Quarterly net sales of $23.5 million up 17% from the prior year quarter.
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MONROVIA, Calif., Nov. 8, 2017 /PRNewswire/ -- 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 third quarter ended September 29, 2017. Third Quarter 2017 Overview
"During Q3, we achieved a number of milestones for the company. We were pleased to deliver a profitable quarter with $0.03 positive earnings per share and approximately $3.1 million in positive cash flow from operations. We achieved record revenue and gross profit for the quarter while benefiting from planned expense management and a shift in marketing expense for our Experts Meeting and ESCRS to the fourth quarter. Top line results include record ICL sales and record ICL units with Canada units up 200%, China units up 76%, Japan units up 48%, Germany units up 28% and Global Distributors units up 22% over the prior year quarter. China's demand was especially strong as the third quarter encompasses the largest procedure volume of the year. As we have expanded our business substantially in China, the largest refractive surgery market globally, we now will be planning for greater revenue in Q3 in future years than in previous years," said Caren Mason, President and CEO. "Our first-in-man clinical trial for the next generation ICL with EDOF optic is nearly finished and the results continue to meet intended outcomes. We plan to begin our pivotal clinical trial during the first quarter of 2018 to evaluate the performance of an EDOF optic design to treat Presbyopia on the approved EVO Visian Implantable Collamer Lens platform. With regard to FDA remediation, we completed our internal work in the first quarter of 2017 and notified the FDA in March that we are ready for inspection," added Ms. Mason. Financial Overview Net sales were $23.5 million for the third quarter of 2017, up 17% compared to $20.1 million reported in the prior year quarter. The sales increase was driven by ICL revenue and unit growth of 22% and 18%, respectively, and strong injector part sales. Sales of IOLs decreased 16% compared to the prior year quarter. Gross profit margin for the third quarter of 2017, was 71.8% compared to the prior year period of 74.2%. The decrease in gross margin for the quarter is due to unfavorable product mix due to increased sales of low margin injector parts, increased inventory provisions due to timing, and an increase in ICL unit costs, partially offset by an increased sales mix of Toric ICLs. Operating expenses for the quarter were $15.8 million compared to the prior year quarter of $16.6 million. The decrease in operating expenses for the quarter was due to planned expense management and the timing of our Experts Meeting and the ESCRS, which were held and expensed in the third quarter of 2016 versus being held and expensed in the fourth quarter of 2017. Net income for the third quarter of 2017 was $1.2 million or approximately $0.03 per diluted share compared with a net loss of $1.8 million or $0.04 per share for the prior year quarter. Adjusted Net Income for the third quarter of 2017 was $1.5 million or $0.04 per diluted share, compared with an Adjusted Net Loss of $0.9 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. Cash, cash equivalents and restricted cash at September 29, 2017 totaled $16.3 million, compared to $14.1 million at the end of the fourth quarter of 2016 and $14.4 million at the end of the third quarter of 2016. Continued focus on optimizing the Company's cash position through revenue growth, expense mitigation, and working capital management enabled the Company to effectively increase its cash balances. Conference Call The Company will host a conference call and webcast on Wednesday, November 8, 2017 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 6998278), 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 6998278) 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 (Loss)" and "Adjusted Net Income (Loss) 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 (Loss)" and "Adjusted Net Income (Loss) 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 (Loss) and Adjusted Net Income (Loss) 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 700,000 Visian ICLs have been implanted to date. To learn more about the ICL go to: www.discovericl.com. STAAR has approximately 340 full-time equivalent employees and markets lenses in over 60 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 future operations or prospects for achieving such plans, expectations for sales, revenue, earnings, marketing and clinical initiatives, completion of remediation or other expense, or expense timing, success and timing of new or improved products, clinical trials, research and development activities, investment imperatives, 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 30, 2016 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: our limited capital resources and limited access to financing; global economic conditions; changes in currency exchange rates; the discretion of regulatory agencies to approve or reject existing, new or improved products, or to require additional actions before approval (including but not limited to FDA requirements regarding the Visian Toric ICL and/or actions related to the FDA Warning Letter and Form FDA-483s), or to take enforcement action; research and development efforts; the purchasing patterns of our distributors carrying inventory in the market; and the willingness of surgeons and patients to adopt a new or improved product and procedure. The Visian Toric ICL and the Visian ICL with CentraFLOW, now known as EVO Visian ICL, are not yet approved for sale in the United States. CONTACT: Investors & Media
EVC Group
Brian Moore, 310-579-6199
Doug Sherk, 415-652-9100
STAAR Surgical Company
Consolidated Balance Sheets
(in 000's)
Unaudited
September 29, December 30,
ASSETS 2017 2016
------ ---- ----
Current assets:
Cash and cash equivalents $16,133 $13,999
Accounts receivable trade, net 16,237 16,344
Inventories, net 13,274 14,825
Insurance receivable 7,000 ?
Prepayments, deposits, and other
current assets 4,936 4,349
Total current assets 57,580 49,517
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Property, plant, and equipment,
net 10,999 11,790
Intangible assets, net 326 473
Goodwill 1,786 1,786
Deferred income taxes 1,043 1,105
Other assets 969 772
--- ---
Total assets $72,703 $65,443
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LIABILITIES AND STOCKHOLDERS'
EQUITY
-----------------------------
Current liabilities:
Line of credit $4,442 $4,283
Accounts payable 5,734 8,311
Obligations under capital leases 1,269 1,198
Litigation settlement obligation 7,000 ?
Other current liabilities 7,253 7,275
----- -----
Total current liabilities 25,698 21,067
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Obligations under capital leases 834 1,339
Deferred income taxes 984 881
Asset retirement obligations 203 195
Deferred rent 184 59
Pension liability 4,138 3,997
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Total liabilities 32,041 27,538
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Stockholders' equity:
Common stock 412 407
Additional paid-in capital 202,148 197,657
Accumulated other comprehensive
loss (788) (1,050)
Accumulated deficit (161,110) (159,109)
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Total stockholders' equity 40,662 37,905
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Total liabilities and
stockholders' equity $72,703 $65,443
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STAAR Surgical Company
Consolidated Statements of Operations
(In 000's except for per share data)
Unaudited
Three Months Ended Nine Months Ended
------------------ -----------------
% of September 29, % of September 30, Fav (Unfav) % of September 29, % of September 30, Fav (Unfav)
---------- ----------
Sales 2017 Sales 2016 Amount % Sales 2017 Sales 2016 Amount %
---- ---- ------ --- ---- ---- ------ ---
Net sales 100.0% $23,473 100.0% $20,052 $3,421 17.1% 100.0% $65,759 100.0% $60,295 $5,464 9.1%
Cost of sales 28.2% 6,624 25.8% 5,180 (1,444) -27.9% 28.7% 18,859 29.5% 17,804 (1,055) -5.9%
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Gross profit 71.8% 16,849 74.2% 14,872 1,977 13.3% 71.3% 46,900 70.5% 42,491 4,409 10.4%
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Selling, general and administrative
expenses:
General and administrative 21.1% 4,946 24.9% 4,985 39 0.8% 22.9% 15,065 30.5% 18,378 3,313 18.0%
Marketing and selling 27.4% 6,431 35.7% 7,149 718 10.0% 30.8% 20,282 36.5% 22,006 1,724 7.8%
Research and development 18.9% 4,429 22.2% 4,453 24 0.5% 21.2% 13,924 26.6% 16,018 2,094 13.1%
----- ----- --- ------ ------ -----
Total selling, general, and
administrative expenses 67.4% 15,806 82.8% 16,587 781 4.7% 74.9% 49,271 93.6% 56,402 7,131 12.6%
Operating income (loss) 4.4% 1,043 -8.6% (1,715) 2,758 160.8% -3.6% (2,371) -23.1% (13,911) 11,540 83.0%
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Other income (expense):
Interest expense, net -0.1% (27) -0.1% (29) 2 6.9% -0.1% (88) -0.1% (85) (3) -3.5%
Gain (loss) on foreign currency
transactions 1.9% 444 -0.1% (29) 473 - 1.1% 738 0.0% 13 725 -
Royalty income 0.6% 141 0.7% 134 7 5.2% 0.6% 400 0.8% 507 (107) -21.1%
Other income (expense), net -0.1% (19) -0.3% (68) 49 - 0.0% 17 -0.2% (150) 167 -
--- --- --- --- ---- ---
Total other income, net 2.3% 539 0.2% 8 531 - 1.6% 1,067 0.5% 285 782 274.4%
--- --- --- ----- --- ---
Income (loss) before provision
(benefit) for income taxes 6.7% 1,582 -8.4% (1,707) 3,289 192.7% -2.0% (1,304) -22.6% (13,626) 12,322 90.4%
Provision (benefit) for income taxes 1.7% 409 0.4% 71 (338) - 1.1% 697 -2.8% (1,664) 2,361 -
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Net income (loss) 5.0% $1,173 -8.8% $(1,778) $2,951 166.0% -3.1% $(2,001) -19.8% $(11,962) $9,961 83.3%
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Net income (loss) per share - basic $0.03 $(0.04) $(0.05) $(0.30)
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Net income (loss) per share - diluted $0.03 $(0.04) $(0.05) $(0.30)
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Weighted average shares outstanding -
basic 41,110 40,486 40,939 40,227
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Weighted average shares outstanding -
diluted 42,104 40,486 40,939 40,227
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STAAR Surgical Company
Consolidated Statements of Cash Flows
(in 000's)
Unaudited
Three Months Ended Nine Months Ended
------------------ -----------------
September 29, September 30, September 29, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Cash flows from operating
activities:
Net income (loss) $1,173 $(1,778) $(2,001) $(11,962)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation of property and
equipment 796 696 2,344 1,933
Amortization of long-lived
intangibles 56 60 166 171
Deferred income taxes 155 (4) 164 (1,806)
Change in net pension liability 65 170 95 390
Stock-based compensation expense 807 385 2,185 8,143
Loss on disposal of property and
equipment 22 48 22 65
Provision for sales returns and bad
debts 120 10 186 99
Inventory provision 478 197 1,267 1,379
Changes in working capital:
Accounts receivable 62 1,772 41 1,707
Inventories (183) (209) 725 222
Prepayments, deposits and other
current assets (486) (700) (764) (1,118)
Accounts payable (984) (688) (2,751) 594
Other current liabilities 1,023 1,428 62 1,104
Net cash provided by operating
activities 3,104 1,387 1,741 921
Cash flows from investing
activities:
Acquisition of property and
equipment (345) (718) (969) (2,709)
Net cash used in investing
activities (345) (718) (969) (2,709)
Cash flows from financing
activities:
Repayment of capital lease
obligations (323) (118) (984) (302)
Proceeds from sale-leaseback
transactions - - - 1,154
Repurchase of employee common stock
for taxes withheld - - (234) (611)
Proceeds from vested resricted
stock and exercise of stock
options 313 915 2,276 1,652
Net cash provided by (used in)
financing activities (10) 797 1,058 1,893
Effect of exchange rate changes on
cash, cash equivalents and
restricted cash (54) 130 305 777
--- --- --- ---
Increase in cash, cash equivalents
and restricted cash 2,695 1,596 2,135 882
Cash, cash equivalents and
restricted cash, at beginning of
the period 13,558 12,807 14,118 13,521
Cash, cash equivalents and
restricted cash, at end of the
period $16,253 $14,403 $16,253 $14,403
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STAAR Surgical Company
Global Sales
(in 000's)
Unaudited
Three Months Ended Nine Months Ended
------------------ -----------------
September 29, September 30, % Change September 29, September 30, % Change
Sales by Region 2017 2016 Fav (Unfav) 2017 2016 Fav (Unfav)
---- ---- ---------- ---- ---- ----------
North
America 9.3% $2,192 12.5% $2,502 -12.4% 10.3% $6,786 12.8% $7,726 -12.2%
Europe,
Middle
East,
Africa,
Latin
America 27.4% 6,441 29.8% 5,985 7.6% 30.5% 20,033 31.1% 18,764 6.8%
Asia
Pacific 63.3% 14,840 57.7% 11,565 28.3% 59.2% 38,940 56.1% 33,805 15.2%
Total
Sales 100.0% $23,473 100.0% $20,052 17.1% 100.0% $65,759 100.0% $60,295 9.1%
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Product Sales
ICLs 77.2% $18,110 73.8% $14,801 22.4% 75.6% $49,698 72.0% $43,389 14.5%
IOLs 16.6% 3,892 23.2% 4,649 -16.3% 19.6% 12,875 24.5% 14,783 -12.9%
Other 6.2% 1,471 3.0% 602 144.4% 4.8% 3,186 3.5% 2,123 50.1%
--- --- --- ---
Total
Sales 100.0% $23,473 100.0% $20,052 17.1% 100.0% $65,759 100.0% $60,295 9.1%
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STAAR Surgical Company
Reconciliation of Non-GAAP Financial Measure
(in 000's)
Unaudited
Three Months Ended Nine Months Ended
------------------ -----------------
September 29, September 30, September 29, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Net income (loss) -(as
reported) $1,173 $(1,778) $(2,001) $(11,962)
Less:
Foreign currency impact (444) 29 (738) (13)
Stock-based compensation
expense 807 385 2,185 8,143
Quality remediation expense - 485 210 1,484
Net income (loss) -
(adjusted) $1,536 $(879) $(344) $(2,348)
====== ===== ===== =======
Net income (loss) per share,
basic -(as reported) $0.03 $(0.04) $(0.05) $(0.30)
Foreign currency impact (0.01) 0.00 (0.02) (0.00)
Stock-based compensation
expense $0.02 0.01 0.05 0.20
Quality remediation expense - 0.01 0.01 0.04
Net income (loss) per share,
basic -(adjusted) $0.04 $(0.02) $(0.01) $(0.06)
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Net income (loss) per share,
diluted -(as reported) $0.03 $(0.04) $(0.05) $(0.30)
Foreign currency impact (0.01) 0.00 (0.02) (0.00)
Stock-based compensation
expense 0.02 0.01 0.05 0.20
Quality remediation expense - 0.01 0.01 0.04
Net income (loss) per share,
diluted -(adjusted) $0.04 $(0.02) $(0.01) $(0.06)
===== ====== ====== ======
Weighted average shares
outstanding -Basic 41,110 40,486 40,939 40,227
Weighted average shares
outstanding -Diluted 42,104 40,486 40,939 40,227
Note: Net income (loss) per
share (adjusted), basic and
diluted, may not add due to
rounding
View original content:http://www.prnewswire.com/news-releases/staar-surgical-reports-third-quarter-2017-results-300552243.html SOURCE STAAR Surgical Company |
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Company Codes: NASDAQ-NMS:STAA |
