BRISBANE, Calif., Feb. 13 /PRNewswire-FirstCall/ -- Cutera, Inc. , a leading provider of laser and other light-based aesthetic systems for practitioners worldwide, today reported financial results for the fourth quarter and year ended December 31, 2005. Key financial highlights are as follows:
Fourth quarter 2005, compared with the same quarter in 2004: * Revenue increased by 49% from $16.1 million to $24.0 million * Operating margins improved from 17% to 29% * Earnings per diluted share climbed from $0.16 to $0.41 * Cash generated by operations improved from $3.9 million to $7.6 million Full year 2005, compared with full year 2004: * Revenue increased by 44% from $52.6 million to $75.6 million * Operating margins improved from 10% to 22% * Earnings per diluted share climbed from $0.31 to $1.00 * Cash generated by operations more than doubled, from $9.2 million to $20.4 million * Cash and marketable investments increased by $25.7 million from $66.3 to $92.0 million.
"These impressive results are attributable to the positive reception that our products have been receiving in the marketplace and to the expansion of our sales force," said Kevin Connors, President and Chief Executive Officer. "In 2005, we experienced significant financial leverage in our business model. We increased gross margins and decreased each of our operating expenses, as a percent of revenue.
"We remain committed to aggressively investing in our business to exploit the growth opportunities in this robust market. Specifically, we are focused on the following key initiatives, which are yielding measurable returns as proven by our results in 2005: (i) worldwide sales force expansion -- we ended 2005 with 47 direct sales territories in North America, up from 32 territories at the end of 2004; (ii) new aesthetic solutions and product introductions; and, (iii) marketing to the broad and expanding market of physicians outside of the traditional dermatology and plastic surgery physician specialties, including the emerging medi-spa market. That market is comprised of physicians who offer aesthetic treatments in a spa environment."
Revenue highlights for the full year 2005, compared with the full year 2004, are as follows:
* U.S. and international revenue increased by 57% and 19%, respectively. * Product revenue grew by 46%, primarily due to our premium multi-application Xeo product and the newly introduced Solera platform products. * Service revenue increased by 60%, primarily due to the sales of post-warranty service contracts to an increasing number of customers. * Revenue from Titan refills- an annuity business line introduced in late 2004 -- contributed $1.8 million in 2005.
Mr. Connors concluded, "We are very pleased with the results of our key initiatives. Our strong financial position, together with the fast-paced growth of our company, strategically position Cutera as a leading global provider of light-based aesthetic systems."
Guidance
The following is management's guidance excluding and including the impact of adopting SFAS 123(R):
Impact of Expensing Employee Stock Options-SFAS 123(R) Three months ended 3/31/2006 Year Ended 12/31/2006 Including Excluding Including Excluding Revenue $19,000 $19,000 $94,300 $94,300 Stock-based compensation $1,000 $230 $4,500 $940 Net Income $1,110 $1,580 $12,330 $14,490 Diluted EPS $0.08 $0.11 $0.85 $1.00
Effective January 1, 2006, Cutera will be adopting Statement of Financial Accounting Standards (SFAS) No. 123(R), which requires the Company to begin recognizing compensation expense relating to share-based payment transactions in the Statement of Operations. In the above guidance, for the benefit of investors, management has provided summary non-GAAP information that is consistent and comparable with the company's historical performance. A table reconciling the non-GAAP financial measure of excluding the impact of SFAS 123(R), to the appropriate GAAP measure, is included in the condensed consolidated financial statements attached to this release.
Conference Call
Cutera, Inc. will host a conference call on February 13, 2006, at 2:00 p.m. PST (5:00 p.m. EST) to discuss its fourth-quarter and year-ended 2005 results. The earnings call will be broadcast live over the internet hosted at the Investor Relations section of the company's website at http://www.cutera.com and will be archived online within one hour of the completion of the conference call. In addition, you may dial 800-811-8824 to access that call. Participating in the call will be Kevin Connors, President and Chief Executive Officer, and Ron Santilli, Chief Financial Officer.
A telephonic playback of this call will be available from 5:00 p.m. PST on February 13, 2006, through 9:00 p.m. PST on February 27, 2006 by calling 888-203-1112. International callers may call 719-457-0820. To access this playback, please enter pass code 6044919.
About Cutera, Inc.
Brisbane, California-based Cutera is a leading provider of laser and other light-based aesthetic systems to the professional aesthetic market. Since 1998, Cutera has been developing innovative, easy-to-use products that enable dermatologists, plastic surgeons, gynecologists, primary care physicians and other qualified practitioners to offer safe, effective and non-invasive 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 continue to rapidly grow its business, its ability to successfully carry out key initiatives for 2006, including sales force expansion, introduction of new aesthetic solutions and product introductions, and broadening of its customer base, as well as Cutera's financial guidance for the first quarter and fiscal year 2006, 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. Cutera's fourth quarter and year ended December 31, 2005 financial performance, as discussed in this release, are preliminary and unaudited, and subject to adjustment. Estimates for the first quarter and fiscal year 2006 financial performance are subject to a number of assumptions regarding the future operation of our business. Further information on potential risk factors that could affect Cutera's business and its financial results are detailed in its most recent 10-K and 10-Q as filed with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks 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, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 31, 2005 2004 Assets Current assets: Cash and cash equivalents $5,260 $7,070 Marketable investments 86,736 59,200 Accounts receivable, net 6,478 6,643 Inventory 5,245 3,004 Deferred tax asset 3,027 2,284 Other current assets 3,728 878 Total current assets 110,474 79,079 Property and equipment, net 1,015 1,071 Intangibles, net 469 399 Total assets $111,958 $80,549 Liabilities and Stockholders' Equity Liabilities: Accounts payable $1,352 $1,195 Accrued liabilities 9,131 8,194 Deferred revenue 1,673 1,171 Total current liabilities 12,156 10,560 Deferred rent 1,096 648 Deferred revenue, net of current portion 1,469 833 Deferred tax liability 60 52 Total liabilities 14,781 12,093 Stockholders' equity: Common stock 12 11 Additional paid-in capital 77,705 62,738 Deferred stock-based compensation (2,171) (2,226) Retained earnings 21,743 7,942 Other comprehensive loss (112) (9) Total stockholders' equity 97,177 68,456 Total liabilities and stockholders' equity $111,958 $80,549 CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended Year Ended December 31, December 31, 2005 2004 2005 2004 Net revenue $23,953 $16,094 $75,620 $52,641 Cost of revenue(1) 6,149 4,235 19,792 14,689 Gross profit 17,804 11,859 55,828 37,952 Operating expenses: Sales and marketing 7,106 5,473 24,801 19,052 Research and development 1,374 1,150 5,065 4,136 General and administrative 2,164 2,195 7,983 8,344 Amortization of stock-based compensation(2) 207 313 1,307 1,267 Total operating expenses 10,851 9,131 39,156 32,799 Income from operations 6,953 2,728 16,672 5,153 Interest and other income, net 683 378 2,034 632 Income before income taxes 7,636 3,106 18,706 5,785 Provision for income taxes (1,825) (1,034) (4,905) (2,025) Net income $5,811 $2,072 $13,801 $3,760 Net income per diluted share $0.41 $0.16 $1.00 $0.31 Weighted-average number of shares used in diluted per share calculations 14,291 13,167 13,864 12,222 (1) Cost of revenue includes amortization of stock-based compensation of: $33 $39 $135 $168 (2) Amortization of stock-based compensation is attributable to the following operating expense categories: Sales and marketing 61 63 220 274 Research and development 47 104 288 413 General and administrative 99 146 799 580 207 313 1,307 1,267 Total amortization of stock-based compensation $240 $352 $1,442 $1,435 CUTERA, INC. CONSOLIDATED REVENUE HIGHLIGHTS (in thousands, except percentage data) (unaudited) Three Months Ended December 31, Year Ended December 31, 2005 2004 Change 2005 2004 Change $ $ % $ $ % Revenue By Geography: United States $18,274 $10,894 +68% $54,506 $34,824 +57% International 5,679 5,200 +9% 21,114 17,817 +19% $23,953 $16,094 +49% $75,620 $52,641 +44% Revenue By Product Category: Products $19,939 $13,325 +50% $63,349 $43,525 +46% Product upgrades 2,060 2,038 +1% 6,630 6,615 0% Service 1,222 659 +85% 3,881 2,429 +60% Titan refills 732 72 +917% 1,760 72 +2344% $23,953 $16,094 +49% $75,620 $52,641 +44% CUTERA, INC.
Reconciliations of Non-GAAP guidance measures to the nearest comparable GAAP
guidance measures (in thousands, except per share data) (unaudited) Three Months Ended 3/31/2006 Year Ended 12/31/2006 GAAP Non-GAAP GAAP Non-GAAP Guidance Adjustment Guidance Guidance Adjustment Guidance Revenue $19,000 $19,000 $94,300 $94,300 $770 (a) $3,560 (a) Net income $1,110 $(300)(b) $1,580 $12,330 $(1,400)(b) $14,490 Net income per diluted share $0.08 $0.03 $0.11 $0.85 $0.15 $1.00 (a) To eliminate incremental stock-based compensation charges resulting from adopting SFAS 123(R) with effect from January 1, 2006. (b) To eliminate the tax benefit related to the incremental stock-based compensation charges resulting from adopting SFAS 123(R) with effect from January 1, 2006. CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Year Ended December 31, 2005 2004 Cash flows from operating activities: Net income $13,801 $3,760 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 689 524 Change in allowance for doubtful accounts (311) 293 Change in excess and obsolete inventory 614 300 Change in deferred tax asset/liability (735) (476) Stock-based compensation 1,442 1,435 Tax benefit related to employee stock options 7,437 674 Loss on disposal of assets -- 47 Changes in assets and liabilities: Accounts receivable 476 661 Inventory (2,855) (1,065) Other current assets (2,850) 1 Accounts payable 157 (720) Accrued liabilities 937 2,485 Deferred rent 448 648 Deferred revenue 1,138 677 Net cash provided by operating activities 20,388 9,244 Cash flows from investing activities: Acquisition of property and equipment (539) (854) Purchase of intangibles (165) -- Proceeds from sales of marketable investments 18,324 9,133 Proceeds from maturities of marketable investments 49,948 14,310 Purchase of marketable investments, net (95,910) (82,652) Change in restricted cash -- 250 Net cash used in investing activities (28,342) (59,813) Cash flows from financing activities: Proceeds from exercise of stock options and employee stock purchase plan 6,144 1,037 Proceeds from issuance of common stock, net -- 46,312 Net cash provided by financing activities 6,144 47,349 Net decrease in cash and cash equivalents (1,810) (3,220) Cash and cash equivalents at beginning of year 7,070 10,290 Cash and cash equivalents at end of year $5,260 $7,070 Supplemental and non-cash disclosure of cash flow information: Conversion of preferred stock to common stock $-- $7,372 Change in deferred stock-based compensation, net of terminations $1,387 $(227) Cash paid for income taxes $1,837 $2,526
Cutera, Inc.CONTACT: Ron Santilli, Chief Financial Officer of Cutera, Inc.,+1-415-657-5500; or Investors, John Mills of Integrated CorporateRelations, Inc., +1-310-395-2215, or jmills@icrinc.com, for Cutera, Inc.
Web site: http://www.cutera.com/
