Third Quarter Overview
- Net Sales of
$18.8 Million Up 3% from the Prior Year Quarter and Up 7% on a Constant Currency Basis -
Worldwide ICL Revenue and Units Up 21% with Strong Performance by Market:
- Europe Middle East Africa (EMEA) ICL Revenue Up 25% and Units Up 37%
Asia Pacific (APAC) ICL Revenue Up 21% and Units Up 13%North America (NA) ICL Revenue Up 14% and Units Up 10%
- Worldwide IOL Revenue Down 24% and Units Down 18%
- Gross Margin Improved 3 points from 65.3% to 68.3% Despite Currency Challenges
- FDA Remediation Effort Continues On-Track and On-Budget for the Quarter and YTD
-
Third Quarter Net Loss of
$0.04 per Share; Adjusted Net Income per Share Breakeven
'Our third quarter results were largely positive due to the continuing momentum in the growth of the ICL business in all markets. Our Toric ICL quarterly shipments surpassed last quarter's record. Our IOL business performed as planned with unit growth in the Japanese market and continuing downward pressure in all other markets. How we participate in the Cataract Care market in coming years will be a focus for us in 2016,' said
Financial Overview
Net sales were
The sales increase was driven by higher ICL unit sales in each region, with EMEA, APAC, and
For the third quarter of 2015, the gross profit margin increased 300 basis points to 68.3% compared to the prior year period of 65.3%. An increased mix of higher margin ICL units, higher average selling prices exclusive of currency impacts, and lower unit and other costs improved gross margin by approximately 450 basis points which was partially offset by a decrease of approximately 150 basis points due to the impact of the weaker euro on average selling prices.
Operating expenses for the quarter increased 10% to
The net loss for the third quarter of 2015 was
The adjusted net loss for the third quarter of 2015 was
Cash and cash equivalents at
Conference Call
The Company will host a conference call and webcast on
A taped replay of the conference call will also 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.
The Company conducts a significant part of its activities outside the U.S. It receives sales revenue and pays expenses principally in U.S. dollars, Swiss francs, Japanese yen and euros. The exchange rates between dollars and non-U.S. currencies can fluctuate greatly and can have a significant effect on the Company's results when reported in U.S. dollars. When preparing its financial statements in conformity with U.S. generally accepted accounting principles ('GAAP'), the Company translates foreign currency sales and expenses denominated in Japanese yen to dollars at the weighted average of exchange rates in effect during the period. As a result, the Company's reported performance may be significantly affected by currency fluctuations. In order to compare the Company's performance from period to period without the effect of currency, the Company will apply the same average exchange rate applicable in the prior period, or the 'constant currency' rate to sales or expenses in the current period as well. Because changes in currency are outside of the control of the Company and its managers, management finds this non-GAAP measure useful in determining the long-term progress of its initiatives and determining whether its managers are achieving their performance goals. The Company believes that the non-GAAP constant-currency sales results provided in this press release are similarly useful to investors to give insight on long term trends in the Company's performance without the external effect of changes in relative currency values. The table below shows sales results calculated in accordance with GAAP, the effect of currency, and the resulting non-GAAP measure expressed in constant currency.
'Adjusted Net Income' excludes the following items that are included in 'Net Income' as calculated in accordance with GAAP: manufacturing consolidation expenses, gain or loss on foreign currency transactions, stock-based compensation expenses, and
Management believes that 'Adjusted Net Income' is 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 excluded manufacturing consolidation expenses and
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
The Company has provided below a detailed reconciliation table, which is useful to investors in providing the context to understand
About
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; the plans, strategies, and objectives of management for future operations or prospects for achieving such plans, expectations for new products or support for product growth, and any statements of assumptions underlying any of the foregoing. Important additional 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
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: our limited capital resources and limited access to financing; the negative effect of unstable global economic conditions on sales of products, especially products such as the ICL used in non-reimbursed elective procedures; the challenge of managing our foreign subsidiaries; backlog or supply delays; changes in currency exchange rates; the discretion of regulatory agencies to approve or reject existing, new or improved products, or to require additional actions before approval (including but not limited to
CONTACT: | Investors | Media |
EVC Group | EVC Group | |
Brian Moore, 310-579-6199 | Dave Schemelia, 646-445-4800 | |
Doug Sherk, 415-652-9100 |
STAAR Surgical Company | ||
Condensed Consolidated Balance Sheets | ||
(in 000's) | ||
Unaudited | ||
October 2, | January 2, | |
ASSETS | 2015 | 2015 |
Current assets: | ||
Cash and cash equivalents | $ 16,081 | $ 13,013 |
Accounts receivable trade, net | 12,776 | 11,054 |
Inventories, net | 14,622 | 15,717 |
Prepayments, deposits, and other current assets | 4,008 | 4,517 |
Deferred income taxes | 598 | 596 |
Total current assets | 48,085 | 44,897 |
Property, plant, and equipment, net | 9,944 | 10,066 |
Intangible assets, net | 719 | 870 |
Goodwill | 1,786 | 1,786 |
Deferred income taxes | 759 | 695 |
Other assets | 617 | 597 |
Total assets | $ 61,910 | $ 58,911 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Line of credit | $ 4,168 | $ 4,150 |
Accounts payable | 5,790 | 6,620 |
Deferred income taxes | 301 | 301 |
Obligations under capital leases | 336 | 399 |
Other current liabilities | 6,280 | 4,901 |
Total current liabilities | 16,875 | 16,371 |
Obligations under capital leases | 224 | 468 |
Deferred income taxes | 1,866 | 1,704 |
Asset retirement obligations | 116 | 115 |
Pension liability | 3,202 | 3,079 |
Other long-term liabilities | 88 | 75 |
Total liabilities | 22,371 | 21,812 |
Stockholders' equity: | ||
Common stock | 399 | 384 |
Additional paid-in capital | 186,294 | 178,232 |
Accumulated other comprehensive loss | (1,017) | (1,070) |
Accumulated deficit | (146,137) | (140,447) |
Total stockholders' equity | 39,539 | 37,099 |
Total liabilities and stockholders' equity | $ 61,910 | $ 58,911 |
STAAR Surgical Company | ||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||
(In 000's except for per share data) | ||||||||||||
Unaudited | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
% of | October 2, | % of | October 3, | Fav (Unfav) | % of | October 2, | % of | October 3, | Fav (Unfav) | |||
Sales | 2015 | Sales | 2014 | Amount | % | Sales | 2015 | Sales | 2014 | Amount | % | |
Net sales | 100.0% | $ 18,750 | 100.0% | $ 18,188 | $ 562 | 3.1% | 100.0% | $ 56,264 | 100.0% | $ 58,414 | $ (2,150) | -3.7% |
Cost of sales | 31.7% | 5,951 | 34.7% | 6,319 | 368 | 5.8% | 32.4% | 18,206 | 32.5% | 18,995 | 789 | 4.2% |
Gross profit | 68.3% | 12,799 | 65.3% | 11,869 | 930 | 7.8% | 67.6% | 38,058 | 67.5% | 39,419 | (1,361) | -3.5% |
Selling, general and administrative expenses: | ||||||||||||
General and administrative | 25.9% | 4,853 | 17.9% | 3,259 | (1,594) | -48.9% | 26.2% | 14,748 | 24.0% | 14,064 | (684) | -4.9% |
Marketing and selling | 33.5% | 6,284 | 38.6% | 7,026 | 742 | 10.6% | 31.6% | 17,784 | 34.6% | 20,189 | 2,405 | 11.9% |
Research and development | 19.6% | 3,684 | 17.2% | 3,137 | (547) | -17.4% | 19.2% | 10,800 | 15.6% | 9,118 | (1,682) | -18.4% |
Selling, general, and administrative expenses | 79.0% | 14,821 | 73.7% | 13,422 | (1,399) | -10.4% | 77.0% | 43,332 | 74.2% | 43,371 | 39 | 0.1% |
Other general and administrative expenses | 0.0% | - | 0.0% | - | - | #DIV/0! | 0.0% | - | 0.6% | 334 | 334 | 100.0% |
Total selling, general and administrative expenses | 79.0% | 14,821 | 73.7% | 13,422 | (1,399) | -10.4% | 77.0% | 43,332 | 74.8% | 43,705 | 373 | 0.9% |
Operating loss | -10.7% | (2,022) | -8.4% | (1,553) | (469) | — | -9.4% | (5,274) | -7.3% | (4,286) | (988) | 23.1% |
Other income (expense): | ||||||||||||
Interest income | 0.0% | 1 | 0.0% | 7 | (6) | -85.7% | 0.1% | 50 | 0.0% | 26 | 24 | 92.3% |
Interest expense | -0.2% | (29) | -0.2% | (35) | 6 | 17.1% | -0.2% | (97) | -0.1% | (102) | 5 | 4.9% |
Gain (loss) on foreign currency transactions | 0.1% | 20 | -3.5% | (628) | 648 | -103.2% | -1.2% | (692) | -1.2% | (696) | 4 | — |
Other income, net | 1.4% | 267 | 0.3% | 51 | 216 | 423.5% | 0.8% | 437 | 0.6% | 338 | 99 | 29.3% |
Total other income (expense), net | 1.4% | 259 | -3.4% | (605) | 864 | -142.8% | -0.5% | (302) | -0.7% | (434) | 132 | -30.4% |
Loss before provision (benefit) for income taxes | -9.4% | (1,763) | -11.9% | (2,158) | 395 | -18.3% | -9.9% | (5,576) | -8.0% | (4,720) | (856) | 18.1% |
Provision (benefit) for income taxes | -0.1% | (11) | 3.0% | 548 | 559 | — | 0.2% | 114 | 1.9% | 1,134 | 1,020 | 89.9% |
Net loss | -9.3% | $ (1,752) | -14.9% | $ (2,706) | $ 954 | — | -10.1% | $ (5,690) | -9.9% | $ (5,854) | $ 164 | — |
Net loss per share - basic and diluted | $ (0.04) | $ (0.07) | $ (0.14) | $ (0.15) | ||||||||
Weighted average shares outstanding - basic and diluted | 39,727 | 38,369 | 39,409 | 38,044 |
STAAR Surgical Company | |||
Condensed Consolidated Statements of Cash Flows | |||
(in 000's) | |||
Unaudited | |||
Nine Months Ended | |||
October 2, | October 3, | ||
2015 | 2014 | ||
Cash flows from operating activities: | |||
Net loss | $ (5,690) | $ (5,854) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation of property and equipment | 1,563 | 1,520 | |
Amortization of intangibles | 154 | 317 | |
Deferred income taxes | (148) | 161 | |
Stock-based compensation expense | 2,747 | 4,736 | |
Change in net pension liability | 136 | 118 | |
Accretion of asset retirement obligation | - | 3 | |
Provision for sales returns and bad debts | 331 | 75 | |
Changes in working capital: | |||
Accounts receivable, net | (2,040) | (1,139) | |
Inventories, net | 1,497 | (3,191) | |
Prepayments, deposits and other current assets | 737 | 207 | |
Accounts payable | (991) | (17) | |
Other current liabilities | 1,387 | (1,364) | |
Net cash used in operating activities | (317) | (4,428) | |
Cash flows from investing activities: | |||
Acquisition of property and equipment | (1,283) | (2,517) | |
Disposal of property and equipment | 2 | 68 | |
Net cash used in investing activities | (1,281) | (2,449) | |
Cash flows from financing activities: | |||
Repayment of capital lease obligations | (306) | (372) | |
Proceeds from exercise of warrants | 2,800 | - | |
Proceeds from exercise of stock options | 2,149 | 2,793 | |
Net cash provided by financing activities | 4,643 | 2,421 | |
Effect of exchange rate changes on cash and cash equivalents | 23 | (139) | |
(Decrease) increase in cash and cash equivalents | 3,068 | (4,595) | |
Cash and cash equivalents, at beginning of the period | 13,013 | 22,954 | |
Cash and cash equivalents, at end of the period | $ 16,081 | $ 18,359 |
STAAR Surgical Company | ||||||||||
Global Sales | ||||||||||
(in 000's) | ||||||||||
Unaudited | ||||||||||
Three Months Ended | Nine Months Ended | |||||||||
October 2, | October 3, | % Change | October 2, | October 3, | % Change | |||||
Geographic Sales | 2015 | 2014 | Fav (Unfav) | 2015 | 2014 | Fav (Unfav) | ||||
United States | 15.3% | $ 2,873 | 15.8% | $ 2,875 | -0.1% | 15.0% | $ 8,464 | 14.9% | $ 8,676 | -2.4% |
Japan | 22.7% | 4,249 | 26.3% | 4,792 | -11.3% | 22.2% | 12,514 | 24.6% | 14,349 | -12.8% |
China | 16.5% | 3,095 | 16.0% | 2,915 | 6.2% | 15.6% | 8,794 | 13.1% | 7,675 | 14.6% |
Korea | 9.0% | 1,690 | 6.0% | 1,098 | 53.9% | 9.4% | 5,303 | 9.7% | 5,671 | -6.5% |
Spain | 6.1% | 1,137 | 6.5% | 1,178 | -3.5% | 7.3% | 4,101 | 7.3% | 4,270 | -4.0% |
Germany | 5.1% | 962 | 3.9% | 713 | 34.9% | 3.8% | 2,151 | 4.5% | 2,625 | -18.1% |
Other | 25.4% | 4,744 | 25.4% | 4,617 | 2.8% | 26.5% | 14,937 | 25.9% | 15,148 | -1.4% |
Total International Sales | 84.8% | 15,877 | 84.1% | 15,313 | 3.7% | 85.0% | 47,800 | 85.1% | 49,738 | -3.9% |
Total Sales | 100.1% | $ 18,750 | 99.9% | $ 18,188 | 3.1% | 100.0% | $ 56,264 | 100.0% | $ 58,414 | -3.7% |
Product Sales | ||||||||||
Core products | ||||||||||
ICLs | 68.8% | $ 12,907 | 58.5% | $ 10,640 | 21.3% | 66.5% | $ 37,396 | 60.0% | $ 35,052 | 6.7% |
IOLs | 23.4% | 4,390 | 31.7% | 5,763 | -23.8% | 26.6% | 14,952 | 32.2% | 18,804 | -20.4% |
Total core products | 92.3% | 17,297 | 90.2% | 16,403 | 5.5% | 93.0% | 52,348 | 92.2% | 53,856 | -2.8% |
Non-core products | ||||||||||
Other | 7.7% | 1,453 | 9.8% | 1,785 | -18.8% | 7.0% | 3,916 | 7.8% | 4,558 | -14.1% |
Total Sales | 100.0% | $ 18,750 | 100.0% | $ 18,188 | 3.1% | 100.0% | $ 56,264 | 100.0% | $ 58,414 | -3.7% |
STAAR Surgical Company | ||||||
Reconciliation of Non-GAAP Financial Measure | ||||||
(in 000's) | ||||||
Unaudited | Three Months Ended | Nine Months Ended | ||||
October 2, | October 3, | October 2, | October 3, | |||
2015 | 2014 | 2015 | 2014 | |||
Net loss - (as reported) | $ (1,752) | $ (2,706) | $ (5,690) | $ (5,854) | ||
Less: | ||||||
Manufacturing consolidation expenses | - | - | - | 334 | ||
Foreign currency impact | (20) | 628 | 692 | 696 | ||
Stock-based compensation expense | 923 | 1,553 | 2,869 | 4,736 | ||
FDA panel/remediation expense | 809 | 612 | 3,367 | 2,104 | ||
Net income (loss) - (adjusted) | $ (40) | $ 87 | $ 1,238 | $ 2,016 | ||
Net loss per share, basic - (as reported) | $ (0.04) | $ (0.07) | $ (0.14) | $ (0.15) | ||
Manufacturing consolidation expenses | $ - | $ - | $ - | $ 0.01 | ||
Foreign currency impact | $ (0.00) | $ 0.02 | $ 0.02 | $ 0.02 | ||
Stock-based compensation expense | $ 0.02 | $ 0.04 | $ 0.07 | $ 0.12 | ||
FDA panel/remediation expense | $ 0.02 | $ 0.02 | $ 0.09 | $ 0.06 | ||
Net income per share, basic - (adjusted) | $ (0.00) | $ 0.00 | $ 0.03 | $ 0.05 | ||
Net loss per share, diluted - (as reported) | $ (0.04) | $ (0.07) | $ (0.13) | $ (0.15) | ||
Manufacturing consolidation expenses | $ - | $ - | $ - | $ 0.01 | ||
Foreign currency impact | $ (0.00) | $ 0.02 | $ 0.02 | $ 0.02 | ||
Stock-based compensation expense | $ 0.02 | $ 0.04 | $ 0.07 | $ 0.12 | ||
FDA panel/remediation expense | $ 0.02 | $ 0.02 | $ 0.08 | $ 0.05 | ||
Net income per share, diluted - (adjusted) | $ (0.00) | $ 0.00 | $ 0.03 | $ 0.05 | ||
Weighted average shares outstanding - Basic | 39,727 | 38,369 | 39,409 | 38,044 | ||
Weighted average shares outstanding - Diluted | 39,727 | 40,169 | 42,393 | 40,348 | ||
Note: Net income per share (adjusted), basic and diluted, may not add up due to rounding |
STAAR Surgical Company | |||||||||
Reconciliation of Non-GAAP Financial Measure | |||||||||
Constant Currency Sales | |||||||||
(in 000's) | |||||||||
Unaudited | |||||||||
Three Months Ended | |||||||||
GAAP Sales | |||||||||
October 2, | Effect of | Constant | October 3, | As Reported | Constant Currency | ||||
2015 | Currency | Currency | 2014 | $ Change | % Change | $ Change | % Change | ||
ICL | $ 12,907 | $ 79 | $ 12,986 | $ 10,640 | $ 2,267 | 21% | $ 2,346 | 22% | |
IOL | 4,390 | 413 | 4,803 | $ 5,763 | (1,373) | -24% | (960) | -17% | |
Other | 1,453 | 203 | 1,656 | $ 1,785 | (332) | -19% | (129) | -7% | |
Total Sales | $ 18,750 | $ 695 | $ 19,445 | $ 18,188 | $ 562 | 3% | $ 1,257 | 7% | |
Nine Months Ended | |||||||||
GAAP Sales | |||||||||
October 2, | Effect of | Constant | October 3, | As Reported | Constant Currency | ||||
2015 | Currency | Currency | 2014 | $ Change | % Change | $ Change | % Change | ||
ICL | $ 37,396 | $ 219 | $ 37,615 | $ 35,052 | $ 2,344 | 7% | $ 2,563 | 7% | |
IOL | 14,952 | 1,516 | 16,468 | 18,804 | (3,852) | -20% | (2,336) | -12% | |
Other | 3,916 | 538 | 4,454 | 4,558 | (642) | -14% | (104) | -2% | |
Total Sales | $ 56,264 | $ 2,273 | $ 58,537 | $ 58,414 | $ (2,150) | -4% | $ 123 | 0% |
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