were audited by another one of our notified bodies, TUV SUD, in Q4 2020 as part of the XenoSure/AlboGraft CE marking process, and that audit remains open. 20% of the audit findings have been resolved, and we continue to collaborate with TUV SUD with the goal of resolving the remaining findings. Issuance of CE marks for XenoSure and AlboGraft depends on the successful audit closure. Together, XenoSure and AlboGraft accounted for 22% of EMEA sales in Q4 2020. Retention of other CE marks previously issued by TUV SUD might also depend on a successful audit closure, and they represent 42% of the EMEA sales. If any of the CE marks referred to above are not reissued, or if the Q4 2020 TUV audit – open audit is not successfully closed, then we could lose our ability to sell some of our devices. We believe, however, that we can partially mitigate the impact of these potential issues through a combination of supplementary inventory production, additional or extended derogations, and engaging the new notified bodies. Turning to guidance. At the midpoint, our Q1 2021 sales guidance of $33.8 million to $36.8 million represents an increase of 16% versus Q1 2020. Our Q1 operating income guidance of $6.8 million to $8.8 million represents an increase of 79%. At the midpoint, our Q1 2021 EPS guidance of $0.24 a share to $0.31 per share represents an increase of 78%. Before I turn it over to the operator for any questions, I’d like to welcome Matt Mishan and Brett Fishbin from KeyBanc. Matt and Brett recently initiated coverage on LeMaitre, and we look forward to working with them in the future. With that, I’ll turn it back over to the operator.

Your first question comes from Rick Wise from Stifel. Your line is open.

Hi, good afternoon everybody. And great to see an encouraging quarter in the middle of all the complications of COVID. Maybe just a couple of things to start with. I’m sort of trying to ask every company, what are you seeing now? I’m sorry, George, to ask about sort of weekly trends, monthly trends. But do you feel like after, I’m guessing, a weaker December, weaker January than you might have hoped for three months ago, do you feel like things have bottomed and they’re starting to look better? Or can you frame it at all? Just where are we now? And what do we think?

Yes. Okay. Okay, Rick. I think I’m going to give 90% of what you want. I think I won’t dig into January or February. But I think I’m going to get you where you want to go here. Let me – we’ve done this once, twice. Let me read out to you the organic growth rates of this company from every month starting in April. And I know it’s a lot of data, but it might be kind of fun for you to see where we’ve been, what our trip was. I would come around to say, I sort of think Q3 was sort of like Q4, was sort of like what we think maybe Q1 might be like. And I would come back to that, but here are your numbers, and maybe you can do a better job making sense out of that because I certainly can’t. So starting in April, minus 38%, minus 28% for May. I’m going to just go now, minus 4%, minus 7%, 0 in August, minus 1%, plus 2%, minus 3% and plus 9% in December. And those are all your COVID months that are on record at our company.

Well, obviously, an encouraging December. Thank you for that clear detail. Artegraft, obviously, you got the January 1 price hike. And I’m not trying to – I’m just curious, you did $5.4 million, I think if I’m – if I’ve got it right, in the third quarter and roughly the same amount in the fourth quarter. What do we make of that? Is that just a lot of moving pieces? Or I assume now we would start to see sequential growth, all things equal, as we proceed through 2021? Is that the right way to think about it?

Yes. Rick, it’s Dave. I mean, we’re not going to guide very far into 2021. We did see Q4 increase over Q3 from $5.4 million to $5.5 million. I think the bottom line result has been a nice pleasant surprise. We beat the guidance we have provided. I think we provided $0.05 a share, and we came in at $0.06. Remember, in the back half of 2020, the Artegraft sales reps were not getting commission on any other LeMaitre product. LeMaitre sales reps were not getting commission on Artegraft products. So that was a big change on January 1. The other change on January 1 was this price increase. So I’m not really here to tell you exactly what’s going to happen throughout 2021 because we don’t really guide specifically on product lines. But I can say we feel quite good about 2021. Obviously, we’re bullish with the price increase. We think much of that can stick. So we think we are optimistic about where Artegraft goes in the future.

That’s great, Dave. And maybe two last ones for me. OpEx, obviously, impressively, I don’t know what the right words are, under control or contained, and I appreciate that, like so many businesses, travel has a lot to do with that and – but how do we think about OpEx going forward just directionally? I mean, can you take more cost out of the business? Is that not the right way to think about it? Should we assume that as things recover through the year, the percent of your sales, that’s going to go up? Again, if you could just help us frame it a little bit, that would be awesome.

Yes, sure. This is JJ. So as you recall, we did some headcount reductions back in February and then again as COVID came through in April and really reduced OpEx as a result. Total headcount is 386 now versus 454 or 455 a year ago, Q4 to Q4. Obviously, we still have a ways to go here, I think, in terms of hiring back. The real question is, how quickly do we get back? Your sales rep count is at 80 at the end of the quarter. I think we said 85 or 86 currently. We were at 112 in Q4 2019. So you’ve got a ways to go there. We want to be measured with that. We want to match that with access to hospitals and sales recovery, and all that kind of good stuff. In terms of non-sales folks, there are clearly areas where during times of a crisis, you cut back and people do more work. We don’t want that to happen indefinitely. We’ve begun to release a lot of physicians in areas that are support physicians, and we’ll continue to do that. I think the trend, the direction for you is that these guys are going to hire back towards some number against the recent high watermark. You would think it was the 455. But I don’t think it was jumping to that right off the bat. Think of us doing this at a measured pace throughout all the areas of the company to try and balance sales recovery with workload, with where we need to be in two, three, four months.

All right. Just last for me, on – as always, it wouldn’t be a LeMaitre call if we didn’t ask about M&A. Or maybe the question is, what’s Dave been up to lately? But George, you called out cardiac surgery and interventional cardiology very specifically, and the main – the refining of the company, so to speak. Should we expect that whether it’s one or three or ten over the next year or three, it’s going to be these adjacent spaces or, let’s say, more aggressively building up these adjacent spaces? Is that the priority now?

Okay. Great question. Yes, big thing, name change, right? So those are the adjacent spaces that we’ve actually already gotten into. I think maybe that’s the message here is that we’re already LeMaitre and not LeMaitre Vascular. We bought CardioCel, as you remember. We bought Cardial. Both of those two names should give you some hints. We’re already in the spaces. I don’t necessarily think it means we’re preferentially going to be acquiring there. I think Artegraft, our largest acquisition, was peripheral vascular. You watch people’s actions, not their words; that was our last big action in June of 2020. So I’d say not necessarily, but you want to be open to it. I think I’m going to swag here. I think on our website, there’s some PowerPoint slides to say something like 10% of our sales are already used by cardiac surgeons and some interventional radiology as well. We’re already there, and it’s a recognition that we’re already there. Dave might have a take on this since it’s an acquisition-related question.

Yes. No, I would echo what George said. We’re already in cardiac surgery with the cardiac patches. We launched a cardiac allograft several months ago. On the interventional side, I think the message there is that there are 14,000 vascular surgeons in the world, and half of them use our products. 75% of their procedures in the U.S. are now endovascular or interventional. As we think about – if it’s down to the fairway, it’s open vascular surgery and open dialysis access, then maybe a little bit to the left is cardiac surgery, and a little bit to the right is sticking with our core customer, but with an interventional or endovascular product line to leverage the relationships we already have. We already do offer a handful of interventional devices, over-the-wire embolectomy catheters. We’ve got valvulotomes over the wire. We’ve got radiopaque tapes and some other products. So I think we’re just trying to build off a little bit there to what we’ve already started building.

Thanks a lot to everybody.

Thanks, Rick.

Your next question comes from Matt Mishan from KeyBanc. Your line is open.

Hey, George, Dave, JJ, this is Brett Fishbin on today for Matt. I appreciate the kind introduction, and we’re happy to be joining the calls. If I can just try one question on the 2021 outlook, and then maybe one or two follow-ups on other topics. So I know you’re not providing full-year guidance today, but could you discuss directionally how you’re thinking about potential revenue progression for 2021 in a base case scenario? What would you want to see before potentially being able to provide full-year guidance at some point in Q2 or Q3?

Yes. Sure, Brett. Thanks very much, and welcome. For the full year, you can kind of read the tea leaves from what we’ve already said even briefly on this call, which is expense-wise, you can expect an increase. The question is how much, how fast. On the top line, if you think of an organic sort of growth rate that you think is appropriate off of our 2020, maybe if you start to normalize through 2021, you can come up with an organic answer that feels right. Layer on top of that some FX. FX has moved a lot, so thinking if it stays, it will add some chunk to the top line throughout the year. If you think of $45 million or so of our sales or whatever the number is, go to our Q and look up the segment geographies and apply the FX change to that, then you can add some of that. Then you’ve got Artegraft for a full year piece. You didn’t have Artegraft for a full year last year. You acquired it essentially mid-year. Those are the three chunks to think about in terms of revenue. As for signs in the macro, it’s kind of like reading the tea leaves here. It was challenging enough to talk about Q1. Not all of our peers are giving quarterly guidance. A bunch aren’t, but I would say there’s still a ton of uncertainty. If you can tell me where those COVID graphs are going, that will help a lot. When things start to settle down, maybe George will rattle through the organic growth rates for the last several months. Maybe if we start seeing some normalcy in those monthly organic growth rates, after a group of them feel normal, then we can talk about a more predictable longer-term outlook.

Just if there would be some signs in the macro that you’d like to see before maybe being able to provide a full year guidance maybe next quarter?

Yes, I mean so it’s kind of like reading the tea leaves here. It was kind of challenging enough to talk about Q1. Not all of our peers are obviously giving even quarterly guidance, and there’s still a ton of uncertainty. You tell me where those COVID graphs are going, and that will help a lot.

All right. That’s definitely fair enough. And then turning back to this dialysis end market. Artegraft was relatively in line with our model at least, but did you see an impact from the increased mortalities signal that was in that patient population given the commentary from Fresenius on its call? If not, is that a headwind that we should be considering for 2021?

So Brett, this is Dave. Good to hear your voice on this call. I’m not so sure we saw that. One of the advantages of a bovine graft, a dialysis access graft, that we acquired is that unlike a fistula, which gets implanted into a patient and takes time to mature, many of them don’t mature. There could be a greater uptake during COVID than otherwise would be, so in terms of treatment modality, the open surgery biologic graft is something you can implant and use right away, making these devices very valuable during the pandemic.

All right. And then last one from me. Do you guys have any thoughts on the recent unfavorable outcome from Becton, Dickinson’s recent FDA panel around BTK indication for its DCB? More broadly, are you seeing any other new technology in the BTK procedural space that we should be paying attention to?

Yes. We didn’t follow that closely. We knew that they were having the panel, but the high-level message continues to be that when you get below the knee and the arterial vasculature bifurcates and trifurcates, with small diameters and low flows, it gets pretty difficult for devices to work down there. Really, what the body wants is your own tissue doing its job. That’s why the valvulotomes have worked so well for so long. We’re on our eighth generation of valvulotome. One of the key attributes to all the generations we’ve developed is to make them smaller so they work further down the leg, into the foot, into the pedal arteries. I have no doubt, companies will keep taking a run with drug-coated balloons and atherectomy, but so far, I think the technology is not exactly there, and that’s part of the reason the valvulotome continues to be the number one product line at LeMaitre.

All right, thanks. Thanks very much. That’s all for me. Appreciate it.

Thanks, Brett.

Your next question comes from Mike Petusky from Barrington Research. Your line is open.

Good evening, guys. Congratulations on a terrific year. I wouldn’t have believed the dollar in earnings was possible if you had asked me 11, 12 months ago, so fantastic job. All right. So George, I was wondering if you could talk about – I’m assuming at this point you probably have a decent sense of what your pricing tailwind for the year is in terms of your product portfolio. Is that – would that be accurate? Are we looking at a 2% to 3% positive tailwind as we look at 2021? Or do you not really have that completely dialed in at this point?

I won’t dig out so far into 2021, but I can give you some hard numbers, which I think we have up on the website on the corporate presentation. For the year, we installed a 5% price hike. Going into 2021, it’s on any price list in any American hospital. We put together another pretty serious price increase, which largely speaking is a continuation of that.

Okay. So if I’m thinking about the tailwind across your portfolio, I could be thinking closer to 5%?

I didn’t say that. I said last year it was 5%. We put a healthy price increase together. It varies by the product line. Some of them didn’t grow, and some did, so maybe of blended – looking backwards of blended. That 5% was a significant increase from the year before and two years before. I tried to call it out in the script here, talking about aggressive valvulotome pricing. We continue to work on pricing. It’s just another way to pay the bills and to underscore our differentiated devices.

Absolutely. Speaking of Artegraft, there’s been a lot of talk around the fact that you guys called out that you raised the price there as well. There’s a lot of talk that there’s some meaningful opportunity in terms of Artegraft. Can you just talk about – I mean, was it a double-digit price increase? I would love even just that level of detail.

Sure. It’s out there on the price list. It’s around $300 a unit, so it is a little bit north of double digits.

Okay. Terrific. Great. All right. Okay. So then in terms of just the products, like, sort of their growth rate by product category, valvulotome, XenoSure, anything else to call out? I mean, can you quantify the growth or lack thereof of the key products?

Sure. Maybe I go back into Q4. We always say we’re happy to give you the information that’s already happened. We’re a little less excited about guiding forward. So for Q4, valvulotomes were up 28%, embolectomy catheter 16%, maybe a little bit tied to COVID. They’re used if there’s extra clotting that happens in your body that’s COVID-related. The cardiac patches were up 40% reported, but it was only 20% organic since we only bought the product in the middle of October 2019. The allograft product, the Chicago product is up 11%. Those were the good guys. The bad guys keep struggling: TRIVEX was down 50%, bovine carotid patches were down 5%, and so on. I think those are the major stories that I just gave you.

What about Xeno? XenoSure?

Okay. So bovine carotid patches are down 5%. Inside of that, Xeno was down 7%.

Got you. Okay. Can I just ask sort of a strategic question? You’ve taken a cautious approach on bringing back the sales reps. I think I remember, George, at one point last year, and if I’m wrong on this, please correct me. But I thought you had said we haven’t abandoned any territories even when you cut it as deeply as you did. My question is, you guys have done so well in a very, very difficult environment. Do you ever need to go back to 112? If you’re covering all the territories, even if they’re more thinly covered, do you really need to go back to 112? Are you getting the incremental value from that cost?

When we were going through all that in the spring and all this COVID stuff, I kept reminding my sales reps, ‘Hey, your boss is addicted to hiring sales reps because he thinks that’s how we grow our business.’ So the short answer is: of course, someday we’ll be back at 112, no question in my mind. But it’s just – you want to be cautious. If you wanted us to throw out a number, we sort of think activity levels are sort of like 60% normal. Oddly, because the reps can get into fewer hospitals and do fewer things in each hospital, they can cover a slightly larger geographic patch. We’re back at 86 as of today. We’re only at 80 at year-end. So we’re getting there. Our low watermark was 79, and our high watermark was 112 about 1.5 years ago, and yes, we’ll get back there at some point.

Mike, this is JJ. I’d add one more thing. I think if you think about the docs and what they’re doing now, they’re probably still working on backlogs and trying to get to a normalized process. They’re not so much focused on new devices. That gives you a little bit of cover in terms of not hiring back too soon. Of course, we’re going to watch that, and if we feel that becomes an exposure and that changes, then we want to start rehiring again.

Got you. And just the last one, and I may have missed it if you touched on this, George, but any update on the China XenoSure trial?

Yes, sure. Actually, things are going well. Believe it or not, with the bounce back of COVID in China at the end of last year, the patients started showing back up for follow-up. We’re now fully enrolled on both sides of the cardiac and vascular trials, the two different trials we’re running there. The very short news is in May, we’ll be filing with the Chinese FDA for that approval. Again, that’s a long runway time. I think it’s about another two years to wait, but we’ll have that in in May.

Okay, all right, great, thanks guys.

Thanks a lot, Mike.

Your next question comes from James Sidoti from Sidoti & Company. Your line is open.

Hi, good afternoon. Can you hear me?

Yes. Hi, Jim.

Hi, Jim.

Great. A couple of follow-ups. You talked on the last couple of calls about the notified bodies and getting the CE marks renewed for some of your products. Can you just give us a sense of what that added to R&D costs in the quarter? How long do you think that extra cost will continue? Is this something that keeps you up at night? Or are you pretty confident you’ll be able to get switched over to new notified bodies?

Jim, let me give you some thought bubbles on this, and then JJ fills in with some numbers after I’m done. The answer is, does it keep me up at night? I’ll tell you, there are two things now. We’ve got a really good track going with one set of folks, and we’re still kind of struggling. I think you heard that in JJ’s script. It’s also in the 8-K. We engaged a couple of new guys in Q3, Q4, September, October. Those folks, principally this SGS company, they’re moving ahead and they’re getting stuff done. We got our first CE mark in 12 months in February for that LifeSpan product. We feel really good about three more. Of the total of six we need, those guys control four of them. On the flip side, we continue to work with TUV notified body. We keep getting a lot of questions. We’re two years deep in this struggle. Fortunately, 13 European governments have stepped up for us, giving temporary mini-approval. These devices are available in 13 countries while we continue to struggle with TUV. It frustrates me a lot. As for the spend, unfortunately, it’s very large.

At the high level, Jim, is R&D as a percent of sales over the last four quarters, you really wouldn’t notice if you’re looking at all R&D. Within R&D, we’ve got product development, process engineering, and regulatory. The thing that changed is the mix. While the aggregate spend may be in the same ballpark, the regulatory and clinical spend is almost double from where it was. The other two have come down. So the mix has shifted within R&D. It’s still under control in the aggregate, but we don’t like that mix. Spending more on regulatory and less on the other two buckets is not what we want.

Okay. All right. And then cash, you said you – if you take out the debt pay down, your cash is up about $14 million. You had net income of $7 million. Where did the balance come from?

So $7 million in net income. Cash from operations, Jim, in total, was about $14.2 million. Call it $3.4 million or so from depreciation, amortization of stock-based comp. Another $3.5 million to $4 million from working capital generally. CapEx was only $1.2 million in the quarter. We had stock option exercise, the $4.3 million. So maybe that’s the missing link for you, a healthy chunk of stock option exercises.

Okay. And then last question and ultimately the cash. You announced the buyback – stock buyback. You also announced the increase in dividend. I’m just curious, you have some debt left over from the Artegraft deal. What’s the priority as you generate cash in 2021? Is it to pay the rest of that down, to do the stock buyback, or to keep increasing the dividend?

I’ll take the front of that since dividends are always on my happy list here. The cadence of this company is as you announce a dividend at the first quarterly call, and that keeps playing out. I’m not guiding what the Board is going to do with the next three quarterly meetings, but that would be the cadence. It feels like that’s set to me. I think roughly speaking, that’s about a $9 million aggregate payment. J, am I close on that?

Yes.

So that’s about a $9 million place to go. You just heard JJ say we produce $14.7 million in a nice quarter, albeit. We produced $14.7 million in Q4, so it feels coverable. We’ve been focused on paying down our revolver for $25 million since the acquisition. That’s been cleared already. You can hear we’re very focused on that. Maybe J, any more color on this for the back end – debt beyond question?

The order, as you probably think, would be generate cash flow, pay dividends, pay off debt, and then buy companies. When we find a good acquisition target, we’ll disrupt that and buying the company will be the number one priority. But on a steady-state basis, I think that’d be the answer. We feel pretty good about the debt we paid down in the second half of 2020. That was a really nice accomplishment, and we’re going to try to keep that momentum going into 2021.

The reason I brought it up is you announced that you have authorization of purchasing $15 million of stock as of February. So where is that today on that list?

The stock repurchase is sort of good housekeeping. It’s not necessarily a big topic for us right now. In the event that the world came unglued and the stock price drop, we’d like to be able to buy back some shares at a bargain. It’s a nice corporate strategy to have that in place. The next logical question is, would you ever raise equity to pay off debt? If the stock price is high, that’s the time you do it. That could be an interesting question.

Okay, all right, thank you.

Thanks a lot, Jim.

I am showing no further questions at this time. 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.