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 fourth quarter and fiscal year ended January 1, 2021.
Fourth Quarter 2020
Overview
- Net Sales of $46.0 Million Up 18% from the Prior Year
Quarter
- ICL Sales of $39.8 Million Up 20% from the Prior Year
Quarter
- ICL Units Up 13% from the Prior Year Quarter
- Gross Margin at 74.6% vs. 74.1% in the Prior Year Quarter
- Net Income of $0.07 per Share vs. Prior Year Quarter Net Income
of $0.14 per Share
- Net Income in Prior Year, Fourth Quarter 2019, included a $0.07
per Share tax benefit
- Cash and Cash Equivalents Ended the Quarter at $152.5
Million
Full Year 2020 Overview
- Record Net Sales of $163.5 Million Up 9% from Prior Year
- ICL Sales Up 9% and Units Up 11% from the Prior Year
- Gross Margin at 72.4% of Sales from 74.5% of Sales in the Prior
Year
- Full Year Net Income of $0.12 per Share vs. Prior Year Net
Income of $0.30 per Share
- Net Income in Prior Year, Full Year 2019, included a $0.07 per
Share tax benefit
“Our 2020 performance reflects the continued momentum behind
STAAR’s commercial growth and product innovation. Consequently, we
achieved strong fourth quarter results and met our original sales
targets for the second half of 2020, despite the unprecedented
global pandemic. Our momentum has continued into the first weeks of
2021,” said Caren Mason, President and CEO of STAAR Surgical. “For
the full year 2020 ICL unit growth was up 11% as compared to a 21%
decline in industry-wide refractive procedures.1 STAAR’s positive
growth affirms the increasing adoption for our EVO ICL family of
implantable lenses and illustrates that our lenses continue to
capture refractive market share. We believe our lenses are likely
to grow the overall market demand for refractive procedures. In
2021 we are confident that our strategies will continue to expand
the ICL’s position as a transformational pathway to Visual
Freedom for patients seeking a life independent of glasses and
frequent replacement contact lenses as we support a lens-based
future of refractive vision correction.”
Financial Overview – Q4
2020
Net sales were $46.0 million for the fourth quarter of 2020, up
18% compared to $38.9 million reported in the prior year quarter.
The sales increase was driven by ICL revenue and unit growth of 20%
and 13%, respectively, as compared to the prior year period. Other
Product Sales increased 10% compared to the prior year quarter due
to increased injector parts sales. ICL revenue was 87% of total Net
sales for the fourth quarter of 2020.
Gross profit margin for the fourth quarter of 2020 was 74.6%
compared to the prior year period of 74.1%. Factors impacting gross
margin in the fourth quarter of 2020, as compared to the prior year
period, include geographic sales mix partially offset by inventory
reserves taken on certain lower margin IOL products which are being
discontinued, and manufacturing projects.
Operating expenses for the fourth quarter were $30.2 million
compared to the prior year quarter of $26.5 million. General and
administrative expenses were $9.5 million compared to the prior
year quarter of $7.9 million. The increase in general and
administrative expenses was due to increased salary-related costs,
variable compensation, corporate insurance and facilities costs.
Selling and marketing expenses were $11.8 million compared to the
prior year quarter of $11.2 million. The increase in selling and
marketing expenses is due to increased salary-related costs and
advertising and promotional expenses, partially offset by decreased
travel, sales meetings and trade show expenses. Research and
development expenses were $9.0 million compared to the prior year
quarter of $7.4 million. The increase in research and development
expenses is primarily due to increased clinical expenses associated
with our EVO clinical trial in the U.S., and increased
salary-related expenses and variable compensation.
Net income for the fourth quarter of 2020 was $3.3 million or
$0.07 per diluted share compared with net income of $6.4 million or
$0.14 per diluted share for the prior year quarter. The year over
year decrease is attributable to higher provision for income taxes
as the result of a $0.07 per diluted share tax benefit in 2019.
Adjusted Net Income for the fourth quarter of 2020 was $6.8 million
or $0.14 per diluted share compared to $5.5 million or $0.12 per
diluted 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.
Financial Overview – Full Year
2020
Net sales were $163.5 million for full year (“FY”) 2020, up 9%
compared to $150.2 million reported in the prior year. The sales
increase was driven by ICL revenue and unit growth of 9% and 11%,
respectively. Other Products Sales increased 6% compared to the
prior year. ICL revenue was 87% of total net sales for FY 2020.
Gross profit margin for FY 2020 decreased to 72.4% of total net
sales compared to 74.5% of total net sales for FY 2019. The
decrease in gross margin for the year is due to geographic sales
mix, a voluntary pause in manufacturing at the Company’s principal
manufacturing facility commencing in March due to the pandemic, and
period costs related to manufacturing projects.
Operating expenses for FY 2020 were $111.6 million compared to
prior year of $100.1 million. The increase in operating expense is
due to increased salary-related costs, variable compensation,
corporate insurance and facilities costs, and increased clinical
expenses associated with the Company’s EVO clinical trial in the
U.S.
Net income for FY 2020 was $5.9 million or approximately $0.12
per share compared with net income of $14.0 million or $0.30 per
diluted share for the prior year. The year over year decrease in
net income is due to lower operating income and a higher provision
for income taxes as the result of a $0.07 per diluted share tax
benefit in 2019. Adjusted Net Income for FY 2020 was $16.7 million
or $0.35 per diluted share, compared with an Adjusted Net Income of
$21.7 million or $0.46 per diluted share for FY 2019. The
reconciliation between GAAP and non-GAAP financial information is
provided in the financial tables included with this release.
Cash and cash equivalents at January 1, 2021 totaled $152.5
million, compared to $120.0 million at end of the fourth quarter of
2019. The Company generated $21.0 million in cash from operations
for FY 2020.
1 Market Scope Refractive Surgery Report, January 2021.
Conference Call
The Company will host a conference call and webcast today,
Wednesday, February 24 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 7649387), please dial
833-350-1429 for domestic participants and 647-689-6661 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 7649387)
will be available beginning approximately one hour after the call’s
conclusion for seven days. This replay can be accessed by dialing
800-585-8367 for domestic callers and 416-621-4642 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”
excludes 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,
stock-based compensation expenses, and valuation allowance
adjustments. 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 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.
Valuation allowance adjustments can occur from time to time based
on forecasted changes in operating results until all net operating
loss carryforwards are fully utilized. In calculating Adjusted Net
Income, STAAR excludes these expenses because they are non-cash
expenses and because of the 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.
The Company also uses Constant Currency as a Non-GAAP financial
measure to exclude the effects of currency fluctuations on net
sales. 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. 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 measures 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.
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 and STAAR
markets these lenses in over 75 countries. To learn more about the
ICL go to: www.discovericl.com. Headquartered in Lake Forest, CA,
the company operates manufacturing and packaging facilities in
Aliso Viejo, CA, Monrovia, CA and Nidau, Switzerland. For more
information, please visit the Company’s website at
www.staar.com.
Safe Harbor
All statements that are not statements of historical fact are
forward-looking statements, including statements about any of the
following: any financial projections, plans, strategies, and
objectives of management for 2021 or prospects for achieving such
plans, expectations for sales, revenue, margin, expenses or
earnings, the expected impact of the COVID-19 pandemic and related
public health measures (including but not limited to its impact on
sales, operations or clinical trials globally), product safety or
effectiveness, the status of our pipeline of ICL products with
regulators, including our EVO family of lenses in the U.S., 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 include risks and uncertainties related
to the COVID-19 pandemic and related public health measures, as
well as the factors set forth in the Company’s Quarterly Report on
Form 10-Q for the quarter ended April 3, 2020, and Annual Report on
Form 10-K for the year ended January 3, 2020 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;
international trade disputes; and the willingness of surgeons and
patients to adopt a new or improved product and procedure. The EVO
version of our ICL lens is not yet approved for sale in the United
States.
Consolidated Balance Sheets (in 000's)
Unaudited January 1, 2021 January 3,
2020 ASSETS Current assets: Cash and cash equivalents
$ 152,453
$ 119,968
Accounts receivable trade, net
35,229
30,996
Inventories, net
18,111
17,142
Prepayments, deposits, and other current assets
10,625
6,560
Total current assets
216,418
174,666
Property, plant, and equipment, net
24,030
17,065
Finance lease right-of-use assets, net
596
1,867
Operating lease right-of-use assets, net
8,764
6,684
Intangible assets, net
270
296
Goodwill
1,786
1,786
Deferred income taxes
4,944
4,408
Other assets
608
751
Total assets
$ 257,416
$ 207,523
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Line of credit
$ 1,379
$ 1,827
Accounts payable
7,874
8,050
Obligations under finance leases
360
560
Obligations under operating leases
2,485
2,700
Allowance for sales returns
4,532
3,644
Other current liabilities
24,606
17,697
Total current liabilities
41,236
34,478
Obligations under finance leases
38
366
Obligations under operating leases
6,537
4,086
Deferred income taxes
222
658
Asset retirement obligations
221
211
Pension liability
11,940
7,840
Total liabilities
60,194
47,639
Stockholders' equity: Common stock
464
448
Additional paid-in capital
338,194
304,288
Accumulated other comprehensive loss
(5,545
)
(3,048
)
Accumulated deficit
(135,891
)
(141,804
)
Total stockholders' equity
197,222
159,884
Total liabilities and stockholders' equity
$ 257,416
$ 207,523
Consolidated Statements of Income (In 000's except for
per share data) Unaudited Three Months
Ended Twelve Months Ended % of January 1,
2021 % of January 3, 2020 Fav (Unfav) %
of January 1, 2021 % of January 3, 2020
Fav (Unfav) Sales Sales Amount %
Sales Sales Amount % Net sales
100.0
%
$ 45,998
100.0
%
$ 38,883
$ 7,115
18.3
%
100.0
%
$ 163,460
100.0
%
$ 150,185
$ 13,275
8.8
%
Cost of sales
25.4
%
11,697
25.9
%
10,059
(1,638
)
-16.3
%
27.6
%
45,098
25.5
%
38,231
(6,867
)
-18.0
%
Gross profit
74.6
%
34,301
74.1
%
28,824
5,477
19.0
%
72.4
%
118,362
74.5
%
111,954
6,408
5.7
%
Selling, general and administrative expenses: General and
administrative
20.7
%
9,505
20.2
%
7,870
(1,635
)
-20.8
%
20.7
%
33,911
19.5
%
29,313
(4,598
)
-15.7
%
Selling and marketing
25.6
%
11,761
28.8
%
11,203
(558
)
-5.0
%
28.0
%
45,764
30.3
%
45,491
(273
)
-0.6
%
Research and development
19.5
%
8,958
19.1
%
7,409
(1,549
)
-20.9
%
19.6
%
31,918
16.8
%
25,298
(6,620
)
-26.2
%
Total selling, general, and administrative expenses
65.8
%
30,224
68.1
%
26,482
(3,742
)
-14.1
%
68.3
%
111,593
66.6
%
100,102
(11,491
)
-11.5
%
Operating income
8.8
%
4,077
6.0
%
2,342
1,735
74.1
%
4.1
%
6,769
7.9
%
11,852
(5,083
)
-42.9
%
Other income (expense): Interest income, net
0.0
%
1
0.5
%
192
(191
)
-99.5
%
0.1
%
238
0.6
%
988
(750
)
-75.9
%
Gain (loss) on foreign currency transactions
1.0
%
476
0.8
%
304
172
56.6
%
0.5
%
864
-0.3
%
(517
)
1,381
267.1
%
Royalty income
0.5
%
201
0.3
%
111
90
81.1
%
0.3
%
440
0.4
%
551
(111
)
-20.1
%
Other income (expense), net
0.1
%
39
0.1
%
28
11
39.3
%
0.0
%
(44
)
0.1
%
152
(196
)
-128.9
%
Total other income (expense), net
1.6
%
717
1.7
%
635
82
12.9
%
0.9
%
1,498
0.8
%
1,174
324
27.6
%
Income before provision for income taxes
10.4
%
4,794
7.7
%
2,977
1,817
61.0
%
5.0
%
8,267
8.7
%
13,026
(4,759
)
-36.5
%
Provision for income taxes
3.2
%
1,467
-8.7
%
(3,402
)
(4,869
)
-143.1
%
1.4
%
2,354
-0.7
%
(1,022
)
(3,376
)
-330.3
%
Net income
7.2
%
$ 3,327
16.4
%
$ 6,379
$ (3,052
)
-47.8
%
3.6
%
$ 5,913
9.4
%
$ 14,048
$ (8,135
)
-57.9
%
Net income (loss) per share - basic
$ 0.07
$ 0.14
$ 0.13
$ 0.32
Net income (loss) per share - diluted
$ 0.07
$ 0.14
$ 0.12
$ 0.30
Weighted average shares outstanding - basic
46,264
44,681
45,605
44,493
Weighted average shares outstanding - diluted
48,808
47,009
47,953
46,895
Consolidated Statements of Cash Flows (in 000's)
Unaudited Three Months Ended Twelve Months
Ended January 1,2021 January 3,2020 January
1,2021 January 3,2020 Cash flows from operating
activities: Net income
$ 3,327
$ 6,379
$ 5,913
$ 14,048
Adjustments to reconcile net income to net cash provided by
operatingactivities: Depreciation of property and equipment
784
812
3,060
3,665
Amortization of long-lived intangibles
9
8
35
34
Deferred income taxes
366
(4,007
)
(849
)
(3,481
)
Change in net pension liability
134
95
656
359
Stock-based compensation expense
3,181
2,769
12,146
10,547
Loss on disposal of property and equipment
210
-
213
14
Provision for sales returns and bad debts
20
(34
)
835
275
Inventory provision
511
358
1,706
1,580
Changes in working capital: Accounts receivable
7,001
(242
)
(3,974
)
(4,502
)
Inventories
(37
)
(771
)
(1,390
)
(950
)
Prepayments, deposits and other current assets
(3,117
)
(1,083
)
(3,753
)
(1,313
)
Accounts payable
(155
)
538
(812
)
1,084
Other current liabilities
7,316
4,971
7,165
4,435
Net cash provided by operating activities
19,550
9,793
20,951
25,795
Cash flows from investing activities: Acquisition of
property and equipment
(2,145
)
(2,926
)
(8,404
)
(10,095
)
Increase in patents and licenses
-
(53
)
-
(83
)
Net cash used in investing activities
(2,145
)
(2,979
)
(8,404
)
(10,178
)
Cash flows from financing activities: Repayment on line of
credit
(4
)
(506
)
(515
)
(2,018
)
Repayment of finance lease obligations
(106
)
(296
)
(561
)
(1,294
)
Proceeds from vested restricted stock and exercise of stock options
6,660
1,630
20,647
3,461
Net cash provided by (used in) financing activities
6,550
828
19,571
149
Effect of exchange rate changes on cash and cash equivalents
160
(1
)
367
203
Increase in cash and cash equivalents
24,115
7,641
32,485
15,969
Cash, cash equivalents and restricted cash, at beginning of the
period
128,338
112,327
119,968
103,999
Cash, cash equivalents and restricted cash, at end of the period
$ 152,453
$ 119,968
$ 152,453
$ 119,968
Reconciliation of Non-GAAP Financial Measure Adjusted Net
Income and Net Income Per Share (in 000's)
Unaudited Three Months Ended Twelve Months
Ended January 1, 2021 January 3, 2020 January
1, 2021 January 3, 2020 Net income (as reported)
$ 3,327
$ 6,379
$ 5,913
$ 14,048
Less: Foreign currency impact
(476
)
(304
)
(864
)
517
Stock-based compensation expense
3,181
2,769
12,146
10,547
Valuation allowance adjustment
720
(3,376
)
(495
)
(3,376
)
Net income (adjusted)
$ 6,752
$ 5,468
$ 16,700
$ 21,736
Net income per share, basic (as reported)
$ 0.07
$ 0.14
$ 0.13
$ 0.32
Foreign currency impact
(0.01
)
(0.01
)
(0.02
)
0.01
Stock-based compensation expense
0.07
0.06
0.27
0.24
Valuation allowance adjustment
0.02
(0.07
)
(0.01
)
(0.08
)
Net income per share, basic (adjusted)
$ 0.15
$ 0.12
$ 0.37
$ 0.49
Net income per share, diluted (as reported)
$ 0.07
$ 0.14
$ 0.12
$ 0.30
Foreign currency impact
(0.01
)
(0.01
)
(0.02
)
0.01
Stock-based compensation expense
0.07
0.06
0.25
0.22
Valuation allowance adjustment
0.01
(0.07
)
-
(0.07
)
Net income per share, diluted (adjusted)
$ 0.14
$ 0.12
$ 0.35
$ 0.46
Weighted average shares outstanding - Basic
46,264
44,681
45,605
44,493
Weighted average shares outstanding - Diluted
48,808
47,009
47,953
46,895
Note: Net income per share (adjusted), basic and diluted,
may not add due to rounding
STAAR Surgical Company
Reconciliation of Non-GAAP Financial Measure Constant
Currency Sales (in 000's) Unaudited
Three Months Ended January 1, 2021 Effect of
Constant January 3, 2020 As Reported
Constant Currency Sales Currency
Currency $ Change % Change $ Change
% Change ICL
$ 39,846
$ (754
)
$ 39,092
$ 33,289
$ 6,557
19.7
%
$ 5,803
17.4
%
IOL
3,694
(163
)
3,531
3,705
(11
)
-0.3
%
(174
)
-4.7
%
Other
2,458
(85
)
2,373
1,889
569
30.1
%
484
25.6
%
Other Products
6,152
(248
)
5,904
5,594
558
10.0
%
310
5.5
%
Total Sales
$ 45,998
$ (1,002
)
$ 44,996
$ 38,883
$ 7,115
18.3
%
$ 6,113
15.7
%
Twelve Months Ended January 1, 2021 Effect
of Constant January 3, 2020 As Reported
Constant Currency Sales Currency
Currency $ Change % Change $ Change
% Change ICL
$ 141,407
$ (1,005
)
$ 140,402
$ 129,322
$ 12,085
9.3
%
$ 11,080
8.6
%
IOL
13,574
(280
)
13,294
15,689
(2,115
)
-13.5
%
(2,395
)
-15.3
%
Other
8,479
(177
)
8,302
5,174
3,305
63.9
%
3,128
60.5
%
Other Products
22,053
(457
)
21,596
20,863
1,190
5.7
%
733
3.5
%
Total Sales
$ 163,460
$ (1,462
)
$ 161,998
$ 150,185
$ 13,275
8.8
%
$ 11,813
7.9
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210224005964/en/
Investors & Media Brian Moore Vice President,
Investor, Media Relations and Corporate Development (626) 303-7902,
Ext. 3023 bmoore@staar.com
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