SUNNYVALE, Calif., Oct. 30, 2018 /PRNewswire/ -- Accuray
Incorporated (NASDAQ: ARAY) today reported its financial results
for the first quarter of fiscal 2019 ended September 30, 2018.
Company Highlights
- China Ministry of Health confirms Type A and B quota and
licenses
- Gross orders increased 10 percent year over year to
$61.4 million
- Revenue increased 5 percent year over year to $95.8 million
- Implements cost savings initiative
"Our fiscal year is off to a good start with double digit gross
order growth and revenue generation meeting our targets," said
Joshua H. Levine, president and
chief executive officer. "We are also encouraged by the potential
benefits to Accuray from the China Ministry of Health's
announcement yesterday of Type A and B quota and licenses. In
addition, we've implemented a cost savings initiative designed to
reduce our annual operating costs by approximately $15 million and provide us with a clear path to
GAAP profitability, while preserving our ability to continue our
product innovation objectives and drive improved sales growth going
forward. These cost savings have enabled us to raise our adjusted
EBITDA outlook for the current fiscal year."
Fiscal First Quarter Results
Gross orders totaled $61.4
million, an increase of 10 percent compared to $55.6 million for the prior fiscal year period.
Backlog as of September 30, 2018 was
$461.9 million.
Total revenue was $95.8 million,
an increase of 5 percent compared to $91.0
million in the prior fiscal year first quarter. Product
revenue totaled $41.5 million
compared to $38.9 million in the
prior fiscal year first quarter, while service revenue totaled
$54.3 million compared to
$52.0 million in the prior fiscal
year first quarter. Product revenue increased 7 percent year over
year driven by strong growth in sales of the Company's Radixact
Systems. Service revenue grew 4 percent year over year driven by
software upgrades sold through service contracts.
Total gross profit for the fiscal 2019 first quarter was
$37.9 million, or 39.5 percent of
sales, comprised of product gross margin of 40.9 percent and
service gross margin of 38.5 percent. This compares to total gross
profit of $38.1 million, or 41.9
percent of sales, comprised of product gross margin of 43.2 percent
and service gross margin of 40.9 percent for the prior fiscal year
first quarter.
Operating expenses were $42.6
million, an increase of 6 percent compared to $40.2 million in the prior fiscal year first
quarter. The fiscal first quarter 2019 operating expenses included
a one-time accounts receivable impairment charge of $3.7 million. Excluding the impact of this
impairment charge, fiscal first quarter 2019 operating expenses
were $38.9 million.
Net loss was $9.2 million, or
$0.11 per share, compared to a net
loss of $9.4 million, or $0.11 per share, for the prior fiscal year first
quarter.
Adjusted EBITDA for the first quarter of fiscal 2019 was
$4.0 million, excluding the impact of
a one-time impairment charge, compared to $3.1 million in the prior fiscal year first
quarter.
Cash, cash equivalents and short-term restricted cash were
$70.5 million as of September 30, 2018, a decrease of $22.4 million from June
30, 2018.
Cost Savings Initiative
Accuray has implemented a cost saving initiative designed to
reduce operating costs and provide a clear path to GAAP net income
while still focusing on top line growth. The actions implemented do
not impact management's fiscal 2019 outlook for gross order and
revenue growth and has resulted in an increase in the adjusted
EBITDA outlook for the fiscal year.
As a result of the initiative, Accuray expects to take a
non-recurring charge of $1.5 million
to $2 million in the second fiscal
quarter of 2019. The company expects annualized cost savings of
approximately $15 million compared to
fiscal 2018, with the full benefit realized starting in the fourth
quarter of fiscal 2019.
2019 Financial Guidance
The Company is reaffirming revenue guidance provided on
August 16, 2018 and updating adjusted
EBITDA guidance for fiscal year 2019 as follows:
- Revenue: Product revenue growth is expected to range between 4
and 8 percent and service revenue is expected to grow approximately
2 percent, resulting in total revenue of between $415.0 million to $425.0
million, which would represent 3 to 5 percent growth year
over year;
- Adjusted EBITDA: $23.0 million to
$29.0 million representing growth of
approximately 35 percent to 70 percent year over year. The adjusted
guidance reflects the impact of restructuring and excludes the
impact of a one-time accounts receivable impairment charge and the
one-time charge related to the announced cost savings initiatives.
This is adjusted from the previous range of $21.0 million to $27.0
million.
Conference Call Information
Accuray will host a conference call beginning at 1:30 p.m. PT/4:30 p.m.
ET today to discuss results for the first fiscal quarter as
well as recent corporate developments. Conference call dial-in
information is as follows:
- U.S. callers: (855) 867-4103
- International callers: (262) 912-4764
- Conference ID Number (U.S. and international): 3146329
Individuals interested in listening to the live conference call
via the Internet may do so by logging on to Accuray's website,
www.accuray.com. In addition, a taped replay of the conference call
will be available beginning approximately two hours after the
call's conclusion and available for seven days. The replay
telephone number is (855) 859-2056 (USA) or (404) 537-3406 (International),
Conference ID: 3146329. An archived webcast will also be available
at Accuray's website.
Use of Non-GAAP Financial Measures
Accuray has supplemented its GAAP net loss with a non-GAAP
measure of adjusted earnings before interest, taxes, depreciation,
amortization and stock-based compensation ("adjusted
EBITDA"). Management believes that this non-GAAP financial
measure provides useful supplemental information to management and
investors regarding the performance of the company and facilitates
a meaningful comparison of results for current periods with
previous operating results. A reconciliation of GAAP net loss
(the most directly comparable GAAP measure) to non-GAAP adjusted
EBITDA is provided in the schedule below.
There are limitations in using these non-GAAP financial measures
because they are not prepared in accordance with GAAP and may be
different from non-GAAP financial measures used by other
companies. These non-GAAP financial measures should not be
considered in isolation or as a substitute for GAAP financial
measures. Investors and potential investors should consider
non-GAAP financial measures only in conjunction with the company's
consolidated financial statements prepared in accordance with
GAAP.
About Accuray
Accuray Incorporated (Nasdaq: ARAY) is a radiation oncology
company that develops, manufactures and sells precise, innovative
treatment solutions that set the standard of care with the aim of
helping patients live longer, better lives. The company's
leading-edge technologies deliver the full range of radiation
therapy and radiosurgery treatments. For more information, please
visit www.accuray.com.
Safe Harbor Statement
Statements made in this press release that are not statements of
historical fact are forward-looking statements and are subject to
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements in this press
release relate, but are not limited, to the company's future
results of operations, including management's expectations
regarding orders, revenue, and adjusted EBITDA; expectations
related to GAAP net income profitability and sales growth;
expectations regarding the company's product portfolio and future
product enhancements and releases, including the impact of new
products and releases on order growth; expectations regarding
regulatory approvals, including the impact of such approvals on
order growth; and the company's leadership position in radiation
oncology innovation and technologies. These forward-looking
statements involve risks and uncertainties. If any of these
risk or uncertainties materialize, or if any of the company's
assumptions prove incorrect, actual results could differ materially
from the results express or implied by these forward-looking
statements. These risks and uncertainties include, but are
not limited to, the company's ability to achieve widespread market
acceptance of its products, including new product offerings; the
company's ability to develop new products or enhance existing
products to meet customers' needs and compete favorably in the
market; the company's ability to effectively manage its growth; the
company's ability to maintain or increase its gross margins on
product sales and services; delays in regulatory approvals or the
development or release of new offerings; the company's ability to
meet the covenants under its credit facilities; the company's
ability to convert backlog to revenue; risks and uncertainties
related to the China Class A and B license announcement; and such
other risks identified under the heading "Risk Factors" in the
company's Annual Report on Form 10-K, filed with the Securities and
Exchange Commission (the "SEC") on August
24, 2018 and as updated periodically with the company's
other filings with the SEC.
Forward-looking statements speak only as of the date the
statements are made and are based on information available to the
company at the time those statements are made and/or management's
good faith belief as of that time with respect to future
events. The company assumes no obligation to update
forward-looking statements to reflect actual performance or
results, changes in assumptions or changes in other factors
affecting forward-looking information, except to the extent
required by applicable securities laws. Accordingly, investors
should not put undue reliance on any forward-looking
statements.
Todd
Kehrli
|
|
Beth
Kaplan
|
Investor Relations,
EVC Group
|
|
Public Relations
Director, Accuray
|
+1 (310)
625-4462
|
|
+1 (408)
789-4426
|
tkehrli@evcgroup.com
|
|
bkaplan@accuray.com
|
Financial Tables to Follow
Accuray
Incorporated
|
Consolidated
Statements of Operations
|
(in thousands, except
per share data)
|
(Unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
2018
|
|
2017
|
Gross
Orders
|
$
|
61,414
|
|
$
|
55,647
|
Net Orders
|
|
24,911
|
|
|
51,038
|
Order
Backlog
|
|
461,876
|
|
|
464,968
|
Net
revenue:
|
|
|
|
|
|
Products
|
$
|
41,517
|
|
$
|
38,916
|
Services
|
|
54,312
|
|
|
52,034
|
Total net
revenue
|
|
95,829
|
|
|
90,950
|
Cost of
revenue:
|
|
|
|
|
|
Cost of
products
|
|
24,524
|
|
|
22,102
|
Cost of
services
|
|
33,426
|
|
|
30,742
|
Total cost of
revenue
|
|
57,950
|
|
|
52,844
|
Gross
profit
|
|
37,879
|
|
|
38,106
|
Operating
expenses:
|
|
|
|
|
|
Research and
development
|
|
13,889
|
|
|
14,093
|
Selling and
marketing
|
|
13,036
|
|
|
14,757
|
General and
administrative
|
|
15,642
|
|
|
11,308
|
Total operating
expenses
|
|
42,567
|
|
|
40,158
|
Loss from
operations
|
|
(4,688)
|
|
|
(2,052)
|
Other expense,
net
|
|
(3,983)
|
|
|
(6,571)
|
Loss before provision
for income taxes
|
|
(8,671)
|
|
|
(8,623)
|
Provision for income
taxes
|
|
535
|
|
|
759
|
Net loss
|
$
|
(9,206)
|
|
$
|
(9,382)
|
Net loss per share -
basic and diluted
|
$
|
(0.11)
|
|
$
|
(0.11)
|
Weighted average
common shares used in computing
loss per share:
|
|
|
|
|
|
Basic and
diluted
|
|
86,479
|
|
|
83,747
|
Accuray
Incorporated
|
Consolidated
Balance Sheets
|
(in
thousands)
|
(Unaudited)
|
|
|
September
30,
|
|
June
30,
|
|
2018
|
|
2018
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
68,545
|
|
$
|
83,083
|
Restricted
cash
|
|
1,969
|
|
|
9,830
|
Accounts receivable,
net
|
|
66,420
|
|
|
65,994
|
Inventories
|
|
117,684
|
|
|
108,540
|
Prepaid expenses and
other current assets
|
|
17,075
|
|
|
15,569
|
Deferred cost of
revenue
|
|
220
|
|
|
1,141
|
Total current
assets
|
|
271,913
|
|
|
284,157
|
Property and
equipment, net
|
|
23,126
|
|
|
23,698
|
Goodwill
|
|
57,767
|
|
|
57,855
|
Intangible assets,
net
|
|
785
|
|
|
821
|
Other
assets
|
|
15,540
|
|
|
12,196
|
Total
assets
|
$
|
369,131
|
|
$
|
378,727
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
25,921
|
|
$
|
19,694
|
Accrued
compensation
|
|
21,857
|
|
|
28,992
|
Other accrued
liabilities
|
|
21,240
|
|
|
22,448
|
Customer
advances
|
|
19,181
|
|
|
22,896
|
Deferred
revenue
|
|
72,278
|
|
|
75,404
|
Total current
liabilities
|
|
160,477
|
|
|
169,434
|
Long-term
liabilities:
|
|
|
|
|
|
Long-term other
liabilities
|
|
9,890
|
|
|
8,608
|
Deferred
revenue
|
|
22,732
|
|
|
20,976
|
Long-term
debt
|
|
128,926
|
|
|
131,077
|
Total
liabilities
|
|
322,025
|
|
|
330,095
|
Equity:
|
|
|
|
|
|
Common
stock
|
|
86
|
|
|
86
|
Additional paid-in
capital
|
|
524,699
|
|
|
521,738
|
Accumulated other
comprehensive income
|
|
698
|
|
|
1,093
|
Accumulated
deficit
|
|
(478,377)
|
|
|
(474,285)
|
Total
equity
|
|
47,106
|
|
|
48,632
|
Total liabilities and
equity
|
$
|
369,131
|
|
$
|
378,727
|
Accuray
Incorporated
|
Reconciliation of
GAAP Net Loss to Adjusted Earnings Before Interest, Taxes,
Depreciation,
|
Amortization and
Stock-Based Compensation (Adjusted EBITDA)
|
(in
thousands)
|
(Unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
2018
|
|
2017
|
GAAP net
loss
|
$
|
(9,206)
|
|
$
|
(9,382)
|
Amortization of
intangibles
|
|
36
|
|
|
36
|
Depreciation
(a)
|
|
2,093
|
|
|
2,478
|
Stock-based
compensation
|
|
3,212
|
|
|
2,432
|
Interest expense, net
(b)
|
|
3,592
|
|
|
6,820
|
Impairment charge
(c)
|
|
3,707
|
|
|
-
|
Provision for income
taxes
|
|
535
|
|
|
759
|
Adjusted
EBITDA
|
$
|
3,969
|
|
$
|
3,143
|
________________________________
|
(a)
|
consists of
depreciation, primarily on property and equipment.
|
(b)
|
consists primarily of
interest income from available-for-sale securities, interest
expense associated with our outstanding debt and non-cash loss on
extinguishment of debt.
|
(c)
|
consists of a
one-time accounts receivable impairment charge related to one
customer
|
Accuray
Incorporated
|
Forward-Looking
Guidance
|
Reconciliation of
Projected Net Loss to Projected Adjusted Earnings Before Interest,
Taxes, Depreciation, Amortization and Stock-Based Compensation
(Adjusted EBITDA)
|
(in
thousands)
|
(Unaudited)
|
|
|
|
Twelve Months
Ending
June 30,
2019
|
|
|
From
|
|
To
|
GAAP net
loss
|
|
$
|
(23,000)
|
|
$
|
(17,000)
|
Depreciation and
amortization (a)
|
|
|
10,100
|
|
|
10,100
|
Stock-based
compensation
|
|
|
13,000
|
|
|
13,000
|
Impairment charge
(b)
|
|
|
3,700
|
|
|
3,700
|
Cost savings
initiative (c)
|
|
|
2,000
|
|
|
2,000
|
Interest expense, net
(d)
|
|
|
15,100
|
|
|
15,100
|
Provision for income
taxes
|
|
|
2,100
|
|
|
2,100
|
Adjusted
EBITDA
|
|
$
|
23,000
|
|
$
|
29,000
|
________________________________
|
(a)
|
consists of
depreciation, primarily on property and equipment as well as
amortization of intangibles.
|
(b)
|
consists of a
one-time accounts receivable impairment charge related to one
customer recorded in the first quarter of 2019.
|
(c)
|
consists of costs
associated with a staff reduction expected to be recorded in the
second quarter of 2019.
|
(d)
|
consists primarily of
interest expense associated with our outstanding debt.
|
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SOURCE Accuray Incorporated