Total truSculpt® Body Sculpting Revenue Grows
29%; Surpasses 1,000 Systems Sold-To-Date
Total International Sales Grows 20%
Cutera, Inc. (NASDAQ: CUTR) (“Cutera” or the “Company”), a
leading provider of laser and other energy-based aesthetic systems
for practitioners worldwide, today reports financial results for
the first quarter ended March 31, 2019.
Key financial and operational highlights for the first quarter
include:
- Revenue for the first quarter
increased 6% over the prior year first quarter, to $36.0 million.
- First quarter continues to reflect
strong demand for our body sculpting platform, as total revenue for
the truSculpt portfolio grew 29% over the prior year period.
- Total recurring revenue, which includes
service, skincare and consumable revenue, was $8.8 million,
representing 28% growth over the first quarter 2018. Consumable
revenues more than doubled year-on-year.
- International revenue grew 20%
year-over-year in the first quarter, reflecting strong growth in
Japan and Australia.
- US revenue declined by 3% in the first
quarter over the prior year period, as continued strong demand for
truSculpt iD and Secret RF systems were offset by challenging
year-over-year comparisons for the Juliet women’s health system and
the overall pricing environment.
- Successful launch of excel V+,
the Company’s latest generation laser technology for vascular and
pigmentation treatments.
- Gross Margin for the first
quarter was 48%, compared to 51% in the prior year period. The
decrease in first quarter gross margin reflects a combination of
geographic mix and pricing. Non-GAAP gross margin* was 49%
for the first quarter compared to 51% for the prior year
period.
- Operating expenses for the first
quarter were 70% of revenue. This compares to 65% for the prior
year period. Non-GAAP* operating expenses for the first
quarter were 62% of revenue, compared to 59% for the same period in
the prior year. The year-over-year increase in operating expenses
was primarily due to select promotional activities, and the
increase in commercial leadership from a year ago, including the
North American regional sales leadership team and the expansion of
our Practice Development Management team.
- GAAP Net Loss for the first
quarter was $8.2 million, or $0.59 per fully-diluted share. This
compares to a loss of $2.0 million, or $0.15 per fully-diluted
share in the prior year period. Non-GAAP* net loss was $4.9
million, or $0.35 per fully-diluted share as compared to a loss of
$0.3 million or $0.02 per fully-diluted share in the first quarter
2018.
“Overall, I am pleased with many aspects of our first quarter
performance,” stated Chief Operating Officer and Interim CEO, Jason
Richey. “Several positive trends and the team’s continued execution
all contributed to driving strong revenue. We continue to see
robust demand for, and utilization of, truSculpt iD, our body
sculpting solution. In addition, we successfully launched our excel
V+ at the American Academy of Dermatology annual meeting where our
enhanced North American sales team generated significant interest.
Likewise, our International sales group grew revenue 20%, executing
on initiatives introduced at year-end. We continue to make progress
in our operational and infrastructure improvement activities,
reflected in lower inventory levels and average system assembly
times. We recognize, however, that we still have significant work
to do.”
2019 Financial Outlook
- We reiterate full year revenue to be in
the range of $165 to $175 million, a 2% - 8% increase over
2018;
- Full year 2019 gross margin is expected
to improve as compared to full year 2018 gross margin; and
- Adjusted EBITDA* is expected to be in
the range of $2 million to $4 million.
Conference Call
The Company will host a live audio webcast for interested
parties commencing today at 1:30 p.m. PDT (4:30 p.m. EDT).
Participating in the call will be Jason Richey, Chief Operating
Officer and Interim Chief Executive Officer and Sandra Gardiner,
Executive Vice President and Chief Financial Officer. The call will
be broadcast live over the Internet, hosted at the Investor
Relations section of Cutera's website at http://www.cutera.com/,
and will be available online within 24 hours of its completion
through June 9, 2019. In addition, you may call 1-877-705-6003 to
listen to the live broadcast.
About Cutera, Inc.
Brisbane, California-based Cutera is a leading provider of laser
and other energy-based aesthetic systems for practitioners
worldwide. Since 1998, Cutera has developed innovative, easy-to-use
products that enable physicians and other qualified practitioners
to offer safe and effective aesthetic treatments to their patients.
For more information, call 1-888-4CUTERA or visit
www.cutera.com.
*Use of Non-GAAP Financial
Measures
In this press release, in order to supplement our condensed
consolidated financial statements presented in accordance with
Generally Accepted Accounting Principles, or GAAP, management has
disclosed certain non-GAAP financial measures for the statement of
operations and net income (loss) per diluted share. Non-GAAP
adjustments include stock-based compensation, depreciation,
amortization, executive separation costs, customer relationship
management (“CRM”) and enterprise resource planning (“ERP”) system
implementation costs, as well as the net tax impact of excluding
these items. From time to time in the future, there may be other
items that we may exclude if we believe that doing so is consistent
with the goal of providing useful information to investors and
management. We have provided a reconciliation of each non-GAAP
financial measure used in this earnings release to the most
directly comparable GAAP financial measure. We have not provided a
reconciliation of non-GAAP guidance measures to the corresponding
GAAP measures on a forward-looking basis due to the potential
significant variability, limited visibility, unpredictability, or
unique non-recurring nature of the items. Forward-looking non-GAAP
measures include adjusted EBITDA. We define adjusted EBITDA as
earnings before interest, taxes, depreciation and amortization,
stock-based compensation, executive separation costs, and charges
related to CRM and ERP software implementation costs.
Company management uses these measurements as aids in monitoring
the Company’s ongoing financial performance from quarter to
quarter, and year to year, on a regular basis and for benchmarking
against other similar companies. Non-GAAP financial measures used
by the Company may be calculated differently from, and therefore
may not be comparable to, similarly titled measures used by other
companies. These non-GAAP financial measures should be considered
along with, but not as alternatives to, the operating performance
measure as prescribed by GAAP. Non-GAAP financial measures for the
statement of operations and net income per diluted share exclude
the following:
Non-cash expenses for stock-based compensation. We have
excluded the effect of stock-based compensation expenses in
calculating our non-GAAP operating expenses and net income
measures. Although stock-based compensation is a key incentive
offered to our employees, we continue to evaluate our business
performance excluding stock-based compensation expenses. We record
stock-based compensation expense related to grants of options,
performance and restricted stock. Depending upon the size, timing
and the terms of the grants, this expense may vary significantly
but will recur in future periods. We believe that excluding
stock-based compensation better allows for comparisons to our peer
companies;
Depreciation and amortization. We have excluded
depreciation and amortization expense in calculating our non-GAAP
operating expenses and net income measures. Depreciation and
amortization are non-cash charges to current operations;
Executive separation. We have excluded costs associated
with the resignation of our former Chief Executive Officer in
calculating our non-GAAP operating expenses and net income
measures. We exclude these non-recurring separation costs because
we believe that these items do not reflect future operating
expenses;
Customer Relationship Management. We have excluded CRM
system costs related to direct and incremental costs incurred in
connection with our multi-phase implementation of a new CRM
solution and the related technology infrastructure costs. We
exclude these costs because we believe that these items do not
reflect future operating expenses and will be inconsistent in
amounts and frequency making it difficult to contribute to a
meaningful evaluation of our operating performance; and
Enterprise Resource Planning. We have excluded ERP system
costs related to direct and incremental costs incurred in
connection with our multi-phase implementation of a new ERP
solution and the related technology infrastructure costs. We
exclude these costs because we believe that these items do not
reflect future operating expenses and will be inconsistent in
amounts and frequency making it difficult to contribute to a
meaningful evaluation of our operating performance.
We believe that excluding all of the items above allows users of
our financial statements to better review and assess both current
and historical results of operations.
Safe Harbor Statement
Certain statements in this press release, other than purely
historical information, are “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
These statements include, but are not limited to, Cutera’s plans,
objectives, strategies, financial performance and outlook, product
launches and performance, trends, prospects or future events and
involve known and unknown risks that are difficult to predict. As a
result, our actual financial results, performance, achievements or
prospects may differ materially from those expressed or implied by
these forward-looking statements. In some cases, you can identify
forward-looking statements by the use of words such as “may,”
“could,” “seek,” “guidance,” “predict,” “potential,” “likely,”
“believe,” “will,” “should,” “expect,” “anticipate,” “estimate,”
“plan,” “intend,” “forecast,” “foresee” or variations of these
terms and similar expressions, or the negative of these terms or
similar expressions. Forward-looking statements are based on
management's current, preliminary expectations and are subject to
risks and uncertainties, which may cause Cutera's actual results to
differ materially from the statements contained herein. These
statements are not guarantees of future performance, and
stockholders should not place undue reliance on forward-looking
statements. There are a number of risks, uncertainties and other
important factors, many of which are beyond our control, that could
cause our actual results to differ materially from the
forward-looking statements contained in this press release,
including those described in the “Risk Factors” section of Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, the Registration Statement on Form S-8 and
other documents filed from time to time with the United States
Securities and Exchange Commission by Cutera.
All information in this press release is as of the date of its
release. Accordingly, undue reliance should not be placed on
forward-looking statements. Cutera undertakes no obligation to
update publicly any forward-looking statements to reflect new
information, events or circumstances after the date they were made,
or to reflect the occurrence of unanticipated events. If we update
one or more forward-looking statements, no inference should be
drawn that we will make additional updates with respect to those or
other forward-looking statements. Cutera's financial performance
for the first quarter ended March 31, 2019, as discussed in this
release, is preliminary and unaudited, and subject to
adjustment.
CUTERA, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) (unaudited) March
31, December 31, 2019 2018 Assets
Current assets: Cash and cash equivalents $ 19,158 $ 26,052
Marketable investments 7,939 9,523 Accounts receivable, net 19,136
19,637 Inventories 26,659 28,014 Other current assets and prepaid
expenses 4,864 3,972 Total current
assets 77,756 87,198 Property and equipment, net 2,407 2,672
Deferred tax asset 451 457 Goodwill 1,339 1,339 Operating lease
right-of-use assets 9,442 - Other long-term assets 5,960
5,971 Total assets $ 97,355 $ 97,637
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable $ 10,337 $ 11,279 Accrued liabilities
21,788 23,300 Operating leases liabilities 1,840 - Extended
warranty liabilities 2,667 3,159 Deferred revenue 10,263
9,882 Total current liabilities 46,895 47,620
Deferred revenue, net of current portion 2,828 2,684 Income
tax liability 399 394 Operating lease liabilities, net of current
portion 7,759 - Other long-term liabilities 354
553 Total liabilities 58,235
51,251 Stockholders’ equity: Common stock 14 14
Additional paid-in capital 71,399 70,451 Accumulated deficit
(32,230 ) (24,010 ) Accumulated other comprehensive loss (63
) (69 ) Total stockholders' equity 39,120
46,386 Total liabilities and stockholders' equity $
97,355 $ 97,637
CUTERA,
INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data) (unaudited)
Three Months Ended March 31, March 31,
2019 2018 Products $ 30,762 $ 29,264 Service
5,264 4,861 Total net revenue
36,026 34,125 Products 15,541 13,922
Service 3,176 2,869 Total cost of
revenue 18,717 16,791 Gross profit
17,309 17,334 Gross margin % 48 % 51 %
Operating expenses: Sales and marketing 16,104 13,088
Research and development 3,706 3,556 General and administrative
5,525 5,439 Total operating expenses
25,335 22,083 Loss from operations
(8,026 ) (4,749 ) Interest and other income (expense), net
(79 ) 98 Loss before income taxes (8,105 ) (4,651 )
Income tax expense (benefit) 115 (2,619 ) Net
loss $ (8,220 ) $ (2,032 ) Net loss per share: Basic and
Diluted $ (0.59 ) $ (0.15 ) Weighted-average number of
shares used in per share calculations: Basic and Diluted
14,017 13,587
CUTERA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (in thousands, except
percentage data) (unaudited) Three Months
Ended % Change March 31, March 31, 2019
Vs 2019 2018 2018 Revenue By
Geography: United States $ 20,400 $ 21,136 -3 % International
15,626 12,989 +20 % Total Net Revenue $
36,026 $ 34,125 +6 % International as a percentage of
total revenue 43% 38%
Revenue By Product Category:
Systems - North America $ 17,580 $ 18,944 -7 % - Rest of World
9,629 8,295 +16 % Total Systems
27,209
27,239 0 % Consumables 1,945 769 +153 % Skincare 1,608
1,256 +28 % Total Products 30,762 29,264 +5 %
Service 5,264 4,861 +8 % Total
Net Revenue $ 36,026 $ 34,125 +6 %
Three Months
Ended March 31, March 31, 2019 2018
Pre-tax Stock-Based Compensation Expense: Cost of revenue $
269 $ 154 Sales and marketing 718 489 Research and development 263
191 General and administrative 57 854 $
1,307 $ 1,688
CUTERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands) (unaudited) Three Months Ended
March 31, March 31, 2019 2018
Cash flows from operating activities: Net loss $ (8,220 ) $
(2,032 ) Adjustments to reconcile net income (loss) to net cash
provided by operating activities: Stock-based compensation 1,307
1,688 Depreciation of tangible assets 411 254 Amortization of
contract acquisition costs 690 373 Change in deferred tax asset 6
(2,737 ) Provision for doubtful accounts receivable 98 187 Other
103 (162 ) Changes in assets and liabilities: Accounts receivable
403 915 Inventories 1,355 (2,197 ) Other current assets and prepaid
expenses (916 ) 1,753 Other long-term assets (679 ) (2,150 )
Accounts payable (942 ) 1,204 Accrued liabilities (1,467 ) (6,727 )
Extended warranty liabilities (492 ) - Other long-term liabilities
(140 ) 35 Deferred revenue 525 (456 ) Income tax liability 5
5 Net cash used in operating activities
(7,953 ) (10,047 )
Cash flows from investing
activities: Acquisition of property, equipment and software (65
) (104 ) Proceeds from sales of marketable investments - 13,044
Proceeds from maturities of marketable investments 3,200 - Purchase
of marketable investments (1,586 ) (4,390 ) Net cash
provided by investing activities 1,549 8,550
Cash flows from financing activities: Proceeds
from exercise of stock options and employee stock purchase plan 131
633 Taxes paid related to net share settlement of equity awards
(490 ) (2,288 ) Payments on finance lease obligations (131 )
(122 ) Net cash used in financing activities (490 )
(1,777 ) Net decrease in cash and cash equivalents
(6,894 ) (3,274 ) Cash and cash equivalents at beginning of period
26,052 14,184 Cash and cash equivalents
at end of period $ 19,158 $ 10,910
CUTERA, INC. RECONCILIATION
OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS TO
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share data) (unaudited)
Three Months Ended March 31, 2019 Three Months
Ended March 31, 2018 GAAP Depreciation
and
Amortization
Stock-Based
Compensation
CRM and ERP
Implementation
Costs
Taxes and
OtherAdjustments
Non-GAAP GAAP Depreciation
and
Amortization
Stock-Based
Compensation
Taxes and
OtherAdjustments
Non-GAAP Net revenue $ 36,026 - - - - $ 36,026 $
34,125 - - - $ 34,125 Cost of revenue 18,717 (129 )
(269 ) - - 18,319
16,791 (85 ) (154 ) -
16,552 Gross profit 17,309 129 269 - - 17,707 17,334 85 154
- 17,573 Gross margin % 48 % 49 % 51 % 51 % Operating
expenses: Sales and marketing 16,104 (868 ) (718 ) (85 ) - 14,433
13,088 (523 ) (489 ) - 12,076 Research and development 3,706 (21 )
(263 ) - - 3,422 3,556 (15 ) (191 ) - 3,350 General and
administrative 5,525 (83 ) (57 ) (239 )
(614 ) (a) 4,531 5,439 (4
) (854 ) - 4,581 Total operating
expenses 25,335 (972 ) (1,038 ) (324 )
(614 ) 22,387 22,083 (542
) (1,534 ) - 20,007 Income
(loss) from operations (8,026 ) 1,101 1,307 324 614 (4,680 ) (4,749
) 627 1,688 - (2,434 ) Interest and other income (expense), net
(79 ) - - - -
(79 ) 98 - -
- 98 Loss before income taxes (8,105 )
1,101 1,307 324 614 (4,759 ) (4,651 ) 627 1,688 - (2,336 )
Provision (benefit) for income taxes 115 -
- - 3 118
(2,619 ) - - 566
(2,053 ) Net loss $ (8,220 ) 1,101 1,307
324 611 $ (4,877 ) $ (2,032 )
627 1,688 (566 ) $ (283 ) Net
loss per share: Basic and diluted $ (0.59 ) $ (0.35 ) $ (0.15 ) $
(0.02 ) Weighted-average number of shares used in per share
calculations: Basic and diluted 14,017 14,017
13,587 13,587 a)Other
adjustment of $614 related to Executive separation costs.
Operating expenses as a % of net
revenue GAAP Non-GAAP GAAP Non-GAAP
Sales and marketing 44.7 % 40.1 % 38.4 % 35.4 % Research and
development 10.3 % 9.5 % 10.4 % 9.8 % General and administrative
15.3 % 12.6 % 15.9 % 13.4 % 70.3
% 62.1 % 64.7 % 58.6 %
CUTERA, INC. RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA (in thousands, except per share data)
(unaudited)
Three MonthsEnded
March 31, 2019 Net loss $ (8,220 ) Adjustments: Stock-based
compensation 1,307 Depreciation and amortization 1,101 CRM and ERP
implementation costs 324 Other adjustments 614
(a)
Interest and other (income) expense, net 79 Provision (benefit) for
income taxes 115 Total adjustments $ 3,540
Adjusted EBITDA $ (4,680 ) a)Other adjustment of $614
related to Executive separation costs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190509005865/en/
Cutera, Inc.Matthew ScaloVice
President, Investor Relations & Corporate
Development415-657-5500mscalo@cutera.com
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