Syneron Medical Ltd. Reports Record Revenue Of $74.1 Million For The Fourth Quarter 2014

YOKNEAM, Israel, Feb. 18, 2015 /PRNewswire/ -- Syneron Medical Ltd. (NASDAQ: ELOS), a leading global aesthetic device company, today announced financial results for the three month period ended December 31, 2014.

Fourth Quarter 2014 and Fourth Quarter 2013 Highlights on a Pro-Forma¹ (Excluding Syneron Beauty) and Non-GAAP² Basis:

• Record revenue of $74.1 million, up 23.7% year-over-year.
• North American product sales grew 50.2% year-over-year.
• International sales grew 15.4%, including 17.5% product growth in the EMEA region and 31.4% product growth in the Asia-Pacific region.
• Non-GAAP gross margin of 55.7%, compared to 55.0% in Q4 2013.
• Generated $13.3 million in cash from operations; ended year with $110.4 million in cash and cash equivalents, and no debt.
• Sold 53 UltraShape systems, bringing U.S. installed base at year-end to 95 systems.
• Generated $2.6 million in PicoWay sales from launch in mid-November.

Full Year 2014 and Full Year 2013 Highlights on a Pro-Forma³ (Excluding Syneron Beauty) and Non-GAAP⁴ Basis:

• Total revenue of $255.8 million, up 10.2% year-over-year.
• Grew non-GAAP operating income by 9.4% to $12.9 million despite significant investments in growth initiatives.
• Generated $17.0 million in cash from operations, compared to negative cash from operations of $(23.0) million in 2013.

Revenue⁵: Fourth quarter 2014 revenue was $74.1 million, up 23.7%, compared to $59.9 million in the fourth quarter 2013 on a pro forma basis (excluding Syneron Beauty). Fourth quarter 2013 reported revenue was $64.3 million (including Syneron Beauty).  Fourth quarter 2014 revenue was negatively impacted by $1.6 million as a result of changes in foreign currency exchange rates, primarily due to the devaluation of the Euro and Japanese Yen against the U.S. dollar as compared to the fourth quarter 2013.

Amit Meridor, Chief Executive Officer of Syneron, said, "The fourth quarter 2014 was our strongest quarter ever, with  robust growth in North American product revenue, driven by the commercial launch of UltraShape in the U.S., the global PicoWay launch, and solid results across the rest of our product portfolio and regions. During the quarter we were pleased that we began to realize the benefits of our sales and marketing investments in North America made over the course of the year. For the full year, we achieved double-digit revenue growth and generated $17 million of cash. Importantly, we achieved these results while continuing to invest in several growth initiatives, which position us for continued improvement in our financial results in 2015 and beyond."

Mr. Meridor concluded, "There was strong interest in UltraShape and PicoWay during the fourth quarter, which gives us confidence as we continue to launch these innovative systems in 2015. We recently hired a CEO for our North American business and a Chief Brand Officer with deep experience in consumer marketing in order to further enhance our customer relationships and consumer awareness of our products, in particular the UltraShape procedure. Given the positive early reception to our recent new product launches and our investments in the business, we believe we have a significant opportunity to accelerate growth."

Hugo Goldman, Chief Financial Officer of Syneron, said, "In addition to the strong revenue growth in the quarter, we achieved operating margin expansion associated with new product launches and leverage benefits from our investments in sales and marketing, primarily in North America. It also includes benefits from our focus on improving operating efficiencies, which are also reflected in the 9.4% increase in our full year operating income to $12.9 million. We generated $13.3 million of cash, our third consecutive quarter of positive cash flow. This positive momentum allowed us to put in place a $20 million share repurchase program, which we begun implementing just before our blackout period started and repurchased approximately $0.5 million during the quarter. We ended the year with a strong balance sheet with $110.4 million in cash and no debt. We also achieved another quarter with improvements in working capital, which we are monitoring closely. This helped drive an improvement in days sales outstanding to 68 days, down from 78 days last quarter and 82 days at the end of 2013, and more favorable inventory levels."

Non-GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2014⁶:

Gross Margin for the fourth quarter 2014 was 55.7%, up from 55.0% in the fourth quarter 2013, reflecting a more favorable geographic and product mix, particularly with strong product growth in North America, partially offset by a lower and less favorable mix of recurring and service revenue.

Operating Income for the fourth quarter 2014 was $5.2 million, up from $3.1 million in the fourth quarter 2013. This reflects improved operating leverage from the Company's strategic investments in sales and marketing expenses related to the significant expansion of the Company's North American sales force, including the establishment of a dedicated body shaping team.  

Net Income and Earnings Per Share in the fourth quarter 2014 were $3.2 million, or $0.09 per share, compared to net income of $5.8 million, or $0.16 per share in the fourth quarter 2013. Fourth quarter 2013 net income and earnings per share included a net tax benefit of $3.3 million, or $0.09 per share, mainly related to the Company's tax settlement with the Israeli authorities, which resulted in the conclusion of the Company's Israeli tax audits for the years 2007 to 2011, partially offset by other tax charges. Excluding the net tax benefit described above, fourth quarter 2013 non-GAAP earnings per share would have been $0.07.

Net income and earnings per share for the fourth quarter 2014 are adjusted to exclude the following items, which are detailed in the Company's financial tables presented at the end of this press release:

• Amortization of acquired intangible assets of $1.5 million
• Stock-based compensation of $0.7 million
• Re-measurement of contingent consideration fair value of $(3.6) million
• Impairment of intangible assets of $2.0 million
• Fair Market Value (FMV) adjustment of $4.6 million
• Income tax positive adjustment of $0.8 million
• Other legal fees of $0.2 million

GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2014:

Gross Margin for the fourth quarter 2014 was 54.4%, up from 50.7% in the fourth quarter 2013. The increase in gross margin was primarily due to favorable geographic and product mix.

Operating loss for the fourth quarter 2014 was $(0.2) million, down from operating income of $2.2 million in the fourth quarter 2013. This loss includes an adjustment of $4.6 million related to a change in the fair market value of Iluminage Beauty from $24.7 million at its creation to $20.1 million at the end of 2014. The fourth quarter 2013 operating income included a one-time gain, net of deal related costs, of $6.0 million related to the Company's investment in Iluminage Beauty commenced in December 2013.

Net Loss and Loss Per Share in the fourth quarter 2014 was $(1.4) million, or $(0.04) per share. This compared to net income of $9.7 million, or $0.27 per share, in the fourth quarter 2013. Fourth quarter 2013 net income and earnings per share included the one-time net-gain of $6 million mentioned above and a tax benefit of $4.8 million mainly related to the Company's tax settlement of past years with the Israeli tax authorities, net of the approximately $4 million paid on trapped profits that was reported in November 2013 and $3.0 million other one-time tax benefit mainly related to U.S. entity consolidation implemented during the fourth quarter of 2013. Excluding the above items fourth quarter 2013 GAAP earnings per share would have been $0.02.

Cash Position: As of December 31, 2014, the Company's cash and cash equivalents were $110.4 million, compared to $100.4 million as of September 30, 2014.

Use of Non-GAAP Measures and Pro-Forma Financials

This press release provides financial measures for gross margin, operating margin, operating income (loss), net income (loss) and earnings (loss) per share, which exclude expenses related to amortization of acquired intangible assets, stock-based compensation, re-measurement of contingent consideration fair value, impairment of intangible assets, Fair Market Value (FMV) adjustment, income tax adjustment and legal settlement, and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance because it reflects our ongoing operational results, operating margin, operating income (loss), net income (loss) and earnings (loss) per share. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses non-GAAP measures when evaluating the business internally and, therefore, believes it important to make these non-GAAP adjustments available to investors. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables.

In addition, this press release provides pro forma financials that exclude revenues from Syneron Beauty following its de-consolidation as of December 8, 2013 in various comparable periods.  A reconciliation of the comparable periods that include revenues from Syneron Beauty is contained in the accompanying financial tables.

Conference Call

Syneron management will host its fourth quarter 2014 earnings conference call today at 8:30 a.m. ET. Syneron will be broadcasting live via the Investor Relations section of its website, www.investors.syneron.com. To access the call, enter the Syneron Investor Relations website, then click on the webcast link "Q4 2014 Results Webcast."

Participants are encouraged to log on at least 15 minutes prior to the conference call in order to download the applicable audio software. The call can be heard live or with an on-line replay which will follow. Those interested in participating in the call and the question and answer session should dial 877-280-1254 in the U.S., and 718-354-1158 from overseas.

To read full press release, please click here.

Help employers find you! Check out all the jobs and post your resume.