Fourth Quarter ICL Sales Rise 41%; Full Year
2018 ICL Sales Rise 48%
GAAP Net Income of $0.02 Per Share in Fourth
Quarter; $0.11 Per Share for Full Year 2018
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 full year ended December 28, 2018.
Fourth Quarter 2018
Overview
- Net Sales of $31.2 Million Up 26% from
the Prior Year Quarter
- ICL Sales Up 41% and Units Up 54% from
the Prior Year Quarter
- Gross Margin at 73.7% of Sales from
69.9% of Sales in the Prior Year Quarter
- Fourth Quarter Net Income of $0.02 per
Share vs. Prior Year Net Loss of ($0.00) Per Share
- Cash, Cash Equivalents and Restricted
Cash Ended the Quarter at $104.0 Million
Full Year 2018 Overview
- Record Net Sales of $124.0 Million Up
37% from Prior Year
- Record ICL Sales Up 48% and Units Up
54% from the Prior Year
- Gross Margin Improved to 73.8% of Sales
from 70.9% of Sales in the Prior Year
- Full Year Net Income of $0.11 per Share
vs. Prior Year Net Loss of ($0.05) Per Share
“2018 was a breakout year for STAAR. The transformation of the
business over the past two years has created a strong trajectory
toward paradigm change in refractive vision correction delivering
visual freedom. Lens based correction of Myopia is becoming a
preferred surgical solution and EVO ICL only clinics are opening in
Asia and Europe. We expect our momentum to continue with strong
clinical evidence from refractive surgeons publishing ever more
data supporting the safety and effectiveness of the ICL,” said
Caren Mason, President and CEO. “Surgeons refer to the ICL patient
as their ‘happiest patients’ and 99.4% of patients in a Patient
Registry said they would have the procedure again. As such, we far
exceeded our projection of breaking the $100.0 million revenue mark
in 2018 by achieving $124.0 million in revenue. In fact, our ICL
sales alone recorded $101.1 million in sales. My appreciation to
the entire STAAR team and our surgeon partners around the globe for
such outstanding performance.”
Financial Overview – Q4
2018
Net sales were $31.2 million for the fourth quarter of 2018, up
26% compared to $24.9 million reported in the prior year quarter.
The sales increase was driven by ICL revenue and unit growth of 41%
and 54%, respectively. Other Product Sales decreased 20% compared
to the prior year quarter. ICL revenue was 84% of total Net sales
for the fourth quarter of 2018.
Gross profit margin for the fourth quarter of 2018, was 73.7%
compared to the prior year period of 69.9%. The increase in gross
profit margin for the quarter is due to favorable product mix
resulting from increased sales of ICLs, and lower freight and
inventory provisions, partially offset by the effect of lower
average selling prices (ASPs) for lower diopter ICLs and large
volume commitment strategic partners.
Operating expenses for the quarter were $21.8 million compared
to the prior year quarter of $18.6 million. General and
administrative expenses were $6.2 million compared to the prior
year quarter of $5.1 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. Marketing and selling expenses were $9.9
million compared to the prior year quarter of $7.9 million. The
increase in marketing and selling expenses was due to increased
headcount and salary-related expenses including stock-based
compensation and investments in digital, strategic, and consumer
marketing. Research and development expenses were $5.7 million
compared to the prior year quarter of $5.6 million. The increase in
research and development expenses was due to an increase in
headcount and salary-related expenses including stock-based
compensation, and increased clinical expenses associated with our
clinical trial for the next generation ICL with EDOF optic.
Net income for the fourth quarter of 2018 was $1.1 million or
approximately $0.02 per share compared with a net loss of ($0.1)
million or ($0.00) per share for the prior year quarter. Non-GAAP
Adjusted Net Income for the fourth quarter of 2018 was $3.2 million
or $0.07 per share compared to $0.8 million or $0.02 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.
Financial Overview – Full Year
2018
Net sales were $124.0 million for FY 2018, up 37% compared to
$90.6 million reported in the prior year. The sales increase was
driven by ICL revenue and unit growth of 48% and 54%, respectively.
Other Products Sales increased 3% compared to the prior year. ICL
revenue was 82% of total Net sales for FY 2018.
Gross profit margin for FY 2018 increased to 73.8% of revenue
compared to 70.9% of revenue for fiscal 2017. The increase in gross
profit margin for the year is due to favorable product mix
resulting from increased sales of ICLs, and lower unit costs,
freight costs, and inventory provisions, partially offset by
the effect of lower ASPs for lower diopter ICLs and large volume
commitment strategic partners.
Operating expenses for FY 2018 were $84.9 million compared to
prior year of $67.9 million. The increase in operating expense is
due to increased headcount and salary-related expenses including
stock-based compensation and increased investments in digital,
consumer, and strategic marketing.
Net income for full year 2018 was $5.0 million or approximately
$0.11 per share compared with a net loss of $2.1 million or $0.05
per share for the prior year. Non-GAAP Adjusted Net Income for full
year 2018 was $12.6 million or $0.28 per share, compared with a
Non-GAAP Adjusted Net Income of $0.4 million or $0.01 per share for
FY 2017. 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 December 28, 2018
totaled $104.0 million, compared to $18.6 million at the end of the
fourth quarter of 2017. The Company generated $12.8 million in cash
from operations in fiscal 2018 and raised $72.2 million in gross
proceeds from the sale of approximately 2 million shares of common
stock to increase its cash balances.
Outlook – Full Year 2019
The Company reaffirms its Outlook as follows:
- ICL Unit Growth Percentage Target
Increase of 30% over FY18
- Company Overall Revenue Growth
Percentage Target Increase of 20% over FY18; Overall Revenue Target
Expected to be Impacted by Other Products Segment Sales Decline of
Approximately $3.60M, including a $2.60M Reduction in Sales of Low
Margin Injector Parts
- GAAP Net Income Anticipated to Increase
over FY18
- Company Anticipates Achieving Positive
Full Year Cash Flow and Cash Balance Increase.
Conference Call
The Company will host a conference call and webcast on Thursday,
February 21, 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 2888737), 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 2888737)
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 (Loss)” as calculated in accordance
with U.S. generally accepted accounting principles (“GAAP”): gain
or loss on foreign currency transactions, stock-based compensation
expenses, and quality remediation 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 excluded quality remediation expenses
because their inclusion may mask underlying trends in our business
performance.
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 complexity and 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.
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
900,000 Visian ICLs have been implanted to date. To learn more
about the ICL go to: www.discovericl.com. STAAR has approximately
400 full-time equivalent employees and markets lenses in over 75
countries. Headquartered in Monrovia, CA, the company operates
manufacturing facilities in Aliso Viejo, CA and Monrovia, CA. 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, and any statements of
assumptions underlying any of the foregoing. 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
29, 2017 and on the Company’s Current Report on Form 8-K on August
10, 2018, under the caption “Risk Factors,” respectively which are
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
December 28,
December 29,
ASSETS
2018
2017
Current assets: Cash and cash equivalents $ 103,877 $ 18,520
Accounts receivable trade, net 25,946 17,853 Inventories, net
16,704 13,310 Prepayments, deposits, and other current assets
5,045 4,207 Total current assets
151,572 53,890 Property, plant, and equipment,
net 11,451 9,776 Intangible assets, net 243 271 Goodwill 1,786
1,786 Deferred income taxes 1,278 1,242 Other assets 1,009
967 Total assets $ 167,339 $ 67,932
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Line of credit $ 3,780 $ 4,438 Accounts payable 6,524
6,033 Obligations under capital leases 1,098 1,278 Allowance for
sales returns 2,895 - Other current liabilities 13,431
7,339 Total current liabilities 27,728
19,088 Obligations under capital leases 459
531 Deferred income taxes 1,022 350 Asset retirement obligations
206 202 Deferred rent 188 172 Pension liability 5,310
4,653 Total liabilities 34,913
24,996 Stockholders' equity: Common
stock 442 414 Additional paid-in capital 289,584 204,920
Accumulated other comprehensive loss (1,320 ) (1,150 ) Accumulated
deficit (156,280 ) (161,248 ) Total stockholders'
equity 132,426 42,936 Total liabilities
and stockholders' equity $ 167,339 $ 67,932
Consolidated Statements of Operations (In 000's
except for per share data) Unaudited
Three Months Ended Twelve-Months Ended
% of
December 28,
% of
December 29,
Fav (Unfav) % of
December 28,
% of
December 29,
Fav (Unfav) Sales
2018
Sales
2017
Amount % Sales
2018
Sales
2017
Amount % Net sales 100.0 % $ 31,186 100.0 % $
24,852 $ 6,334 25.5 % 100.0 % $ 123,954 100.0 % $ 90,611 $ 33,343
36.8 % Cost of sales 26.3 % 8,194 30.1 %
7,472 (722 ) -9.7 % 26.2 % 32,444
29.1 % 26,331 (6,113 ) -23.2 %
Gross profit 73.7 % 22,992 69.9 % 17,380
5,612 32.3 % 73.8 % 91,510 70.9
% 64,280 27,230 42.4 % Selling,
general and administrative expenses: General and administrative
20.0 % 6,233 20.5 % 5,085 (1,148 ) -22.6 % 19.6 % 24,287 21.5 %
19,465 (4,822 ) -24.8 % Marketing and selling 31.6 % 9,867 31.9 %
7,929 (1,938 ) -24.4 % 31.1 % 38,600 31.3 % 28,402 (10,198 ) -35.9
% Research and development 18.3 % 5,705 22.6 %
5,626 (79 ) -1.4 % 17.8 % 22,028 22.1 %
20,044 (1,984 ) -9.9 % Total selling, general,
and administrative expenses 69.9 % 21,805 75.0 % 18,640 (3,165 )
-17.0 % 68.5 % 84,915 74.9 % 67,911 (17,004 ) -25.0 %
Operating income (loss) 3.8 % 1,187 -5.1 %
(1,260 ) 2,447 194.2 % 5.3 % 6,595 -4.0
% (3,631 ) 10,226 281.6 % Other income
(expense): Interest expense, net 0.7 % 230 -0.1 % (24 ) 254 1058.3
% 0.1 % 165 -0.1 % (112 ) 277 247.3 % Gain (loss) on foreign
currency transactions -0.9 % (291 ) 0.3 % 81 (372 ) -459.3 % -0.7 %
(836 ) 0.9 % 819 (1,655 ) -202.1 % Royalty income 0.5 % 168 0.7 %
181 (13 ) -7.2 % 0.5 % 633 0.6 % 581 52 9.0 % Other income
(expense), net 0.1 % 21 0.1 % 30
(9 ) -30.0 % 0.1 % 82 0.1 % 47
35 74.5 % Total other income (expense), net 0.4 % 128
1.0 % 268 (140 ) -52.2 % 0.0 %
44 1.5 % 1,335 (1,291 ) -96.7 %
Income (loss) before provision for income taxes 4.2 % 1,315 -4.1 %
(992 ) 2,307 232.6 % 5.3 % 6,639 -2.5 % (2,296 ) 8,935 389.2 %
Provision for income taxes 0.7 % 219 -3.4 %
(854 ) (1,073 ) -125.6 % 1.3 % 1,671
-0.2 % (157 ) (1,828 ) -1164.3 % Net income
(loss) 3.5 % $ 1,096 -0.7 % $ (138 ) $ 1,234 894.2 %
4.0 % $ 4,968 -2.3 % $ (2,139 ) $ 7,107 332.3 %
Net income (loss) per share - basic $ 0.02 $ -
$ 0.12 $ (0.05 ) Net income (loss) per share -
diluted $ 0.02 $ - $ 0.11 $ (0.05 )
Weighted average shares outstanding - basic 44,146
41,223 42,587 41,004
Weighted average shares outstanding - diluted 46,976
41,223 45,257 41,004
Consolidated Statements of Cash Flows (in
000's) Unaudited Three Months Ended
Twelve-Months Ended
December 28, 2018
December 29, 2017
December 28, 2018
December 29, 2017
Cash flows from operating activities: Net income (loss) $ 1,096 $
(138 ) $ 4,968 $ (2,139 ) Adjustments to reconcile net income
(loss) to net cash provided by (used in) operating activities:
Depreciation of property and equipment 638 789 2,430 3,133
Amortization of long-lived intangibles 8 55 34 221 Deferred income
taxes 78 (711 ) 441 (547 ) Change in net pension liability (2 ) 91
231 186 Stock-based compensation expense 1,836 976 6,762 3,161 Loss
on disposal of property and equipment 2 601 10 623 Provision for
sales returns and bad debts 13 277 905 463 Inventory provision 292
472 1,473 1,739 Changes in working capital: Accounts receivable
(2,051 ) (1,898 ) (6,040 ) (1,857 ) Inventories (569 ) (413 )
(4,194 ) 312 Prepayments, deposits and other current assets 423 700
(598 ) (64 ) Accounts payable (1,878 ) 250 243 (2,501 ) Other
current liabilities 2,459 61
6,102 123 Net cash provided by operating
activities 2,345 1,112 12,767
2,853 Cash flows from investing
activities: Acquisition of property and equipment (524 )
(77 ) (2,245 ) (1,046 ) Net cash used in
investing activities (524 ) (77 ) (2,245 )
(1,046 ) Cash flows from financing activities:
Repayment on line of credit (496 ) - (747 ) - Repayment of capital
lease obligations (511 ) (316 ) (1,907 ) (1,300 ) Net proceeds from
public offering of common stock - - 72,150 - Repurchase of employee
common stock for taxes withheld (54 ) - (54 ) (234 ) Proceeds from
vested restricted stock and exercise of stock options 615
1,695 5,197 3,971
Net cash provided by (used in) financing
activities
(446 ) 1,379 74,639 2,437
Effect of exchange rate changes on cash, cash
equivalents and restricted cash 308 (26 )
197 279 Increase in cash, cash
equivalents and restricted cash 1,683 2,388 85,358 4,523 Cash, cash
equivalents and restricted cash, at beginning of the period
102,316 16,253 18,641
14,118 Cash, cash equivalents and restricted cash, at end of
the period $ 103,999 $ 18,641 $ 103,999 $
18,641
Global Sales (in 000's)
Unaudited
Three Months Ended Twelve-Months
Ended
December 28,
December 29,
% Change
December 28,
December 29,
% Change Sales by Region
2018
2017
Fav (Unfav)
2018
2017
Fav (Unfav) North America 7.4 % $ 2,314 9.0 % $ 2,228 3.9 %
7.0 % $ 8,671 9.9 % $ 9,014 -3.8 % Europe 20.5 % 6,408 23.9 % 5,950
7.7 % 20.7 % 25,698 24.8 % 22,449 14.5 % Middle East, Africa, Latin
America 6.7 % 2,080 7.3 % 1,821 14.2 % 5.1 % 6,273 5.9 % 5,351 17.2
% Asia Pacific 65.4 % 20,384 59.8 % 14,853 37.2 %
67.2 % 83,312 59.4 % 53,797 54.9 % Total Sales 100.0
% $ 31,186 100.0 % $ 24,852 25.5 % 100.0 % $ 123,954 100.0 % $
90,611 36.8 %
Core Product Sales ICLs 84.1 % $
26,214 75.0 % $ 18,627 40.7 % 81.5 % $ 101,082
75.4
% $ 68,325 47.9 %
Other Product Sales IOLs 13.2 % 4,125 17.6
% 4,383 -5.9 % 13.1 % 16,193 19.0 % 17,258 -6.2 % Injector Parts
and Other 2.7 % 847 7.4 % 1,842 -54.0 % 5.4 %
6,679 5.6 % 5,028 32.8 % Total Other Sales 15.9 %
4,972 25.0 % 6,225 -20.1 % 18.5 % 22,872 24.6 %
22,286 2.6 % Total Sales 100.0 % $ 31,186 100.0 % $ 24,852
25.5 % 100.0 % $ 123,954 100.0 % $ 90,611 36.8 %
Reconciliation of Non-GAAP Financial Measure
(in 000's) Unaudited Three Months
Ended Twelve-Months Ended
December 28,
December 29,
December 28,
December 29,
2018
2017
2018
2017
Net income (loss) - (as reported) $ 1,096 $ (138 ) $ 4,968 $
(2,139 ) Less: Foreign currency impact 291 (81 ) 836 (819 )
Stock-based compensation expense 1,836 976 6,762 3,161 Quality
remediation expense - - -
210 Net income (loss) - (adjusted) $ 3,223 $
757 $ 12,566 $ 413 Net income (loss)
per share, basic - (as reported) $ 0.02 $ - $ 0.12 $ (0.05 )
Foreign currency impact 0.01 - 0.02 (0.02 ) Stock-based
compensation expense 0.04 0.02 0.16 0.08 Quality remediation
expense - - - 0.01
Net income (loss) per share, basic - (adjusted) $ 0.07
$ 0.02 $ 0.30 $ 0.01 Net income
(loss) per share, diluted - (as reported) $ 0.02 $ - $ 0.11 $ (0.05
) Foreign currency impact 0.01 - 0.02 (0.02 ) Stock-based
compensation expense 0.04 0.02 0.15 0.08 Quality remediation
expense - - - -
Net income (loss) per share, diluted - (adjusted) $ 0.07
$ 0.02 $ 0.28 $ 0.01 Weighted
average shares outstanding - Basic 44,146 41,223 42,587 41,004
Weighted average shares outstanding - Diluted 46,976 42,823 45,257
42,096 Note: Net income (loss) per share (adjusted), basic
and diluted, may not add due to rounding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190221005914/en/
Investors & MediaEVC GroupBrian Moore,
310-579-6199Doug Sherk, 415-652-9100
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