Cutera Reports Third Quarter 2015 Results
November 02 2015 - 4:02PM
Cutera, Inc. (NASDAQ:CUTR) ("Cutera" or the "Company"), a leading
provider of laser and energy-based aesthetic systems for
practitioners worldwide, today reported financial results for the
third quarter ended September 30, 2015.
Key highlights for the third quarter of 2015 were as
follows:
- Revenue increased 23% to $23.1 million,
compared to the same period last year, driven primarily by recently
launched new products—enlightenTM and excel HRTM—as well as
continued strong contributions from legacy products.
- Product revenue grew 80% in North America and
35% globally.
- Gross margin improved to 58%, from the 57% in
the second quarter of 2015.
- Net loss narrowed to $957,000, or $0.07 per
diluted share, and included $1.3 million of non-cash expenses
related to stock-based compensation, depreciation and amortization
of intangibles.
- Cash and investments balance as of September
30, 2015 was $47.7 million, or $3.60 per outstanding share.
- Share repurchases during the third quarter and
year-to-date of 2015 were $19.4 million and $37.1 million,
respectively.
Kevin Connors, President and Chief Executive Officer of Cutera,
stated, "We are pleased with our fifth consecutive quarter of
double-digit revenue growth and significant progress towards
profitability. Looking forward, we are well positioned to continue
revenue expansion, improve operating cash flow, and expect to
generate GAAP profitability in the fourth quarter of 2015 and for
the full-year 2016. Our North American sales organization continues
to demonstrate strong market share expansion in a growing market,
as reflected by 80% Product revenue growth year-over-year to $10.8
million. Rest of World ('ROW') Product revenue declined by 5%
year-over-year to $6.6 million as a result of unfavorable foreign
currency exchange rates. On a constant currency basis, ROW Product
revenue was up approximately 3 percent year-over-year."
Since commencement of commercial shipments in December 2014,
enlighten, the Company's picosecond and nanosecond tattoo removal
and benign pigmented lesion treatment laser, demonstrated global
appeal and has become a major revenue contributor for the Company.
In June, the Company announced its first product extension to
broaden enlighten's utility for the Asian market. "We believe that
our proprietary, flexible platform will allow us to further broaden
technical capabilities and usher new applications for aesthetic
physicians moving forward. We are pleased with the early market
response and believe that we have significant opportunities to
expand our global reach with this product as well," added Mr.
Connors.
The third quarter gross margin of 58% exceeded Company's recent
guidance. This improvement was primarily attributable to an
increase in the Company's direct sales as well as a sooner than
planned realization of product cost reductions. The Company's loss
narrowed to $957,000, which includes $1.3 million of non-cash items
for stock-based compensation, depreciation and intangible
amortization. Relative to the third quarter of 2014, the Company
reduced its operating loss by approximately $1.6 million,
reflecting leverage in the business model.
"The third quarter financial performance was driven by our
strategy based on organic revenue growth coupled with a
strengthened commercial organization, which is translating to
improved operating metrics. We believe, with our organization and
our strong portfolio of products, we are strategically positioned
to continue to increase market share in a growing market. We look
forward to ending 2015 with continued momentum as we plan for an
exciting 2016," concluded Mr. Connors.
Conference Call
The conference call to discuss these results is scheduled to
begin at 2:00 p.m. PST (5:00 p.m. EST) on November 2, 2015.
Participating in the call will be Kevin Connors, President and
Chief Executive Officer, and Ron Santilli, 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, and will be archived online within one hour of its
completion through 8:59 p.m. PST (11:59 p.m. EST) on November 16,
2015. 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 been developing 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.
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. Specifically, statements concerning Cutera's ability to
increase revenue, reduce expenses, make productivity improvements,
grow the Company's market share, realize benefits from additional
investment, achieve profitability, penetrate the market, generate
cash from operations, and statements regarding long-term prospects
and opportunities in the laser and other energy-based equipment
aesthetic market are forward-looking statements within the meaning
of the Safe Harbor. 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. Potential
risks and uncertainties that could affect Cutera's business and
cause its financial results to differ materially from those
contained in the forward-looking statements include those related
to the Company's efforts to improve sales productivity, hire and
retain qualified sales representatives, improve revenue growth,
gross margins and profitability through leveraging operating
expenses in the fourth quarter of 2015 and full year 2016; the
Company's ability to successfully develop and launch new products
and applications and market them to both its installed base and new
customers; unforeseen events and circumstances relating to the
Company's operations; government regulatory actions; and those
other factors described in the section entitled, "Risk Factors" in
its most recent Form 10-Q as filed with the Securities and Exchange
Commission on November 2nd, 2015. Undue reliance should not be
placed on forward-looking statements, which speak only as of the
date they are made. 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. Cutera's financial
performance for the third quarter ended September 30, 2015, as
discussed in this release, is preliminary and unaudited, and
subject to adjustment.
CUTERA,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(in thousands, except
per share data) |
(unaudited) |
|
|
Three Months
Ended |
|
September 30, |
September 30, |
|
2015 |
2014 |
Net revenue |
$ 23,085 |
$ 18,726 |
Cost of revenue |
9,594 |
7,935 |
Gross profit |
13,491 |
10,791 |
Gross margin % |
58% |
58% |
Operating expenses: |
|
|
Sales and marketing |
8,790 |
7,805 |
Research and development |
2,748 |
2,628 |
General and administrative |
2,937 |
2,897 |
Total operating expenses |
14,475 |
13,330 |
Loss from operations |
(984) |
(2,539) |
Interest and other income, net |
84 |
-- |
Loss before income taxes |
(900) |
(2,539) |
Provision for income taxes |
57 |
97 |
Net loss |
$ (957) |
$ (2,636) |
|
|
|
Net loss per share: |
|
|
Basic and diluted |
$ (0.07) |
$ (0.18) |
|
|
|
Weighted-average number of shares used in per
share calculations: |
|
|
Basic and diluted |
13,827 |
14,334 |
|
|
CUTERA,
INC. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(in
thousands) |
(unaudited) |
|
|
September 30, |
June 30, |
September 30, |
|
2015 |
2015 |
2014 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 10,055 |
$ 11,627 |
$ 11,377 |
Marketable investments |
37,689 |
54,708 |
69,321 |
Cash, cash equivalents and marketable
investments |
47,744 |
66,335 |
80,698 |
|
|
|
|
Accounts receivable, net |
9,013 |
8,919 |
8,736 |
Inventories |
13,479 |
13,521 |
11,106 |
Deferred tax asset |
69 |
27 |
29 |
Other current assets and prepaid
expenses |
1,977 |
1,625 |
1,947 |
Total current assets |
72,282 |
90,427 |
102,516 |
|
|
|
|
Property and equipment, net |
1,386 |
1,512 |
1,301 |
Deferred tax asset, net of current
portion |
291 |
283 |
316 |
Intangibles, net |
227 |
332 |
1,438 |
Goodwill |
1,339 |
1,339 |
1,339 |
Other long-term assets |
392 |
351 |
13 |
Total assets |
$ 75,917 |
$ 94,244 |
$ 106,923 |
|
|
|
|
Liabilities and Stockholders'
Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 2,659 |
$ 3,597 |
$ 2,718 |
Accrued liabilities |
12,234 |
10,308 |
8,975 |
Deferred revenue |
8,470 |
8,659 |
8,745 |
Total current liabilities |
23,363 |
22,564 |
20,438 |
|
|
|
|
Deferred revenue, net of current portion |
2,495 |
3,107 |
4,596 |
Income tax liability |
187 |
180 |
151 |
Other long-term liabilities |
538 |
699 |
1,029 |
Total liabilities |
26,583 |
26,550 |
26,214 |
|
|
|
|
Stockholders' equity |
49,334 |
67,694 |
80,709 |
Total liabilities and stockholders'
equity |
$ 75,917 |
$ 94,244 |
$ 106,923 |
|
|
CUTERA,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(in
thousands) |
(unaudited) |
|
|
Three Months
Ended |
|
September 30, |
September 30, |
|
2015 |
2014 |
Cash flows from operating
activities: |
|
|
Net loss |
$ (957) |
$ (2,636) |
Adjustments to reconcile net loss to net cash
used in operating activities: |
|
|
Stock-based compensation |
1,044 |
980 |
Depreciation and amortization |
290 |
329 |
Other |
(32) |
129 |
Changes in assets and liabilities: |
|
|
Accounts receivable |
(94) |
(1,234) |
Inventories |
42 |
(1,076) |
Accounts payable |
(938) |
690 |
Accrued liabilities |
1,230 |
1,500 |
Deferred revenue |
(801) |
202 |
Other |
(398) |
(146) |
Net cash used in operating
activities |
(614) |
(1,262) |
|
|
|
Cash flows from investing
activities: |
|
|
Acquisition of property, equipment and
software |
(25) |
(107) |
Net change in marketable investments |
16,941 |
1,226 |
Net cash provided by investing
activities |
16,916 |
1,119 |
|
|
|
Cash flows from financing
activities: |
|
|
Repurchases of common stock |
(18,872) |
— |
Proceeds from exercise of stock options and
employee stock purchase plan |
1,046 |
655 |
Payments on capital lease obligations |
(48) |
(37) |
Net cash provided by (used in) financing
activities |
(17,874) |
618 |
|
|
|
Net increase (decrease) in cash and cash
equivalents |
(1,572) |
475 |
Cash and cash equivalents at beginning of
period |
11,627 |
10,902 |
Cash and cash equivalents at end of
period |
$ 10,055 |
$ 11,377 |
|
|
|
|
|
|
Supplemental disclosure of non-cash
items: |
|
|
Repurchase of common stock acquired but not
settled |
$ 604 |
$ — |
|
|
CUTERA,
INC. |
CONSOLIDATED FINANCIAL
HIGHLIGHTS |
(in thousands, except
percentage data) |
(unaudited) |
|
|
|
Three Months
Ended |
% Change |
|
Q3 |
Q3 |
Q3 '15 Vs |
|
2015 |
2014 |
Q3 '14 |
Revenue By Geography: |
|
|
|
United States |
$ 13,206 |
$ 7,607 |
+74% |
International |
9,879 |
11,119 |
-11% |
|
$ 23,085 |
$ 18,726 |
+23% |
International as a percentage of total
revenue |
43% |
59% |
|
|
|
|
|
Revenue By Product
Category: |
|
|
|
Products |
|
|
|
-North America |
$ 10,830 |
$ 6,018 |
+80% |
-Rest of the World |
6,562 |
6,904 |
-5% |
Total Products |
17,392 |
12,922 |
+35% |
Service |
4,288 |
4,317 |
-1% |
Hand Piece Refills |
671 |
824 |
-19% |
Skincare |
734 |
663 |
+11% |
|
$ 23,085 |
$ 18,726 |
+23% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Q3 |
Q3 |
|
|
2015 |
2014 |
|
Pre-tax Stock-Based Compensation
Expense: |
|
|
|
Cost of revenue |
$ 112 |
$ 145 |
|
Sales and marketing |
311 |
195 |
|
Research and development |
148 |
167 |
|
General and administrative |
473 |
473 |
|
|
$ 1,044 |
$ 980 |
|
CONTACT: Cutera, Inc.
Ron Santilli
Chief Financial Officer
415-657-5500
Investor Relations
John Mills
Integrated Corporate Relations, Inc.
646-277-1254
john.mills@icrinc.com
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