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 second quarter ended June 28, 2019.
Second Quarter 2019
Overview
- Net Sales of $39.7 Million (Up 17%) as Reported and $40.3
Million (Up 19%) Constant Currency from the Prior Year Quarter
- ICL Sales of $34.4 Million (Up 26%) as Reported and $34.9
Million (Up 28%) Constant Currency from the Prior Year Quarter
- ICL Units Up 34% from the Prior Year Quarter
- Gross Margin at 75.4% Up 100 Basis Points from the Prior Year
Quarter
- Net Income of $0.08 per Share vs. Prior Year Quarter Net Income
of $0.04 per Share
- Cash and Cash Equivalents Ended the Quarter at $103.3
Million.
“The record second quarter 2019 results we reported today
represent excellent progress for STAAR Surgical as we target
paradigm change in refractive vision correction with our family of
proprietary Collamer® lenses. Growth metrics in the second quarter
for ICL Sales, Units, Gross Margin, Operating Margin and GAAP EPS
were all up meaningfully as compared to our breakout financial
results in the year ago period. When coupled with a solid first
quarter, we believe our second quarter results put us firmly on
track to achieve or exceed our full year targets for 30% ICL unit
growth, 20% company revenue growth, achievement of year-over-year
improvements in GAAP net income, positive cash flow generation and
a higher level of cash on our balance sheet,” said Caren Mason,
President and CEO of STAAR Surgical. “Our ICL units were up 34% in
the second quarter over the prior year period with growth of 48% in
China, 43% in consolidated smaller APAC markets, 42% in Korea, 29%
in Japan, 22% in India, 12% in Spain and 10% in Latin America.
Importantly, in concert with record top line growth, key operating
and financial metrics were strong during the second quarter with
expanding margins, a doubling of our GAAP net income profitability
and meaningful cash generation from operations. Subsequent to the
end of the quarter we also took actions to advance our pipeline of
ICL products with regulators, which notably included a European
submission of data from our multi-site clinical trial for our EDOF
lens for Presbyopia which met the clinical trial primary endpoint
and a revised submission to the FDA for a least burdensome pathway
forward encompassing a clinical trial for our EVO family of lenses
in the U.S.”
Financial Overview – Q2
2019
Net sales were $39.7 million for the second quarter of 2019, up
17% as compared to $33.9 million reported in the prior year
quarter. The sales increase was driven by ICL revenue and unit
growth of 26% and 34%, respectively, which was partially offset by
an anticipated decrease in other product sales, which declined 21%
as compared to the prior year quarter. Currency, primarily the
Euro, negatively impacted reported net sales by approximately $0.6
million in the second quarter. Adjusting for the impact of
currency, net sales in the second quarter of 2019 were $40.3
million, representing 19% growth over the prior year quarter.
Gross profit margin for the second quarter of 2019 was 75.4%
compared to the prior year period of 74.4%. The 100 basis point
increase in gross profit margin for the quarter is primarily due to
favorable product mix resulting from increased sales of ICLs and
lower other product sales.
Operating expenses for the quarter increased 14% to $25.3
million compared to the prior year quarter of $22.2 million.
General and administrative expenses were $7.5 million compared to
the prior year quarter of $6.2 million. The increase in general and
administrative expenses was due to increased headcount and
salary-related expenses, including stock-based compensation and
increased facility costs and professional fees. Marketing and
selling expenses were $11.7 million compared to the prior year
quarter of $10.7 million. The increase in marketing and selling
expenses was due to increased headcount and salary-related expenses
including stock-based compensation, increased travel expenses and
continued investments in digital, strategic, and consumer
marketing. Research and development expenses were $6.1 million
compared to the prior year quarter of $5.3 million. The increase in
research and development expenses is due to an increase in
headcount and salary-related expenses, including stock-based
compensation.
Operating income margin for the second quarter of 2019 increased
270 basis points to 11.6% as compared to the prior year operating
income of 8.9%. The increase in operating income margin is
attributable to higher gross margin and lower total operating
expense as a percentage of sales in the second quarter of 2019 as
compared to the prior year quarter.
Net income for the second quarter of 2019 was $3.9 million or
approximately $0.08 per share compared with net income of $1.8
million or $0.04 per share for the prior year quarter. Non-GAAP
Adjusted Net Income for the second quarter of 2019 was $6.5 million
or $0.14 per share compared to $3.9 million or $0.09 per 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.
Cash, cash equivalents, and restricted cash at June 28, 2019
totaled $103.3 million, compared to $104.0 million at the end of
the fourth quarter of 2018. The Company generated $3.5 million in
cash from operations in the second quarter.
Conference Call
The Company will host a conference call and webcast today,
Wednesday, July 31, 2019 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 7270219), please dial
855-765-5684 for domestic participants and 262-912-6252 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 7270219)
will 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. “Adjusted Net Income” and
“Adjusted Net Income Per Share” exclude 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 and stock-based compensation
expenses. Management believes that “Adjusted Net Income” and
“Adjusted Net Income Per Share” are 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. In
calculating Adjusted Net Income and Adjusted Net Income Per Share,
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 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,
including those relating to the plans, strategies, and objectives
of management for 2019 or prospects for achieving such plans,
expectations for sales, revenue, or earnings, product safety or
effectiveness, the status of our pipeline of ICL products with
regulators, including our EDOF lens for Presbyopia and 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 are set forth in the
Company’s Annual Report on Form 10-K for the year ended December
28, 2018 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; potential
international trade disputes; and the willingness of surgeons and
patients to adopt a new or improved product and procedure. The
Visian ICL with CentraFLOW, now known as EVO Visian ICL, is not yet
approved for sale in the United States.
Consolidated Balance Sheets (in 000's)
Unaudited June 28, 2019 December 28, 2018
ASSETS Current assets: Cash and cash equivalents
$
103,251
$
103,877
Accounts receivable trade, net
32,962
25,946
Inventories, net
16,328
16,704
Prepayments, deposits, and other current assets
6,367
5,045
Total current assets
158,908
151,572
Property, plant, and equipment, net
13,382
11,451
Finance lease right-of-use assets, net
2,338
-
Operating lease right-of-use assets, net
7,219
-
Intangible assets, net
261
243
Goodwill
1,786
1,786
Deferred income taxes
1,355
1,278
Other assets
713
1,009
Total assets
$
185,962
$
167,339
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Line of credit
$
2,854
$
3,780
Accounts payable
8,097
6,524
Obligations under finance leases
960
1,098
Obligations under operating leases
2,766
-
Allowance for sales returns
3,263
2,895
Other current liabilities
10,771
13,431
Total current liabilities
28,711
27,728
Obligations under finance leases
580
459
Obligations under operating leases
4,580
-
Deferred income taxes
1,406
1,022
Asset retirement obligations
212
206
Deferred rent
-
188
Pension liability
6,138
5,310
Total liabilities
41,627
34,913
Stockholders' equity: Common stock
445
442
Additional paid-in capital
296,063
289,584
Accumulated other comprehensive loss
(1,602
)
(1,320
)
Accumulated deficit
(150,571
)
(156,280
)
Total stockholders' equity
144,335
132,426
Total liabilities and stockholders' equity
$
185,962
$
167,339
Consolidated Statements of Income (In 000's except for
per share data) Unaudited Three Months
Ended Six-Months Ended % of June 28, 2019
% of June 29, 2018 Fav (Unfav) % of
June 28, 2019 % of June 29, 2018 Fav
(Unfav) Sales Sales Amount %
Sales Sales Amount % Net sales
100.0
%
$
39,664
100.0
%
$
33,905
$
5,759
17.0
%
100.0
%
$
72,247
100.0
%
$
60,998
$
11,249
18.4
%
Cost of sales
24.6
%
9,765
25.6
%
8,678
(1,087
)
-12.5
%
25.1
%
18,168
26.8
%
16,340
(1,828
)
-11.2
%
Gross profit
75.4
%
29,899
74.4
%
25,227
4,672
18.5
%
74.9
%
54,079
73.2
%
44,658
9,421
21.1
%
Selling, general and administrative expenses: General and
administrative
18.9
%
7,508
18.3
%
6,196
(1,312
)
-21.2
%
19.9
%
14,345
19.6
%
11,967
(2,378
)
-19.9
%
Marketing and selling
29.5
%
11,682
31.4
%
10,659
(1,023
)
-9.6
%
30.2
%
21,825
29.7
%
18,113
(3,712
)
-20.5
%
Research and development
15.4
%
6,098
15.8
%
5,346
(752
)
-14.1
%
16.3
%
11,733
17.6
%
10,753
(980
)
-9.1
%
Total selling, general, and administrative expenses
63.8
%
25,288
65.5
%
22,201
(3,087
)
-13.9
%
66.4
%
47,903
66.9
%
40,833
(7,070
)
-17.3
%
Operating income
11.6
%
4,611
8.9
%
3,026
1,585
52.4
%
8.5
%
6,176
6.3
%
3,825
2,351
61.5
%
Other income (expense): Interest Income (expense), net
0.7
%
259
-0.1
%
(24
)
283
1179.2
%
0.7
%
530
-0.1
%
(36
)
566
1572.2
%
Gain (loss) on foreign currency transactions
0.0
%
11
-1.5
%
(520
)
531
102.1
%
-0.3
%
(237
)
-0.9
%
(597
)
360
60.3
%
Royalty income
0.4
%
163
0.5
%
149
14
9.4
%
0.5
%
334
0.5
%
306
28
9.2
%
Other income, net
0.0
%
1
0.0
%
4
(3
)
-75.0
%
0.1
%
98
0.0
%
21
77
366.7
%
Total other income (expense), net
1.1
%
434
-1.1
%
(391
)
825
211.0
%
1.0
%
725
-0.5
%
(306
)
1,031
336.9
%
Income before provision for income taxes
12.7
%
5,045
7.8
%
2,635
2,410
91.5
%
9.5
%
6,901
5.8
%
3,519
3,382
96.1
%
Provision for income taxes
2.9
%
1,131
2.4
%
805
(326
)
-40.5
%
2.2
%
1,620
1.8
%
1,106
(514
)
-46.5
%
Net income
9.8
%
$
3,914
5.4
%
$
1,830
$
2,084
113.9
%
7.3
%
$
5,281
4.0
%
$
2,413
$
2,868
118.9
%
Net income per share - basic
$
0.09
$
0.04
$
0.12
$
0.06
Net income per share - diluted
$
0.08
$
0.04
$
0.11
$
0.06
Weighted average shares outstanding - basic
44,479
41,723
44,357
41,568
Weighted average shares outstanding - diluted
46,733
43,999
46,842
43,654
Consolidated Statements of Cash Flows (in 000's)
Unaudited Three Months Ended Six-Months Ended
June 28, 2019 June 29, 2018 June 28, 2019
June 29, 2018 Cash flows from operating activities:
Net income
$
3,914
$
1,830
$
5,281
$
2,413
Adjustments to reconcile net income to net cash provided by (used
in) operatingactivities: Depreciation of property and equipment
761
619
1,983
1,168
Amortization of long-lived intangibles
9
8
17
17
Deferred income taxes
314
266
393
358
Change in net pension liability
84
72
203
159
Stock-based compensation expense
2,579
1,598
5,220
2,899
Loss on disposal of property and equipment
-
-
-
6
Provision for sales returns and bad debts
2
130
(32
)
644
Inventory provision
332
247
787
753
Changes in working capital: Accounts receivable
(5,979
)
(3,635
)
(6,533
)
(6,390
)
Inventories
113
(1,140
)
106
(1,536
)
Prepayments, deposits and other current assets
1,163
(159
)
(1,154
)
(889
)
Accounts payable
748
(1,082
)
563
956
Other current liabilities
(563
)
1,022
(2,626
)
1,748
Net cash provided by (used in) operating activities
3,477
(224
)
4,208
2,306
Cash flows from investing activities: Acquisition of
property and equipment
(2,398
)
(304
)
(4,601
)
(1,269
)
Increase in patents and licenses
-
-
(30
)
-
Net cash used in investing activities
(2,398
)
(304
)
(4,631
)
(1,269
)
Cash flows from financing activities: Repayment on line of
credit
(500
)
-
(999
)
-
Repayment of finance lease obligations
(316
)
(501
)
(681
)
(881
)
Proceeds from vested restricted stock and exercise of stock options
488
1,953
1,112
2,407
Net cash provided by (used in) financing activities
(328
)
1,452
(568
)
1,526
Effect of exchange rate changes on cash, cash equivalents
and restricted cash
267
(449
)
243
163
Increase (decrease) in cash, cash equivalents and restricted
cash
1,018
475
(748
)
2,726
Cash, cash equivalents and restricted cash, at beginning of the
period
102,233
20,892
103,999
18,641
Cash, cash equivalents and restricted cash, at end of the period
$
103,251
$
21,367
$
103,251
$
21,367
Global Sales (in 000's) Unaudited
Three Months Ended Six-Months Ended June 28,
2019 June 29, 2018 % Change June 28, 2019
June 29, 2018 % Change Sales by Region Fav
(Unfav) Fav (Unfav) North America
6.2
%
$
2,442
6.7
%
$
2,275
7.3
%
6.4
%
$
4,640
7.1
%
$
4,354
6.6
%
Europe, Middle East, Africa, Latin America
19.6
%
7,786
23.8
%
8,064
-3.4
%
22.2
%
16,051
27.2
%
16,573
-3.1
%
Asia Pacific
74.2
%
29,436
69.5
%
23,566
24.9
%
71.4
%
51,556
65.7
%
40,071
28.7
%
Total Sales
100.0
%
$
39,664
100.0
%
$
33,905
17.0
%
100.0
%
$
72,247
100.0
%
$
60,998
18.4
%
Core Product Sales ICLs
86.8
%
$
34,432
80.5
%
$
27,292
26.2
%
86.1
%
$
62,218
79.4
%
$
48,450
28.4
%
Other Product Sales Ions
9.8
%
3,874
12.3
%
4,186
-7.5
%
10.9
%
7,891
13.5
%
8,244
-4.3
%
Injector Parts and Other
3.4
%
1,358
7.2
%
2,427
-44.0
%
3.0
%
2,138
7.1
%
4,304
-50.3
%
Total Other Sales
13.2
%
5,232
19.5
%
6,613
-20.9
%
13.9
%
10,029
20.6
%
12,548
-20.1
%
Total Sales
100.0
%
$
39,664
100.0
%
$
33,905
17.0
%
100.0
%
$
72,247
100.0
%
$
60,998
18.4
%
Reconciliation of Non-GAAP Financial Measure Adjusted Net
Income and Net Income Per Share (in 000's)
Unaudited Three Months Ended Six-Months Ended
June 28, 2019 June 29, 2018 June 28, 2019
June 29, 2018 Net income (as reported)
$
3,914
$
1,830
$
5,281
$
2,413
Less: Foreign currency impact
(11
)
520
237
597
Stock-based compensation expense
2,579
1,598
5,220
2,899
Net income (adjusted)
$
6,482
$
3,948
$
10,738
$
5,909
Net income per share, basic (as reported)
$
0.09
$
0.04
$
0.12
$
0.06
Foreign currency impact
-
0.01
-
0.01
Stock-based compensation expense
0.06
0.04
0.12
0.07
Net income per share, basic (adjusted)
$
0.15
$
0.09
$
0.24
$
0.14
Net income per share, diluted (as reported)
$
0.08
$
0.04
$
0.11
$
0.06
Foreign currency impact
-
0.01
0.01
0.01
Stock-based compensation expense
0.06
0.04
0.11
0.07
Net income per share, diluted (adjusted)
$
0.14
$
0.09
$
0.23
$
0.14
Weighted average shares outstanding - Basic
44,479
41,723
44,357
41,568
Weighted average shares outstanding - Diluted
46,733
43,999
46,842
43,654
Note: Net income per share (adjusted), basic and diluted, may
not add due to rounding
Reconciliation of Non-GAAP Financial Measure Constant
Currency Sales (in 000's) Unaudited Three
Months Ended June 28, 2019 Effect of
Constant June 29, 2018 As Reported Constant
Currency Sales Currency Currency $
Change % Change $ Change % Change ICL
$
34,432
$
509
$
34,941
$
27,292
$
7,140
26.2
%
$
7,649
28.0
%
IOL
3,874
94
3,968
4,186
(312
)
-7.5
%
(218
)
-5.2
%
Other
1,358
7
1,365
2,427
(1,069
)
-44.0
%
(1,062
)
-43.8
%
Total Sales
$
39,664
$
610
$
40,274
$
33,905
$
5,759
17.0
%
$
6,369
18.8
%
Six Months Ended June 28, 2019 Effect
of Constant June 29, 2018 As Reported
Constant Currency Sales Currency
Currency $ Change % Change $ Change
% Change ICL
$
62,218
$
1,049
$
63,267
$
48,450
$
13,768
28.4
%
$
14,817
30.6
%
IOL
7,891
243
8,134
8,244
(353
)
-4.3
%
(110
)
-1.3
%
Other
2,138
10
2,148
4,304
(2,166
)
-50.3
%
(2,156
)
-50.1
%
Total Sales
$
72,247
$
1,302
$
73,549
$
60,998
$
11,249
18.4
%
$
12,551
20.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190731005904/en/
Investors & Media Brian Moore Sr. Director, Investor,
Media Relations and Corporate Development (626) 303-7902, Ext. 3023
bmoore@staar.com
STAAR Surgical (NASDAQ:STAA)
Historical Stock Chart
From Aug 2024 to Sep 2024
STAAR Surgical (NASDAQ:STAA)
Historical Stock Chart
From Sep 2023 to Sep 2024