MONROVIA, Calif., May 1, 2013 /PRNewswire/ -- STAAR Surgical Company (NASDAQ: STAA), a leading developer, manufacturer and marketer of minimally invasive ophthalmic products, today reported record revenue for the first quarter ended March 29, 2013 of $18.0 million compared to $15.5 million reported for the first quarter of 2012. The results included sales of $10.6 million of the Company's Visian ICL product portfolio and $6.3 million of its IOL products and were in-line with preliminary revenue results announced on April 9. In addition, Other Product sales increased to $1.0 million. The effect of foreign currency exchange versus prior year reduced total sales by $750,000 during the quarter.
Gross profit margin for the quarter was 70.3%, consistent with the first quarter of 2012. Gross margin expansion was limited primarily by a large increase in very low margin IOL injector systems sales to a third party supplier for the buildup of their acrylic preloaded product supply, which appears in the Other Product sales category. This accounted for a 170 basis point difference in gross margin percentage. If not for this inventory buildup factor, the gross margin would have been 72%.
Net income for the first quarter of 2013, calculated in accordance with GAAP, was $471,000, or $0.01 on a per diluted share basis, compared with net income of $232,000, or $0.01 on a per diluted share basis, in the first quarter of 2012. Adjusted net income (excluding manufacturing consolidation expenses, distribution transition expenses in Spain, gain (loss) on foreign currency transactions, fair value adjustment of warrants, and stock-based compensation expense) for the quarter ended March 29, 2013 was $3.2 million or $0.08 per diluted share versus adjusted net income for the year ago quarter of $1.4 million, or $0.04 per diluted share.
Operating expenses for the first quarter of 2013 were $11.6 million, up 9% from the $10.6 million prior year period reflecting $901,000 (a $346,000 increase) in related charges associated with the Company's manufacturing consolidation project and a $623,000 increase in sales and marketing expenses driven by the additions to the Company's headcount throughout 2012 and commissions paid to the former distributor in Spain for early transition to a direct sales model. Overall operating expenses were impacted positively by foreign currency exchange of $351,000.
Income taxes increased to $314,000 during the first quarter of 2013 compared to $232,000 during the first quarter of 2012. The Company's effective tax rate for the first quarter was 40%, and is now expected to remain at this level for the remainder of 2013, versus the previously expected 50% tax rate for 2013.
Cash and cash equivalents on March 29, 2013 totaled $19.2 million, compared to $21.7 million at the end of the prior quarter. Cash utilization during the quarter was impacted by: $563,000 negative effect on exchange, $442,000 paid to the former Spanish distributor relating to the transition to a direct selling model (these charges were completed on March 8) and $1.2 million used for manufacturing consolidation and expansion of the Monrovia, CA facility.
"We are encouraged by the continued revenue growth we are achieving in the refractive surgery space, which resulted in an overall improvement in year-over-year sales of 16% for the first quarter of 2013 which on a constant currency basis is actually 21% growth," said Barry Caldwell, president and CEO. "Sales of our Visian ICL exceeded $10 million for the first time and reflected a 24% increase over the same period in the prior year. Visian ICL sales increased in our focused markets, led by Europe, which increased by 57% during the first quarter and the Middle East with a 94% increase. The competitive landscape we face in refractive surgery seems to have changed more in the past six months than in previous years. LASIK surgery seems to be facing more difficult negative pressure with most market data showing that LASIK procedures are declining in major markets. Lenses which attempt to compete for refractive procedure share which are in the anterior segment of the eye all seem to be facing new clinical challenges. The Visian ICL sits behind the iris in the posterior segment unlike those competitive lenses. Also, our new Visian ICL CentraFLOW™ technology in Europe has been a key driver of our success in that marketplace," added Mr. Caldwell.
"Total IOL sales in the first quarter of 2013 were $6.3 million, relatively flat with the comparable period a year ago. On a constant currency basis, IOL sales increased 10%, reflecting the strength of our recently launched KS-SP preloaded acrylic IOLs. However, the negative impact of foreign exchange, which totaled $750,000 for the quarter, was $646,000 for IOLs alone. Japan represented 56% of all IOL sales, an increase of 25% in total unit sales and a 32% revenue increase without the negative impact of foreign currency exchange," said Mr. Caldwell. "Backorders of our preloaded acrylic IOLs in Europe were $900,000 and reflect both the strength of the recently launched KS-SP and the supply constraints we continue to experience from a third party supplier. This backorder position is expected to be a limiting factor to our IOL sales for the entire year and we are evaluating potential options to meet this demand. During the ASCRS meeting a few weeks ago we formally launched our new nanoFLEX™ Toric IOL for Europe and would expect to see sales during the second quarter."
"Many things went right for us both from an operational and commercial perspective during the first quarter. We are well positioned in two large markets – Refractive and Cataract - and have a pipeline in place for new products throughout this year and well into 2014. In addition, we have made investments to drive future top line and bottom line growth with our spending to add new sales and marketing positions and our resource dedication to the manufacturing consolidation project. By maintaining our strong balance sheet, continuing to invest in focused research & development initiatives, and keeping a close eye on operational efficiencies, I believe we can achieve our growth plans for 2013 and beyond," concluded Mr. Caldwell.
Recent Visian Implantable Collamer® Lens (ICL) Highlights
Regional ICL UpdatesEurope, Middle East, Africa
Recent Intraocular Lens (IOL) Highlights
Project Comet Update
Expansion of Monrovia facilityThe Monrovia, California headquarters was expanded by approximately 26,000 square feet that directly adjoin the current 44,000 square feet. The additional space is expected to create a more productive working environment as manufacturing is consolidated at this facility. The Company has incurred $899,000 in costs to date and expects to spend an additional $264,000 through the remainder of the year to complete this expansion.
2013 Metrics-Solid Start to the Year, No Change to OutlookThe Company reiterates and will continue to report and update on each of the 2013 metrics quarterly:
Conference CallThe Company will host a conference call and video webcast today, May 1, 2013 at 4:30 p.m. Eastern / 1:30 p.m. Pacific to discuss the Company's first quarter 2013 financial results and recent corporate developments. The dial-in number for the conference call is 877-703-6110 for domestic participants and 857-244-7309 for international participants, both using a passcode 23245755.
The Company will also be using slides to illustrate its first quarter results and operational progress. The slides and live webcast of the call can be accessed from the investor relations section of the STAAR website at www.staar.com.A taped replay of the conference call will also be available beginning approximately one hour after the call's conclusion and will be available for seven days. This replay can be accessed by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers, both using passcode 40120994. An archived webcast will also be available at www.staar.com.
Use of Non-GAAP Financial MeasuresThis press release includes supplemental non-GAAP financial information, which STAAR believes investors will find helpful in understanding its operating performance.
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 our results when reported in U.S. dollars. When preparing its financial statements in conformance with GAAP, the Company translates foreign currency sales and expenses denominated in Japanese yen to dollars at the weighted average of exchange rates in effect during the period. As a result, the Company's reported performance may be significantly affected by currency fluctuations. 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.
"Adjusted Net Income" excludes the following items that are included in "Net Income" as calculated in accordance with U.S. generally accepted accounting principles ("GAAP"):
manufacturing consolidation expenses, Spain distribution transition expenses, gain or loss on foreign currency transactions, the fair value adjustment of outstanding warrants issued in 2007, and stock-based compensation expenses.
We believe that "Adjusted Net Income" is useful to investors in gauging the outcome of the key drivers of our business performance: our 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 we have control.
We have excluded manufacturing consolidation and Spain distribution transition expenses because these are non-recurring expenses and their inclusion may mask underlying trends in our business performance. Expenses associated with the Company's plans to consolidate its manufacturing operations to the U.S. are largely expected to be completed at the end of 2013 and the Spain distribution transition expenses were completed at the end of the first quarter of 2013.
We have excluded gains and losses on foreign currency transactions and the fair value adjustment of warrants 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 Statement of Financial Accounting Standards ("SFAS") No. 123R. In calculating Adjusted Net Income STAAR excludes these expenses and the fair value adjustment of outstanding warrants 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.
We have provided below a detailed reconciliation table, which is useful to investors in providing the context to understand our Adjusted Net Income and how it differs from Net Income calculated in accordance with GAAP.
About STAAR SurgicalSTAAR, which has been dedicated solely to ophthalmic surgery for over 25 years, designs, develops, manufactures and markets implantable lenses for the eye and delivery systems therefor. All of these lenses are foldable, which permits the surgeon to insert them through a small incision. STAAR's lens used in refractive surgery as an alternative to LASIK is called an Implantable Collamer® Lens or "ICL." A lens used to replace the natural lens after cataract surgery is called an intraocular lens or "IOL." Over 350,000 Visian ICLs have been implanted to date; to learn more about the ICL go to: www.visianinfo.com. STAAR has approximately 300 full time employees and markets lenses in over 60 countries. Headquartered in Monrovia, CA, it manufactures in the following locations: Nidau, Switzerland; Ichikawa City, Japan; Aliso Viejo, CA; and Monrovia, CA. For more information, please visit the Company's website at www.staar.com or call 626-303-7902.
Collamer® is the registered trademark for STAAR's proprietary biocompatible collagen copolymer lens material.
Safe HarborAll statements in this press release that are not statements of historical fact are forward-looking statements, including statements about any of the following: any projections of earnings, revenue, sales, profit margins, cash, effective tax rate or any other financial items; the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; metrics for 2013; statements regarding new products, including but not limited to, expectations for success of new products in the U.S. or international markets or government approval of new products; future economic conditions or size of market opportunities; expected IOL backorder position; expected costs of Monrovia facility expansion; expected costs and savings from business consolidation plans and the timetable for those plans; statements of belief, including as to achieving 2013 growth plans or metrics; and any statements of assumptions underlying any of the foregoing.
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; the negative effect of unstable global economic conditions on sales of products, especially products such as the ICL used in non-reimbursed elective procedures; the challenge of managing our foreign subsidiaries; backlog as we prepare for our manufacturing facility consolidation; the risk of unfavorable changes in currency exchange rate; the discretion of regulatory agencies to approve or reject new products, or to require additional actions before approval; unexpected costs or delays that could reduce or eliminate the expected benefits of our consolidation plans; the risk that research and development efforts will not be successful or may be delayed in delivering for launch; the purchasing patterns of our distributors carrying inventory in the market; the willingness of surgeons and patients to adopt a new product and procedure; patterns of Visian ICL use that have typically limited our penetration of the refractive procedure market, and a general decline in the demand for refractive surgery particularly in the U.S. and the Asia Pacific region, which STAAR believes has resulted from both concerns about the safety and effectiveness of laser procedures and current economic conditions. The Visian Toric ICL and the Visian ICL with CentraFLOW are not yet approved for sale in the United States.CONTACT:
EVC Group Douglas Sherk, 415-652-9100
Amy Phillips, 412-327-9499Leigh Salvo, 415-568-9348 STAAR Surgical CompanyCondensed Consolidated Balance Sheets(in 000's)March 29,December 28,20132012ASSETSCurrent assets:Cash and cash equivalents$ 19,243$
21,675Accounts receivable trade, net8,6078,543Inventories, net11,01011,673Prepaids, deposits, and other current assets2,7442,183Total current assets41,60444,074Property, plant, and equipment, net6,1845,439Intangible assets, net1,8582,142Goodwill1,7861,786Deferred income taxes188187Other assets1,0381,131Total assets$ 52,658$
54,759LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Line of credit$
5,850Accounts payable3,6635,129Deferred income taxes440439Obligations under capital leases 701829Other current liabilities5,0755,702Total current liabilities15,17917,949Obligations under capital leases 346488Deferred income taxes892885Asset retirement obligations646707Pension liability2,9462,988Total liabilities20,00923,017Stockholders' equity:Common stock364364Additional paid-in capital163,361162,251Accumulated other comprehensive income9051,580Accumulated deficit(131,981)(132,453)Total stockholders' equity32,64931,742Total liabilities and stockholders' equity$ 52,658$
54,759 STAAR Surgical CompanyCondensed Consolidated Statements of Operations(In 000's except for per share data)Three Months Ended% ofMarch 29,% ofMarch 30,ChangeSales2013Sales2012Amount%Net sales100.0%
$ 15,509$ 2,49216.1%Cost of sales29.7%
10,9021,75216.1%Selling, general and administrative expenses: General and administrative22.0%
3,860982.5% Marketing and selling29.4%
4,66362313.4% Research and development7.6%
1,546(180)-11.6% Medical device tax0.3%
0590.0%Selling, general, and administrative expenses59.4%
10,0696006.0% Other general and administrative expenses5.0%
55534662.3%Total selling, general and administrative expenses64.4%
278806289.9%Other income (expense): Interest income0.2%
-35#DIV/0! Interest expense-0.5%
(95)12-12.6% (Loss) Gain on foreign currency transactions-1.9%
67(408)-609.0% Other income (expense), net0.5%
214(124)-57.9%Total other income (expense), net-1.7%
186(485)-260.8%Income before provision for income taxes4.3%
46432169.2%Provision for income taxes1.7%
239103.0%Net Income per share-basic$
.01Net Income per share-diluted$
.01Weighted average shares outstanding - basic36,42736,071Weighted average shares outstanding - diluted37,41838,420 STAAR Surgical CompanyCondensed Consolidated Statements of Cash Flows(in 000's)Year Ended March 29,March 30,20132012Cash flows from operating activities:Net income $
232Adjustments to reconcile net income to net cash used in operating activities:Depreciation of property and equipment369317Amortization of intangibles117175Deferred income taxes757Fair value adjustment of warrant(27)14Gain on disposal of property and equipment(28)-Stock-based compensation expense1,034687Change in net pension liability5872Accretion of asset retirement obligation5-Other2740Changes in working capital:Accounts receivable trade, net(322)556Inventories288(432)Prepaids, deposits and other current assets(581)(665)Accounts payable(1,328)(1,100)Other current liabilities(522)(390)Net cash used in operating activities(432)(437)Cash flows from investing activities:Acquisition of property and equipment(1,218)(287)Decrease in restricted cash, including reinvested interest-129Net cash used in investing activities(1,218)(158)Cash flows from financing activities:Repayment of capital lease lines of credit(242)(195)Proceeds from exercise of stock options23837Net cash (used in) provided by financing activities(219)642Effect of exchange rate changes on cash and cash equivalents(563)(184)Decrease in cash and cash equivalents(2,432)(137)Cash and cash equivalents, at beginning of the period21,67516,582Cash and cash equivalents, at end of the period$ 19,243$ 16,445 STAAR Surgical CompanyGlobal Sales(in 000's)Three Months EndedMarch 29,March 30,%Geographic Sales20132012ChangeUnited States
3,95916.8% Total International Sales
$ 15,50916.1%Product Sales Core productsICLs
6,358-0.2% Total core products
14,96313.5% Non-core productsOther
$ 15,50916.1% STAAR Surgical CompanyReconciliation of Non-GAAP Financial MeasureAdjusted Net IncomeThree Months EndedMarch 29,March 30,20132012Net income- (as reported)$
232Less: Manufacturing consolidation expenses$
555 Spain distribution transition cost$
- Foreign currency impact$
(67) Fair value adjustment of warrants$
4 Stock-based compensation expense$
87Net income - (adjusted)$
,421Net income per share, basic - (as reported)$
.01 Manufacturing consolidation expenses$
.02 Spain distribution transition cost$
- Foreign currency impact$
(0.00) Fair value adjustment of warrants$
.00 Stock-based compensation expense$
.02Net income per share, basic - (adjusted)$
.04Net income per share, diluted - (as reported)$
.01 Manufacturing consolidation expenses$
.01 Spain distribution transition cost$
- Foreign currency impact$
(0.00) Fair value adjustment of warrants$
.00 Stock-based compensation expense$
.02Net income per share, diluted - (adjusted)$
.04Weighted average shares outstanding - Basic36,427
36,071Weighted average shares outstanding - Diluted37,418
38,420Note: Net income per share (adjusted), basic and diluted, may not add up due to roundingSTAAR Surgical CompanyReconciliation of Non-GAAP Financial MeasureConstant Currency Sales GAAP Sales March 29, Effect of Constant March 30, As Reported Constant Currency 2013 Currency Currency 2012 $ Change % Change $ Change % Change ICL $
24% IOL 6,347
10% Other 1,023
100% Total Sales $
$ 18,751$ 15,509$
|SOURCE STAAR Surgical Company|
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