Executive Summary

Q4 2023 revenue increased 1.7% year over year to $43.6M, while diluted EPS declined to $3.65 from $4.70; sequentially, revenue rose versus Q3 ($41.9M) and EPS improved from $1.67, indicating stabilization amid supply chain recovery .
Gross and operating margins improved sequentially (gross: 37.4% vs 32.8% in Q3; operating: 15.3% vs 9.7%), though both remain below Q4 2022 levels due to prior under-absorption from temporarily idled lines .
2024 outlook: management expects a high single-digit revenue increase, with operating income pressured in 1H24 as inventory is worked down and improving in 2H24 as idled lines resume .
Strategic drivers: record MPS 3 console production, renewed multi-year OEM agreements, and new partnerships expected to add “tens of millions” in revenue by 2030, supporting reacceleration narratives .
Near-term stock reaction catalysts include normalization of OEM inventory and MPS 3 component supply resolution; medium-term upside levers are pipeline commercialization and OEM partnership-driven growth .

What Went Well and What Went Wrong

What Went Well

Sequential recovery: “continuous easing of revenue declines throughout the year, culminating with a 2% increase in sales in the fourth quarter” .
Supply chain progress: “Our MPS 3 console production is now at record levels to meet strong demand,” reducing lost sales risk from earlier component shortages .
Commercial momentum: every expiring multi-year supply agreement was renewed for multi-year terms, and new OEM partnerships are expected to add “tens of millions of dollars” of revenue by 2030 .

What Went Wrong

Margin compression vs prior year: Q4 operating income fell to $6.7M from $8.8M YoY; EPS decreased to $3.65 from $4.70 as under-absorption persisted amid earlier production interruptions and customer inventory right-sizing .
Component shortages constrained sales: MPS 3 console demand could not be fully met in 2023 due to shortages of electronic components .
OEM order deferrals: OEM customers reduced orders in 2023 to right-size inventories after over-ordering during 2022 supply chain disruptions, pressuring revenue and margins .

Financial Results

Sequential Trend – Recent Quarters

Metric	Q2 2023	Q3 2023	Q4 2023
Revenue ($USD Millions)	$43.8	$41.9	$43.6
Gross Profit ($USD Millions)	$17.3	$13.7	$16.3
Operating Income ($USD Millions)	$7.4	$4.1	$6.7
Net Income ($USD Millions)	$6.6	$2.9	$6.4
Diluted EPS ($)	$3.73	$1.67	$3.65
Gross Margin (%)	39.4%	32.8%	37.4%
Operating Margin (%)	16.8%	9.7%	15.3%
Net Income Margin (%)	15.0%	7.0%	14.7%

Year-over-Year Comparison – Q4

Metric	Q4 2022	Q4 2023	YoY Change
Revenue ($USD Millions)	$42.9	$43.6	+1.7%
Gross Profit ($USD Millions)	$18.2	$16.3	-10.2%
Operating Income ($USD Millions)	$8.8	$6.7	-24.3%
Net Income ($USD Millions)	$8.3	$6.4	-23.0%
Diluted EPS ($)	$4.70	$3.65	-22.3%
Gross Margin (%)	42.4%	37.4%	-500 bps
Operating Margin (%)	20.6%	15.3%	-530 bps
Net Income Margin (%)	19.4%	14.7%	-470 bps

Estimates vs Actuals – Q4 2023

Metric	Consensus Estimate	Actual	Surprise
Revenue ($USD Millions)	Unavailable (S&P Global consensus not retrievable)*	$43.6	N/A
Diluted EPS ($)	Unavailable (S&P Global consensus not retrievable)*	$3.65	N/A

*Estimates unavailable via S&P Global due to missing CIQ mapping for ATRI.

Segment Breakdown

Segment	Q4 2023 Revenue	Notes
Fluid Delivery	Not disclosed	Product line referenced; no revenue detail provided in Q4 release
Cardiovascular	Not disclosed	Product line referenced; no revenue detail provided in Q4 release
MPS 3 Consoles	Not disclosed	Demand strong; production at record levels, but no revenue detail

KPIs and Balance Sheet Highlights

Metric	Q2 2023	Q3 2023	Q4 2023
Cash & Short-Term Investments ($USD Millions)	$5.44	$4.50	$6.26
Long-Term Investments ($USD Millions)	$10.19	$9.47	$8.17
Total Cash & Investments ($USD Millions)	$15.63	$13.97	$14.42
Inventories ($USD Millions)	$80.25	$82.95	$82.31
Current Liabilities ($USD Millions)	$16.43	$15.27	$12.62
Line of Credit Outstanding ($USD Millions)	$3.84	$4.50	$0.00

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue growth	FY 2024	Expect positive revenue comparisons in 2024 vs 2023 (qualitative)	High single-digit increase; returning to, or near, 2022 record levels	Increased specificity; positive maintained
Operating income cadence	FY 2024	Expect positive operating income comparisons in 2024 vs 2023 (qualitative)	Challenging in 1H24 due to under-absorbed overhead while filling orders from inventory; improving in 2H24 as idled lines resume	Cadence outlined; near-term headwind clarified
Capital/Balance Sheet	FY 2024	Cash & investments $14.0M at Sep 30, 2023	Ended 2023 debt-free; cash and short- & long-term investments $14.4M	Strength maintained; liquidity modestly higher

Earnings Call Themes & Trends

(Note: No Q4 2023 earnings call transcript available; themes derived from Q2–Q4 earnings releases.)

Topic	Previous Mentions (Q2 2023, Q3 2023)	Current Period (Q4 2023)	Trend
Supply chain (MPS 3 components)	Production “impacted by supply chain shortages; new suppliers brought online”	“MPS 3 console production is now at record levels”	Improving
OEM customer inventory	Customers “continued to reduce inventories” ; “deferring orders as they dealt with excess inventories”	Expect customers to achieve rightsized inventories in 2024	Easing
Overhead absorption/production lines	One-time write-offs; overhead absorption burden from temporarily stopping production	Under-absorption in 1H24 while shipping from inventory; improvement in 2H24 when lines restart	Improving in 2H
Product performance (MPS 3)	Demand impacted by components; backorder focus	Record production to meet strong demand	Improving
Commercial momentum (OEM contracts)	Not emphasized previously	All expiring multi-year agreements renewed; new OEM partnerships expected to add “tens of millions” by 2030	Strengthening
Pipeline/R&D execution	Not emphasized previously	“New product pipeline grew faster than at any point in our history”	Strengthening

Management Commentary

“We saw a continuous easing of revenue declines throughout the year, culminating with a 2% increase in sales in the fourth quarter. Operating income remained weighed down by lower production levels of fluid delivery and certain cardiovascular products.” — David Battat, President & CEO .
“Our MPS 3 console production is now at record levels to meet strong demand… every multi-year supply agreement that expired in 2023 was renewed… new partnerships alone will add tens of millions of dollars in new revenue by 2030.” — David Battat .
“For 2024, we expect a high single digit increase in revenue… Increases in operating income will be challenging in the first half of the year… Operating income should improve in the second half of the year…” — David Battat .

Q&A Highlights

No Q4 2023 earnings call transcript was available in our document catalog; therefore no Q&A summary could be prepared from primary sources [ListDocuments results show 0 transcripts in period].

Estimates Context

S&P Global consensus EPS and revenue estimates for Q4 2023 were unavailable due to missing CIQ mapping for ATRI; as a result, an estimates comparison could not be completed using S&P Global data (attempted retrieval returned an error)*.
Based on management’s 2024 commentary, sell-side models may need to reflect a high single-digit revenue trajectory with 1H24 margin pressure and 2H24 improvement from production normalization .

*Values intended from S&P Global; unavailable due to CIQ mapping error for ATRI.

Key Takeaways for Investors

Sequential improvements are evident: Q4 revenue and EPS recovered vs Q3, with notable margin expansion, suggesting stabilization as supply chain constraints ease .
2024 setup is constructive: high single-digit revenue growth guided, with the cadence indicating near-term operating income headwinds followed by 2H improvement as production resumes .
Strategic visibility improving: renewed multi-year OEM contracts and new partnerships with quantified long-term revenue potential (“tens of millions” by 2030) provide pipeline-backed confidence .
Watch inventories and production cadence: elevated inventories and under-absorption dynamics are likely to weigh in 1H; monitor inflections as inventory depletion triggers line restarts .
MPS 3 consoles are a near-term driver: component supply resolution and record production should translate to improved direct sales execution in 2024 .
Full-year margin rebuild will take time: 2023 operating margin was 13.3% (annual), well below historical levels, highlighting the magnitude of catch-up required; management’s plan implies gradual recovery through 2H24 .
Trading lens: near-term upside catalysts include evidence of OEM reorder normalization and sustained MPS 3 production; risk factors include any relapse in component supply or slower-than-expected inventory digestion .

ATRION CORP (ATRI)·Q4 2023 Earnings Summary