ICL Units Up 39% Resulting in Seventh
Consecutive Quarter of Significant Growth
Earnings per Share of $0.03
Announces U.S. Surgeons Summit
STAAR Surgical Company (NASDAQ: STAA), a leading developer,
manufacturer and marketer of implantable lenses and companion
delivery systems for the eye, today reported financial results for
the first quarter ended March 29, 2019.
First Quarter 2019
Overview
- Net Sales of $32.6 Million Up 20% from
the Prior Year Quarter
- ICL Sales Up 31% and Units Up 39% from
the Prior Year Quarter
- ICL Sales Up 34% and Net Sales Up 23%
on a Constant Currency Basis from the Prior Year Quarter
- Gross Margin at 74.2% Up 250 Basis
Points from the Prior Year Quarter
- First Quarter Net Income of $0.03 per
Share vs. Prior Year Net Income of $0.01 per Share
- Cash, Cash Equivalents and Restricted
Cash Ended the Quarter at $102.2 Million
“Our ICL family of lenses continue to grow at rates
significantly above reported growth for the Ophthalmic Refractive
sector,” said Caren Mason, President and CEO of STAAR Surgical.
“Total ICL units grew 39% globally in the first quarter including
86% growth in Japan, 62% in Korea, 56% in China, 27% in Germany and
23% in India as compared to the prior year quarter. As we recognize
and appreciate seven quarters of strong double digit ICL sales and
unit growth, we anticipate the strong future our product pipeline
and market expansion should provide. The U.S. is one of many
markets with significant potential for the ICL and we are pleased
to announce our inaugural invitation only U.S. Surgeons Summit.
This summer weekend summit will bring together key ophthalmic
opinion leaders and executives for educational, podium and panel
participation and a thoughtful exchange of ideas as we execute our
path forward in the U.S. Joining the U.S. contingent will be top
surgeons from China, Japan and Germany who will share their
clinical pathways, learnings, and business models to a new ICL
continuum of visual freedom care and economic expansion. We are
delighted to report the initial response to our surgeon outreach
has been very strong with U.S. refractive surgeon opinion leaders
leading educational sessions and surgeons from the largest
refractive markets in the U.S. participating.”
Financial Overview – Q1
2019
Net sales were $32.6 million for the first quarter of 2019, up
20% compared to $27.1 million reported in the prior year quarter.
The sales increase was driven by ICL revenue and unit growth of 31%
and 39%, respectively. Other Product Sales decreased 19% compared
to the prior year quarter. Currency, primarily the Euro, negatively
impacted Net Sales by approximately $0.7 million in the first
quarter. Adjusting for the impact of Currency, Net sales in the
first quarter of 2019 were $33.3 million, representing 23% growth
over the prior year quarter.
Gross profit margin for the first quarter of 2019, was 74.2%
compared to the prior year period of 71.7%. The 250 basis point
increase in gross profit margin for the quarter is due to favorable
product mix resulting from increased sales of ICLs and decreased
sales of injector parts and lower unit costs, partially offset by
the effect of lower average selling prices (ASPs) for lower diopter
ICLs and large volume commitment strategic partners.
Operating expenses for the quarter were $22.6 million compared
to the prior year quarter of $18.6 million. General and
administrative expenses were $6.8 million compared to the prior
year quarter of $5.8 million. The increase in general and
administrative expenses was due to increased headcount and
salary-related expenses including stock-based compensation and
increased facility costs. Marketing and selling expenses were $10.1
million compared to the prior year quarter of $7.5 million. The
increase in marketing and selling expenses was due to increased
headcount and salary-related expenses including stock-based
compensation, increased travel expenses and continued investments
in digital, strategic, and consumer marketing. Research and
development expenses were $5.6 million compared to the prior year
quarter of $5.4 million.
Net income for the first quarter of 2019 was $1.4 million or
approximately $0.03 per share compared with net income of $0.6
million or $0.01 per share for the prior year quarter. Non-GAAP
Adjusted Net Income for the first quarter of 2019 was $4.3 million
or $0.09 per share compared to $2.0 million or $0.05 per share for
the prior year quarter. The reconciliation between GAAP and
non-GAAP financial information is provided in the financial tables
included with this release.
Cash, cash equivalents and restricted cash at March 29, 2019
totaled $102.2 million, compared to $104.0 million at the end of
the fourth quarter of 2018. The Company generated $0.7 million in
cash from operations in the first quarter.
Conference Call
The Company will host a conference call and webcast today,
Wednesday, May 1, 2019 at 4:30 p.m. Eastern / 1:30 p.m. Pacific to
discuss its financial results and operational progress. To access
the conference call (Conference ID 2299537), please dial
855-765-5684 for domestic participants and 262-912-6252 for
international participants. The live webcast can be accessed from
the investor relations section of the STAAR website at
www.staar.com.
A taped replay of the conference call (Conference ID 2299537)
will be available beginning approximately one hour after the call’s
conclusion for seven days. This replay can be accessed by dialing
855-859-2056 for domestic callers and 404-537-3406 for
international callers. An archived webcast will also be available
at www.staar.com.
Use of Non-GAAP Financial
Measures
This press release includes supplemental non-GAAP financial
information, which STAAR believes investors will find helpful in
understanding its operating performance. “Adjusted Net Income” and
“Adjusted Net Income Per Share” exclude the following items that
are included in “Net Income” as calculated in accordance with U.S.
generally accepted accounting principles (“GAAP”): gain or loss on
foreign currency transactions and stock-based compensation
expenses. Management believes that “Adjusted Net Income” and
“Adjusted Net Income Per Share” are useful to investors in gauging
the outcome of the key drivers of the business performance: the
ability to increase sales revenue and our ability to increase
profit margin by improving the mix of high value products while
reducing the costs over which management has control.
Management has also excluded gains and losses on foreign
currency transactions because of the significant fluctuations that
can result from period to period as a result of market driven
factors. Stock-based compensation expenses consist of expenses for
stock options and restricted stock under the Financial Accounting
Standards Board’s Accounting Standards Codification (ASC) 718. In
calculating Adjusted Net Income and Adjusted Net Income Per Share,
STAAR excludes these expenses because they are non-cash expenses
and because of the complexity and considerable judgment involved in
calculating their values. In addition, these expenses tend to be
driven by fluctuations in the price of our stock and not by the
same factors that generally affect our other business expenses.
About STAAR Surgical
STAAR, which has been dedicated solely to ophthalmic surgery for
over 30 years, designs, develops, manufactures and markets
implantable lenses for the eye with companion delivery systems.
These lenses are intended to provide visual freedom for patients,
lessening or eliminating the reliance on glasses or contact lenses.
All of these lenses are foldable, which permits the surgeon to
insert them through a small incision. STAAR’s lens used in
refractive surgery is called an Implantable Collamer® Lens or
“ICL”, which includes the EVO Visian ICL™ product line. More than
1,000,000 Visian ICLs have been implanted to date. To learn more
about the ICL go to: www.discovericl.com. STAAR markets lenses in
over 75 countries and had approximately 475 full-time equivalent
employees at December 28, 2018. Headquartered in Lake Forest, CA,
the company operates manufacturing facilities in Aliso Viejo, CA
and Monrovia, CA. For more information, please visit the Company’s
website at www.staar.com.
Safe Harbor
All statements in this press release that are not statements of
historical fact are forward-looking statements, including
statements about any of the following: any financial projections,
including those relating to the plans, strategies, and objectives
of management for 2019 or prospects for achieving such plans,
expectations for sales, revenue, or earnings, product safety or
effectiveness, and any statements of assumptions underlying any of
the foregoing, including those relating to our product pipeline and
market expansion activities. Important factors that could cause
actual results to differ materially from those indicated by such
forward-looking statements are set forth in the Company’s Annual
Report on Form 10-K for the year ended December 28, 2018 under the
caption “Risk Factors,” which is on file with the Securities and
Exchange Commission and available in the “Investor Information”
section of the company’s website under the heading “SEC Filings.”
We disclaim any intention or obligation to update or revise any
financial projections or forward-looking statement due to new
information or events.
These statements are based on expectations and assumptions as of
the date of this press release and are subject to numerous risks
and uncertainties, which could cause actual results to differ
materially from those described in the forward-looking statements.
The risks and uncertainties include the following: global economic
conditions; the discretion of regulatory agencies to approve or
reject existing, new or improved products, or to require additional
actions before approval, or to take enforcement action; potential
international trade disputes; and the willingness of surgeons and
patients to adopt a new or improved product and procedure. The
Visian ICL with CentraFLOW, now known as EVO Visian ICL, is not yet
approved for sale in the United States.
Consolidated Balance Sheets (in 000's)
Unaudited
ASSETS
March 29,2019
December 28,2018
Current assets: Cash and cash equivalents $ 102,111 $ 103,877
Accounts receivable trade, net 26,601 25,946 Inventories, net
16,439 16,704 Prepayments, deposits, and other current assets
7,534 5,045 Total current assets
152,685 151,572 Property, plant, and
equipment, net 11,300 11,451 Finance lease right-of-use assets, net
2,445 - Operating lease right-of-use assets, net 6,629 - Intangible
assets, net 263 243 Goodwill 1,786 1,786 Deferred income taxes
1,275 1,278 Other assets 836 1,009
Total assets $ 177,219 $ 167,339
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Line of credit $ 3,272 $ 3,780 Accounts payable 7,018 6,524
Obligations under finance leases 1,158 1,098 Obligations under
operating leases 2,495 - Allowance for sales returns 2,971 2,895
Other current liabilities 11,317 13,431
Total current liabilities 28,231 27,728
Obligations under finance leases 656 459 Obligations under
operating leases 4,270 - Deferred income taxes 1,100 1,022 Asset
retirement obligations 206 206 Deferred rent - 188 Pension
liability 5,418 5,310 Total liabilities
39,881 34,913
Stockholders' equity: Common stock 444 442 Additional paid-in
capital 292,722 289,584 Accumulated other comprehensive loss (1,343
) (1,320 ) Accumulated deficit (154,485 ) (156,280 )
Total stockholders' equity 137,338 132,426
Total liabilities and stockholders' equity $ 177,219
$ 167,339
Consolidated Statements of Income (In 000's except for
per share data) Unaudited Three Months
Ended
% ofSales
March 29, 2019
% ofSales
March 30, 2018 Fav (Unfav) Amount %
Net sales 100.0 % $ 32,583 100.0 % $ 27,093 $ 5,490 20.3 %
Cost of sales 25.8 % 8,403 28.3 % 7,662
(741 ) -9.7 % Gross profit 74.2 %
24,180 71.7 % 19,431 4,749 24.4
% Selling, general and administrative expenses: General and
administrative 21.0 % 6,837 21.3 % 5,771 (1,066 ) -18.5 % Marketing
and selling 31.1 % 10,143 27.5 % 7,454 (2,689 ) -36.1 % Research
and development 17.3 % 5,635 20.0 % 5,407
(228 ) -4.2 % Total selling, general, and
administrative expenses 69.4 % 22,615 68.8 % 18,632 (3,983 ) -21.4
% Operating income 4.8 % 1,565 2.9 %
799 766 95.9 % Other income (expense):
Interest Income (expense), net 0.8 % 271 0.0 % (12 ) 283 2358.3 %
Loss on foreign currency transactions -0.7 % (248 ) -0.3 % (77 )
(171 ) -222.1 % Royalty income 0.5 % 171 0.6 % 157 14 8.9 % Other
income, net 0.3 % 97 0.1 % 17 80
470.6 % Total other income, net 0.9 % 291 0.4
% 85 206 242.4 % Income before
provision for income taxes 5.7 % 1,856 3.3 % 884 972 110.0 %
Provision for income taxes 1.5 % 489 1.1 % 301
(188 ) -62.5 % Net income 4.2 % $ 1,367
2.2 % $ 583 $ 784 134.5 % Net income
per share - basic $ 0.03 $ 0.01 Net income per share
- diluted $ 0.03 $ 0.01 Weighted average
shares outstanding - basic 44,235 41,410
Weighted average shares outstanding - diluted 46,913
43,087
Consolidated Statements of Cash Flows (in 000's)
Unaudited Three Months Ended
March 29,2019
March 30,2018
Cash flows from operating activities: Net income $ 1,367 $ 583
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation of property and equipment 1,222
549 Amortization of long-lived intangibles 8 9 Deferred income
taxes 79 92 Change in net pension liability 119 87 Stock-based
compensation expense 2,641 1,301 Loss on disposal of property and
equipment - 6 Provision for sales returns and bad debts (34 ) 514
Inventory provision 455 506 Changes in working capital: Accounts
receivable (554 ) (2,755 ) Inventories (7 ) (396 ) Prepayments,
deposits and other current assets (2,317 ) (730 ) Accounts payable
(185 ) 2,038 Other current liabilities (2,063 ) 726
Net cash provided by operating activities 731
2,530 Cash flows from investing activities:
Acquisition of property and equipment (2,203 ) (965 ) Increase in
patents and licenses (30 ) - Net cash used in
investing activities (2,233 ) (965 ) Cash
flows from financing activities: Repayment on line of credit (499 )
- Repayment of finance lease obligations (365 ) (380 )
Proceeds from vested restricted stock and
exercise of stock options
624 454 Net cash provided by (used in)
financing activities (240 ) 74 Effect
of exchange rate changes on cash, cash equivalents and restricted
cash (24 ) 612 (Decrease) increase in
cash, cash equivalents and restricted cash (1,766 ) 2,251 Cash,
cash equivalents and restricted cash, at beginning of the period
103,999 18,641 Cash, cash equivalents
and restricted cash, at end of the period $ 102,233 $ 20,892
Global
Sales (in 000's) Unaudited Three
Months Ended
% Change Sales by Region
March 29, 2019
March 30, 2018
Fav (Unfav) North America 6.7 % $ 2,198 7.7 % $ 2,079 5.7 %
Europe 21.6 % 7,027 25.8 % 6,990 0.5 % Middle East, Africa, Latin
America 3.8 % 1,238 5.6 % 1,519 -18.5 % Asia Pacific 67.9 %
22,120 60.9 % 16,505 34.0 % Total Sales 100.0 % $ 32,583
100.0 % $ 27,093 20.3 %
Core Product Sales
ICLs 85.3 % $ 27,786 78.1 % $ 21,158 31.3 %
Other Product
Sales IOLs 12.3 % 4,017 15.0 % 4,058 -1.0 % Injector Parts and
Other 2.4 % 780 6.9 % 1,877 -58.4 % Total Other Sales
14.7 % 4,797 21.9 % 5,935 -19.2 % Total Sales 100.0 %
$ 32,583 100.0 % $ 27,093 20.3 %
Reconciliation of Non-GAAP Financial Measure (in
000's) Unaudited Three Months Ended
March 29, 2019 March 30, 2018 Net income (as
reported) $ 1,367 $ 583 Less: Foreign currency impact 248 77
Stock-based compensation expense 2,641 1,301
Net income (adjusted) $ 4,256 $ 1,961 Net income per
share, basic (as reported) $ 0.03 $ 0.01 Foreign currency impact
0.01 - Stock-based compensation expense 0.06
0.03 Net income per share, basic (adjusted) $ 0.10 $ 0.05
Net income per share, diluted (as reported) $ 0.03 $ 0.01
Foreign currency impact 0.01 - Stock-based compensation expense
0.06 0.03 Net income per share, diluted
(adjusted) $ 0.09 $ 0.05 Weighted average shares
outstanding - Basic 44,235 41,410 Weighted average shares
outstanding - Diluted 46,913 43,087 Note: Net income per
share (adjusted), basic and diluted, may not add due to rounding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190501005891/en/
Investors & MediaBrian MooreSr. Director, Investor,
Media Relations and Corporate Development(626) 303-7902, Ext.
3023bmoore@staar.com
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