Revenue Growth of 12% Over Prior Year
Highest Quarterly Revenue in Company
History
Second Consecutive Quarter of Double-Digit
International Revenue Growth
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 second quarter ended June 30,
2019.
Key second quarter financial and operational highlights
include:
- Revenue increased 12% over the prior year second
quarter, to $47.8 million, the highest quarterly revenue in the
Company’s history. Second quarter revenue performance driven by:
- International revenue grew 36% year-over-year in the second
quarter, continuing the positive momentum seen in first quarter and
reflecting strong performances in Japan, Europe and Australia.
- Continued demand for our body-sculpting platform as total
revenue for the truSculpt portfolio grew 44% over the prior year
period. Performance includes contributions from the limited launch
of the Company’s new muscle sculpting technology, truSculpt flex,
in June.
- Continued expansion of recurring revenue, including service,
skincare products and procedure related consumables. Total
recurring revenue was $10.2 million, representing 41% growth over
the second quarter 2018.
- Gross Margin for the second quarter was 54%, compared to
53% in the prior year period and 48% in the first quarter of 2019.
Increase in second quarter gross margin performance reflects
leverage from revenue growth as well as product and channel
mix.
- Operating expenses for the second quarter were 53% of
revenue as compared to 58% for the prior year period demonstrating
improved leverage as the Company begins to realize benefit from
investments in commercial leadership and practice development
efforts.
- Net Income for the second quarter was $0.6 million, or
$0.04 per fully-diluted share as compared to a net loss of $1.6
million, or $0.11 per fully-diluted share in the prior year
period.
“Our second quarter performance reflects the Company’s progress
on commercial and operational execution,” stated President, Jason
Richey. “We continue to see growth from our truSculpt body
sculpting portfolio, which includes the recently launched truSculpt
flex, as well as the consumable revenue stream associated with
these platforms. I am also encouraged by the Company’s gross margin
performance delivered through our pricing strategies implemented
earlier this year and progress on operational initiatives.”
Mr. David Mowry, Chief Executive Officer stated, “I’m delighted
to join the Cutera team and encouraged by the quality of the
Company’s people, products and development pipeline. Cutera is
well-positioned to shape the future of energy-based aesthetics and
the second quarter performance reflects this potential. While I am
new to the business and need some time to come up to full speed, I
am confident there are multiple pathways to sustain above-market
growth, enhance the Company’s profitability and be the supplier of
choice in these exciting and growing markets.”
2019 Financial Outlook Reiterated:
- 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
- The Company’s 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 David Mowry, Chief Executive
Officer, Jason Richey, President and Chief Operating 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 September 8, 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 second quarter ended June 30, 2019, as discussed in this
release, is preliminary and unaudited, and subject to
adjustment.
CUTERA, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) (unaudited)
June 30,
March 31,
December 31,
2019
2019
2018(1)
Assets Current assets: Cash and cash equivalents
$
27,668
$
19,158
$
26,052
Marketable investments
4,002
7,939
9,523
Accounts receivable, net
24,919
19,136
19,637
Inventories
26,889
26,659
28,014
Other current assets and prepaid expenses
4,536
4,864
3,972
Total current assets
88,014
77,756
87,198
Property and equipment, net
2,834
2,407
2,672
Deferred tax asset
458
451
457
Goodwill
1,339
1,339
1,339
Operating lease right-of-use assets
8,990
9,442
-
Other long-term assets
6,311
5,960
5,971
Total assets
$
107,946
$
97,355
$
97,637
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable
$
11,441
$
10,337
$
11,279
Accrued liabilities
27,026
21,788
23,300
Operating leases liabilities
1,276
1,840
-
Extended warranty liabilities
2,399
2,667
3,159
Deferred revenue
10,717
10,263
9,882
Total current liabilities
52,859
46,895
47,620
Deferred revenue, net of current portion
3,142
2,828
2,684
Income tax liability
93
399
394
Operating lease liabilities, net of current portion
7,888
7,759
-
Other long-term liabilities
782
354
553
Total liabilities
64,764
58,235
51,251
Stockholders’ equity: Common stock
14
14
14
Additional paid-in capital
74,870
71,399
70,451
Accumulated deficit
(31,642)
(32,230)
(24,010)
Accumulated other comprehensive loss
(60)
(63)
(69)
Total stockholders' equity
43,182
39,120
46,386
Total liabilities and stockholders' equity
$
107,946
$
97,355
$
97,637
(1)
As of January 1, 2019, the Company adopted the requirements of ASC
842 using the modified retrospective method, and as a result, there
is a lack of comparability to the prior periods presented.
CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
2019
2018
2019
2018
Products
$
41,968
37,650
72,730
$
66,914
Service
5,806
4,903
11,070
9,764
Total net revenue
47,774
42,553
83,800
76,678
Products
18,393
17,045
33,935
30,967
Service
3,550
3,131
6,725
6,000
Total cost of revenue
21,943
20,176
40,660
36,967
Gross profit
25,831
22,377
43,140
39,711
Gross margin %
54%
53%
51%
52%
Operating expenses: Sales and marketing
16,992
15,535
33,096
28,623
Research and development
3,273
4,095
6,979
7,651
General and administrative
5,267
4,902
10,792
10,341
Total operating expenses
25,532
24,532
50,867
46,615
Income (loss) from operations
299
(2,155)
(7,727)
(6,904)
Interest and other income (expense), net
46
(129)
(33)
(31)
Income (loss) before income taxes
345
(2,284)
(7,760)
(6,935)
Income tax benefit
(243)
(712)
(128)
(3,331)
Net income (loss)
$
588
$
(1,572)
$
(7,632)
$
(3,604)
Net income (loss) per share: Basic
$
0.04
$
(0.11)
$
(0.54)
$
(0.26)
Diluted
$
0.04
$
(0.11)
$
(0.54)
$
(0.26)
Weighted-average number of shares used in per share
calculations: Basic
14,086
13,709
14,051
13,649
Diluted
14,356
13,709
14,051
13,649
CUTERA, INC.
CONSOLIDATED FINANCIAL
HIGHLIGHTS
(in thousands, except
percentage data)
(unaudited)
Three Months Ended
% Change
Six Months Ended
% Change
June 30,
June 30,
2019 Vs
June 30,
June 30,
2019 Vs
2019
2018
2018
2019
2018
2018
Revenue By Geography: United States
$
28,147
$
28,132
+0%
$
48,547
$
49,268
-1%
International
19,627
14,421
+36%
35,253
27,410
+29%
Total Net Revenue
$
47,774
$
42,553
+12%
$
83,800
$
76,678
+9%
International as a percentage of total revenue
41%
34%
42%
36%
Revenue By Product Category: Systems - North America
$
26,491
$
25,886
+2%
$
44,071
$
44,830
-2%
- Rest of World
11,048
9,405
+17%
20,677
17,700
+17%
Total Systems
37,539
35,291
+6%
64,748
62,530
+4%
Consumables
2,654
1,057
+151%
4,599
1,826
+152%
Skincare
1,775
1,302
+36%
3,383
2,558
+32%
Total Products
41,968
37,650
+11%
72,730
66,914
+9%
Service
5,806
4,903
+18%
11,070
9,764
+13%
Total Net Revenue
$
47,774
$
42,553
+12%
$
83,800
$
76,678
+9%
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
2019
2018
2019
2018
Pre-tax Stock-Based Compensation Expense: Cost of revenue
$
404
$
226
$
673
$
380
Sales and marketing
997
715
1,715
1,204
Research and development
370
262
633
453
General and administrative
748
1,002
805
1856
$
2,519
$
2,205
$
3,826
$
3,893
CUTERA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
2019
2018
2019
2018
Cash flows from operating activities: Net income (loss)
$
588
$
(1,572)
$
(7,632)
$
(3,604)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Stock-based compensation
2,519
2,205
3,826
3,893
Depreciation of tangible assets
404
290
815
544
Amortization of contract acquisition costs
722
449
1,412
822
Change in deferred tax asset
(7)
(587)
(1)
(3,324)
Provision for doubtful accounts receivable
(117)
300
(19)
487
Other
48
137
151
(25)
Changes in assets and liabilities: Accounts receivable
(5,666)
(2,747)
(5,263)
(1,832)
Inventories
(230)
841
1,125
(1,356)
Other current assets and prepaid expenses
302
(2,322)
(614)
(569)
Other long-term assets
(1,073)
572
(1,752)
(1,578)
Accounts payable
1,104
2,537
162
3,741
Accrued liabilities
5,246
2,402
3,779
(4,325)
Extended warranty liabilities
(268)
-
(760)
-
Other long-term liabilities
-
35
(140)
70
Deferred revenue
768
1,002
1,293
546
Income tax liability
(306)
2
(301)
7
Net cash provided by (used in) operating activities
4,034
3,544
(3,919)
(6,503)
Cash flows from investing activities: Acquisition of
property, equipment and software
(251)
(477)
(316)
(581)
Disposal of Property and equipment
20
38
20
38
Proceeds from sales of marketable investments
-
-
-
13,044
Proceeds from maturities of marketable investments
6,400
2,500
9,600
2,500
Purchase of marketable investments
(2,434)
-
(4,020)
(4,390)
Net cash provided by investing activities
3,735
2,061
5,284
10,611
Cash flows from financing activities: Proceeds from
exercise of stock options and employee stock purchase plan
1,032
2,405
1,163
3,038
Taxes paid related to net share settlement of equity awards
(80)
(376)
(570)
(2,664)
Payments on finance lease obligations
(211)
(112)
(342)
(234)
Net cash provided by financing activities
741
1,917
251
140
Net increase in cash and cash equivalents
8,510
7,522
1,616
4,248
Cash and cash equivalents at beginning of period
19,158
10,910
26,052
14,184
Cash and cash equivalents at end of period
$
27,668
$
18,432
$
27,668
$
18,432
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 June 30, 2019 Three Months
Ended June 30, 2018 GAAP
DepreciationandAmortization Stock-BasedCompensation
CRM and ERPImplementation Taxes andOtherAdjustments
Non-GAAP GAAP DepreciationandAmortization
Stock-BasedCompensation Taxes andOtherAdjustments
Non-GAAP Net revenue
$
47,774
-
-
-
-
$
47,774
$
42,553
-
-
-
$
42,553
Cost of revenue
21,943
(123
)
(404
)
-
-
21,416
20,176
(76
)
(226
)
-
19,874
Gross profit
25,831
123
404
-
-
26,358
22,377
76
226
-
22,679
Gross margin %
54
%
55
%
53
%
53
%
Operating expenses: Sales and marketing
16,992
(912
)
(997
)
(27
)
-
15,056
15,535
(601
)
(715
)
-
14,219
Research and development
3,273
(26
)
(370
)
-
-
2,877
4,095
(17
)
(262
)
-
3,816
General and administrative
5,267
(65
)
(748
)
(460
)
-
3,994
4,902
(45
)
(1,002
)
-
3,855
Total operating expenses
25,532
(1,003
)
(2,115
)
(487
)
-
21,927
24,532
(663
)
(1,979
)
-
21,890
Income (loss) from operations
299
1,126
2,519
487
-
4,431
(2,155
)
739
2,205
-
789
Interest and other income (expense), net
46
-
-
-
-
46
(129
)
-
-
-
(129
)
Loss before income taxes
345
1,126
2,519
487
-
4,477
(2,284
)
739
2,205
-
660
Benefit for income taxes
(243
)
-
-
-
279
36
(712
)
-
-
(397
)
(1,109
)
Net income (loss)
$
588
1,126
2,519
487
(279
)
$
4,441
$
(1,572
)
739
2,205
397
$
1,769
Net income (loss) per share: Basic
$
0.04
$
0.32
$
(0.11
)
$
0.13
Diluted
$
0.04
$
0.31
$
(0.11
)
$
0.12
Weighted-average number of shares used in per share
calculations: Basic
14,086
14,086
13,709
13,709
Diluted
14,356
14,356
13,709
14,311
Operating expenses as a % of net
revenue GAAP
Non-GAAP
GAAP
Non-GAAP
Sales and marketing
35.6
%
31.5
%
36.5
%
33.4
%
Research and development
6.9
%
6.0
%
9.6
%
9.0
%
General and administrative
11.0
%
8.4
%
11.5
%
9.1
%
53.4
%
45.9
%
57.7
%
51.4
%
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)
Six Months Ended June 30,
2019
Six Months Ended June 30,
2018
GAAP
Depreciation and
Amortization
Stock-Based
Compensation
CRM and ERP
Implementation
Taxes and Other
Adjustments
Non-GAAP
GAAP
Depreciation and
Amortization
Stock-Based
Compensation
Taxes and Other
Adjustments
Non-GAAP
Net revenue
$
83,800
-
-
-
-
$
83,800
$
76,678
-
-
-
$
76,678
Cost of revenue
40,660
(251
)
(673
)
-
-
39,736
36,967
(160
)
(380
)
-
36,427
Gross profit
43,140
251
673
-
-
44,064
39,711
160
380
-
40,251
Gross margin %
51
%
53
%
52
%
52
%
Operating expenses: Sales and marketing
33,096
(1,783
)
(1,715
)
(112
)
-
29,486
28,623
(1,124
)
(1,204
)
-
26,295
Research and development
6,979
(46
)
(633
)
-
-
6,300
7,651
(32
)
(453
)
-
7,166
General and administrative
10,792
(147
)
(805
)
(699
)
(614
)
(a)
8,526
10,341
(50
)
(1,856
)
-
8,435
Total operating expenses
50,867
(1,976
)
(3,153
)
(811
)
(614
)
44,313
46,615
(1,206
)
(3,513
)
-
41,896
Loss from operations
(7,727
)
2,227
3,826
811
614
(249
)
(6,904
)
1,366
3,893
-
(1,645
)
Interest and other income (expense), net
(33
)
-
-
-
-
(33
)
(31
)
-
-
-
(31
)
Loss before income taxes
(7,760
)
2,227
3,826
811
614
(282
)
(6,935
)
1,366
3,893
-
(1,676
)
Provision (benefit) for income taxes
(128
)
-
-
-
282
154
(3,331
)
-
-
169
(3,162
)
Net income (loss)
$
(7,632
)
2,227
3,826
811
332
$
(436
)
$
(3,604
)
1,366
3,893
(169
)
$
1,486
Net income (loss) per share: Basic
$
(0.54
)
$
(0.03
)
$
(0.26
)
$
0.11
Diluted
$
(0.54
)
$
(0.03
)
$
(0.26
)
$
0.10
Weighted-average number of shares used in per share
calculations: Basic
14,051
14,051
13,649
13,649
Diluted
14,051
14,051
13,649
14,298
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
39.5
%
35.2
%
37.3
%
34.3
%
Research and development
8.3
%
7.5
%
10.0
%
9.3
%
General and administrative
12.9
%
10.2
%
13.5
%
11.0
%
60.7
%
52.9
%
60.8
%
54.6
%
CUTERA, INC. RECONCILIATION OF NET INCOME
(LOSS) TO ADJUSTED EBITDA (in thousands)
(unaudited) Three MonthsEnded Six MonthsEnded
June 30, 2019 Net income (loss)
$
588
$
(7,632
)
Adjustments: Stock-based compensation
2,519
3,826
Depreciation and amortization
1,126
2,227
CRM and ERP implementation costs
487
811
Other adjustments
-
614
(a) Interest and other (income) expense, net
(46
)
33
Provision (benefit) for income taxes
(243
)
(128
)
Total adjustments
$
3,843
$
7,383
Adjusted EBITDA
$
4,431
$
(249
)
a) Other adjustment of $614
related to Executive separation costs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190808005585/en/
Cutera, Inc. Matthew Scalo Vice
President, Investor Relations & Corporate Development
415-657-5500 mscalo@cutera.com
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